Taking over a medical practice in Austria

Anyone taking over a medical practice (Ordination) usually says "I am buying the practice". Legally, no such object of purchase exists. The authorisation to practise medicine independently is tied to the person – under § 3 para 1 of the Physicians Act 1998 (Ärztegesetz, ÄrzteG) it is reserved exclusively to doctors of general medicine, medical specialists and the further groups named there. An authorisation cannot be sold, and the panel doctor contract (Kassenvertrag) does not transfer either.

What is transferred is therefore a bundle of individual assets: furnishings and equipment, the right to the practice premises, the employment relationships, the practice's reputation – and, subject to considerable restrictions, access to the patient base. How much this bundle is worth depends almost entirely on two questions that are not decided in the purchase contract itself: whether the successor obtains the panel doctor contract, and whether an existing in-house pharmacy (Hausapotheke) may be continued.

Panel practice or elective doctor practice: the first fork in the road

What is being taken over decides which of the following sections apply. With an elective doctor practice (Wahlarztordination) there is no panel position, no tender and no handover practice under the general contract – the next two sections concern only the panel practice (Kassenordination). The in-house pharmacy, too, is in effect a matter of the panel practice: § 29 para 1 no 1 ApoG ties the licence to a contractual relationship under § 342 para 1 of the General Social Insurance Act (ASVG), that is, to the panel doctor contract – a purely elective doctor does not meet this requirement.

What remains when an elective doctor practice is taken over is the rest of the bundle: furnishings and equipment, the practice premises (§ 12a MRG in the case of leased premises), the employment relationships, the patient records together with the data protection (GDPR) questions, and the practice's reputation. The valuation question, however, presents itself differently: the patient base is not secured by an individual contract but tied to the person of the predecessor.

The panel doctor contract is put out to tender, not handed over

The panel position (Kassenplanstelle) is not an asset of the departing doctor. When it becomes vacant, it is advertised by the Austrian Health Insurance Fund (Österreichische Gesundheitskasse, ÖGK) in agreement with the Salzburg Medical Chamber (Ärztekammer für Salzburg); publication is made through the Chamber. Applications are received by the Chamber; the selection follows the ranking guidelines and requires agreement between the Chamber and the ÖGK; if no agreement is reached, the provincial arbitration commission (Landesschiedskommission) decides.

From this follows the most important economic sentence of this article: the purchase price can be higher than the value of what actually transfers. Anyone who pays for furnishings, conversions and goodwill without having secured the panel position bears the risk alone. The purchase contract therefore needs a condition precedent: it only takes effect once the individual contract (Einzelvertrag) with the insurance fund comes about. Without this condition, the contract is incalculable for the acquiring party.

The handover practice – regulated in the Salzburg general contract, not in the Physicians Act

For an orderly transition there is a dedicated model that is frequently searched for and rarely cited correctly: the handover practice (Übergabepraxis). It is not found in the Physicians Act but in § 5 of the general contract for physicians for Salzburg (Ärzte-Gesamtvertrag), which the Salzburg Medical Chamber concluded with the health insurance carrier – today the ÖGK. Transferor and successor run the practice jointly for a limited period so that the patient base does not break away.

The following key points reflect the Salzburg general contract in the compiled version containing the first four supplementary agreements. How old that version is can be seen from the very name it uses: the contract still refers to the Salzburger Gebietskrankenkasse, which was absorbed into the Austrian Health Insurance Fund when the insurance funds were merged at the beginning of 2020. Further supplementary agreements have been concluded since – most recently the 16th, dated 13 September 2022. Anyone concretely planning a handover should ask the Salzburg Medical Chamber for the current version; the system does not change as a result, but individual deadlines and percentages may.

The key points:

• Time window. The panel doctor can request the operation of a handover practice at the earliest three years and at the latest one year before the end of the contract – and must do so together with the termination of his or her individual contract. The panel position is then advertised with the note that applicants must be prepared to run the handover practice.
• The price is not a selection criterion. The general contract expressly clarifies that a private-law agreement on the terms of a practice takeover is not a condition of the tender or of the selection. Anyone who believes they can determine the buyer through the handover practice is mistaken.
• A limited say nevertheless exists. In the case of particularly serious objections to the person of the top-ranked applicant, the departing doctor has a right of veto within six weeks of being notified of the ranking result. The hearing commission decides whether the objections are justified. If it considers them unjustified, the departing doctor loses the right to the handover practice and continues to run the practice alone until the termination date.
• Duty of presence. Over the entire handover period, the departing panel doctor must personally provide at least 50 per cent of the consultation hours, and at least 25 per cent in every quarter. Unless otherwise agreed, a continuous 50/50 split applies in every quarter. In the course of the handover period, the consultation hours are to be increased to at least 20 hours per week – in general medicine spread over a five-day week with at least two afternoon surgeries or one afternoon and one Saturday surgery. This rule then also applies to the successor's contract.
• Age limit. The right to a handover practice exists only if the termination date is not later than the end of the quarter following the doctor's 65th birthday. To maintain the provision of care, a handover practice can be permitted beyond that in individual cases by agreement of the parties to the general contract, at the longest until the age of 70.
• If it does not work out. For important reasons – the general contract expressly names serious problems in the cooperation – the departing doctor may withdraw early at the end of the current quarter; the successor's individual contract then begins with the following quarter. Without an important reason, this is possible only by mutual agreement. An extension of the handover period is permitted only in justified individual cases and with the consent of the Chamber and the insurance fund.

The internal relationship – cost sharing, substitution, equipment, staff, exit – is regulated by the two doctors themselves. The general contract merely requires that the participation in the jointly generated turnover be appropriate, and has the Chamber monitor this; if the departing doctor does not fulfil his or her performance obligations, part of the fee total or the entire sum can be paid directly to the successor. It is precisely in this internal relationship that the conflicts arise, and it is precisely there that the contract is often at its thinnest.

The in-house pharmacy decides the value of a rural practice

In practices outside the urban centres, a substantial part of the earnings depends on the doctor's in-house pharmacy. It is the point at which takeover negotiations fail most often – because the licence does not transfer.

The licence under § 29 of the Pharmacies Act (Apothekengesetz, ApoG) is granted to the individual doctor for a specific place of operation. Whoever takes over the practice must apply anew. A particularity applies here that one has to know: for a new licence, § 29 para 1 requires a doctor of general medicine with a panel doctor contract, that there is no public pharmacy in the municipality, and that the professional seat is more than six road kilometres from the place of operation of the nearest public pharmacy. For succession to an existing in-house pharmacy, § 29 para 1a provides for a distance of more than four road kilometres. Succession is therefore easier than a new establishment – but it remains a separate procedure with its own outcome.

Two points therefore belong in every review before the contract is concluded:

1. Has the pharmacy situation changed since the original licence was granted? If a public pharmacy has meanwhile been established closer by, the predecessor's licence can remain in force while the successor no longer receives one.
2. Is a public pharmacy in preparation? If a public pharmacy is newly established and the route to it does not exceed four road kilometres, the in-house pharmacy licence must be revoked under § 29 para 3 ApoG – except in certain municipalities listed in the statute. The timing is set out in para 4: the authority must decide in such good time that operation ends three years after the grant of the concession for the new pharmacy becomes final. Three years sound like a long time; in relation to a purchase price built on the pharmacy's earnings, they are short.

In practical terms this means: the part of the purchase price attributable to the in-house pharmacy should be tied to the actual licence – through a condition, a price adjustment or a rescission clause.

The patient records are not an asset

The doctor's duty of confidentiality under § 54 ÄrzteG does not end with the handover of the practice. Patient records therefore cannot be handed over like a stock of goods. § 51 para 2 ÄrzteG permits the transmission of data to other doctors treating the patient, with the patient's consent – this consent is the pivotal point.

The only clean route therefore runs through the patients themselves: information about the change, the opportunity to consent, and, for all who do not consent, separate safekeeping. The retention obligation must also be borne in mind: under § 51 para 3 ÄrzteG, the records must be kept for at least ten years. This obligation does not disappear because someone closes their practice – whoever hands over must regulate who keeps the documents for the remainder of the period and how requests for information are answered.

Premises, staff, taxes

With the lease of the practice premises, it depends. Within the full scope of application of the Austrian Tenancy Act (Mietrechtsgesetz, MRG), the acquirer enters into the main lease by operation of law where a business is sold for continuation in the same premises (§ 12a para 1 MRG) – the landlord's consent is not required for this, but prompt notification is, and the landlord may raise the rent. Outside this scope, it remains a matter of the landlord's consent or a contractual right of entry. In both cases: clarify before the price negotiation, not afterwards – whether the entry applies and what it triggers for the rent decides the calculation.

The employment relationships of the practice staff transfer with all rights and obligations in a transfer of business under § 3 AVRAG. The acquiring party thus steps into existing entitlements – outstanding holiday, prior service periods, severance expectancies. A review of the employment relationships before the contract is concluded is not a formality.

In tax terms, the allocation of the purchase price between tangible assets and goodwill is relevant for both sides, and for the transferring side the sale may qualify for preferential treatment. This must be planned together with the tax adviser before the contract is signed – a purchase price allocation cannot sensibly be changed afterwards.

If the aim is cooperation rather than handover

Not every succession has to run through a sale. The Physicians Act knows several forms of cooperation that are frequently confused:

• § 47a ÄrzteG regulates the employment and substitution of doctors in practices and group practices.
• § 52 ÄrzteG concerns shared-premises and shared-equipment arrangements (Ordinations- und Apparategemeinschaften): shared rooms and equipment, but separately run practices.
• § 52a ÄrzteG regulates the group practice (Gruppenpraxis), which can be run as a general partnership or as a GmbH – and is thus, in the office-based sector, the only constellation in which shares in a medical structure can be transferred.

Which form fits is not decided by the tax rate, but by how those involved want to work in future – and by what the general contract permits for the panel position concerned.

What belongs in the contract

From the handovers we have advised on, these are the points that are fought over later – in the takeover of an elective doctor practice, the points on the individual contract, the in-house pharmacy and the handover practice do not apply:

• a condition precedent for the individual contract with the ÖGK
• a dedicated provision for the in-house pharmacy licence, including a price adjustment
• the procedure for the patient records, including safekeeping and requests for information
• the landlord's consent or a secured right of entry
• an inventory of the employment relationships and recourse for legacy claims
• a purchase price allocation agreed with the tax adviser
• a non-compete clause for the transferring side, limited in subject matter, time and territory
• a complete regulation of the internal relationship during the handover practice: costs, substitution, holidays, exit, and what applies if the individual contract does not come about in the end

The last point is the most important one. The handover practice is an instrument of the general contract for securing medical care, not a purchase contract. It orders the relationship with the insurance fund – the relationship of the two doctors to each other it expressly does not. Those involved must do that themselves.