Acquiring a Medical Practice: The Contract Machinery
The acquisition of a medical practice in Georgia works through the machinery of the sale contract: the norms of the Civil Code determine what is transferred to the buyer, which costs fall on the seller, and how the transferred value — including the patient base and know-how — is protected by the trade-secret regime. One thing must be said separately: the medical confidentiality duty connected with patients lives in a separate source — the Law on Medical Practice — and the acquisition transaction does not replace it.
The architecture of the transaction stands on the sale norms: the concept of sale, the transfer of rights, the duty to deliver a defect-free item, the protection of know-how, and the purchase option.
What Is Transferred to the Buyer
Under the sale contract, the seller must transfer to the buyer the right of ownership in the property, the documents connected with it, and deliver the goods; the buyer must pay the agreed price and take the purchased property. Where the price is not indicated directly, the parties may agree on the means of determining it — the valuation of the practice is thus part of the transaction, not an external condition.
In acquiring a practice, what is bought is often not only equipment but rights as well — contracts, leasing, service connections. Here Article 498 operates: the rules governing the sale of a thing apply, correspondingly, to the sale of a right or other property; in selling a right, the seller bears the burden of substantiating its authenticity and the costs of transfer; and where the right sold gives the possibility of possessing a thing, the seller must deliver to the buyer an item free of tangible and legal defects. Article 487 confirms this generally: the seller must deliver an item free from tangible and legal defects — these norms perform precisely the due-diligence function.
The Patient Base and Know-How
The real value of a practice often lies not in equipment but in information: the patient base, working methods, organizational knowledge. Article 1105 of the Code gives this an instrument: an entrepreneur who holds industrial-commercial secrets (know-how) — technological, organizational or commercial information of special value, evidenced by the necessary and sufficient measures taken for keeping it secret — has an exclusive right to that information. In a transaction this means the transfer of the base must be structured under a secrecy regime: where the information was not kept secret, the exclusive right over it weakens.
Moreover, knowledge connected with patients stands under a dual regime: commercially it falls within know-how, and medically — within the confidentiality of the Law on Medical Practice. The acquirer builds the two regimes together: the confidentiality of the transaction protects the base commercially, while medical confidentiality secures the patient's interest.
The Option and the Form of the Transaction
Writing the transaction in time is done through Article 515: the parties may agree that the buyer alone has the right to purchase the subject up to a determined time or event — a purchase option — or that, on the same conditions, the seller has the right to sell it — a sale option. The norms of the sale contract apply to the option contract unless the parties agree otherwise. For a practice, the option is needed where the buyer first wants a trial period — for instance, to assess the flow of patients.
Three layers operate together in the transaction of acquiring a practice: the proprietary — transfer of apparatus, equipment and premises; the intellectual — transfer of research and treatment methods, knowledge and the reputational capital of the clientele; and the regulatory — preservation of the licensing and permit conditions by the new holder. It is the third layer that distinguishes the deal from an ordinary sale: continuity of the activity is preserved only where every condition of the transfer is lawful and each step is fixed documentarily. Preparation of the transaction therefore always begins with an inventory of the documents of the establishment being acquired.
Frequently Asked Questions
Below we summarize the questions most often asked about acquiring a medical practice.
What is included in the transaction?
Property, the documents connected with it and the goods; in the sale of rights, substantiating authenticity and the transfer costs are on the seller.
How is the patient base protected?
By the trade-secret regime — the exclusive right to information of special value is established through measures keeping it secret.
Is a trial period possible?
Yes — through a purchase option: the buyer unilaterally acquires the subject up to a determined time or event.
What is the seller's duty on quality?
The item must be free from tangible and legal defects — a direct requirement of the Code.
How does the purchase of a practice differ from an ordinary sale?
By the object of transfer: together with the property, knowledge, methods and reputational capital pass, and these have their own legal conditions.
How We Help on Legal.ge
On Legal.ge we structure practice-acquisition transactions: we draft the list of transferred assets, build the know-how protection regime, write option conditions, and link the transaction to the requirements of medical confidentiality. Contact us — the transaction will be defect-free for both sides.