The last six miles of a marathon are the most difficult. No one wants to give up so close to the finish line, yet if you don’t have vital elements in place for your transition plan, you may be doing exactly that. Whether you are handing the reins of your practice over to an associate or you are purchasing a practice, it’s vital that you preserve the quality of the brand. Don’t jeopardize the goodwill gained over decades!
There are three main elements of a successful transition plan.
AN ACCURATE VALUATION
To get an accurate estimate, you have to compare apples to apples. Why? It can make a huge difference at tax time. If you’re buying a practice, you want to get a good price. Be aware that there are a lot of subtleties involved. For example, just because a similar practice may be nearby, it doesn’t mean that it will have the same–or even a similar—valuation to yours.
Some of the factors that should be taken into account include:
- Tangible and intangible financial assets, such as medical equipment
- Patient accounts receivable
- Revenue-based financial formulas
- Geographical location—it may be more difficult to sell a practice if it is located in a rural area
- Gross or net incomes
- While it may appear to be easy to simply plug numbers into a formula to figure a practice’s valuation, professionals warn that it’s not so simple. Not only do formulas change, but some are more appropriate for medical practices. Using a practice advisor will help you get a fair and accurate valuation.
STRUCTURING A SEAMLESS TRANSFER
Customer service is one of the most important assets in the “bank” of your brand. Patients will be concerned when they learn that a dentist they have seen for years is leaving the practice. All of the “moving parts” involved in transferring a practice means it’s too easy to overlook the impact it has on patients.
There are several ways you can help the process run smoothly:
Keep your patients informed. Be sure they receive advanced noticed in accordance with all required laws.
Be sure the transition plan includes when patients will start seeing the new doctor.
Be sure your practice has a formal employee manual; if the new practice owner wants to add additional employees, then both “new” and “old” health care professionals will have a clear idea of what is expected. This will allow you to maintain the high standards of customer service your patients have come to expect.
MAINTAIN AN ACCURATE FINANCIAL SNAPSHOT—WITHOUT THE EMOTION
Owning your own practice is often seen as a piece of the American dream. Therefore, leaving or selling a practice may cause feelings to float to the surface. For this reason, it is too easy to focus on the emotional value of the practice, even when this may not accurately reflect the financial snapshot. Of course, it doesn’t help matters that vague terms such as “goodwill” are often used in reference to your practice’s ability to generate long-term income. Placing a value on this goodwill is important, but it can only be effective if you realize it is best for you to step away from the picture and let a professional practice advisor help.
For some, a practice transition represents the end of one stage of life and the beginning of an enjoyable retirement. For others, it means embarking on a journey of development and self-discovery. Either way, there is a lot involved. This includes determining not only the “nuts and bolts” value of a practice, but assessing its goodwill without letting emotions cloud judgment. A practice advisor can guide you through the entire process so you can concentrate on the next stage of your career.