How to Increase the Value of Your Practice

Grand Prismatic Spring – 2009

Yellowstone National Park, WY

First Steps

The accomplishment of any grand goal depends on a clear vision of your strategy, practical operational plans and meticulous execution of tasks that support your objective.

When it comes to transitioning from your practice, the first items to address are to prepare yourself personally and professionally. These include the creation of lifestyle and financial plans to determine whether your current assets will support your desired lifestyle. 

Once completed, it is prudent to undertake a thorough, objective review of the current condition of your practice. The purpose is to ensure that it's functioning properly. This is the subject of a previous article.

Next: Optimize Practice Value

The next  step in preparation will benefit you in the near term as well as at the time of sale. That is to optimize its profitability and value for your benefit now and to a prospective buyer.

The methodology of this endeavor is to prepare a Practice Value Optimization Plan. 

To that end, consider that there are things that stand out in importance for what you should do as well as those that are best avoided, if possible. 

To Do or Not Do

As you proceed with the assessment of your practice, you will probably find that there are benefits to be found in doing some things and not doing others. Let us discuss the latter first and cite examples, as I leave it to you to evaluate your own practice.

Not Do:

I know physicians who, for one good reason of another, decrease their volume of professional services as they approach their end of career. This is understandable. However, it is important to keep in mind when making such an optional change, that this will likely decrease your profitability and subsequent valuation. When you consider that practices may sell for multiples of their profitability, more specifically EBITDA, the adverse impact can be significant.

To do:

• Practices may incur seemingly insignificant expenses, sometimes over a period of decades, that are not monitored closely. The cumulative effect of these on your profitability can be significant. Start by reviewing expenditures, specially recurrent ones. Evaluate their present need and consider options.
• Review and identify your sources of revenue. Include your professional services as well as that of others. Is everyone’s productivity optimized?
• Is the work schedule of each member of the practice optimal? Think beyond past work habits. Consider the impact that changes over the relatively short term of your transition can have on additional profitability.
• Are there sufficient personnel to meet the demand for services and possible growth?
• To what degree are you dependent on current staff to support the preparations for transition? To what degree does doing so affect productivity? Are staff reassignments or additions necessary that will also support a new physician(s)?
• If you have an in-office surgical facility, do you know the cost of each surgical procedure? What about multiple procedures? Is your facility a true profit center or does it operate at a loss?
• Beyond what you know now, can you identify other opportunities?

These are just a few examples among the universe of possibilities. 

Your Staff as a Resource

You probably have a knowledgeable, talented and devoted staff. I suggest that it is really important to engage them in this endeavor and ask their opinions and suggestions. Ask questions like: What, Why, When, How, Where and Who. The answers will be revealing.

Ask yourself: Do I practice a good balance between my role as a leader and manager? 

Great leaders are also great managers who are able to balance the two roles effectively.

This is a critical time of your career when it is beneficial to marshal all your resources for your benefit, your patients, staff, and those that will follow in your steps. 

Seize the initiative and savor the moments.

My best wishes to you and your family!

Updated: April 5, 2024

PS: Would you like to learn more about how to transition from your practice? I would like to help you. I provide practice transaction services that are tailored to your specific needs. Click here to request an introductory conversation.

If you would like to learn about another way that I can guide you, check out this brief video that describes my unique online course: 

 The Practice Transition Course for Physicians. _TM   

Sunset Splendor – 2009

Gulf of Mexico, FL