Do You Want to Sell Your Practice?

Big Creek Detail – 2009

Great Smoky Mountains National Park

 How To Prepare For Success

The successful preparation of your practice for succession and sale requires careful planning. There are several stages of the process that evolve in a natural, practical manner.

It is best to create plans that correspond to each of these stages. Each of these plans will provide the blueprint that will guide you and your staff through each of these phases successfully.

Phases

There are three concerns that should be addressed in a thoughtful, structured matter in order to optimize the probability of a good outcome. These are: to enhance the performance of your practice, optimize its value and make it ready for the recruitment and introduction of a new associate via a classic succession or sale to a financial institution.

The underlying principle of preparing your practice as it functions presently, is that it is not the same thing as preparing it for a new associate. Your practice may or may not be functioning optimally for you presently. Either way, an analysis should be undertaken of its performance first and then implement necessary improvements. Some examples are: the financial condition of your practice and organization of related data, staff performance, the physical condition of your office, etc.

The second phase is to optimize the value of your practice. You begin by evaluating what is commonly referred to as “net revenue” and identifying certain types of expenses that will increase your EBITDA (Income Before Interest, Taxes, Depreciation and Amortization). In addition, there may be a variety of other extraneous expenses that can be identified to increase EBITDA. Another analysis approach is to apply the Seller Discretionary Expenses approach. This method is designed to identify discretionary expenses and is useful in a single owner practice. The result of these analyses will likely increase your “net revenue” and thus, the value of your practice.

A related consideration is to evaluate your sources of revenue and explore the possibility of diversifying and increasing it. This should be considered in the context of the anticipation of having a new associate.

The third phase involves preparing your practice for your new associate. This includes, but is not limited to ensuring adequate office space, staff, scheduling, hospital privileges, various types of credentialing, introduction to the community, etc.

Corresponding Plans

The following plans comprise a methodology to organize and execute the process. They correspond to each of the phases described:

Phase 1 - Practice Preparation Plan

Phase 2 - Practice Value Optimization Plan

Phase 3 - New Plastic Surgeon Preparation Plan

Plan to Prosper

It is important to note that this is a process that is labor-intensive and lengthy. For this reason, it is prudent to begin early, often much earlier than you may think. How long? In general, three to five years in advance of your anticipated date of transition from practice..

Keep in mind that this process and related tasks will take place simultaneously with the ongoing care of your patients. It is wise to assess if there are needed staff adjustments that should be made to adequately support the transition process and preserve excellence and safety in patient care. 

Finally, be prepared to be flexible and adjust your plans as needed.

Updated: Friday, September 13, 2024

PS: Would you like to learn more about how to transition from your practice? I would like to assist 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     

South Fork, Snake River – 2021

Idaho