Your Career Transition: Preliminary Planning

Aspen Elegance - 2019

Sierra Nevada, NV

The Benefits of Proactive Preparation

When the time to transition from your practice draws closer, you will likely start thinking about when and how to prepare. Questions will arise about personal, professional and practice matters.

Whether you're in group practice, a solo practitioner or otherwise employed, there are important professional matters that are necessary for you to address.

When to Begin?

It’s very difficult to know exactly when is the right time to begin to plan, primarily because this is an unfamiliar experience. It’s surprising to physicians how involved and time consuming the process can be. Consequently, they often wait too long to begin to develop their plans, let alone implement them. So, when is the right time to start planning and preparing?

Here’s a tip for timeliness: At the core, the process of transition is a very personal endeavor. It really begins when you begin thinking about it more often than you’re used to. When you find yourself in that situation, your transition has already begun. That’s a clear signal to begin planning right away.

How Much Time Do You Need?

Generally speaking, if you're in solo practice and plan to undertake a succession with a younger physician or a sale to a financial institution, you should begin planning at least five years in advance. If you’re planning to close your practice and undertake an asset sale, three years in advance is advisable. This is a similar timeframe if you’re otherwise employed.

You might ask: why does it take so long?

There are three reasons:

First, there are numerous, significant personal and professional considerations that you will need to address. There will be inevitable adjustments to be made that take more time.

Second, there are numerous matters that need to be planned for and completed. These are all part of the transition process which creates additional work for you and your staff. This is a process, not an event. Keep in mind that it’s an additional endeavor that occurs simultaneously with the ongoing care of your patients.

Third, even the best of plans sometimes don't work out exactly as you wanted. You must provide yourself with time to make adjustments so that you can succeed.

What to Do: Practices and Preparations 

The nature of preparations vary significantly according to personal and professional needs as well as the type of practice .

In this article, the example is that of a solo, private practice. Many of the characteristics of this model are shared by other types of practices.

There are two areas of preparation that apply to most types of practices. By applying some variations in preparation, individual needs can be satisfied.

These can be broadly stated as preparing yourself first and then preparing your practice

Preparing Yourself

This involves preparing yourself personally and professionally. It’s probably the critical necessity that is most overlooked because it’s often unrecognized and under-appreciated. 

Your personal preparation is about much more than what you want to do after you end your career. There are also practical implications: The conclusions you reach and the decisions you make will have a direct impact on your practice preparations. And, it’s important to note that this aspect of your preparation involves adjustments that may be lengthy.

Here are some initial questions to ask yourself:

• Am I really clear on the difference between my internal identity and my persona(s)? (See previous article for more detail on this topic.)
• Do I really want to end my career? If not, do I want to continue to work full or part time?
• Do I want to recruit and mentor a younger associate?
• Do I want to close my practice?
• Am I financially prepared to end my career?
• Have I completed my next lifestyle plan? (See previous article about this topic.)
• Have I developed a financial assessment of whether my lifestyle plan can be supported by my assets?
• Does that assessment conclude that I am financially prepared to end my career? If not, what adjustments of my plans can I make?

If you are financially prepared and do want to end your career, you can proceed to develop and execute a plan to do so (see previous article about your End of Career Transition Plan).

Preparing Your Practice

It’s common for physicians to equate the status of their well-functioning practice to readiness for acquisition by a prospective buyer. In some instances this may be an associate that you have recruited or an acquisition of the practice by a private equity firm or other financial institution.

You have a successful practice that works well for you and your patients. But that does not necessarily mean that it’s optimal for a prospective buyer.  Having a practice that functions well and is profitable is certainly the basis for offering it for succession. But that is not quite the same as it being ready for an acquisition. Preparation requires much more than that.

A critical element of preparing your practice for acquisition is to optimize your practice not just for yourself, although it will benefit you directly, but to prepare it for the direct benefit of the buyer. To the degree that you can present a greater, legitimate value to a prospective buyer, so will be the ability of that buyer to justify paying you an amount commensurate to that value.

These are some items to consider as you seek to optimize the function and profitability of your practice in order to enhance its present value:

• Is your patient case mix, sources and inflow conducive to supporting a return on investment for a buyer?
• What is the nature and degree of recurring professional services? Non-physician services?
• What other services, products provide additional revenue?
• Are your financial documents necessary for conducting due diligence ready for presentation?
• What is the nature of your competition?
• Do you perform procedures in an office facility?
• Is that facility truly a profit center? Or is its cost supported by professional fees?
• Do you know the true cost of providing those services?
• Do various costs such as mortgage, lease, personnel, insurance, etc. reflect excellent management?
• What is your history and business plan for practice development and growth?

Your Role as Leader and Manager

As you enter this phase of your career, it’s important to note that your role will necessarily evolve. You will need to take on new responsibilities. In particular, they are your role as the leader and manager of your End of Career Transition.

As the leader, you will create the vision that is the framework of the process. It’s up to you to convey it clearly to your staff and earn their emotional support and practical assistance.

While you probably have a capable office manager or administrator, this process is best served by your exercising a certain degree of management in addition to that already provided. Specifically, that you ensure that the policies and procedures that guide your transition are executed with efficiency and efficacy in a timely manner. That they are properly documented. That attention to patient care above and beyond the norm becomes the new normal with particular attention to continuity of care in the context of your transition. 

The list goes on and on. It is doable and well worth it.

These are my thoughts as I encourage you to: 

Plan. Prepare. Prosper. _TM

Date Updated: December 3, 2022

PS: Would you like to learn more about how to prepare yourself and your practice for the End of Career Transition? You may be in solo practice and wish to carry out a succession or outright sale; perhaps you are in group practice or are otherwise employed. I provide consulting/coaching services that are tailored to your specific needs. Click here to request a complimentary introductory conversation.

Aspen Grove - 2008

Grand Teton National Park, WY