Your Practice Succession - Preparation Pointers

Path and Pinnacle, - 2021

Path to Taggart Lake and The Teton Range

Grand Teton National Park

Proactive Preparation Benefits You Now and Supports Success in the Future

The preparation of your practice for succession involves undertaking a series of measures that elevate your practice performance, profitability and value beyond its present state. You will benefit now and at the time of acquisition. So will the physician that acquires it and succeeds you in the future.

Practices and Preparations 

Just as there are a variety of practice settings, the nature of corresponding preparations also vary significantly. These are primarily private solo or group practices and physicians who are otherwise employed.

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.

The two major considerations can be broadly stated as preparing yourself first and then preparing your practice

Preparing Yourself

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

It is not just about what you want to do after you end your career. Your preparation should be much deeper than that, for your sake and that of your family. You must also do so because the conclusions you reach and the decisions you make will have a direct impact on your practice preparations for succession. 

Here are some 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 or do I want to continue to work full or part time?
• Do I want to recruit and mentor a younger associate?
• Or do I want to close my practice?
• Am I financially prepared to end my career?
• Have I completed a 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 is 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 is 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 present 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 is important to note that your role will necessarily evolve. You will have to taken on new responsibilities. In particular, they are your role as the leader and manager of your End of Career Transition.

As leader, you will create the vision that is the framework of the process. It is 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. This, with particular attention to continuity of care in the context of your Transition. 

Yes, 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 

PS: By the way, do you want to learn more about how to prepare yourself and your practice for a fulfilling End of Career Transition and life beyond? I would like to help you. I provide consulting/coaching services that are tailored to your specific needs. Click here to request a complimentary introductory conversation.

Dreams of Ongoing Achievement - 2021

The Teton Range, Grand Teton National Park