November 23, 2009
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Hunting for a new practice
One of the fastest ways to get your new practice up and running is to buy someone else’s. You can be set up, adjusting patients for fun and profit in just a matter of months. Slow down! Based on the horror stories, two old saws come to mind: “Buyer beware” and “If it seems too good to be true, it probably is.”
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• Retiring from active practice and headed for Boca.
• Frustrated with insurance hassles and leaving the profession.
• Loves the start-up phase and wants to start over elsewhere.
• Disability or injury prevents continued practice.
• Invalid parent or other family issues necessitate relocation.
While others can help you determine if the asking price is commensurate with the value of the equipment you’re purchasing and any leases you’ll be assuming, there is something far more difficult to place a value on: good will.
What is good will? It’s the fact that the practice has been at this same location for 23 years. It’s the practice name and reputation in the community you’ll be acquiring. It’s the likelihood of patients continuing their care when delivered by someone else (you). It’s the willingness of current staff members to continue serving under new management. And the big one: all those inactive patient files.
“Shucks boy, I’m sure you can reactivate 30% or more of them once you get your sea legs.”
Sounds appealing. Even possible. And better yet, the retiring chiropractor is willing to carry the paper, so no hoop jumping at the bank since Mom and Dad are helping with the down payment.
Slow down. Get answers to the following questions:
1. Does the selling chiropractor have a personality practice or a patient education practice? All too many offices are based on the charisma and personal charm of the chiropractor. Coming from years of experience, a high level of technical certainty and the confidence of knowing just about everyone in town, you have big shoes to fill.
A personality practice means that all those inactive patient files you’re buying are little more than a mailing list of people who have had a chiropractic encounter in the past. Which makes their names only slightly more valuable than buying a mailing list of residents living within a three to five mile radius of this little fixer upper of a practice.
Oh sure, the selling chiropractor knows everyone of those people linked to those manila folders. He or she can visualize each patient’s spinal pattern. Naturally they’re valuable! To him or her, yes. To you? Not so valuable.
2. Will the selling chiropractor invest in a smooth transition? This may not be possible if an emergency is prompting the sale. But if I were buying a practice, I would insist on no less than a 90-day transition period. That means being side by side in the practice, every day, with every patient. Besides the introduction to each patient, the selling chiropractor should explain what he or she is doing with each patient and why. Yes, it may sound technical in front of the patient, but that’s the point. You want patients to see a clear hand off so they can expect similar care from you.
That also means no fewer than two letters to all inactive patients. The first announces the sale or retirement and lists the criteria he or she was looking for in a replacement chiropractor. That serves as a great introduction to you. The second letter, a week or so later, includes a patient invitation to meet the buyer of the practice. You’re primary motive is to meet as many inactive patients as possible during this transition period. Consider ways the selling chiropractor could encourage reactivations. “Just for the chance to meet you, Dr. Buyer will pay for your visit. So this would be great time to come in for a chiropractic checkup.” Or whatever.
3. Will the selling chiropractor anoint you? One of the key ingredients of the transition period is for the selling chiropractor to talk you up in front of patients. “When she adjusted me I knew my patients would lover her!” “These new chiropractors are coming out of school twice the chiropractor I was when I graduated.” You get the idea. It must be genuine and authentic. And it needs to be delivered with an Oscar award-winning performance.
The fact is, all too many practitioners are simply trying to cash out because the practice environment has changed so much in the last 10 years. If those bulging inactive files are all insurance cases that discontinued care once their benefits were used up, there is very little “good will” to buy. Good will is when patients understand and want chiropractic so much, they’ll pay cash for their care. Count how many of those patients there are. That’s how much good will you’re really buying!
William D. Esteb is the founder and creative director of Patient Media Inc. and the co-director of Perfect Patients, an interactive Web site service for the chiropractic profession. He can be reached through www.patientmedia.com.
