Your Health Care Practice May Be Worth More Than You Think
Don't give your charts to a colleague and close your practice. Convert your sweat equity into Cash. Look into selling your practice. We welcome your inquiry.
Think you can't sell a practice anymore? Don't believe everything you hear in the physicians' lounge. Practices sell regularly, many for a good price, most with minimal fanfare. Not every practice sells, but not every practice is in a condition to be sold, nor does every physician properly try to sell his or her practice. I am amazed at how many practices simply close with the physician giving charts to a colleague. This is like throwing money off the bridge. You owe it to yourself and family to talk to a professional regarding selling your practice. You put your sweat and time to create your practice so cash out, don't throw it away.
The truth is, the harder it is to start a practice from scratch in a particular city or location, the easier it is to sell an existing one and the more it is worth. If a physician new to an area wants to have a practice, often the easiest and least costly way to do it is to buy one. It may be the only way or certainly the cost effective way to enter the market. Don't forget, "Time is Money". Buying an established practice at the right price can save you thousands in dollars and years in time. The more competition there is, usually the more an existing practice's transferable cash flow is worth. In undeserved areas, where all practices in your specialty are swamped with patients, and appointment waiting times are measured in weeks, not days, your practice may have a far less value.
Considering selling your practice? Here are a few keys:
Plan ahead. A year ahead is not too far. A physician who doesn't have a plan for selling his or her practice risks being forced to sell it at "fire sale" prices, if it sells at all. Don't scale back or slow down in advance. You can even increase productivity and profitability by cutting out unnecessary tasks and expenditures . This is your time to trim the fat! Cancel unused services and contracts that have little or no benefit to your practice. Clean out the storage room and retain only the necessary items required to operate your practice.
Don't tell, or even insinuate, your plans to colleagues or staff until the right time.
Get a professional appraisal, so you know the worth of your practice and to convince a buyer of its value. Use a medical practice expert that can demonstrate compliance with Uniform Standards of Professional Appraisal Practice (USPAP), or is an Accredited Business Intermediary. The cheapest appraisal might be OK for the cheapest practices. Is that yours? I've seen an extra $3,000 worth of research and remodeling result in an extra $100,000 in value.
Consider using a confidential intermediary to protect the identity of the practice for sale. Philip Driver and Company offers such a service.
Be open minded when you learn of a possible candidate interested in buying your practice. It might be your biggest competitor, or a perfect stranger. They might not have the same ideas regarding your practice you have, but that in itself doesn't make them the wrong suitors for your practice.
Make sure your last 3 years' (at least) accounting conforms to industry standards.
Make sure your last year's accounting clearly segregates regular expenses from IRS Sec 179 capital assets, and clearly can identify tax-deductible person benefits, like health insurance, automobiles, employed family members, travel and entertainment, ect.
Don't think this is the time to take all of your money out of the practice. Declare all your income. Undeclared income not only is a crime, but will turn away all but the most disreputable buyers, since it breaks trust right up front.
Philip Driver and Company offers the following advise for practice sellers:
(1) Clean up the practice and your desk, to make them appear more modern and attractive before any candidate ever visits. This can take a month or two. You'll need outside help because you can't "see" your own space after having lived there. (2) If possible, increase income by means other than your personal labor, like using mid-levels or ancillary services. (3) You can market your practice wisely without spending a lot. ($12K Tip) We think it is better to spend $1,200 per year on a sharp web site than $1,200 per month on a Yellow Page Ad. The Yellow Page's is yesterdays way to advertise. People 60 and below use the internet to look up phone numbers more than looking in the phone book. And yes, you can still make an argument for keeping your Yellow Page ad, but at least control your spending. Don't spend over a couple hundred per month and always direct people to your Web Site from your ad. Look into TV advertising. You may be surprised how cost effective TV can be. You can budget $1,250 per month for 3 months and get a lot of exposure for your practice. This may also appeal to a potential buyer as well. When a patient calls and you put them on hold, do they hear a positive message about your service and practice? "Message on Hold" is an inexpensive way to actually market while patients are waiting for your office staff to answer your questions.
The key to selling a home is "location, location, location". The key to selling a practice is "planning, planning, planning".
Your broker representative will prepare a professional promotional package. This presentation will include your financials, data with statistics regarding your practice, demographics and of course pictures of your practice.
Philip Driver, ABI is the founder and Principal Broker of Philip Driver and Company LLC, a Certified Business Intermediary (CBI), and member of the American Business Brokers Association (ABBA) and an Accredited Business Intermediary (ABI). He can be reached at his office (919) 848-4202 or by Email: driverphilip@gmail.com
