Success or failure when buying a practice
8 critical things to consider
By Greg Kingsbury, DC

Buying an established practice can be a shortcut and most efficient way to achieve career fulfillment and economic success. It can also hazard great emotional and financial loss if you do not carefully consider these eight critical factors.

1. Know the catchment area. This is the geographical area that surrounds the practice location within a two- to five-mile radius.

Make a thorough analysis that includes a population breakdown according to age, occupation, median income, and education. Learn about the regional economy, including major employers and the stability of the job market. This will tell you if the local population is growing, holding steady, or shrinking.

2. Be a hunter-gatherer. The savvy buyer will look closely and do a thorough analysis of the seller’s appointment book, day sheets, travel cards, practice financial records, patient charts, accounts receivable ledgers, tax forms, and profit and loss statements, with special emphasis on the previous six months.

3. Always seek professional help. This recommendation is well worth any costs you incur. The professionals you may consider asking for help include an accountant, attorney, and a knowledgeable chiropractic practice broker/appraiser.

4. Get to know the staff. A competent staff that will stay with the practice after the new owner takes over can be an invaluable asset. Learn their names, length of employment, work hours, and seller’s opinion of them.

Also, get to know each of them on a personal basis. They can be a great resource for inside information that can be critical to your success as a buyer.

5. Rate the office. What is the appearance and condition of the space and the equipment? Is the layout efficient and will it accommodate growth? Is the location good and easily accessible? How is the parking and sign visibility? Give each of these things a score.

6. Identify referral sources. Who are the sources of new patient referrals? Sources may include attorneys, insurance networks, advertising, local business owners, and, of course, patients.

7. Perform a statistical analysis. Become familiar with the vital practice statistics from the last three years, paying particular attention to the past six months. Stats to eye closely include monthly gross and net income, patient visits, new patients, patient-visit average, office-visit average, and collection ratio.

8. Transition for success. An absolute necessity for the buyer is a minimum transition period of four to six weeks. During this time, the seller should be willing to introduce you to all of his or her patients, or, at a minimum, provide a letter of introduction.

You should also meet any attorneys or business owners with whom the seller has established a referral relationship. Sophisticated buyers also insist upon a two week “test run” period when they care for all active patients while the seller takes a vacation. This practice takeover trial can give you time to establish a bond with existing patients and provide insightful feedback.

Patients will inform the seller and his staff about how they feel about the new doctor in terms of personality, technique, and “bedside manner.” If the feedback is positive, then chances are excellent that purchasing the practice is the right move and success will be assured.

Greg Kingsbury, DC, is founder of ChiroEquity, a nationwide chiropractic practice brokerage and appraisal company. He has assisted hundreds of chiropractors in the practice acquisition and sales process. He can be reached at 908-419-7510 or at greg@chiroequity.com.