This article covers three approaches to building a practice, including joining an established clinic as an independent contractor or by subleasing space, purchasing a retiring doctor’s patient list or buying a fully operating practice.
This article covers three approaches to building a practice, including joining an established clinic as an independent contractor or by subleasing space, purchasing a retiring doctor’s patient list or buying a fully operating practice.Are you one of many chiropractors who dream of practice ownership but find the idea of starting from scratch overwhelming? You’re right to be cautious; according to the US Bureau of Labor Statistics, nearly half of new healthcare businesses close within five years, and only about one in three is still open at the practice’s 10-year anniversary. You’re also not alone in these concerns. Many new chiropractors dream of building a thriving clinic, but the startup reality can feel insurmountable. It takes most new businesses an average of two to three years to generate enough income to pay all of the business bills and the owner’s personal expenses, which is a long time to stare at an empty schedule, juggle bills and keep up with student loans, wondering how to make ends meet. Any entrepreneur who has started a business from scratch will tell you it’s an exciting time, and also an exhausting recipe for sleepless nights.
The good news is you have other options. By building on another doctor’s momentum you can reduce risk, skip years of trial and error and grow faster (with fewer costly mistakes). Building on existing foundations doesn’t make you less entrepreneurial; it makes you strategic, as each of the following options lets you learn the realities of ownership while still benefiting from existing systems, patients and/or reputation.
Join a clinic
When you join an existing practice as an independent contractor (IC) or sublessor, you’re choosing a path that gives you more independence than being an employee while still benefiting from an established setting. You essentially run your own small business inside someone else’s practice. An IC typically works within the host practice’s systems and pays a fee or percentage for shared resources, while a sublessor simply rents space and operates their business entirely separately. These models give you a taste of the benefits of ownership; you have freedom to set your own schedule and develop your style of care. You can also observe how the owner manages the business side of the practice while building your own patient base, without being responsible for full office expenses.
For many doctors this arrangement can sound ideal, but it has several common pitfalls. Many new DCs assume they’re entering a mentorship situation in which they will get guidance and collaboration, when they’re actually entering more of a landlord-and-tenant arrangement. To minimize frustration, clarify expectations up front with questions such as, “Will you be referring patients to me?” and “Can I market my services to existing patients?”
Another common surprise is income. The practice owner rarely transfers existing patients to an independent contractor or sublessor. So even though you’re attached to an existing business, you’re still typically starting from zero when it comes to your patient visits and income. The reality is you may work as many (or more) hours as you did as an associate, but take home less until you build your own patient base and accounts receivable. You’ll also need to understand your contract, which may restrict you from practicing nearby or limit your ability to take your patients with you. Think with the end in mind here; you will likely struggle to sell or scale a practice inside someone else’s practice down the road, so try to avoid situations that won’t let you move what you’ve created out of this practice and continue to build on its success.
Buy a patient list
When a doctor retires without selling their practice, they sometimes allow another local doctor to purchase their patient list. This typically includes taking custodianship of those records, creating the opportunity to continue patients’ care. With many list purchases priced between $10,000 and $25,000 or structured as a percentage of income earned from those patients for a defined time, this can be an affordable and high-potential investment. But it will only pay off if you successfully connect with those patients. An introductory endorsement letter and a short transition with the retiring doctor in your office will cost more, but can make all the difference in patient retention. For example, one of our clients builds onto his multi-clinic group annually through purchasing patient lists from retiring chiropractors, and he commonly sees six-figure returns on those purchases within one to two years.
Of course, buying a patient list doesn’t guarantee those people will become your patients. The retiring clinic should be close to where you plan to practice, ideally within five miles in metro areas. Make sure the patient demographics align with those of your typical patient. The style of care should complement your own, and the records should be recent; if most patients haven’t been seen in years, the transferability will be limited. Also, contact details can be outdated or missing altogether. so spot check the records to be sure they are useable. Once purchased, implement your recall campaign immediately for best results. While this is a simpler purchase than buying a full practice, the transaction still requires certain components to protect all parties. Your contract should clearly define what you’re buying, including any endorsements from the seller, and both the contract and the patient data transfer must be compliant with HIPAA regulations.
Buy a clinic
This is the fastest path to practice stability and a professional income. In this model, you purchase the entire operation: equipment, name recognition, trained staff, proven systems and community reputation. You step in on day one with the phones ringing and a full schedule, giving you stability most new owners spend years trying to build. And because banks also know taking over an established clinic is far less risky than starting from scratch, financing is easier to secure, often with as little as a 5% to 10% down payment. Once you’re comfortably established in this practice you can use its existing profit to fund growth by adding services, providers or hours.
While buying an existing clinic is typically the shortest route to owning a busy and profitable practice, it is not a risk-free path. For most chiropractors, the biggest challenges are understanding what a clinic is truly worth and carefully verifying the details before buying. Many new doctors overpay because they get excited about owning a business and don’t take the time to evaluate it objectively. To truly understand the practice and any potential issues, you must review more than just tax returns and profit and loss statements. It’s crucial to compare financial data to the practice’s operational information to ensure the story told by the financials matches the reality of how the practice operates on a day-to-day basis. This comparison can be challenging for any doctor, much less a first-time practice owner. That’s why guidance is essential. An experienced chiropractic broker can help connect those dots, identify warning signs, explain the numbers clearly and help you feel confident that you’re not taking on hidden problems.
Choose your path forward
Each of these strategies offers a different balance of cost, control and risk; the best choice typically depends on where you are in your career and your financial situation. If you want a lower-cost, lower-pressure way to get experience and build confidence, and you can afford to start with limited income, joining a practice as a contractor or sublessor can be a great stepping stone and learning experience. If you have savings to invest and are comfortable with a bit of financial uncertainty, buying a patient list can be a great option to jump-start a start-up. And if you’re confident in your clinical skills, ready to take full control of your future and need the professional income of an established doctor, acquiring a full clinic can dramatically accelerate your financial success, helping you reach the stability and success most start-ups spend a decade building.
Final thoughts
Remember that in real life, success in ownership doesn’t belong to those who “move fast and break things”; it belongs to those who are best prepared. So lean on professionals who’ve walked this road before. With the right expert guidance, you’ll make smarter decisions and avoid costly mistakes. That preparation and support helps you build the kind of practice (and life) you envisioned when you first chose this profession.
Crystal Misenheimer, CBI, CM&AP, a leading expert in chiropractic practice sales, is the first and only chiropractic broker to earn the coveted Certified Business Intermediary (CBI) designation from the International Business Brokers Association (IBBA) and sets the gold standard in expertise, quality and service. A former clinic owner, she is uniquely qualified to provide comprehensive support on the complexities of clinic valuations and practice sales. Contact Misenheimer and her team at 888-508-9197, marketplace@progressivepracticesales.com or online at progressivepracticesales.com.
