Buy vs. start: Q&A

Once you have decided not to work for someone else when you graduate, the next question becomes whether to buy a practice or start your own. It sounds easier to buy, but is it? Buying can be less trouble, but buying a practice is still a lot of work and it may not be the best option for you. Three reasons buying a practice can be easier:

• You don’t have to start with no patients. The established patient files give you a base of income each month to help pay the bills.

• You don’t have to buy all the equipment and supplies. The office might not be set up exactly as you want, but everything is there, and you don’t need to go looking for the many items needed to set up a practice.

• You don’t have to set up the practice systems. Billing, collections, patient flow, and other procedures are already in place, so you can step in and begin working the system immediately.

Of course, you have to pay for this established practice, So how do you know the practice is worth the price? Let’s say you have found a practice you might want to buy. Here are some questions to ask before you get too involved in the purchase decision:

Is the practice similar to the way I want to work? If you want to run a family practice, and most of the patients are work-related injury or PI (personal injury), you will have to start from scratch to attract families to your practice. If your technique is very different from the other doctor, you will have a difficult time transitioning the patients.

Is the practice location where I want to be? If the practice is in a town you want to move to and live in for many years, you can proceed knowing that you will be buying a business you can stay with for a long time. If the practice is not exactly where you want to be, you will probably be better off finding a town you like and starting your own practice.

Is there a practice broker involved? Most chiropractic practice brokers are reputable, and they can help smooth the way toward a sale. But, remember that the broker works for the seller, not the buyer and their objective is to get the sale done for as much money as possible, since this is how they get their commissions. Hire your own CPA and attorney and verify everything the broker says.

Is the price reasonable? Many doctors have put inflated prices on their practices, for two reasons: (1) They want to get paid for 35 years of work, and (2) They have been counting on using the proceeds of the practice sale to fund their retirement. A practice in which the doctor has only been working a few days a week might seem like a steal, but if the selling doctor won’t come down in price, you will be paying too much for the practice.

Can you get a non-compete from the doctor? The last thing you want is to buy a practice and have the doctor open up down the street and take back all of his or her old patients. Some states (like California) do not uphold non-compete agreements, and you will have to pay a reasonable amount of money for this non-compete as part of the purchase price. If you don’t think you can get a good non-compete, or you don’t think it will be upheld in court, this practice may not be for you. See if you can find out the real reason the doctor is selling; if your instincts tell you you’re not getting the real story, be cautious.

The final, and most important, question you need to ask: How long would it take me to make a reasonable living from the proceeds of this practice? If the price is too high, if there is no strong patient base, and if you are going to have to start basically from “scratch,” you might be better off going down the street and opening your own practice.

Finally, trust your instincts. If the offer sounds too good to be true, it probably is. If everything looks great and you get a good feeling about the practice and the town, it can be a wonderful life-long investment for you.

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