One of the fastest ways to get your new practice up and running is to buy someone else’s. But even though you can be set up and adjusting patients for fun and profit in just a matter of months, you still have to be cautious.
The adage “If it seems too good to be true, it probably is,” definitely applies.
Practices that are for sale can be available for a variety of reasons. Here are five of the most common. The current owner is:
- Retiring from active practice.
- Frustrated with insurance hassles and leaving the profession.
- Oriented toward the start-up phase and wants to start over elsewhere.
- Disabled or injured, preventing continued practice.
- Dealing with an invalid parent or another family issue.
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 appraise: goodwill.
What is goodwill?
Goodwill is the practice’s name and reputation. It’s the likelihood of patients continuing their care when delivered by a new doctor. It’s the willingness of current staff members to serve under new management. And maybe, most importantly, it’s those inactive patient files.
And while reactivating many of those patients seems like it should be easy, get the answers to the following questions before submitting your change-of-address card:
1. Does the selling chiropractor have a personality practice or a patient-education practice? All too often, practices are based on the charisma and personal charm of the chiropractor.
A personality practice means that all those inactive patient files are little more than a mailing list of people who have had a chiropractic experience. This makes their names only slightly more valuable than a list of residents living within a three- to five-mile radius.
2. Will the selling chiropractor invest in a smooth transition? This may not be possible if an emergency is prompting the sale. But otherwise, insist on no less than a 90-day transition period.
Besides the introduction to each patient, the selling chiropractor should explain what he or she is doing with each patient and why. You want patients to see a clear handoff so they can expect similar care from you.
This also means no fewer than two letters to all inactive patients. The first letter will announce the previous owner’s sale or retirement with a list of what the selling chiropractor is looking for in a replacement. The second letter should include an invitation to meet the buyer of the practice (i.e., you).
Your primary motive is to meet as many inactive patients as possible during this transition period. Consider ways the selling chiropractor could encourage reactivations.
3. Will the selling chiropractor anoint you? The selling chiropractor should talk you up in front of patients. And it should be genuine and authentic.
Too often, when doctors decide to leave practice, they are simply trying to cash out because the practice environment has changed and they’re finding it difficult to adapt. If those bulging inactive files are all insurance cases that discontinued care once their benefits were used up, there is very little “goodwill” to buy.
Goodwill is when patients under- stand and want chiropractic so much that they’ll pay cash for their care. Count how many of those patients are in the practice now. That’s how much goodwill you’re really buying.
