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Diagnose and Plan your Practice Transition
by Teri McAviney, CEO MaK Concepts

As professionals in the healthcare industry, we spend most of our time diagnosing and treatment planning with definitive goals for presenting solutions and options so patients can make informed decisions. What about the practice you currently own or perhaps are preparing to purchase? Have you diagnosed it? Whether you are selling a practice or preparing for practice ownership, the opportunity to diagnose the “condition” of a practice is a critical step in making informed decisions about transitioning. At MaK Concepts, Inc. we take great pride in providing Comprehensive Practice Evaluations that offer insight, understanding and opportunity from a practice management perspective. In essence, we perform a thorough examination of business systems followed by a diagnosis of the operation. This is our springboard to treatment planning the business and your guiding light on the opportunity for transition. Over the years we have unveiled practice opportunity in each and every practice we have evaluated. This does not mean that they all look the same in relation to productivity and efficiency. It does suggest that regardless of dollars produced, whether a $1,000,000 or $300,000 practice, opportunity exists within the fundamental framework of the systems and the people supporting them. It is simply impossible to determine the “total condition” of the practice solely through financial records. These records reveal financial history, trends, projections and cash flow analysis which work in conjunction with the operation. The Comprehensive Evaluation is a crucial first step for doctors. It opens the door to future growth opportunities and gives a broad outlook on the business. To properly prepare for either transitioning “in” or “out” take careful consideration for what lies ahead.

Buyer Considerations

Consideration: Purchasing a practice takes time, personal thought and research. Action Plan: Create a plan and enlist experts to review every aspect of the practice from financial records to the overall practice management and patient care standard.

Consideration: The trends in production and collections are critical measurements of the business. Action Plan: Refer to the trends as they either reflect weaknesses and opportunity or present strength and efficiency through the systems and people linked to production and collections.

Consideration: Understand the value of the “active” patient base. Action Plan: Ascertain the patient statistics of the practice and audit the charts to determine longevity of patient care and potential for reactivation.

Consideration: The practice UCR fees should be competitive and based on area averages. Action Plan: Have an analysis done of the UCR and PPO fees to be certain you remain competitive and profitable.

Consideration: The standard of care, practice philosophy and treatment planning should be synonymous. Action Plan: Invest the time to review the practice charts to determine the philosophy, standard of care and diagnostic styles to be certain there is a plan to address any discrepancies.

Consideration: Accounts receivables are impacted by financial arrangements. Action Plan: Determine the type of financial options that are available, and how they are presented to ensure strong collections.

Consideration: The schedule forecasts future treatment and productivity. Action Plan: Verify the efficiency of units (time) and the systems that support a strong and productive schedule.

Consideration: The practice new patient flow is recognized as the life-blood of the practice. Action Plan: Clarify the marketing campaigns and sources for new patients along with the return on investment and evaluate the utilization of tracking sources.

Seller Considerations

Consideration: The practice trends down as the seller nears retirement. Action plan: Find out how you can trend your practice up to gain the highest return.

Consideration: The practice experiences a tremendous amount of staff turnover. Action plan: Take careful consideration in hiring the right support team and seek assistance if negative patterns of turnover persist. High turnover devalues the goodwill of the practice and may reflect on the leadership.

Consideration: Your schedule is not booked efficiently and reflects open time. Action plan: Be sure to incorporate a reactivation system to fill open time, so the buyer can forecast production possibilities. Consideration: The doctor has unrealistic expectations of what the value of the practice should be. Action plan: Utilize the reputable “experts” in the industry that “value” practices and show you how they determine the offering price.

Consideration: The selling doctor may oppose the “due diligence” the buyer is requested to provide. Action plan: Be forthcoming and prompt with information to the buyer and enlisted experts to ensure trust and a smooth transition process.

Consideration: The new patient numbers reflect minimal marketing efforts. Action plan: Establish the marketing campaigns, internally and externally that support future sustainable practice growth.

Consideration: The financial records are poorly tracked or unavailable to the buyer. Action plan: Understand that the process of selling requires that you divulge certain financial records. Have them ready when you decide to sell and be sure to maximize the practice software to support the data.

Transitioning as a seller or buyer is often met with great emotion and uncertainty. Planning with the proper diagnostic tools and expertise not only opens the window of opportunity but often minimizes costly mistakes. Carving out retirement or preparing for ownership is a big decision and requires an understanding that it is a process not an event. Consider the personal and financial rewards of strategic planning. Design your future and make your dreams a reality!