I WAS five months pregnant when I began thinking about my current practice’s acquisition; I started the business when I was eight months pregnant. I made it happen because I had the drive, I was determined I could make it successful, and I was, and remain, dedicated to working on it every day.
Here, I discuss how to determine whether an acquisition is for you, how to evaluate a practice before deciding to buy it and the steps needed to make it happen.
EVALUATE YOUR WILLINGNESS/ABILITY
For me the benefits of being a practice owner far outweigh the ownership challenges, such as keeping up-to-date on insurance changes. The sense of pride I feel in seeing my accomplishments on a daily basis is extremely rewarding. Also, the loyalty from my patients keeps me motivated to continue improving the business and, potentially, acquire other practices in the future to care for even more patients. But, practice ownership isn’t for everyone.
Here are a few questions to ask yourself when deciding whether this is the appropriate course of action for you:
- What tasks are you most happy completing each day?
- What tasks are you least happy completing?
- Do you give up easily when things don’t go your way?
- Do you like to work 9 a.m. to 5 p.m.?
- Do you like to make decisions?
From here, evaluate your answers. (See p.26 for an example.) Perhaps some obstacles are insurmountable to responsibly owning a practice and achieving your goals. Maybe, your goals align perfectly. Perhaps, it’s something to re-evaluate in the future.
VISIT THE PRACTICE
If you’ve determined that practice acquisition is for you, it’s time to visit the practices that have caught your eye. When evaluating potential practices, I recommend visiting the practice. While there, assess the condition of the office. For example, the aesthetic and physical needs: Will there need to be improvements to the building’s exterior and/or interior? Is the equipment what you need or is it outdated? Also, factor in how much money you will need to invest on improvements to make the practice the way you want it to be. Does the practice price make sense with the extra investments that you will need to make? Also, question the health of the business: What are the demographics of the current patients in the practice? Is the practice growing, stable or declining? Is the town/city growing, stable or declining? (See “Ready to Buy or Sell a Practice?” in the November issue for more specifics.)
Lessons from Acquisition
We are taught how to be excellent clinicians in optometry school, but how many of us come out of optometry school feeling confident that we can run a business? For me, I learned most of my business skills once I became a practice owner. Here are some of those lessons:
- Even though you may not have business experience when you acquire a practice, show confidence in front of your staff and patients – otherwise staff may have difficulty following your leadership (especially if they’ve worked in the practice for years before you acquire it).
- Start the process of getting on insurance panels right away. It took several months for a couple of insurance companies to credential me in the new practice, so I was limited to providing care to private-pay patients for a period of time. Also, make sure to go through the proper process of re-credentialing as it comes up.
- Institutional patients are used to the previous doctor. They will be skeptical of you. Always greet them with a warm welcome and a genuine smile. Assure them that you are planning to take care of them for many years into the future (so that they do not look to switch to another doctor in your area).
- Don’t be afraid to ask for advice from others in the industry and colleagues, who can offer great advice, since they most likely have been through similar situations.
- There will be many stressors along the way. Keep a good work/life balance. Don’t put all your time into work that you are too tired and worn out to enjoy life!
Also, consider personnel: Do you fit well with the staff? Is the staff planning to stay once the acquisition takes place, or will you need to hire new staff? To determine this, ask the staff directly. (I met with all the staff prior to acquiring the practice and spoke with each of them individually and as a group about expectations, etc.) All these factors need to be considered to know whether the practice is a good fit for you.
I looked at three practice acquisition opportunities the prior two years or so before making a decision on the practice I have today. For all these instances, I had either previous professional experience within the practice or had visited on multiple occasions to get a feel for the inner workings.
The first person I sought advice from was my banker, who had experience with medical practice acquisitions. He helped me analyze my personal finances, so I could determine what I could afford to purchase and guided me through questions and scenarios I had not thought about prior to deciding to acquire a practice. The banker also stressed the importance of having a good accountant and lawyer and provided me with names of people he trusted and knew had experience in situations similar to mine. (Side note: Bankers do not charge an hourly fee, so it’s helpful to get their advice before investing in the advice of others who do charge. Bankers are also invested in wanting you to succeed, so you can pay your loans back.)
Next, I reached out to the two recommended accountants. Given that I needed this person’s advice, I knew I wanted him or her to be very direct and to the point. I did a mini-interview with each. One of the accountants was very passive and the other was assertive, so it was an easy decision. My accountant ran the numbers of the practices I was interested in and gave me feedback to help me negotiate the purchase prices of each, so I could decide which one to make an offer on.
For example, I was advised that the first practice I was interested in was going to require me to work for a few years sans payment to pay off the debt of purchasing the practice. Knowing that I would not be happy working every day without any financial reward for a long time, I decided against buying this practice. The lesson: If you choose practice acquisition, be prepared to hear that you may have to go some time without a large income, possibly making the practice price out of range.
PERFORM DUE DILIGENCE
The final person I spoke with was the banker-recommended lawyer. This is important, as he or she will be able to make sure there are no lawsuits on the practice you are interested in acquiring and can, at the appropriate time, transition the practice acquisition to setting up shop. My lawyer helped me to set up the business name and check availability on the name I liked. Also, he went over the differences of business types, so I could choose whether an S Corporation or Limited Liability Company (LLC) was the best for me for tax purposes. He then submitted all the documentation for me to get a tax ID number and set the bylaws for the corporation.
A few ways to identify where opportunities exist for practice acquisition include:
- Drive around the neighborhood in which you are interested in practicing. Then, do some research online of the practices you saw to discern more information about the owner O.D. Schedule time to meet with him or her to learn more and to see whether he or she has any interest in selling.
- Talk with other doctors at local optometry meetings and events to see whether they, or someone they know, is looking to sell in the near future. Similarly to patients being our best referrals, our colleagues can be our biggest source of knowledge about opportunities in the area where you’d like to own a practice.
- Look in classified sections of local or industry publications for practices for sale.
- Contact the closest optometry school in your area to see whether it has a list of practices for sale.
- If you are in optometry school, join a private practice club, if one is available.
NOT FOR EVERYONE
Practice acquisition is not for everyone, but for me, it’s been a great experience. Not only has it been more financially rewarding than being an employee, it, more importantly, gives me a greater sense of accomplishment. I urge you to ponder what you want to accomplish in your career. If ownership is a goal, assess the opportunities in the area where you would like your practice, and consider the steps above to see what prospects await you. OM