Keys to Medical Practice Succession Planning
Business owners who regularly read this column and other business resources know that succession planning is a critical component of business ownership—and for many physicians, it’s one of the most important decisions they will face—determining precisely how and when to retire from their medical practice.
Unfortunately, there are plenty of physicians throughout California that fail to plan their business exit. Just like estate planning and going to the dentist, we tend to put off the difficult and the unpleasant. While it may be unpleasant to sit down and complete your tax return, selling your medical practice and setting off on your next adventure or phase of your life can be exhilarating.
But frequently—and especially when physicians don’t enlist the assistance of a qualified and veteran business consultant—they lull themselves into the belief that they can wait and easily sell the medical practice immediately when they’re set to retire.
But these doctors don’t realize that they must have their practices well-positioned and ready to transition far ahead of time. Adequate planning and preparation can be the difference between a successful and lucrative sale and a disappointing result and failure.
Sacramento business consultant Andrew Rogerson explains that there many time-tested strategies that physician partners can embrace to facilitate the smooth transition of ownership. That said, several variables must be considered in each specific scenario. Keep reading to find out about some of these important factors.
Looking for a Mirror Image
Many physicians who are ready to sell their medical practices are under the wrong impression that their successors must be exact copies of themselves for them to successfully take over the practice. It’s easy for a doctor they think this way since it’s his or her way of operating that’s resulted in a successful business. But this thinking is limiting: the most critical aspect of a successful transition is to align values and leverage the unique styles of the individuals to attain these values. That opens the door to many more potential buyers.
When physician owners get frustrated because their junior partners don’t emulate them, they should take the time to converse with them, understand their perspectives, and even take away something from them. Those physicians stuck in an unworkable model may also only be succeeding in getting their practices stuck.
How to successfully plan the succession of your medical practice; Photo by Jesse Orrico on Unsplash
Personality and Style
The personalities and styles of those physicians who started private practices typically are very strong and independent individuals who took risks to achieve success, and they may want the
next generation of ownership to fit that precise mold. Instead, a physician looking to sell his or her medical practice should determine the roles and responsibilities that give their probable successors the best chance to showcase their skills and allow them to flourish with their style.
Many physicians are surprised and a bit disappointed when they see that the incoming partner’s style—although different from their own—is warmly accepted by the patients and staff. While it may be a welcome change from an emotional and upbeat physician to one who’s calm, thoughtful, and never panics, the aspects of style that have made the practice successful, like responsiveness and patient care, shouldn’t be forgotten.
Plan Ahead
Like doing your taxes, succession planning can be a frenetic rush or it can be a calm and orderly process. The difference is contingent on everyone involved placing the medical practice first and laboring toward the common goal of long-term sustainability.
Savvy physician owners will try to uncover the special talents and attribute that the other partners bring to the mix, even if these are different than the status quo. In Andrew’s years of experience with transitioning medical practices, he’s found that when the values are in sync, and owners soften from the notion that there’s just one way to do things (their way!), the transition is smoother and the outlook much more positive. A well-thought-out succession plan lets the physician owner have the time to train a successor and be certain that he or she truly understands the medical practice.
Transitioning from a practice takes time and preparation, and there are a lot of issues to address. That’s why it requires professional assistance with the planning process so that handing over of your practice is seamless and stress-free.
But you’re on your own with the dentist.
There are Many Steps to Selling a Medical Practice
There are many steps to successfully selling a medical practice. Andrew Rogerson specializes in helping healthcare business owners sell their business including a medical practice and its many steps. This includes a practice valuation, creating a marketing strategy to find qualified buyers, and handling all phases of the transaction including third-party finance for the buyer, due diligence, and escrow.
He’s the author of “Successfully Sell Your Business” which is available for immediate download.