Secure your future: Protect the equity in your practice

Journal of the American Chiropractic Association, Feb 2001 by Vincent, Richard E

No matter how long you have been in practice, now is the time to secure your future. Lack of planning leaves the future to chance.

We have all seen it. "Doctor A," a hard-working and a valuable member of the community, closes his office doors and walks away from many productive years of practice with nothing to show for it but memories. The doctor's legacy and personal investment are gone. Patients are free to seek chiropractic care elsewhere and are often left unserved.

The enviable "Doctor B," however, retires with financial security, as well as professional and personal fulfillment. This doctor's patients and the community have been well served, and he or she is both independent and happy.

Understanding the life cycle of a chiropractic practice makes travel from the starting point to the finish fine easy. There are four very distinct phases to the practice life cycle. They are embryo, growth, maturity, and disengagement. Each phase is measurable from a qualitative and a quantitative perspective.

Stage I: The Embryo Phase.

The new graduate leaves school with high ideals, newly acquired clinical skills, and great expectations, only to meet the reality of managing a practice. The doctor must now perform the unfamiliar tasks of doing geodemographic studies, finding an appropriate information system, hiring and training staff, securing proper legal and accounting assistance, and becoming familiar with insurance coding and reporting, along with the intricacies of managed care. The new doctor must also develop a business and marketing plan that makes Stage 19 I a period of continwing education in the gathering of a whole new set of skills and information. Practice growth during this time is often slow and challenging.

Stage II: The Growth Phase. Growth begins once the doctor has acquired and honed those skills obtained in the Embryo Phase. Energized by persistent adherence to the mission of the office, with a focus on clearly defined goals and objectives, patient-centered care, and ever-improving clinical skills, the practice is driven forward as long as the energy is there to propel it. Qualitative measures of patient/staff satisfaction and clinical outcomes are high during this period. Quantitative measures that include gross production, collection ratios, and new patient acquisition are consistently high. The practice shows a well-balanced payer profile with a consistently high collection ratio. The growth phase will ebb and flow, but the trend line steadily moves upward.

Stage III: The Mature Phase of the practice life cycle is characterized by a dimming focus. The practice may run smoothly, but the overall dynamics of the practice are insufficient to promote continued growth. The trend line remains relativestatic. Gross production, new patient acquisition, and the overall dynamics of the practice are flat. The zest for continuing education is diminished. If the mature pahse continues for any length of time without corrective intervention, the practice will enter the final stage of the cycle.

Stage IV: Disengagement.

This stage has no acute onset but is accompanied by a gradual shifting of personal and professional priorities. Energy once focused on the practice diminishes. In the latter stages of disengagement, the doctor begins to exhibit increased feelings of fatigue and dulled interest that can lead to a costly and unnecessary demise of the practice. It is time to move on. It is time to pursue those activities and projects that have been put on the shelf for "someday." Today is someday. It is never too early or too late to plan and/or execute an exit strategy.

How do you avoid the plot of "Doctor V? How do you convert your years in practice to meaningful equity? Simple. The answer exists in meaningful planning and execution. The key to this planning and execution has a new doctor with the established practice-a true win-win. With the infusion of new energy, the practice will avoid or reverse decline. The practice can be driven to new growth through higher levels of performance, creating greater practice value that can lead to a successful buy-in/buyout at any stage of a doctor's career. As the new doctor becomes astute in the business management side of practice, he/she can relieve the senior doctor from many tedious and time-consuming chores.

At this juncture, the senior doctor has the option to continue in the practice at varying levels of involvement or to gradually disengage or retire.

Whatever the doctor chooses, at whatever time schedule, the result is maximum return on a life long investment. The new doctor is saved the risks and uncertainties of starting a practice or working in a less than satisfying associateship that leaves him or her without a future-a lose-lose relationship.

With the increasing number of graduates from chiropractic colleges and a growing population of established doctors considering their long-term options, an exit strategy that links new graduates to established practices makes more sense now than ever. Whether you are in the growth or later phases of your career, a carefully planned strategy can work for you. It deserves serious consideration.