Thinking of Selling Your Practice?

Recently, we have been working with a number of physicians who are interested in selling or gradually transferring their practices to a younger doctor. The values of their practices are being impacted by the operational choices they made before the idea of retirement. Below are a few tips for those thinking of a practice transition.

What’s In a Name?

Make no mistake: branding makes a difference in how easy it is to transfer goodwill and reputation to another physician. Start your practice right by choosing a name that will easily allow you to grow. Some plastic surgeons think that by using ”Advanced Plastic Surgery” they will top their colleagues in the Yellow Pages, thus giving themselves a marketing advantage. A name like ”advanced” has the advantage of being easily transferable.

Other surgeons believe that their name deserves marquee billing. As long as the surgeon plans to stay the main act and remain solo this works fine. The John Smith Clinic for Plastic Surgery ceases to work well when Dr. Anderson takes over the practice.

What happened to Dr. Smith?

CPT Codes Matter—Even If Yours Is An Aesthetic Practice

Everybody who contemplates a practice transfer will need data that substantiates value and price. In one deal we observed, negotiations came close to a grinding halt when the senior doctor could not come up with a list of procedures he had performed over the last five years. Because ”he does not bill insurance” the manager announced, ”we do not have to use CPT codes.” The lack of readily available procedure data was very time consuming for her since she had to go through the logs and hand tally the case information from the surgery scheduling books. And, because they did not include all the procedures on the schedule, face, eyes, etc., the count was probably short. Remember, the buyer will want to see what the trend line is, up or down. Furthermore, one of the things you are selling is great business systems. If the other doctor’s advisors do not see orderly systems, they are likely to say, ”Why buy that practice? If they cannot produce some of the most basic data, how well run can it be?”

Failing to itemize revenue is another costly error. Frequently, we see one line on the practice P & L: Patient Revenue. What a mistake! They do not line item list the money generated by skin care product sales and treatments. Additionally, many practices fail to appropriately account for implants.

Be aware that the operational Choices you make today will have an impact on the perceived value of your practice tomorrow!

Planning and realizing successful exit strategies makes for the best retirement possible. Cindy Collier, CPA, assists plastic surgeons in practice valuations and transitions. Visit her website at www.cindycollier.com.