Transition Planning | Ways to Prepare & Common Mistakes to Avoid
1. DEFINE YOUR EXPECTATIONS
Answer these questions to yourself
What do you expect to result from the sale or take place during the transition?
What do you want to accomplish? (Maximize value? Leave a legacy?)
How would you like to see the transition take place? What roles will each party play?
2. DEFINE YOUR TIMELINE
Consider the answers to these questions
When will you be ready to make a change?
When do you want to start cutting back?
When do you want to retire?
When can you afford to do either?
When will you feel comfortable with a transition?
3. DEFINE YOUR “IDEAL” SUCCESSOR
Despite sounding silly, a transition is easily compared to a marriage. Make sure you determine what type of characteristics and attributes your ideal successor will have. Consider management skills, practice philosophy, attitude, social skills, etc. Write down your expectations of him/her.
4. INVOLVE YOUR STAFF
Your staff will be absolutely essential to a successful transition, and their willingness to stay on will add value to your practice. Despite any concerns or fears you may have, very few staff members will quit when they hear of your interest in selling the practice or bringing on an associate.
5. TIGHTEN COLLECTIONS & RAISE FEES
If collections have become lax, evaluate your financial policy and tighten up collections. Obtain a fee survey for your area, compare with your own & raise them, if needed.
6. “SPRUCE UP”
Re-upholster and repair old equipment. Redecorate the office, paint, install new carpet, install new light fixtures, clean out clutter, etc. Make the physical aspect of the practice as attractive as possible.
7. SAVE FOR RETIREMENT
Do not rely on the sale of your practice to fund your retirement. Doing so will add undue pressure to an already tenuous process. Ideally, your retirement should be fully funded before you sell.
8. AVOID “SKIMMING”
It is tempting for some doctors to aggressively treatment plan or complete all unfinished work shortly before selling. In addition to increasing their income, they hope this will “pad” the numbers and make the practice worth more. The opposite is true.
9. STAY WITH YOUR PPO’S
Since ‘fee-for-service’ practices have a higher perceived value, some doctors have the false notion that discontinuing PPO participation just before selling will increase the practice value. The opposite is true, since it increases risk of patient attrition.
10. MAINTAIN THE STATUS QUO
Avoid cutting back too much and continue to market the practice and recall existing patients. An established patient base, healthy new patient flow and good earnings are some of the most valuable assets of your practice.