Building your orthotic practice
By Dr. Martin Dziak
By Dr. Martin Dziak
We all recognize the importance that the relationships with our patients have in building a successful practice. The tricky element of a practice built on good relationships with patients is that, from a business perspective, it can create much subjectivity or “goodwill” when it comes to identifying the value of your practice.
We all recognize the importance that the relationships with our patients have in building a successful practice. The tricky element of a practice built on good relationships with patients is that, from a business perspective, it can create much subjectivity or “goodwill” when it comes to identifying the value of your practice. Consequently, when a different practitioner is brought into our practice, some patients may not return because the new practitioner is different in personality and practice style. “Goodwill is the probability that the same patrons will continue to patronize the same shop” is a sentence we’ve often seen, as business owners. The value of goodwill is determined by its transferability so that another other person can capitalize on it.
The custom orthotic dispensation portion of our practices can minimize the subjectivity of goodwill, especially if the proper systems are in place because another practitioner can duplicate the exam, casting technique and orthotic design. This type of practice can be easy to reproduce, resulting in a higher goodwill factor, and therefore a higher patient retention upon transfer to another practitioner. Another advantage is that the orthotic dispensing portion of your practice can be sold separately or together with your clinical practice. However, again, this is only possible if you have the proper practice management systems in place.
Shortly after I opened my own practice, an associate joined me. She had had a busy and successful practice for 15 years, but when she and her husband decided to have a family, she slowed her practice down to raise her children. She joined in with me after her children were in school for full days, with the intention of building her practice back up again. Unfortunately, she started having some health issues and on the advice of her doctors, family and friends, she decided to stop practising. When it came to assessing the value of her practice, the timing could not have been worse and essentially she had to walk away from it, without anything tangible to sell. She had been dispensing custom orthotics during the 15 years of her practice, but did not have the systems in place to create a recurring, viable practice that could be sold for its ongoing income stream.
What she had were a bunch of files with carbon paper copies of all of the orthotics that she had dispensed to her patients. If the correct systems had been put in place, she could have maintained a viable orthotic practice before, during and after she raised her young children, if she so chose. As well, when faced with health challenges, she could have continued to practice the orthotic dispensation portion of her practice if she so chose – since this type of practice is much less physically demanding – or she could have sold it.
The previous example may never apply to you. However, one or more of the following scenarios most likely will:
- If you became injured or ill, a viable orthotic practice could be maintained while the clinical portion could be sold or an associate or locum doctor could continue to practice.
- Should we chiropractors ever lose the right to dispense orthotics, we would have the option of hiring a professional that is deemed able to dispense orthotics to dispense the orthotics for us. They could be paid either hourly or per dispensation, and all appointments could be scheduled back to back. This way the chiropractor maintains the ownership of these patients as well as the majority of the income stream.
- The orthotic dispensation portion of a practice can be maintained post-retirement – this would maintain some patient interaction for you, in an environment that is not very time consuming or physically demanding.
- The clinical practice and orthotic dispensation practice could be sold together or separately to two different professionals, since a properly managed orthotic dispensing practice has value to any professionals who already dispense orthotics as their primary purpose or as a part of what they do. This includes certified pedorthists, podiatrists, physio-therapists or other chiropractors.
PROPER MANAGEMENT SYSTEMS
Proper information management systems allow you to keep track of and have easy access to:
- Patient records: Records give you easy access and the ability to print all relevant history, physical exam, diagnosis and orthotic design information, and have standardized forms.
- Followup: It is important to maintain regular contact with your patients and ensure that the device that you dispensed is doing and continues to do what it was designed to do and that your patient is feeling better and will come back in the future. A re-exam should be scheduled to check for device breakdown and dispense another pair if necessary to increase ease of use and, consequently, compliance issues.
- Statistical information: This information helps you to determine the quality of care that you are providing as well as track the financial growth of the practice.
There are two types of statistics that the proper management systems can help you track. They are as follows:
1. Clinical statistics
Quantifies per cent pain relief for each patient from the initial examination to the first two-week follow-up call to the yearly follow-up calls. Determines the progress of the patient numerically and compares this progress to statistical norms for each diagnosis.
As the database grows, success rates for each treated condition can be determined and used clinically. For example, if over the last five years that the program has been running I have an average pain relief of 87 per cent for the diagnosis of plantar fasciitis and my patient comes for a re-examination and has a percent pain relief of 60 per cent I know that I can do better, even though my patient may be happy.
2. Business statistics
Track the number of orthotics sold each week, month and year to track and compare to previous weeks, months or years.
Approximate the value of the practice that you have worked so hard to build. After consulting with various chartered accountants who valuate businesses, the best estimate for a practice that operates in such a manner as one outlined in this article and has several years of consistent and provable sales figures, is that it has a value multiplier between three to five times net profits. The reason for this generous multiplier is that the numbers are transparent, income streams are predictable to a buyer and it is obvious that it is a stable and predictable business. Otherwise stated, it has a high value for goodwill since another practitioner can capitalize on it.
Having the proper practice management systems in place will ensure that you are organized, continue to grow your orthotic dispensing practice and are in control financially of what you have worked so hard to build. If the time comes for you to sell, or partially retire, having viable options as to how you can do so is of tremendous value.
Martin Dziak, DC, CPed(C), is a chiropractor and certified pedorthist. Dr. Dziak is the creator of a customizable orthotic practice management software called ORTHOTRACK.ca. He can be reached at email@example.com or 1-888-337-7362.