Business Talk: Merger matters
A viable solution for a struggling practice
There is a new trend happening among both young and veteran chiropractors who are either struggling in business practice or are looking for a way to alleviate the daily stresses that go along with running their own show. More and more DCs are looking to join bigger, multidisciplinary practices for mutually derived benefits.
Running a business in the owner-operator model can be very difficult in any line of work. In our case, we can only address one patient at a time, but during the time we spend with each patient our business is continually in need of attention.
I surveyed 204 chiropractors from across Canada and asked them what issues in their practice would cause them to merge their practice with a bigger one. Here are some insights from that survey.
Lack of organization. The need to implement systems into every aspect of your practice plays a big role in the future viability of your business. As featured in previous issues, I created the “flowchart of success” that focuses on how spending, collecting and scheduling are the three main aspects that drive the lifeblood of any practice. Further, the importance of systemizing your assessment and treatment approach not only provides more clarity, but provides your patients with more consistent clinical results.
Unable to collect fees. The Oct. 7, 2014, issue of Chiropractic Economics featured survey results from chiropractors across the U.S. The most intriguing statistic was that DCs are only collecting 61.8 per cent of the fees they billed to their patients. This means for every five patients treated only three are paying their bill. No business can be viable over the long term with a collection system like this.
Growing pains. Once they establish themselves, chiropractors are having problems expanding their practice so that they do not have to work 10 hours per day or six days a week. Adding other chiropractors and therapists is a great way to grow the practice but many doctors are lacking the knowledge and confidence to do so.
Benefits of a merger
This business practice is commonly seen in the corporate world, but learning how it can help you will influence how you proceed. Essentially, a merger offers organization, collection of nearly 100 per cent of fees, and reduction of expenses, creating more revenue and growing the bottom line. I have absorbed smaller practices into my own clinic and have found the doctors receive the following benefits.
Increased exposure, reduced risk. When you merge with a larger multidisciplinary entity, you expose your services to a myriad of patients, while reducing your overall expenses, which reduces your risk. On slow periods, the stresses of paying rent, bills and payroll are eliminated.
Better remuneration. In my practice, I have a system that ensures patients pay before the visit takes place and any insurance-based visits are pre-approved before any treatment takes place. This ensures we get paid every time and essentially makes our accounts receivable zero.
Greater support staff. Answering phones, booking appointments, reminding patients of their next visit and billing insurances are all perks of merging with a larger practice which allows more attention to be directed to growing your patient base.
Mentorship. In my practice, an inherent benefit offered to new clinic practitioners is mentorship and skill development from me and/or our senior physiotherapist. We provide mentorship on business development strategies and clinical guidance through the learning of different assessment, manual skills and diverse acupuncture methods geared toward making them better practitioners.
What’s in it for the big guys?
Bigger practices need to see a long-term benefit in taking you on. You need to be clear with what you can offer the clinic and how your addition will make them better – both clinically and financially. In general, clinics who absorb smaller practices are looking for three things: instantly increase patient flow, instantly increase revenue and, most importantly, your commitment.
If you are looking to merge your practice, it’s best to do it with another clinic in your surrounding area. You need to be close enough that your existing patients will be able to follow. Make sure the clinic you join shares your practice philosophies, as philosophical disagreements can affect your relationship and your long-term happiness.
Be clear on how you can help a practice courting you for a merger. Be prepared to sell yourself and delineate the measurable benefits of taking you on in their practice.
To have long-term success in practice you need to make sure quality patient care remains the focus. In any business decision, make sure patient care remains optimal regardless of the financial benefits of your potential merger.
Anthony Lombardi, DC, is consultant to athletes in the NFL, CFL and NHL, and founder of the Hamilton Back Clinic in Hamilton, Ont. He teaches his fundamental EXSTORE Assessment System and conducts practice-building workshops to health professionals. Visit www.exstore.ca for information.