For many of you who own a medical or dental practice, there was a moment in your training or career as a physician or dentist where you realized something important -- that you are not just a clinician and healthcare provider, that you are a business owner. What a different animal that is! Especially, when you consider where you thought you would be (for those who didn't initially anticipate owning their own business) or what it would be like (for those who may have known they would be a business owner).
This first step is taking a minute and think about if owning your own business is what you want to be doing.
When you are considering the possibility of becoming a practice owner, it is crucial to put some intentional thought behind it. You may also want to speak with your friends, family, or another business owner about what makes you want to be an owner.
Some of the reasons you are interested in owning your own dental or medical practice may include your desire to:
Control your ecosystem – do things the way you want
Create efficiencies in your business
Benefit from all the columns of income
Leverage the tax benefits
Writing the reasons down may help clarify why you want to become an owner or are looking for a change. You don't want to take for granted that you need to own a practice because it feels like everyone else is a practice owner. Many benefits come with being a business owner, but there are just as many stresses.
Some of the burden you may encounter as an owner are:
Acting as an HR manager
Building and managing a cohesive team
Being responsible for bookkeeping
It may not be the right time in your life to tackle running a business. Whether you are getting married or having children, going through a divorce, or grieving the loss of a loved one, all of these things can take your focus away from properly building a successful business. Some issues happen externally that can take the desire off your plate. It is essential to be realistic about your ability to starting a new practice. The biggest mistake is to go down that road and not be totally prepared and committed.
One area that is often overlooked is how realistic you are about your limitations, knowing what you are good at and where you struggle. It is essential to find the right people to outsource the tasks at which you do not excel. You will want to find someone who can do them in a way that will end in a great final product – an outstanding patient experience.
Consider doing a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis around your personal skills and how they may affect running a business. Think about:
You will also want to gain a better understanding of what your leadership style is. Understanding your leadership style is essential because as an owner, you are a leader, whether or not you are naturally inclined or not to lead.
Taking a personal inventory is a critical step for those who own their business or practice or are considering that step. It brings up the concept of making the space to work on your business, not just in your business. When you are in your business day-to-day with the HR issues, the patient issues, the billing issues, the rent or mortgage issues, the collections, the contractual – there is never an end to the work. The best business owners and the ones that launched their career or their practice to the next level are the ones who are disciplined about finding time on a regular cadence to take that personal inventory of their skillset and leverage their unique ability to fully develop their business.
It's good to remember that even if you are well into your career as a practice owner, you can still benefit from this step. If you are experiencing frustration or are struggling to communicate with your staff, take the time to tune in to where you have strengths and where you may need assistance.
No matter the situation, you will want to make time to work on your practice, not just in it, but by doing a personal inventory regularly to be self-aware as to where you have strengths or weaknesses.
You will need to determine if you want to buy a practice, build a practice, partner in a practice, or some combination. This step is like a game show because the opportunities are a bit of a game of chance. It is exciting in that sense.
Many dental or medical practice owners, who have already been on this journey, will say that they were in the right place at the right time. The reality is opportunities are opening up everywhere, all the time – you just have to be ready, willing, and open to see them.
This is two-fold; it ties to the opportunities around you and goes back to that personal inventory.
For example, suppose you are exploring buying an existing practice or building a new practice. In that case, you will need to decide if the convenience of purchasing a practice outweighs the frustration of having to change it. In some cases, the treatment philosophy and a different way of thinking over clinical careers may lead you not to purchase a specific practice.
Another side of the equation that is important to mention is partnerships. It is essential to talk through what is the partnership responsibility. Partnerships most commonly break up over the lack of communication on tasks and over income and how it will be allocated and split. The doctor who is buying into a practice needs to have the skills necessary to take some of the running of the business off the original owner's plate to justify the partnership, and what each partner is going to do should be clearly communicated.
When you take stock of the practice itself and what needs to be done (quick change, slow change, or stay the course), it often revolves around purchasing a practice. It can also include culture shifts within a business, treatment modality or treatment planning shifts, treatment expansion or regional expansion, and all things of that nature with a financial game plan to accomplish those things there needs to be a continuity plan.
There is a thought experience call the "Ship of Theseus" from an ancient Greek philosopher. It raises the question of whether an object that has had all of its components replaced, like a ship having all of its planks replaced over time, remains fundamentally the same object.
The question becomes how much can you change at any one time and for something to keep its identity?
The goal is to find:
Ultimately, if you decide to purchase a practice, there needs to be something you appreciate or enjoy, or you are better off starting your own medical or dental practice.
Some entrepreneurs have what we call quick-start energy to see what ought to be done, like upgrading the furniture to make it more comfortable or revising the treatment plan to better align with billing. There are others by temperament who don't have a lot of energy, but are very disciplined or structured and their strength aligns with following the same system.
The latter can benefit from asking for feedback from others around them, team members, and even select patients. Posing the questions, 'If you could change one thing here, what would you do?' and 'What do you think would take us to the next level?' can lead to helping highlight what needs to change and inspire that change.
Where to Start: Staffing
One area that requires almost immediate evaluation to see if a change is necessary - is staffing. As the old saying goes, "Having one bad apple on your team can ruin the whole bunch."
You never want to come in and start terminating people immediately. It is valuable to get to know the employees first to determine if anyone on the team you have acquired doesn't fit in with your practice philosophy and treatment plan. It may be as simple as a mismatch in personalities, but it may be a better decision in the long-term to find a path forward to part ways with someone who is not the right fit. With that said, it is crucial to refrain from doing too much of this as it will be difficult to maintain continuity.
Another challenge of small business owners is falling into the trap of tolerating someone (a bad apple) on the team who only has a select skill set or limited knowledge. Keeping an employee who is not a good fit may occur because there is no process or appetite for meeting new people or identifying new talent. Whether you are running an office of three people or 33 people, either the owner or chief lieutenant needs to establish a culture of always looking for great people.
Although it helps track as much information as possible, especially from an automated perspective, it is necessary to find the balance between tracking everything and focusing on a handful of key metrics. For example, if you have practice management software that helps guide you through your day-to-day operations, learn how to generate relevant reports, which can become valuable later. Finding the handful of data or key performance indicators (KPIs) to measure related to the practice can give you insight into the overall practice's health and where you may need to make changes.
Those metrics come from two places:
It is helpful to be mindful of industry-specific data points for your specific business and of shortcomings the practice may have. The key is finding several metrics to focus on because if you try to track all of them, you end up in a circumstance when you stop understanding everything that is going on, and it creates confusion rather than clarity.
One of the best analogies for this is the cockpit of an airplane. There may be 100's of gauges and instruments above and around a pilot, and you wonder how they track all of them. The truth is the pilot doesn't. The pilot only looks at four or five of them, and if those five gauges are fine, there is no need to look at the other ones. If there is a problem with one of the five, the pilot will drill down the issue by looking at other instruments.
What are the most common key performance indicators that a practice needs to track?
Tracking the above and a few industry-specific areas should give insight into 70-80% of the questions you may have. Remember, when one of these top metrics presents an issue, you review the other relevant data to find more information.
What brings all of this home is surrounding yourself with professionals who understand your business. Based on your specialty, certain experts are required and others are elective.
Typically, you have someone you know or are familiar to reach out to with when a specific issue comes up.
Specialization Not Necessary:
It is crucial to find the people who know your discipline, whether you work in dentistry or medicine. That specialization is valuable in that team of advisors. Remember, just because someone can identify an issue does not mean they have the training or knowledge and are equipped to handle it. Someone who is trained in that specialty should be able to dive deeper to identify the issue and determine what the best course of action is to remedy the problem.
If you think about moving into ownership, it is a fantastic opportunity to build something special, but having a good team around you takes a lot of the stress off creating this. Building a team early in the process is key and working with people who understand that growth curve and are sensitive to that is also vital.
There is a thread that runs through all of these steps - intentionality and thoughtfulness. As you decide whether owning your own practice is the right decision for you, it is essential to put thought and intention behind determining your goals and what you are willing to do to achieve them. We hope you see this as a useful framework for people out there who are thinking about that next step.
Spaugh Dameron Tenny offers an array of practice support, including assisting you with planning for 401K benefits, bundling supplemental insurance packages, review shareholder agreements, as well as, strategic planning for your practice and partners.
Our team of advisors offers a consultative approach to help you understand your core objectives and work with your legal team to execute your strategy properly.
For over 50 years, Spaugh Dameron Tenny has provided comprehensive financial planning for physicians and dentists in Charlotte, NC. In addition to providing personalized advice, we walk our clients through their options to help maximize finances and maintain financial security.
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