BUSINESS

  BUSINESS STRATEGIES

SELLING AT RECORD PRICES

SOME OWNERS FIND PATIENT RECORDS ARE THE ONLY THING WORTH SELLING

GARY GERBER, O.D.

AS THE population of practitioners ages and more doctors look to sell their practices, more prospective buyers are changing the question from, “How much is that practice worth?” to, “How much are those records worth?”

Sadly, sellers may come to realize the only thing worth selling are their patient records after dated equipment and inventory, short-term leases and a rundown appearance don’t attract buyers.

The answer to this is the same as “What is my house [or car]worth?” It is worth whatever the buyer is willing to pay. And that amount varies wildly.

TWO BUYER CONSIDERATIONS

The two most important factors for buyers to consider are the selling practice’s culture and its business model. The closer those are to the buyer’s, the higher likelihood the deal will make sense.

For example, if patients are not used to tests being delegated and have never been charged a separate fee for contact lens professional services (yes, that still happens), the transition won’t be easy if the buyer delegates and charges. That doesn’t negate the deal. It just means it requires more introspection and analysis to ensure it’s affordable.

Similarly, if the selling practice has a huge population base from Plan X, and the buyer is not on that plan, that doesn’t blow up the deal.

PLACING A VALUE ON RECORDS

With all this said, can sellers find a per record dollar number to plan their exit? We’ve heard everything from $1 to $50 per chart. If a buyer considers the likelihood of patients transferring to its practice to be low, then the fair price drops precipitously. However, if the buyer has a high margin practice that is perfectly aligned with the seller’s, then a high price is easily justified. In some cases, a “pay per patient who actually transfers over” method can work.

There are two important lessons here.

• For sellers, prepare sooner vs. later, and plan to sell your entire practice, not just the records. This will necessitate improvements in the practice, which, when done properly, will come back to the seller at sale time. Like fixing up your bathroom and kitchen before you sell your house, remodeling your office and enjoying the ensuing spike in revenues translates to a more sellable practice at a higher price.

• For buyers, the lesson is to reject the so-called “industry norms” formula that states, “you should pay X dollars per chart.” Instead, do careful and insightful analysis to forecast how your revenue might be affected by paying various price points for the charts. Also, consider the cost of the transition, such as possible software integration, marketing the buying of the charts, excess labor from new patients, etc.

THE DOWNSIDES OF A SALE

It’s sad to see a long-term practice close its doors, especially when we know it could have been avoided with modest amounts of planning and improvement. On the other side of the equation, it hurts to see buyers over pay for a practice. It’s also unfortunate when the buyer claims the practice selling price is too high and passes up a deal that would benefit both the buyer and seller. OM

DR. GERBER is the president of the Power Practice, a company specializing in making optometrists more profitable. Learn more at powerpractice.com, or call Dr. Gerber at (888) 356-4447.