Buying a Practice: Lessons Learned (part 3)

Here's what I wish I would have known before buying a practice.


Buying a Practice: Lessons Learned

A few years ago, I purchased my chiropractic practice from my father. Reflecting back, I thought it would be a relatively seamless process, but there were a few surprises.

I already worked with my father for several years, which allowed me to better understand the patients and the office. It made the bumps easier to overcome because I knew what I was working toward. With the benefit of hindsight, here’s what I wish I would have known.

Before the Purchase

While I didn’t need start-up funding, I did use some savings. So I suggest you be ready to spend money.

I also advise setting up a corporation with a new tax ID number and finding out if you can secure a loan. Without a tax ID number, transitioning insurance and Medicare is difficult. What’s more, because I didn’t have two years of tax returns with the practice’s tax ID number, I couldn’t secure a business loan.

Also, plan to spend a significant amount of time to re-establish relationships with health insurance companies. I underestimated the amount of time and effort this would take.

After the Sale

One of my first steps after completing the sale was to require each member of the staff to reapply and interview for their jobs. We had two people quit, but this was expected. We also discovered our overhead was outrageous because overtime wasn’t being monitored and managed.

Consequently, I reduced the number of chiropractic assistants and gave the remaining CAs more autonomy. I asked them to work out their schedule among themselves, raised their hourly wages and gave them more responsibilities. Now they help make appointments and take co-pays. They review charts and ensure we get paid.

Changes to the hiring process were also implemented. Instead of running costly newspaper ads, I relied on referrals. While our current staff isn’t incented directly for referrals, their contributions are acknowledged with something extra, like a lunch.

The workplace environment needed to change, as well. Staff used to carry their cell phones with them. Under a new policy, cell phones are kept in the back room to use between patients and during breaks.

The practice started to hold more staff meetings. This improved communications, and now everyone has ideas about how to improve the practice.

Office Management

One of the first things I did after purchasing the practice was to hire my wife. Yes, we became that cliché, but in our case, it made sense.

She is an accountant and was qualified to take over the books. She also has business experience and understands what it takes to run a successful practice. All of this made it easier for me to focus on what is important to me—the patients.

My wife implemented many of the processes and policies that make the business run more efficiently including:

  • Follow up on bills. When I purchased the practice, there was $55,000 in receivables more than 30 days past due.
  • Because we were spending $500 per year on checks, we started used our credit card more and using direct deposit.
  • The move to direct deposit was also applied to payroll. In the past, someone always had to be in the office on Sunday to write checks for Monday morning.
  • My wife could cover for the other staff as needed.

Practice Personality

The practice initially reflected my father’s style. There were many family photos. The music was tuned to a radio station and not a playlist. Equipment was old.

I asked a photographer friend to display his photos in the office and make them available for purchase. These images captured local attractions and interesting scenery. As photos are purchased, we get new photos to display, which keeps our art interesting and fresh.

There are a number of Mennonite patients in the practice who don’t have insurance. Many of them paid with cash and would bring in homemade bread and other household goods, as well. Now we allow these items to be purchased.

We’ve switched off the radio and created playlists on Pandora and my iPhone. We added fresh flowers in the waiting room. Also, I transitioned an office space into a break room. We didn’t have one before, and it seemed important to continue fostering team building.

While I embraced the high level of care that was provided before, I wanted to make changes that reflect my vision.All in all, I think things came together very well!

The information in the NCMIC Learning Center is offered solely for general information and educational purposes. It is not offered as, nor does it represent, legal or professional advice. Neither does this information constitute a guideline, practice parameter or standard of care. You should not act or rely upon this information without seeking the advice of an attorney familiar with the specific legal requirements of the state(s) in which you practice. If there is a discrepancy between the site and an insurance policy you have with NCMIC, the policy will prevail.