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Maximize the value of your practice and property by putting a proper plan in place.
After working for years to build a successful medical practice, are you ready to move on to retirement or something new? To maximize the value of your practice and properly sell or pass it along to the next generation, a succession plan should be in place.
Succession planning can be a slow-moving and difficult process. While many physician owners claim they look forward to days when they can retire, they often fail to create a transition plan. Daily clinical duties and caring for patients take precedent over long-term planning concerns and this pushes succession planning to the back burner often for long periods of time.
It can be more comforting for the physician owner if the succession planning process starts years before their actual transition. It’s also important because the more time spent shifting the core business responsibilities of the practice away from the current owner, the better.
To facilitate this process, it’s necessary to document the core areas of responsibility. This will help segregate various aspects of the owner’s responsibilities and create a clear vision for which tasks can be allocated to others as potential backups. It also provides clarity when searching for a successor on key tasks they will need to be able to perform. The more that is known about the role, the easier it will be to find a match.
Effective succession planning doesn’t happen overnight. It can take many years to understand organizational challenges, identify solutions, and then get all the puzzle pieces to fit. The key is to establish a goal retirement date and then work backwards from there. Since things often change in the healthcare arena, it’s not essential for the date to be an absolute. However, a rather flexible goal date that can change as needed is best.
Planning at least four years in advance will allow for maximum planning time and efficiency. Working with the end in mind is the best way to approach succession planning and allows for the complex process to be broken into smaller pieces. Your succession plan should include a detailed list of circumstances and, if applicable, dates for all major steps in the succession plan. Depending on the situation, your timeline may stretch across many years.
A critical component to successful succession planning is determining a successor. Although every situation is unique, there are three primary methods of ownership transfer:
Once you have determined which transfer option is best for your specific situation, a succession plan can be crafted.
Although you may have a single successor in mind, it is best to list multiple options organized by order of consideration. If you are not planning to transition soon and do not have a set successor list in mind, begin by listing qualifications, skills, and/or personality traits you would like to find in a future successor.
It’s important to identify a successor as early in the planning process as possible. Without an identified successor, much of the work of succession planning is quite limited. Beyond this, the job of most physician owners is so complex that it may require a great deal of time to conduct training, introduce them into relationships, and coach them through transition. Start the training processes as soon as reasonably possible. This will ensure a maximum amount of time to transfer organizational and business knowledge.
Once a successor has been identified, there will be opportunity to share tasks or responsibilities. It’s not uncommon to see a successor approach a task or tackle a challenge in a way the current owner may not. Don’t be alarmed, it’s important to be open to the new ideas, processes, and ways of doing business that a successor can bring to the table. Open the door for them by allowing them to manage some existing responsibilities and make them part of the decision-making process quickly.
If you plan to sell your medical practice to an outside party, determine how appealing your practice may be:
Planning for succession well in advance of a transition is extraordinarily helpful for increasing the practice’s marketability. Succession planning offers peace of mind for any physician owner, regardless of retirement timetable, but it is no small task. These are emotional decisions which require structured thought and time to contemplate. You may want to consider consulting professional advisors to assist in the tasks outlined in this article and to work with you to develop a comprehensive strategy.