COLUMN BUSINESS TALK Let’s make a deal H The ins and outs of buying a practice BY ANTHONY LOMBARDI ow do I buy an existing prac-tice, how much should I pay, and what should I be aware of? These are questions I’ve re-ceived most from chiropractors and chiropractic students recently. The first thing you need to know is that the only practices you will find for sale in your price range will be practices that are failing or have negative patient growth. Successful practices rarely, if ever, go for sale because they generate passive income for whoever owns it. Let’s take my practice for example. If I die, my wife will take over ownership of the practice, and all the therapists would work under their contracts. The clinic – which would then be owned by my wife and kids – would draw an income from the work the therapists do. The contract with my associ-ates has a clause describing how the agree-ment changes if I die. So if I die, my family could draw about $5,000 per month from my practice to help with living expenses. Following the above example, let’s now replace my death with my retirement. In this case, I don’t have to go to work and I can manage the prac-tice indirectly and make $5,000 per month. The associate DC in this scenario who takes over for me will be seeing 130 patients per week and will be earning an average of 65 per cent of the patient fee for each patient. So they are very well taken care of, but they do not own the practice. Successsful practices typically never sell because they generate too much passive income, and if they did sell, no one would likely be able to afford them. How much should I pay? I read one story where a new DC purchased a practice from a chiropractor who had been practicing for 13 years and was averaging 57 patient visits per week. The office she worked out of shared expenses with other practitioners who collec-tively owned the practice and paid rent to the owner of the building. Because the practice was in a negative growth stage, DR. 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 exstore.ca for information. 16 Canadian Chiropractor September 2016 the office was only open part-time, so half the time the office was not staffed – meaning all phone calls, emails and requests for appointments went unanswered during that time. The young chiropractor secured a line of credit and bought the practice for $123,000, which did not include anything except the hope that the patients would continue to come to the clinic once the practice changed hands. Conversely, I just met a new graduate who paid $28,000 for a practice that sees 42 patients per week and includes some equipment. The practice is open full time and he has 100 per cent control as the owner. The price paid for this practice is much more reasonable than the $123,000 paid in my first example. The downside Typically, at least 30 per cent of the patient files you “pur-chased” will go elsewhere. People look to buy an existing practice (myself, included back in 2002) because it appears to be the path of least resistance. There are many other factors that can become problematic when buying an exisiting prac-tice. One is philosophy. What if the DC was a subluxa-tion-based practice and you are functionally based or your www.canadianchiropractor.ca
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