Merging Professional Practices, Part 1 Continued from Page 22 waiting room, office area, washrooms, storage and common areas. It can be more cost efficient in that there will be better use and less duplication of ancil-lary and clerical staff, services and bill-ing systems. Cost savings will be realized through bulk purchases, and the pooling of financial resources. A merged clinic will have a greater ability to acquire and utilize more recent and updated diagnos-tic and other equipment. Today’s chiro-practic environment requires substantial amounts of investment and working capital. New technology is expensive and because of constant updating, so much of it has a short shelf life. On top of this, governments are reducing the amounts paid to chiropractors. Insurance com-panies are not fireballs when it comes to paying. Banks are often reluctant to extend substantial amounts of credit to professional practices, particularly start-ups, and seldom will you have the lux-ury of obtaining outside investors. perform those functions in which he/she has a high level of expertise while pass-ing other patients to a partner who dem-onstrates different talents. However, the marketplace will always dictate size limi-tations and compatibility. Other advantages of a merged clinic include greater ability to adapt to chang-ing circumstances, improved negotiat-ing ability with insurance companies, worker’s compensation boards, managed care organizations and other third-party payers. It should be able to recruit other chiropractors and professionals, such as a practice manager, whose qualifications do not exist within the firm. Each chi-ropractor is now able to better advance him/herself in the profession in ways that would otherwise have been impossible. practice while others are more interest-ed in family life or recreation. There are leaders and there are followers. Still, all must promote the welfare of the group, and not that of any individual in prefer-ence to others. The hierarchy among in-dividual chiropractors must disappear. There cannot be a pecking order. BIGGER IS OFTEN BETTER All chiropractors strive for zero defect; or to get as close to it as is humanly possible. While professionalism and patient care is paramount, flexibility is ultra-important. This requires the constant practice man-agement and peer oversight that only the larger clinic can support. Still, under-lying all else is patient benefit and retention coupled with the requirement to provide exemplary service, all of which must be correlated with the economics of scale. To survive in today’s business environment, practices must expand their rosters of pro-fessionals who possess the required exper-tise to offer differing chiropractic services. The principal advantage is that a merged practice of several chiropractors, each with a different specialty is better able to provide more full-service care to its patients and compete in the market-place. The larger practice can garner and retain business where it otherwise may not have been able to do so. This creates the ability to obtain a larger market share by offering more services in house. It ben-efits the individual chiropractors in that it allows them to advance their profession and patient load beyond what they could have previously done. A chiropractor can 26 • Canadian ChiropraCtor | September 2011 THE DOWNSIDE On the other hand, there are disadvantag-es to merging chiropractic clinics. Some-times amalgamations are brought about because of a crisis situation, which is, ac-tually, the worst of all reasons to merge. It may not eliminate all of the problems; in fact, it could exacerbate some. For instance, the larger the practice the more direct management control will be required and not all chiropractors are good business managers. Some who could be capable do not wish to assume the respon-sibility or, as time spent managing is time away from professional practice duties, do not wish to divide their attention by taking on administrative duties. In short, this can be a touchy issue. Therefore, if the practice reaches a size at which full-time manage-ment would be beneficial, it is often wise to employ a person competent in this area – and this costs money. Before merging, then, these elements need to be consid-ered: is one chiropractor going to assume a greater practice management role and its responsibilities, or are the partners going to put out the money to hire a dedicated practice manager? But, the principal shortcoming is in-compatibility with the other merger part-ners and differing expectations of what the merger will accomplish. Not every-one is a team player. Yet, this is what each must be if the merger is to prove success-ful. Incompatibility problems can take different forms. There are conflicting ob-jectives, differing talents, abilities, work ethics and financial contributions. Some wish to work hard and develop their WHERE TO BEGIN The starting point for a merger of two or more chiropractic practices is a meet-ing with all prospective merger candi-dates and a general, open and respectful roundtable discussion of what is wanted, what is expected by the individuals, what the group hopes to accomplish, what each individual brings to the table and procedural matters. When a melding of objectives has been achieved, all have agreed to the basics, and have laid out the rudimentary guidelines, the next step is to undertake a detailed pre-merger assessment and valuation of each individual practice that is intended to participate. It is best to have one neutral professional analyst and/or a professional practice appraiser conduct this task. By using this method, assumedly, all bias is eliminated. The analysis should include: • market value of each individual practice, the tangible and intangi-ble assets, including the goodwill; • history of each practice, annual billings, collections; • details of the services each prac-tice offers, particularly specialties not available everywhere; • staff of each practice, their sala-ries, duties, competency, length of service, etc; • facilities that could be occupied by the new practice – or abandoned; • a general economic analysis of each practice with a clear under-standing of what each of the pro-posed participants brings into the merger (senior professionals are seldom interested in supporting poor performers); • untapped potential or potential as yet not fully capitalized on; • an economic and personal analysis to ensure all are compatible; and • an assurance that each will be better off after the merger. In Part 2 of this article, I will discuss the mechanics of a merger and how to put it all together. • www.canadianchiropractor.ca
Chiropractic + Naturopathic Doctor September 2011: Page 26
