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Planning an exit strategy with an associate who doesn't want to own
I'm the sole owner of a two-doctor practice. I have a great associate. She loves it here, I pay her well, and she knows she's appreciated.
I'm the sole owner of a two-doctor practice. I have a great associate. She loves it here, I pay her well, and she knows she's appreciated. But she doesn't know if she wants to be a partner because of the stress associated with ownership. I'm looking to retire in five to 10 years, and I don't know whether the practice is big enough to support another doctor whom I could groom for ownership. Do long-term associates who don't want to buy in stay when a new owner comes on board? I'd hate to send my current associate packing.
Susan J. Flemming, MBA
"Assuming she's happy, your associate will probably stay after you sell," says Susan Flemming, MBA, a consultant with Wutchiett Tumblin and Associates in Columbus, Ohio. "If she leaves, she'd have to deal with not just a new boss but also a new clinic and practice team—all unknowns.
"And for the buyer, your long-term associate could be one of the biggest selling points, because she knows the practice," says Flemming. "Your associate's relationships with the healthcare team and clients facilitate the transfer of goodwill for the new owner, which helps maintain the practice's earnings."
"But I would recommend you to challenge your assumptions," Flemming says. First: Encourage your associate. "You say your associate isn't sure whether she's interested in ownership. With her agreement, you could begin with some small steps toward management. Maybe she'll be surprised that she enjoys some of those duties."
Second: Make efforts to grow. "You aren't sure whether you could be a two- or three-doctor practice. Review your client numbers and visits," she recommends. "Are you expanding the revenue opportunities with your existing client base? What are the limits? Make sure to manage your growth and practice finances so even if you can't grow enough to bring in another associate, your practice will have a higher value and lower risk for a potential buyer when the time comes."
Third: Network. "I know this advice is common, but it may be the key to your successful sale," says Flemming. "Keep your eyes and ears open for people interested in buying a practice in your area. You never know when you'll meet a solo practitioner who's looking to move to your community. Or perhaps you could hire someone part-time who's interested in future ownership. This person could transition to full-time work as you transition to retirement."
Fourth: Consider a merger. "A local colleague might be interested in owning multiple locations, which means that your hospital may not have to change very much, and you'd still have the advantages of another owner to buy your shares. If he or she has associates interested in ownership, all the better."