This is the second in a series of posts on practical and legal considerations for physicians in deciding whether to sell, merge or stay the same. Before making any major practice decision along those lines, physicians should engage in some careful strategic planning. Simply put, before you can know which or whether one of these transactions will help you to achieve your goals, you must first know what those goals are.
From a practice standpoint, here are some basic “strategic planning” questions you should try to answer:
1. What are the greatest short term and long term challenges faced by your medical practice?
2. What are the greatest opportunities available to your practice?
3. If you were able to overcome your practice challenges and take advantage of your practice opportunities without selling, merging or affiliating with any third party, would your practice be where you want it to be from a financial and lifestyle perspective?
4. What are your options for overcoming your practice challenges and taking advantage of your practice opportunities and could you do that without selling, merging or affiliating with a third-party?
5. If you determine that sale, merger or affiliation is necessary to overcome your practice challenges and take advantage of your practice opportunities, which of these options is readily available and would enable you to achieve your professional, financial and lifestyle goals with the least amount of expense and disruption?
Answering these questions may not be so simple. Effective strategic planning often involves gathering and analysis of data regarding the practice and your specific market. Among other things, you should have a firm grasp on your income and expenses over the last several years to know how they are trending and why they might be trending that way. Similarly, you should understand your practice utilization and referral patterns (including the number of referrals in and out, what those referrals are for, where they come from and where they go). Finally you should have an understanding of what is happening in your market, who your competitors are, what your competitors are doing, who your allies are and how you can improve those relationships.
The above represent only a few of the important considerations for developing a strategic plan for your practice. Even if sale, merger or affiliation is not on your radar screen at present, one way to help ensure that you are prepared for change is to develop a three-year strategic plan and revisit it annually to see whether modifications are necessary and to evaluate whether you are fulfilling that plan.