By Luis de la Prida, MBA, CM&AA
Volume 3 Issue 19, September 13, 2016
Summer is almost over, the kids are back in school, and your practice is gearing up for flu season, which is right around the corner. In other words, it’s the perfect time to head to Music City for the Urgent Care Association of America’s Fall Conference.
What awaits you there? Well, you will learn. You will network. You will have fun. And you may even be approached by a hospital system or a large group that wants to learn more about your practice with the possibility of making an offer to acquire your business.
Are you prepared to answer their questions?
Here are five things you need to do right away if you are considering selling (or merging) your urgent care center.
1. Schedule a Checkup
It has been said that the greatest benefit of an annual checkup is knowledge. Good clinicians use checkups as a way to determine the general health status of their patients—and their practice. Your goal before the conference (and in general) is to not only thoroughly understand the health of your business, but also to give serious thought to your end goals, so you can come up with a plan to get there.
The minute your practice is for sale, buyers will want to know its vital signs, history, and goals for the future. Profitability, practice profile, staff continuity: these are among the questions you will need to answer. But you might also want to consider the following:
2. Document the Chart
Once you know where you want to go, it helps to know where you are right now. Get reacquainted with your practice’s “chart”—and commit to updating it when you get back from the conference. It will come in handy during the due diligence process.
Document and understand the key elements of your financial, legal, and operational systems. Year-to-date financial statements, tax returns for the past three years, and detailed billing, collections, and payroll reports are a good start. So, too, are documents describing how much is paid (salaries and fringe benefits) to practice owners (and their immediate family members).
Spend a couple of hours familiarizing yourself with the legal documents of your practice, such as articles of Incorporation, shareholder agreements, employee benefits, facilities, claims, litigation; risk management, assets, financing documents; and other contracts, including medical contracts with third parties.
You don't need detailed knowledge of these documents. At this point it's enough to know they exist and have a high-level view of what they contain.
3. Perform Diagnostics
To advise a patient, you often rely on diagnostic tests. Have you done one on your practice? If not, it makes sense to consider a formal valuation. The above documents will help, along with an understanding of the major items owned by the practice, such as furniture and equipment, computers, vaccines, etc.
By the way, reviewing your legal documents will allow you to better focus during the conference on ways to increase the value of your practice. It can also help you effectively network with other conference attendees who can help you understand how those documents affect the value of your practice.
4. Recruit a Team
What do you do when a patient presents your practice with multiple issues in need of attention? You probably arrange for a consult with trusted medical specialists.
In the same vein, if you end up selling your practice, you'll want to assemble a transition team. This includes your accountant, attorney, financial advisors, and mergers and acquisitions professionals—all of whom preferably have experience working with healthcare companies.
Use your time before the conference to consider who's already on your team and what skills may be lacking. Then use the conference to locate advisors who can help you identify your goals and make better, more informed decisions.
5. Start Your Plan
You’ve taken a history. You have done a review of systems. You’ve ordered some needed tests. You have now reached the assessment and planning stage with which you are so familiar. Now is the time to review your goals and decide how to proceed.
As you attend the conference, consider ways to improve the fundamentals of your business. Ideally, you'll eventually want a detailed marketing plan that addresses the unique benefits and challenges offered by your practice.
If after the conference you're considering selling your practice, stay focused on running your practice—especially with regards to patient care and employee relations.
Staying focused and building a strong plan will increase the likelihood that multiple buyers compete for the right to partner with you.
As the poet Samuel Coleridge once said: “He is the best physician who is the most ingenious inspirer of hope.” In the time before and during the conference, I hope you will give yourself a much needed checkup and prepare yourself for the possibilities to come.
Happy Fall Conference.
Lou is a Certified Merger & Acquisition Advisor (CM&AA), consultant, and healthcare entrepreneur with over 25 years of successful experience advising middle market businesses and Fortune 500 companies. As a former Chief Operating Officer of a medical practice, he presided over a multi-million operating budget and acquisition efforts, while transforming it into a multi-specialty medical group focused on primary care, urgent care, cardiology, neurology, and home care.
His diverse career includes nearly a decade on Wall Street, where he gained valuable international experience in financial roles at J.P. Morgan and Credit Suisse First Boston. Lou's professional memberships include the Alliance of Merger & Acquisition Advisors (AM&AA) and the Healthcare Financial Management Association (HFMA).