Many physical therapists dream of owning their own practice one day. While some clinicians wait until they’ve been working for years before they take the plunge, more and more new graduates are opting for clinic ownership right out of school.
Regardless of when the timing feels right, one of the biggest decisions facing an aspiring clinic owner is whether to buy an existing PT practice or start one from scratch. Many folks wind up purchasing existing practices so they don’t have to build a patient load from the ground up or worry about forging relationships with referral sources.
However, there are some important questions to ask when buying any type of medical practice. With that in mind, here are a few things to ponder before you purchase a PT practice:
1. An amicable transition is invaluable.
John Baio, PT, DPT, owner of Martino Physical Therapy, strongly advises that anyone purchasing a PT clinic do everything possible to keep things amicable during the transition. He notes that it’s always preferable to have the previous owner in your corner as your biggest cheerleader. After all, he points out, “One malicious letter or unpleasant meeting with a referral source can freeze the stream of incoming patient referrals.”
Continuity with staff and technology providers can help keep things running smoothly.
It’s also important to consider how the transition will impact the clinic’s current personnel situation. To do that, Lilyanne Pagador, PT, DPT, owner of Pagador Physical Therapy, recommends asking yourself:
- Will the current staff want to stay on with you as the new owner?
- If they choose not to stay, with whom will you re-staff the clinic, and how will you train those employees?
She also points out that you’ll need to decide whether you’ll continue using the same EMR provider, billing service or solution, bookkeeper, accountant, and legal counsel. Pagador opted to stay on WebPT, and she retained the previous owner’s office assistant, bookkeeper, and accountant. “I felt that patients seemed more comfortable knowing that [the office assistant] stayed during the transition,” she explains. “I also felt better working with the existing bookkeeper and accountant for better continuity.”
2. Announcing the transition is an art form.
Even if you do everything in your power to ensure a smooth transition, you might still run into unanticipated roadblocks. For example, according to Pagador, some patients may feel shell-shocked by the announcement that their beloved clinic is under new management. That’s why it’s so crucial to establish trust and build a positive rapport with the patients you will “inherit” from the previous owner.
Putting a celebratory spin on the change helps keep morale high.
When Pagador purchased her clinic, she made it a point to maintain the warm, family-oriented atmosphere the previous owner had created. “I threw him a ‘Happy Retirement’ party and invited current patients as a way to show a positive transition of ownership,” she says. She believes this helped keep the good vibes flowing after his departure, as his current and returning patients really trusted his judgement.
3. Patients often follow their therapists to new clinics.
Despite your best intentions, though, many patients will stay loyal to their therapists. You might assume that when you purchase a practice, the existing patient pool will come as part of the deal. But, if that practice’s top clinicians decide to join or open another clinic down the street after you come on board, you could lose many of their patients, too.
Employment contracts can help prevent staff attrition.
Baio says one way to combat this is to include an employment contract with current employees as part of the sale. “This can prevent you from having your dreams of a turn-key clinic crushed,” he explains.
If patients do leave when you take over the clinic, though, Pagador cautions against taking it personally. “It’s not your fault; they may just have been blindsided by the transition, or they are just very picky about who they want to work with,” she says.
4. Your treatment style may clash with the status quo.
Pagador also stresses that it’s vital to understand the clinic’s treatment style or philosophy (if there is one) before you take over. For example, if a manual-based practice were to switch over to a movement-based one, it could cause some raised eyebrows from patients.
A gradual approach to shifting methodology will help foster buy-in.
She recommends gradually transitioning over to your preferred techniques and treatments styles, rather than switching overnight. This will help maintain the trust and support of current patients. She also points out that simply understanding the existing clientele is critical during a practice buyout. If you’re unfamiliar with pelvic floor treatments, but 20% of existing patients are in the clinic for those diagnoses, you’ll need to know that in advance and plan accordingly.
Pagador does add that if you have a strong following from your previous clinic or setting, then this may not be as much of an issue. But, if you’re expecting to simply take over an existing patient load, it’s essential to understand how treatment differences will come into play.
5. Marketing and branding are key from before day one.
One of the biggest benefits to purchasing an existing practice—especially a successful one—is the fact that the prior owner has likely done quite a bit of marketing and branding. If you want to keep the transition seamless, Baio recommends that you start working out the details of taking over marketing efforts—including doing any necessary re-branding—well before you start seeing patients under new ownership. “A costly mistake would be to begin marketing after you start seeing patients at your newly purchased practice,” he says.
6. The renaming and insurance credentialing processes can take time.
Pagador originally purchased a clinic that bore the name of the existing owner. So, she decided to change the name to reflect the new ownership, as well as create a whole new employee identification number (EIN) for the new entity. She anticipated that this would take time, but it ended up taking much longer than she expected. Thus, she recommends working with a legal professional who can help you understand all of your options before you decide to rename an existing company with an existing EIN (as opposed to, say, creating a whole new entity).
Similarly, Pagador advises looking at provider-payer relationships before making the purchase. If you’re going to transition to cash-only, a name change won’t make a huge difference when it comes to collecting payments. But if you’re hoping to maintain the same insurance contracts, a name change can cause lots of headaches!
7. Change is often good, and making the clinic your own is key.
As much as you want to respect the way the former owner(s) ran the clinic, Pagador maintains that making the new practice your own is key to building your brand and establishing your own loyal clientele.
That said, she believes you should be as upfront as possible with your staff regarding the things you would like to change or improve. “Enlist their help as far as how to explain changes to patients,” she says. “Have a script prepared in case patients get curious as to why certain changes are occurring.”
Your attitude influences staff and patient attitudes.
If your explanation has a positive spin, most patients and staff will be happy about the changes. She recommends using wording such as:
- “We are excited to announce updated office hours”
- “We are pleased to add the following additional services”
- “We are thrilled to introduce new staff members”
With change comes opportunity, and Pagador suggests leveraging the transition period to consider all the new ways you can grow the practice. “Just because the former owner did things a certain way does not mean you need to keep doing the same,” she explains, noting that you can borrow from the things that worked well for the previous owner and brainstorm fresh, creative ways to make things work even better for you.
Have any of you purchased existing PT practices? Please share your words of advice in the comment section below!