Profiting from the Business End of Healthcare

Profiting from the Business End of Healthcare

Treating patients is not the only way you succeed as a practice owner. The wealthiest, most successful practice owners hire associates and make a profit from the associates' work. They sell partnerships. They build their wealth by selling thriving, profitable practices.

With good management, your practice investments of energy, money and intelligence can pay off better than any investment on the market. Or they can be wasted with bad management, poor planning and inaction.

Going out the Top

You can build your wealth as a practice manager in many ways. For example, Dr. Bob works hard and spends 10 years building his practice. He hits $70,000 collections per month without managed care and with less than 55% overhead. He goes through two associates before finding his match with Dr. Chris. He pays Dr. Chris 33% of her collections while spending hundreds of hours grooming her to take over his practice.

Over the next five years, Dr. Bob cuts his work week to 40 hours and stops working weekends. Dr. Chris builds her production from $25,000 to $50,000 to $75,000 per month. Although Dr. Bob's personal production drops to $55,000 per month, his profit increases because he skillfully manages the practice.

Dr. Chris then pays Dr. Bob $190,000 for half the practice. As his partner, she begins to accumulate her own wealth. Dr. Bob spends less time at the office to pursue his passion for breeding thoroughbred race horses. The staff and patients love Dr. Chris because she walks in Dr. Bob's shoes.

After the 10-year partnership period ends, the two doctors finalize their buy-sell contract. Dr. Chris pays Dr. Bob $220,000 more and takes over as sole owner. Dr. Bob works a few hours per week for 50% of his production. He continues to advise and support Dr. Chris for three final years. Dr. Bob then moves to Kentucky to raise horses. Because he is only 55 at this point, he starts another practice as well. Dr. Chris also thrives.

If you can effectively manage people, you have all the options. You can build a group of doctors. You can create satellite practices. You can form strategic partnerships. You control the game.

Going out the Bottom

Without management skills, your income is limited to your own production. For example, Dr. Ed graduates with Dr. Bob, but with better grades. He opens a practice down the road from Dr. Bob and focuses on his technique. Although he is a better technician than Dr. Bob, he ignores the business end of his practice.

After 10 years, Dr. Ed hits his production peak average of $45,000 per month. However, staff members come and go with no stability. Dr. Bill tries to work with an associate, but fires him for being an idiot. Another associate takes a dozen patients with him when he quits. Dr. Ed decides hiring associates is a bad idea.

He then tries a partnership with a colleague who hates management more than Dr. Ed. Together, they get less done with more stress. The resentment builds and builds until patients and staff hate coming in. Dr. Ed is relieved when the new guy leaves. He vows to work alone forever.

During the next 25 years, Dr. Ed's production slowly dwindles to $25,000 per month. At 65, he decides to sell his practice. Unfortunately, his equipment and patient base is so old that he can't find a practice broker to help him. So he sells his patient files to Dr. Chris for $10,000. He moves to Arizona because living there is cheaper.

What Is Your next Step?

Decide to play a bigger game. Win your current phase and move on. If you don't move on, you get stuck at your current activity and income.

Set big goals. Write a strategy that makes sense. Use ExecTech advice and materials for the details.

With ExecTech's support, you learn to hire, train and manage associates with less risk and more gain. You form or sell partnerships. You sell your practice at a healthy profit. You go out the top.