10 Tips to Consider for a Successful Practice Transition

As an advisor to eye care professionals, my primary goal is to help ODs in all phases of their professional careers. Whether you’re opening a practice, on your way to retirement, just graduating from optometry school, or looking to take over an existing practice, we help doctors run their offices more efficiently and more effectively. 

What to Consider in a Practice Transition
If you’re in the position to be thinking about a practice transition, there are countless things to consider. However, to get the wheels turning, I’ve compiled a list of the top 10 things ODs should be thinking about during their practice transition. 

1. Financial Success of the Practice. If you’re considering taking over an existing practice, before you take over, you need to make sure that there’s a growth curve in the business that you’re buying. It’s important to look at the number of exams and the key performance indicators in the office. Also make sure you’re seeing the number of exams performed year after year for the past three years. Look at the mix of new patients versus established patients, as well as the demographics of the patients being seen and community as a whole. Having this information helps you strategize what age groups you need to target your marketing towards. 
2. Asset Purchase vs. Stock Purchase. When you do a stock purchase, you’re buying the history of the practice. So, if something happened in the past that you don’t know about, you could be held responsible. Understanding the ebbs and flows, or benefits and disadvantages, of stock purchases versus asset purchases is very important. I’ll typically advise clients that a stock purchase is off the table or must be considered very carefully unless they’ve worked in the practice for three to five years. There are certainly exceptions to this rule. 
3. The Lease. It’s very important to have a professional review your lease. You want to make sure it’s transferable, the terms are right, and there’s at least three to five years remaining on the lease. If there’s not, it needs to be negotiated by the seller ahead of time. Banks may be hesitant to loan money if there’s only a year or less left on a lease. They do not want to see the client forced to incur the expense of relocating the business.  
4. Technology. What technology are you inheriting? Will you need to invest more so you can practice the way you want to? If so, how do you plan to do this? Is there an electronic health record system in the practice? If you’re a doctor exiting a practice, not having updated technology is going to impact the value of the practice because a new owner will have to invest. If instruments in the office are being leased, can those terms be transferred to the new owner, or will the seller pay it off beforehand? If anything is financed, how is it financed, and how will it impact the purchase price of the practice?
5. Inventory. You want to make sure the frame product is current and valuable to the practice. Part of what you’re buying is the goodwill of the practice, and that includes warranties.  Be sure to transfer information from accounts and vendors for frames and labs for two to three years prior to the sale to your new accounts you open under your own business entity.  
6. Human Resources. The staff is the most important asset in any business, especially in private practice. They are the faces who know many of the patients and where your supplies are stored and more. Review the employee handbook and evaluate what the employees are currently earning. When you are the seller, once a letter of intent is put in place, don’t give everybody pay increases without checking with the interested party/buyer. If you’re going to make any significant changes, let the buyer know what’s being considered and why, because the decision will be theirs in the coming weeks. The same goes for the purchasing of instruments. Make the interested party aware of surprises or issues should an instrument go down. They may have a suggestion for the new instrument as it will be theirs soon and, in some cases, I have seen clients assist with the purchase of a new item.  
7. Open Communication. Whether you’re the buyer or the seller, you must have open communication both ways. Throughout the whole process, communication is key. Whether you’re looking to give your staff raises, buy a new piece of equipment, or anything big or small, both parties need to communicate openly and honestly. 
8. Marketing. When you are the buyer, look at how the practice was marketed. Look at the website and social media presence. Surprisingly, there are still many practices not utilizing social media. That’s a major growth opportunity for the new owner. However, you’ll also have to know if you need to update the website and any other digital assets. Make certain you give the website, and the social media accounts your personality when you take over a practice. You are the difference from one practice to another.  
9. Engage the Staff. Once the deal is buttoned up, I encourage a meeting between the seller and the staff where the existing doctor introduces the new doctor to the team. I recommend the selling OD takes their team to a neutral location, explains the situation, and opens the floor for any questions or concerns from the staff. Then, the buyer should also meet with the existing staff and take the time to answer any questions. Get to know the staff better from a personal perspective and not just from a work standpoint. This makes the transition easier for everyone involved, and the staff a feeling of inclusion.
10. The Handoff. Part of this process is transitioning the practice from the existing doctor to the new doctor, and you need to make sure the past owner is endorsing the new owner coming in, not only to the employees, but also to the patient base. There needs to be a handoff, whether it’s through letter or through an open house event. I think it’s important to invite patients into the practice and do a farewell event for the past owner. This helps them as they start a new chapter in their lives, and it brings them closure. They’ve passed their legacy on to somebody else who is going to provide the same or better level of care. 

Helping ODs Be Better Doctors
If you’re contemplating a transition, whether a sale or a purchase, an advisor can help you in several ways. First and foremost, this is a huge decision in your career, and you want to make sure you’re weighing all options and understand all the nuances. Advisors can give options from experience versus trying to make it on your own. 

Whether you want to sell your practice or you’re looking to transition into a new practice, my goal is to help facilitate that process. When a practice transition goes smoothly, ODs are more likely to provide the highest quality of care to their patients and reap the greatest benefits from their work.