Download - WELCOME! Meet your medical practice partners
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EXPLORING THE PATH OF PRIVATE PRACTICE MEET YOUR MEDICAL PRACTICE PARTNERS
ALEXANDRA KOHRS
BANK OF AMERICA
PRACTICE SOLUTIONS
JEREMY BURROUGHS
CARR HEALTHCARE
REALTY
PRACTICE MANAGEMENT TRACK
LECTURE 1 : EXPLORING THE PATH OF PRIVATE PRACTICE – 10:15AM-11:45AM
LECTURE 2 : GUIDE TO TRANSITIONING STRATEGIES – 1:15PM – 2:45PM
MEET THE EXPERTS BREAKFAST & LEARN: 7:45AM BOOMER ROOM
Q & A SETTING
Don’t miss out on your opportunity to ask the real estate and banking experts any question. We will start with most common questions and provide an open platform for a panel discussion. Come have breakfast with us on try to stump the experts!
PRACTICE OWNERSHIP TIMELINE
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Positives
• Build a practice the way you want it built
• Normally a fast growing company and developing area (less/no competition)
• New equipment and fixtures
• Hire and train your own staff using your business and service philosophies
• Patient selection matches your personality strengths and weaknesses
Negatives
• Stress of building, managing and running an office
• No patient base
• You have to deal with growing pains, i.e. staff, billing, benefits, pay plans, scheduling, to name a few,
• You will have to continue your current employment until the practice can support itself
SHOULD I START A PRACTICE FROM SCRATCH?
WHAT DOES THE PROCESS LOOK LIKE? START UPS
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Doctor
Banker
Business
Office Equipment
Maintenance
Technology Rep
HR Consultant
LawyerMarketing Website Design
Investment
Equipment Specialist
Medical Specific
Accountant
Space Finder
Contractor
Insurance
DO YOU HAVE YOUR START UP TEAM?
Positives
• CASH FLOW!
• Have a patient based already established
• Staff understands their roles and are trained
• The practice has been marketed and maintains a consistent flow of new patients
• Established insurance relationships
Negatives
• You are buying someone else’s philosophy, flow, treatment planning, staff training, systems, etc.
• Possible loss of patients in transition
• Existing staff salary is already established
• Staff may resent new owner and leave the practice
• The equipment and office may be old and worn which will require additional economic investment
SHOULD I BUY AN ESTABLISHED PRACTICE?
Practice Specialty
Cash Flow
Revenue Trend
Expenses• Hiring/firing employees• Staff wage costs• Adjusted overhead costs
Last Cosmetic Update
Technology• Digital X-Ray• Computer systems
WHAT DETERMINES THE PRICE?
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WHAT DOES THE PROCESS LOOK LIKE? ACQUISITIONS
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Doctor
Banker
Lawyer
Marketing Website Design
Investment
Equipment Specialist
Medical Specific
Accountant
Space Finder
Practice Broker
Insurance
DO YOU HAVE YOUR ACQUISITION TEAM?
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Doctor
Banker
Lawyer
Marketing Website Design
Investment
Equipment Specialist
Medical Specific
Accountant
Space Finder
Contractor
Insurance
DO YOU HAVE YOUR EXPANSION TEAM?
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• Credit worthiness
• Capital (liquidity)
• Character (financial position)
• Capacity (cash flow)
• Collateral (business)
THE FINANCIAL PIECE
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- Trade lines and accounts:
- Public record and derogatory information :
- Hard vs. soft inquiries
- Contact information, employment history, aliases & notes
Getting your credit in order - Your Credit Bureau file includes
How are Credit Scores calculated?
Payment History
Credit Useage
Inquries
Account Types
Age of Accounts
15%
31%
14
10
30%
STUDENT LOANS HOME
AUTOMOBILE
CREDIT CARDS REVOLVING LINES
OF CREDIT
#1 DEBT QUESTION- WHAT IS GOOD AND BAD DEBT?
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PURCHASE RESPONSIBLY
-keep short and long term plans in
mind
Do you KNOWEXACTLY
where you will purchase or start
a practice?
Does it MAKE MORE
SENSE to purchase or rent?
BUYING VS RENTING BEFORE A PRACTICE?
Specialty Lenders Local Banks Seller Financing
Term Rates Fees Pre-Payment
Down Payments
ApprovalFlexibility
Personal Guarantees
Residential Guarantees
Approval Time
Life Insurance
DisabilityInsurance
MalpracticeInsurance
KNOW THE LENDING OPTIONS
SBA
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• Develop your “Why”…Why am I doing what I’m about to do?
- The “Why” becomes your driving force behind your decision
• Create an experienced TEAM
- Successful Opening, Speed & Savings (Time and Money)
• Have a plan
- Know exactly what you want to do
- Commit to the plan
- Execute the plan with your TEAM
• Develop a project list
- Organize and prioritize your “To Do” items
Identified issues that are coming (ahead of time)
Reduces stresses – by being proactive vs. reactive
• Don’t take shortcuts
• It’s never too early to start looking at your options
-Work on Personal Situation if Need be
-Find the right space/ practice takes time
SUCCESS TIPS
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• Not becoming a practice owner sooner
• Location - Poor visibility and signage - Trying to negotiate your own lease terms - Poor demographics
• Financial/Budgeting mismanagement
• Practice Homework
• Lack of marketing
• Not hiring the right staff
• Non Compete concerns
• NOT HAVING THE RIGHT TEAM IN PLACE
MOST COMMON PITFALLS
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LECTURE 2 : GUIDE TO TRANSITIONING STRATEGIES
1:15PM – 2:45PM
MEET THE EXPERTS BREAKFAST & LEARN: FRIDAY, 7:45AM BOOMER ROOM Q & A SETTING
Come have breakfast with us on try to stump the experts!
Bank of America, N.A. provides information from speaker topics for your discussion and review purposes only. Please consult your tax advisor, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice. AR: AR9SRJ9D
The Path of Private PracticeSession 1
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Types of Real Estate Transactions
• Start-Ups
• Lease Renewals
• Expansions
• Relocations
• Additional Offices
• Purchases (Land/Building)
• Practice Transitions
The Importance of Real Estate to Your PracticeSecond-Highest Expense
• Your office is typically the second-highest expense after payroll
• After years of lease escalations, most offices are significantly overpaying for their lease
• You typically get only one chance every 5-10 years to reduce this expense. Don’t Miss the critical opportunity!
How does real estate impact your practice?
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Commercial Property types
• Office (condo/ stand alone)
• Retail
• MOB
• Hospital Campus
• Land/New Construction
Pros and Cons• Signage
• Exposure
• Access
• Parking
• Synergy of Other Tenants
• Costs
• Natural light/windows
• Amenities
Understand Your Lease Type
• Full Service, Modified Gross, or NNN
• Base Year vs. Expense Stop
• What is a CAM?
• Utilities and Janitorial Included?
• Office park fees
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Everything is Negotiable (almost…)
• Lease rate and annual escalations
• Build out period
• Improvement allowance
• Free rent
• Signage, Parking, Exclusivity, etc.
Purchase vs. Lease• Is it always better to own?
• How does it affect your cash flow?
• Short term vs. long term
• Principal pay-down and equity
• Tax implications
• Exit strategy
Leverage Your Opportunity Through Representation
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Negotiation StrategyAppropriate timeframe
• New Lease or Purchase: 9-12 months
• Renewal: 12 months
• Land Purchase: 18-24 months
• Practice acquisition: 30-60 days
Posture is mandatory
• Understand what is really at stake
• Renewal Scenario
Negotiation Strategy (Cont.)
Negotiation Strategy (Cont.)
Whoever has the most viable options wins
• If the landlord believes you can’t move or aren’t willing to move…
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Key Players and Their Roles
• Real Estate Broker
• Lender
• Attorney
• CPA
• Architect
• Equipment and Technology
• Contractor
Closing • Real estate dramatically impacts
your practice
• Understand the market and your top options
• Maximize your opportunity through representation
• Create a team of trusted professionals
Jeremy Burroughs405-410-8923