out of the box: an investment model of associate relationships natural medicine plus nancy aagenes,...
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Out of the Box: An Investment Model
of Associate Relationships
Natural Medicine Plus
Nancy Aagenes, ND
Jeff Roush, ND
Big Important Disclaimers
We have no particular expertise except our own experience
Anything you decide has to pass the test of your own integrity and solid business sense—rely on expertise
Get legal and accounting review before you sign a contract
A Significant Professional Trust
Associate relationships contribute to increased personal income and prosperity
If our practices have value we can share them, buy them and sell them
Associate relationships are sum and substance of the quality of our daily lives
Do business only with those you enjoy and trust.
Be impeccable with thoughts and actions.
The Bottom Line
Transparency—all financial information relevant to the practice(s) is available to all associates all the time
Sharing information helps you think from the other’s point of view
If it isn’t good for everybody,
it won’t work for anybody
“Jeff has my back.”
We help each other reach our individual, independent goals more easily than we could reach them alone
We are both at risk It’s an evolving maturing relationship grounded in
communication.
“We’re pals.
“We look forward to our time together.
“We leave little unsaid.
“We’re always available to each other.
“But we’re not joined at the hip.”
What the established doc wants Help with a patient load Help with overhead A retirement strategy A chance to teach a less experienced
physician Collaboration on a daily basis
Between two docs with established practices the considerations are altered
What the new associate wants An immediate flow of patients An income sufficient for living and student
loan repayment A mentor for practical clinical education A mentor for learning business skills A way of beginning practice without the need
to borrow money
For some the percentage split has been a recipe for resentmentAdvantages It’s simple
No investment is required from the new associate
No risk to the new doc
Disadvantages The established doc has
never earned the percentage given the new associate
The new associate is not always included in financial and management decisions
And sometimes resents leaving what he sees as too much of his own money on the table
It doesn’t lead to transfer of ownership
There is no risk or investment from the new associate
No singular association solutionThe goals are common. We basically want the
same things.
1) Financial success
2) Financial independence
3) A comfortable retirement
The Nut of the Deal: Investment Association The new associate joins the practice paying a low
percentage of total overhead That percentage grows over time until it exceeds that
of the established associate for a defined period This new associate gets:
An income Growth of an individual business and practice
The established associate gets: Immediate help with over head Repayment for investment in new associate’s practice
Advantages to New Associate Begin professional life in an established
practice with a mentor and guide Building personal practice without need to
borrow money An experienced associate committed to and
invested in your success
It’s an accomplishment to build a practice.
New associates work hard.
Advantages to established associate
More retained net income with associate’s increasing contribution to expenses Invest in retirement
Development of an able potential buyer committed to your practice and location
Transfer of ownership:A bridge we have not yet crossedBoth could make further investment by The seller sharing dispensary income The selling cosigning the loan for the buying
associate
In a model we studied from dentists (using hygiene income)
The buyer has a new income stream to pay off the loan
The seller creates the ability of the buyer to pay a lump sum
As the new associate becomes established The process can start over with young
associates buying into the practice over time It creates an ongoing model for association
and transfer of ownership
Other ideas
With two established associates consider paying overhead by percentage of combined total gross.Example: Paul earns 45% of monthly gross
Helen earns 55% of monthly gross
Therefore: Paul pays 45% of monthly overhead
Helen pays 55% of monthly overhead
Paul earns 45% of monthly net
Helen earns 55% of monthly net
Anatomy of Agreement: The Parts Title--Intention Description of the relationship Physical location(s) Separate Practices or Partnership Any other agreements between the parties Will you want to add other associates? Are you planning to retire? Term and termination
Expense Sharing
Which expenses will be shared? Which remain individual responsibility? Who pays the bills? How is the money collected and shared? Where is bookkeeping housed? How is dispensary purchased and sold? What about lab fees?
Have your own lawyer review everything.
Maybe your accountant too.
Intangibles: Who owns the clinic name? The clinic phone number?
Tangibles: Inventory of equipment and ownership
Describe what responsibilities you each will assume
Who holds the lease or building ownership? Vacation coverage Malpractice Management authority and responsibility
Boiler plate
Indemnification Time is of the essence Entire agreement Montana law governs Enforcement/attorney’s fees/mediation fees Notices Severability
Thanks, we are eager for feedback
Dr. Nancy Aagenes and Dr. Jeff Roush33 Neill Ave
Helena, MT 59601406-442-8508
Integrity: Association as an Act of Truth
May a new power be born.
By the force of this new power may all those in our world, achieve through our work together
true happiness and prosperity.
Geshe Michael Roach and Lama Christie McNally
The Diamond Cutter,
The Buddha on Managing Your Business and your Life