Tag: ROI corporation

Remember DUE DILLIGENCE IS A 2-WAY Street

Buying-Selling A Practice, Practice

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Due Diligence

With the ever-growing size and complexity of practice transactions, the level of scrutiny selling owners find themselves under has increased. What looks like a very simple operation from the inside is not so straight forward to those on the outside looking in.

Transactions that would ordinarily have taken 3 months to complete have for a multitude of reasons increased to 4 – 6 months. First, risk tolerance of inexperienced buyers is extremely low, they often shell out vast sums of money to consultants that will seek to justify these fees.

Next, landlords and the assignment or negotiation of leases can absorb significant time at the tail end of a transaction. And finally, interest rate hikes and the associated eroding margins have made financing deals tighter and meant increased scrutiny from financiers. All this said, the acquisition of a profitable practice by an owner/operator remains one of the most lucrative financial vehicles in our complicated economy. That’s why it is so important that when picking a buyer, a selling practice owner chooses one that will deliver.

Extravagant offers are not worth the paper they are printed on if they are ill-conceived.

Most vendors have a significant vested interest in the legacy of their practice that goes far beyond the purchase price. We encourage all our vendors to demand a conditional offer, rather than a letter of Intent. As the name suggests, conditional offers give a purchaser the confidence to place an offer on a practice knowing they have conditions in place to correctly understand the target acquisition before completing the sale.

What most people fail to grasp and what Letters of intent don’t appropriately ponder is the existence of conditions to afford comfort to the vendor and allow them an opportunity to have a stake in the tempo a deal takes and in extreme cases an off ramp if they don’t like the direction things are going.

In representing vendors we take great comfort cosigning all conditions and having satisfaction about the status of the terms in our own right as opposed to making the contentment of the purchaser the overarching focus of any transaction.

A vendor should be able to counter examine the purchaser and their intentions just as a vendor is put under the microscope in the form of financial and clinical due diligence. An experienced broker will guide a vendor in an examination of the following, allowing the vendor to build a comfort level with a buyer prior to an offer being accepted or a firm deal going through.

These points are not mutually exclusive, and the list is not exhaustive.

  1. Look at any other offices owned by the buyer. If they are an associate, who do they work with? Have they built tenure in one location, or are they more of a journeyman?
  2. Understand who the buyer intends to work with and verify the credibility of these individuals. Who is their lawyer, banker and accountant?
  3. Engage the associated lawyers, bankers and accountants and understand that they are well intentioned. Do they like the deal for their client? Ask them directly!
  4. Quantify what the buyer’s due diligence looks like and find out who they plan to hire to conduct it. I have seen perfectly good purchasers take bad advice from overzealous consultants, causing them to lose out on deals.
  5. Determine the estimated assignment costs and prepare to absorb them. They are usually small, but they should never be a surprise.
  6. Prepare for an unreasonable landlord and hope for reason to prevail. Landlords are pricklier than ever, and they usually want a personal indemnity.
  7. Find out how buyers’ transactions played out if they’ve purchased offices before. The industry is small, and reputations last. Acquisition histories can be determined from brokerage records and anecdotal evidence. It is a big red flag if there is a history of multiple signed offers and a lack of closed transactions.
  8. Find out how did the previous owner enjoyed the process. There is a story to be told in how a previous acquisition has progressed since the subject individual took possession. We often request a reference from a previous acquisition, and this has helped a vendor sleep better at night.
  9. Look up the buyer on their provincial regulatory authority. Are there any disciplinary proceedings? These investigations are often trivial in nature, but best believe questions would be asked if the shoe was on the other foot.
  10. Prepare the buyer for terms of any associate agreement well in advance. Ensure these terms are fair while respecting the wishes of the outgoing vendor. Experience is key. Many of the individuals we sell a practice for will add untold value in the form of goodwill and mentorship post-sale. A properly motivated previous owner is the ultimate glue during a transition. This contribution is impossible to quantify, and buyers would do well to gravitate toward this kind of owner.
  11. Understand the kind of work they do. Are the styles practiced like yours? Would their philosophy gel with yours and the wider team? A fit is important, and synergies on clinical delivery are helpful to all sides. It’s important for vendors to provide detailed documentation and satisfy all the requests of a buyer. This is what you commit to when you choose to sell a business.

After all, most purchases are share sales and significant corporate and employment legacy is usually inherited. This said, I encourage all vendors to make this conversation a dialogue and know exactly to whom your office being sold.

Many selling owners end up working with this individual for some time and there is an onus on them to prove themselves as an appropriate successor. The happiest clients are the ones that build a great rapport with the new owners. Many vendors have superb assets that would be the envy of many purchasers.

The selected buyer should never forget this important fact. Vendors should consider recruiting the broker, accountant, and lawyer that will fight the hardest for the vendors interests before, during and after this process.

Remember that leverage resides with the selling owner until such a time as they chose to give it up. Buyers should be kept honest, and the dignity of the seller is to be maintained always. The tried and tested way to do this is to expose the opportunity to the open market.

Jackie Joachim, COO ROI Corp

JACKIE JOACHIM

Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.

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Do Owners Earn More Than Associates?

Practice

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Plants growing on piles of quarters

I received a revealing financial statement the other day. From a doctor who practiced as a phenomenally successful associate for many years. As with most Associates, the ownership motive was a large part of her career plan.

The adventure into practice ownership began about three years ago.

She was fortunate enough to be able to locate a property for sale which eliminated the landlord threat. There are too many providers in the immediate area, yet the practice is generating about $750,000 annually. That is about 20 to 30% more income than the average new startup at this early stage.

Data reveals that annual gross income for a three-year-old cold start is under $500,000. There will always be outliers and exceptions.

Let’s look at her financial journey:

  • The last year’s net income (as an Associate) was ~$301,000.
  • First year as an owner net income was ~$5,000.
  • Second year net income was ~$160,000.
  • Third year net income will be ~$225,000

And this is a success story for a three-year-old start up!

Let’s do the math:

  1. During the first three years of ownership her total net income will be ~$400,000.
  1. Had she remained a successful associate, her net income for the last three years would be over $900,000. More likely over $1 million!

What? That’s 60% MORE net income working as an associate versus an owner!

 Now let’s talk about the time invested to start and operate this new practice. I spoke about this in previous articles titled “Ownership Hours” and it is easy to invest 1,000 ‘sweat equity’ hours in the early years.

For this client, I estimate that she invested almost 2,000 hours of unpaid ownership hours. What could she have done with that time had she remained an associate?

Yes, if she were to sell the practice today there is some goodwill to be sold and that will be the return on investment in exchange for the ownership hours invested.

Pride of ownership has no price, and it cannot be appraised.

 Cash flow can be measured.

The law of diminishing returns suggests that goodwill will peak at some point and then because she is not cashing in and realizing the capital gain of the goodwill, each year she does not sell, the time-adjusted present value of her hours goes down.

Ask your accountant about this. If they do not understand, please ask me.

While she is above average and doing very well in my view, she is frustrated, and the economics of ownership are not working out for her.

The staff burden is enormous and that is why she called me the other day.

“Give it another two or three years” is what I suggested, but I do not think she will wait that long.

She is likely to sell the practice and keep the building to collect the rent and go back to being an associate.

They call it freedom from ownership.

No hassles, no staff problems, no landlords, no stress.

Ask yourself; is it better to be an owner or to be an associate?

Jackie Joachim, COO ROI Corp

JACKIE JOACHIM

Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.

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Practice Values in 2023

Buying-Selling A Practice, Practice

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Practices have faced huge challenges and have undergone an incredible amount of change over the past few years, and this won’t slow down in 2023. The time has come now for practices to deal with the aftereffects of the global pandemic, increase in interest rates along with the rise of inflation.

The market for optometry sales is becoming quite interesting. In the past, most practices were sold privately to partners or associates, the true values of these practices were not tested by the open market. As such, the level of value was not necessarily as high as that of their dental and veterinary counterparts. This is now clearly changing as the market develops.

In general, valuations for healthcare practices are driven by two overriding forces: the industry’s appeal and current macroeconomic conditions.

1. The attractiveness of the industry can be summarized by these key factors:
• You have shown that optometric services are recession and pandemic-resistant, demonstrating quality performance relative to other businesses in challenging times;
• Aging population; and
• Solid historical growth rates of four to five percent, with a good outlook on future growth rates.

2. Macroeconomic conditions, the second force impacting valuations, affect prices because of the following factors:
• Record low-interest rates during the past decade, making capital cheap for practice buyers;
• Stable economic conditions and slow, but steady, economic growth; and
• An abundance of investment capital, and many investors finding our resilient industry to place their funds.

The last 3 months have certainly had an impact on individual doctors looking to purchase. The sharp rise in interest rates and the above average offers from corporate buyers have impacted the decision to purchase. Furthermore, with corporates offering sizeable compensation packages and signing bonuses, the idea of owning vs., being an employee is significantly less attractive. Younger doctors are burdened with huge amounts of student debt and seeking better work/life balance creating less interest in ownership among those under 45 than prior generations.

For owners, this is where practice values become a bit tricky. We predict the value of practices will decrease. This is simply because if key expenses such as wages and supplies increase, then net income will decrease. Cashflow plays a huge factor in determining the value. Therefore, if an independent owner is going to compete against the corporates in attracting and retaining doctors and staff in general, the owner will not only have to pay more but also consider offering signing bonuses. This is certainly a tough pill to swallow. Owners had a difficult enough time accepting that younger doctors wanted work -, life balance, but signing bonuses? What could be next?

As much as things may feel or look bleak, all is not lost. Good practices, continue to appeal to the right buyer. Business cycles have a wonderful way of self correcting. If you are not ready to sell for at least 5 years, now is the time to plan and be prepared to manage your finances with this in mind. Find out what your practice is worth now and budget for the proceeds of sale in your financial plan. There are a few reputable and experienced appraisers to choose from.

Ask yourself the following questions:

  • Do I know the value of my practice today?
  • Are there any reasonable overhead reductions I can make?
  • Can I invest in new technology to add additional revenue or improve efficiency?
  • Can I keep my gross income stable or, even better, increase it? As a note, practices in any state of decline worry buyers and usually attract a lower sale price.

The final thought as we move into 2023 is to “Keep Calm and Carry On”. The challenges that may come are ones that can be managed provided they are faced head on. I would like to leave you with one of my favourite quotes from Barack Obama “The future rewards those who press on. I don’t have time to feel sorry for myself. I do not have time to complain. I’m going to press on.”

Jackie Joachim, COO ROI Corp

JACKIE JOACHIM

Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.

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First COVID, Now Inflation and Rising Interest Rates

Practice, Resources

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The market has continued to change.  Many are asking great questions about corporate buyers, and the impact of the rise interest rates and inflation on practice values.

Healthcare is (still) Recession and Pandemic Resilient
The market continues to expand and corporate buyers, like traditional ones, see the value in healthcare. I may sound like a broken record, especially now that we are 2 years past those initial dark days, but healthcare has proven it is recession and pandemic resilience.

People simply need humans to take care of them. Rates of return on healthcare businesses are 8% or more depending on cost structures.

The Numbers Game (Hint: It’s Not a Game)
An individual doctor will always purchase a practice unless they want to be a career associate.  A corporate entity will go after an office where an improvement in gross revenue can be made through the increase of hours and services while also, of course, trimming expenses as well.

Practice sellers may not like their hard work broken down into “simple numbers” but the reality is that numbers drive corporate decision makers. It is just business.

Sometimes corporates will pay more than an private individual doctor purchaser and other times not.
Ultimately, a vendor must put personal feelings and ego aside in order to make the decision that makes most sense for them.

Market influencers – interest rates and inflation
Good news, historically, despite the varying rates, practice values have continued to rise.  They may jump more in value at certain times and less in others but in reality, the actual values have not decreased in my 30 years of being in this industry.

These past couple of years have certainly been interesting.  Despite a pandemic and increasing inflation, values have continued to rise.

This is simple economics – supply and demand.   There continues to be more buyers than good practices available. The vendors who may have chosen to delay due to pandemic by holding on, continue to put pressure on purchasers who are looking for something to buy.

Lenders also continue to fund these acquisitions provided that the buyer can qualify.  As long as this cycle continues, values will not be negatively impacted.

Can the rise in interest rates affect a practice value?
My initial answer is no BUT I do feel the need to qualify my response.

There are certain transactions that a bank will not provide 100% which means the buyer must put some money into the deal to successfully close.

This does not mean the practice is overvalued. It simply means that based on risk, a lender is comfortable in financing only a certain percentage of the purchase price.

The market has been trained in the past 20+ years to expect 100% financing.  However, many factors have changed significantly such as increased practice values along with increased, personal debt load of purchasers.

Practice value is not synonymous with level of financing.  Values are separate from the level of financing a bank will offer a purchaser.  For example, an insurance brokerage will sell for 12-15x EBITDA yet lenders do not finance this level.

Inflation can cause practice values to decrease.

It is quite simple – the more expenses rise (staffing, supplies, PPE), the more the net profit is negatively affected.

As such, value is impacted.  Therefore, before anyone opines as to whether higher rates and inflation impacts value, the real assessment is how these factors affect a practice on a case per case basis.

A blanket statement is always a dangerous thing to make.

It should also be noted, the final practice value is truly determined by the price a vendor and purchaser agree to. Even if increased expenses bring value down, a buyer can still offer more if they see opportunities in the practice.

Jackie Joachim, COO ROI Corp

JACKIE JOACHIM

Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.

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Why Use A Broker When Selling To An Associate

Buying-Selling A Practice, Practice, Resources

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Those who choose to sell to an associate, often do not see the need for the services of a broker. Afterall, you know each other, the associate knows the practice and the patients and more importantly, you have a good relationship so it should be easy to cross the finish line.

Owner Reluctance
While we all wish things were that simple, the reality is that selling your practice is a process. It can take a significant amount of time to prepare, organize, and to ultimately close the transaction. Owners are also reluctant to engage the services of a broker at this point because there is always the fear of paying commission, as well as the concern that the broker will over complicate things.

Regardless of whether you are selling to an associate, partner, or colleague; selling a practice is a complex activity that requires another party to coordinate the activities of the buyer and seller.

A practice broker has the expertise and training to do just that. When doing it yourself there is a higher possibility that the relationship between the two parties will be negatively impacted, because of the length of time the transaction is taking or the difficult conversations that occur during the process.

Until you experience the actual sales process, parties are unaware of the amount of information required by the buyer and their advisors. Unfortunately, many transactions fail when the buyer and/or seller try to conduct the sale of a practice without the aid of an experienced practice broker.

From the day you choose to list until the closing day, your number one priority should always be your practice and your patients. Negotiating and navigating your own sale takes time away from what you do best.

You also must be aware that things will be changing within the practice. Staff may change, prices for supplies may increase or another event could affect the day-to-day operations. These are all material changes that must be communicated to the purchaser.

A Broker Brings Order and Sometimes, Creativity
An experienced intermediary will bring organization, and even sometimes creativity to a transaction. The primary function of the broker is to get the deal closed.

An experienced broker will earn the trust of the other professionals, i.e. accountants and make sure deadlines are met and tasks are completed, and maintain communication with all the principals in the transaction.

A broker does not take the place of a lawyer, accountant, or other advisor. However, your broker can be a huge asset as the final details are being worked out. After all, the broker is familiar with the practice, the buyer, and all that led up to the sale, so they can help with final negotiations. More importantly, they can assist when two parties reach an impasse.

3 Key Points to Remember
The first is that the most important place to start the selling process is to have a formal valuation completed. Many owners really do not know the value of their practices. There are numerous factors that go into determining the value of an office. It is truly the best way to know you have been fairly paid for your years of ownership.

The second key piece of advice is to keep an open mind and trust that the broker knows what they are doing, given that this person has facilitated the sale of many practices like yours.

Finally, and perhaps most importantly, a vendor needs patience. A practice never sells overnight. Every practice is different, but with a professional guiding the process, the likelihood of success increases.

Jackie Joachim, COO ROI Corp

JACKIE JOACHIM

Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.

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Why You Should Avoid the Do-It-Yourself Trap When Selling Your Practice

Buying-Selling A Practice, Practice, Resources

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Recently I have met with a number of vendors who tried selling their clinics privately.  These were not good experiences for a multitude of reasons.

The number one reason people do this is to not only save commission but more importantly to try and keep the sale quiet.  There is a definite fear that going to the market will mean EVERYONE will discover that your practice is for sale.

Ultimately, owners want to sell to the right buyer, a person who will treat their staff and patients well.  In general, most buyers also want a smooth transition.  After all, they have purchased your practice and want to ensure it succeeds.

However, when you open your practice to one or a selected group of potential buyers, there are risks associated.  Some potential buyers can be quite crafty particularly when they start poking around your office.  Most will often conduct the first bit of research before you even know he/she is interested in buying your practice. He/she may pose as a new patient calling for an appointment, visit your website or even come into your office to get a feel for things.  This may cause staff to wonder if the clinic is for sale.

Without an experienced broker, you expose yourself and your practice to various pitfalls of a private buyer.

  • Due diligence is a stressful time – to put it crudely, it is “the owner’s proctology exam”. Unfortunately, if you manage this process yourself, you will quickly find out what it feels like when a stranger pokes, prods, and looks inside every inch of your practice. You are asked to produce many documents and then, you need to answer questions as to your reasons for doing business the way you do.
  • Using an advisor who is not familiar with the industry can also negatively impact your sale and stigmatize your practice. There are many times where our appraisal is used in a private sale.  Buyers then call us to clarify certain points because the person representing the owner is not providing correct answers.  I am definitely not insinuating that the individual is intentionally misleading but the reality is if you do not know the market by default, you will lose a potentially good purchaser.
  • It is never good to have one person representing both the vendor and the buyer. Relationships are extremely important.  However, when the party who is introducing you to the buyer will continue to have a relationship with that buyer post sale, it is natural that the advisor may push a little harder for the buyer’s interests.  This is exactly why we choose to represent vendors only.  We believe you need someone in your corner fighting for you.

Selling a practice is not as straight forward as owners think.  With the guidance of an experienced business broker, you will be challenged to take nothing for granted and look at the value of your clinic from a variety of angles, some of which may not be top of mind for you.

To ensure you receive the best possible outcome, you must ensure that when you sell, the practice is positioned in the best possible light and that the terms, which are important to you, are negotiated properly.

I always tell owners not to let what may be the biggest transaction of your life turn into something you think will be “obvious” to a new owner based on a quiet and private sale.  You deserve to maximize your sale, exit ownership with dignity and to have no regrets.

Jackie Joachim, COO ROI Corp

JACKIE JOACHIM

Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.

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Selling Your Practice? Keep Expectations Real and Be Prepared

Buying-Selling A Practice, Practice, Resources

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Your practice is your baby. Even if you purchased it from another optometrist, you have put your own hard work in to make it your own.

You’ve toiled, fretted, and challenged yourself to reach new heights and now it’s nearing the time to move on.

When the time comes for selling, it is critical that realistic expectations are set. If not, the goal may never be achieved.

Healthcare is Pandemic Resilient
Thankfully, the market has not cooled since the beginning of the pandemic which is proof that healthcare is pandemic resilient. Vendors need not be afraid to sell if they believe the time is right for them.

People choose to sell for a variety of reasons. Those who have owned 30+ years simply feel it is time to hand over the reins. Some feel that owning a practice is stressful with HR issues, attracting new patients, retaining existing ones, dealing with landlords, etc.

For others, it is the desperate search for work life balance. After all, managing a practice and a young family is no easy feat.

There are also those external and internal events: divorce, health issues, death, partner disputes, death of a partner or a family member, having to relocate or issues with children. All of which can cause a practice owner to want to sell.

Emotions are Natural – Put Them Aside
Regardless of the reason, vendors do need to enter the sale process with the right mindset. The practice itself represents so much more than patient charts, equipment, and the physical location.

Regardless of how long the individual has been an owner, the practice represents them, their efforts, successes, and failures. It is a symbol of fierce pride and accomplishment.

All these reasons are valid which is why the sale of a practice has an emotional component whether an owner wishes to admit this or not.

The harsh truth is that once the decision has been made, the vendor must be realistic in how the process will unfold and more importantly how a buyer will view their practice.

It is not uncommon for a vendor to believe that the buyer should be grateful to acquire such an amazing practice. However, a buyer, while happy to have the ability and opportunity to purchase the office, also believes they are paying the vendor a fair price.

This is where things get a bit tricky.

Consider the Buyer’s Burdens
During the negotiations, the vendor feels the buyer should agree to all their terms because they are presenting them with an office they can simply walk in to and take over, unlike the vendor who had to work exceptionally hard to establish and build this practice.

The buyer on the other hand, feels that their requests should be accepted because once again, they are paying a healthy price. Whenever money changes hands the potential for ugliness to rear its head most certainly can be expected.

Many vendors believe any purchaser of their practice will be successful if they simply treat their patients well.

This is partially true, but a buyer likely must make some improvements, engage in a marketing plan, and most importantly have the staff rally around them to ensure their success.

Buyers, unlike the current owner are also carrying a significant loan, therefore the room for error is quite slim. If a vendor wants to stay on as an Associate for a period, many will demand 45% to 50% as associate compensation.

While this certainly makes sense given the level of experience and maturity the vendor has, the reality is that if this vendor worked with a large corporation, the compensation would be 40%.

In addition, more times than not, the numbers simply do not work for the purchaser by the time the bank loan is repaid along with the overhead and some type of draw to cover personal expenses.

Post Sale Emotions – Be Prepared
Another expectation that must be addressed by the seller is the relinquishing of control.

They may be your patients and staff today, but on day one of new ownership, these fine people are now the buyer’s patients and staff.

This can be a very tough thing to accept particularly if the vendor wishes to remain working post-sale. Vendors are very protective of patients and staff. They are always worried that the new owner will not be accepted easily.

They worry how staff will be treated. Buyers worry about this too; they worry that they will not be seen as the owner and that staff will constantly run back to the prior owner.

When the vendor wants to stay post-sale, they must accept the changes made by the purchaser regardless of whether they agree or not. It is difficult to change behavours after 20 or 30+ years of being in charge. The vendor must be prepared that their opinion is not required regarding new technology, schedule changes, treatment planning and staff motivation (or lack thereof).

The vendor must also be willing to accept additional growth generated by the new owner. One cannot have regrets when the buyer increases revenue by 20 or 30%.

There will almost always be opportunities for improved efficiencies, expanded hours, etc. It is not a sign that the vendor did not maximize potential or failed to reach a certain level of success.

A vendor needs to understand that it is normal for a level of comfort to set in, particularly when the practice and perhaps even personal debt is paid off or at least nominal.

Selling a practice can be quite emotional for some vendors. It is so critical to be prepared because an owner does not want to suddenly be faced with a good offer and back out of a sale midway through the transaction because they did not prepare themselves psychologically for what happens next.

Get the Right Advisors
Fear of the unknown can be paralyzing, and no one can make the best financial decisions if the proper time was not spent planning for the next phase. Transition planning looks different for every practice owner.

The common thread is the need to proactively prepare for both the financial and emotional aspect.

With the right advisors, vendors can successfully go through the sale of their practice with few battle scars. Change is always scary, but it is also important to remember that none of us are defined by our professional occupation.

There are so many other facets of our lives that we should be aware of and be grateful for. Life post-sale can be exciting if one chooses to make it so.

Jackie Joachim, COO ROI Corp

JACKIE JOACHIM

Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.

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Staffing Challenges – They Aren’t Going to Disappear

Human Resources, Managing Others, Talent Acquisition

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people management

We always consider the staff an important factor when valuing a practice. Optometry, much like many other sectors of the economy, is facing severe workforce shortages in all facets of their team.

These challenges can be found throughout the country. Whether it is a shortage of optometric assistants or lab technicians, and unrealistic salary expectations from new hires, or the threat of staff leaving due to offers of significant wage increases, the situation is the same no matter where you are.

HR was always a challenge for many owners, but no one can argue that it has been exacerbated by the pandemic.

Adapt a Proactive Strategy
Staff turnovers and shortages will continue to be a serious issue; therefore, owners need to create a two-prong strategy that enables them to be more proactive instead of reactive. Like the old expression goes, “best defence is a good offence”.

I would suggest that the first prong include the change of recruitment and hiring techniques. Consider widening your pool of potential candidates.

Traditionally, optometrists looked to temp and recruiting agencies which makes sense because ideally, candidates have qualifications and training. However, if these people cannot be found, why not be creative and expand your potential list.

A key and valuable employee in any service business is one who has excellent communication and customer service skills. Therefore, think about people from other industries that can be trained to work in a dental office.

Another suggestion is to energize your interview process. We can all agree that the interview, offer, negotiation and onboarding process often takes far too long. It is amazing how many people do not craft questions based on the culture of the practice. Many go straight to the tasks and duties that the candidate will have to perform.

While this is important, identifying key traits in an individual is truly beneficial. Remember, using old patterns in these challenging times may cost you a strong candidate. It is worth noting that in this market, you can assume that candidates are interviewing with multiple employers, and an efficient and thoughtful hiring process can help you stand out.

Focus on Retention
The second prong strategy must be to focus on retaining the employees you have. Given the competitive landscape, it may be worth more to invest in the employees you have rather than look for new ones.

Think about offering better financial and educational incentives. The goal is to keep your employees feeling valued and motivated. Employees will be more likely to stay with you if they believe they cannot find a better opportunity elsewhere.

Make it a priority to make sure this is true. Studies have shown that employees stay committed to their employers when they are involved, mentored, paid well, empowered, appreciated, listened to, understood, and valued.

Owners must do an assessment and see if they encourage these traits and adjust appropriately if not. Remember, an owner’s biggest responsibility aside from patient care is to manage and motivate the team.

Your employees are the ones that will go the extra mile for your patients. Unfortunately, if a team member does not feel valued, appreciated, or challenged at work, they stop focusing on taking care of patients and unfortunately start to focus on themselves.

It’s Your Responsibility to Lead and Nurture
It is the practice owner’s responsibility to hire talent, train accordingly and applaud employees for their efforts in having a healthy work environment. Employees who are confident, knowledgeable, and respected in their profession will have a higher likelihood of staying committed to their employers.

Your job as the owner is to be committed to developing a high-quality optometry practice management system that nurtures your team and leadership growth. It is so critical for an owner to listen to their employees.

You must have enough humility to do this. Remember to give positive feedback – point out what is working out well. Praise employees for their hard-work and commitment.

Remember to treat your employees the way that you treat your patients. Both can truly destroy a practice if you are not taking care of them. Your employees need to know that they are part of a team.

Whether that means offering to get them coffee when you are out, bringing in Taco Tuesdays, or taking them axe throwing to build relationships with each other. You want your team to enjoy being together and working toward the same goals.

If you like the people you work with, feel respected and listened to, can grow as a professional without a micromanager breathing down your back, the stress will decrease. If doctors let their teams support them, the employees will stay because they love where they work, and your patients will be happy because there is no turnover.

Jackie Joachim, COO ROI Corp

JACKIE JOACHIM

Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.

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Looking Towards a Brighter 2022

Practice, Resources

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Most of us can certainly say that 2021 was an improvement on 2020. Many of us came to the end of 2021 feeling very hopeful and encouraged as we felt the worst was behind us.

Then the Omicron variant entered the picture and quickly changed (and perhaps even dashed) some of these hopes. None of us could have predicted that such a highly transmissible variant would come along. I am hopeful, though, that the end is finally in sight. It might be foolish to make another prediction, but I think we must believe we are in the final stages of this pandemic.

Why am I so hopeful?
We all know that healthcare offices can adapt despite all the measures and protocols required to keep staff and patients safe. We know a lot more about SARS-CoV-2 today than we did 18 months and three waves ago. Whether you choose to be vaccinated or not, the fact is that we at least have more protection against severe illness due to COVID-19.

It is true that during something like a pandemic, practice owners must be more vigilant at business planning. Ideally, this should be an exercise undertaken at the start of every new year but as we move forward there are always the same questions that must be asked in order to achieve success. Perhaps, as you read through them, you may see these are the same questions that should have been asked prior to the pandemic.

How well do you know your patients?
Any growth that one wishes to attain in practice, must begin with this. The COVID-19 crisis has reinforced what we already know: we must communicate in very clear and precise terms. In other words, speak to your patients (through social media, in person etc.) and share information in language that means something to them. The pandemic has taught us that any messages we share must be relevant. Personal/human connections were even more important in the last 18 months when social distancing became a way of life.

Are you retaining and increasing referrals by ensuring the last best experience your patient had?
There is no doubt that all our expectations were already on the rise before COVID-19. But when the coronavirus hit, digital transformation accelerated overnight. Savvy owners focused on improving their social media presence to communicate and educate patients as well as potential patients. In-person appointments became very different due to PPE protocols and social distancing, thus making personal experiences even more challenging. Again, the smart practice owner ensured that patients felt appreciated and valued.

Do people feel valued in your office?
COVID-19 has placed a new emphasis on relationships. Staffing during the pandemic has proven to be a massive challenge and point of stress for owners. Successful owners have worked very hard to capitalize on the strength of their bonds prior to March 2020. Trust and integrity are fundamental to driving practice success. Trust will be built by and rewarded to those that listen to the needs of staff (and patients) and then craft solutions to meet those needs.

How flexible have you become? Like it or not, COVID-19 has created an irreversible trend for owners to be nimble and adapt quickly. Hopefully, this crisis has helped to create a mindset of responsiveness that is likely to be permanent. Never take things for granted and run-on auto pilot. Always continue to observe and listen. Flexibility enables one to make faster decisions.

Have leadership skills improved?
COVID-19 has created a leadership culture of collaboration combined with the urgent need for resilience. A good leader is pro-active. There is no doubt that news of the 4th wave and of newer variants of concern on the horizon is upsetting. But if we look at pandemics of the past, subsequent waves have been part of their life cycles as well.

The purpose of these questions is merely to illustrate the importance of developing and implementing strategies that are essential to maintain practice value and to drive growth in a post-Covid-19 world. We all know that we cannot continue to do things the way we always have.

No doubt we have had to become accustomed to adjusting and changing. However, my hope is that even in a pandemic we have comfort in knowing that the answers to these questions should have been a priority prior to the pandemic. Despite what is currently happening, one can be successful if they choose to be. At least in 2022, a fresh start enables owners to prioritize the critical things that influence success.

It is a fact that the pandemic will create huge lasting changes that will take years to fully understand, which can feel scary. Yuval Noah Harari, once wrote that, “people are usually afraid of change because they fear the unknown. But the single greatest constant of history is that everything changes.”

The world has adapted to big disruptions before, and we will do it again.

Jackie Joachim, COO ROI Corp

JACKIE JOACHIM

Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.

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The Best Time to Sell

Buying-Selling A Practice, Practice, Resources

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After the last 18 months we’ve experience, people are always asking,”Is it time to should sell my practice”. Today most owners want to know if one should sell during a pandemic.

Pandemic Effect on Practice Valuations
The easiest, and yet ironically most complex, answer is simple: sell when you are really ready to let go of ownership as long as you can afford to.

There are many factors that determine the best timing for selling a practice — the financial position of the owner, valuation of the office, potential for further growth, past performance and history, as well as the current market.

Healthcare has proven over the last 15 years to be both recession and now pandemic resilient. Practice values have not gone down and in fact, during the pandemic, values have increased.

The best place to start is to ask 2 simple questions: can you afford to sell and are you ready to walk away without looking back?

The financial question is easier because it is all about the math. Has financial security been achieved? If yes, then by all means, pass go and collect.

The second question, is truly the toughest. An owner might be very attached to their office and maybe even more than they think.

After all, many owners feel they have invested a significant portion of their life to its success and handing their “baby” over may not be easy.

Do the Math
Most owners want to sell when they know they can maximize the price. However, owners should also consider what they are giving up in order to delay the sale for the ultimate price.

Doing a cost-benefit analysis is a worthy exercise to undertake. For example, let’s say a clinic is valued at $1,000,000. The owner, after 30 years, is getting tired of managing all aspects but if they can sustain their current pace for another 2 years, they may achieve a price of $1,200,000.

In other words, is $200,000 worth it when someone feels they are reaching their limit? For some, it may definitely be the case but what if the owner wants to work less, travel more? What if the current pace is causing health issues? How much are these factors truly worth?

Engage your Expert Team
Before any decision is made, the most important step to take is to have a valuation completed. Knowing the value of the clinic helps the owner to determine if a sale would meet their objectives.

The next step is to discuss the sale with an accountant. Understanding the tax position of the owner is critical. Too many times, the owner wishes to sell but the professional corporation is not in its purest state to facilitate the best possible outcome.

Personal Considerations
The next key factor to consider is what will the owner do post-sale. Is the owner ready to stop practising? If the new owner wants the vendor to stay on, is this realistic? An owner needs to truly do some soul searching and decide after so many years of ownership if they can go back to marching to the beat of another owner’s drum. Relinquishing control sounds easy but for many owners it is not as simple as it sounds.

A sale does not mean the end of an owner’s identity. It also does not mean the end of a career either. A vendor can certainly discard the chains of administration and management in order to seek other opportunities – such as working part-time, doing locum work, or teaching.

So going back to the original question, when is the best time is to sell. Practice owners can quite honestly sell whenever they are ready. The present economic environment most definitely facilitates the successful sale of a practice.

In our current economy, buyers continue to exceed sellers which always creates a robust exit market. We have yet to see the flood of baby-boomer business owners ready to sell. Banks continue to provide 100% financing over 12 years to buyers.

Healthcare in general – be it for people or animals, despite or in spite of a pandemic, has proven to be a profitable business with a continued good economic future.

Therefore, a vendor never needs to feel forced into a sale. Instead, every vendor must simply decide if the time is right for them. Vendors need to do some homework and then move forward with confidence.

 

Jackie Joachim, COO ROI Corp

JACKIE JOACHIM

Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.

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