How to Guarantee a Satisfactory Retirement Fund

It is never too early in your career to start funding your retirement. You may only be one day out of school, but you should be thinking about and planning out a retirement fund.

We have found from our surveys that an ongoing decline of interest in practice ownership is making it increasingly difficult for practice owners to sell their practices, and this is causing many doctors to work in their practice years after they wanted to leave.

Unfortunately, less and less new graduates want to own a practice. More of them are looking to become associates in a practice, work 35–40 hours a week and start out with full benefits.

As part of my research, I recently spoke to a doctor in Ohio that was at retirement age. He had been in practice for over 38 years and was ready to retire. I asked him if he had adequately funded his retirement, and he told me that he had always thought that when the time came, he would sell his practice and have plenty to retire on. He found out that he was mistaken.

When I talked with him, his practice had been up for sale for over 3 years, and he couldn’t find a buyer. And of course, he was still working as he had not adequately funded his retirement outside of a practice sale. He was counting on the sale of the practice to handle his retirement. He found out, way too late, that such a plan is not always workable.

I’m hearing this story more and more from doctors all over the country.

Here are a few things that you can do to protect yourself from this situation:

  1. Place a portion of your monthly overhead into your retirement fund. Budget this in from the start. Retirement is something that needs to be figured into the overhead so that it is taken care of every month. Treat it as you would an equipment lease, a mortgage or employee salaries. Make it an ongoing expense.
  2. Find a financial planner that can properly advise you on what to do with the money that you set aside each month. Get a professional involved to help you find the best vehicle for your retirement plan.
  3. Own your practice real estate. This is a big one. Real estate is something that you can always fall back on. Even if you can’t find a buyer for your practice, you can sell real estate. If you own the building, and you find someone to buy the practice, you can lease the building to them and make a residual monthly income off the lease and have that extra income.

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Resolving Negativity in the Office

Some time ago, I read this article in the Wall Street Journal – which discussed dealing with feuding employees. There is good information in this article on feuding employees, and anyone having staff-conflict issues should check it out. Since dealing with staff bickering and personality conflicts can be a major source of stress in an office, knowing how to deal with it can be extremely useful.

As the Wall Street Journal article points out, when you let employee situations linger too long, bad things happen, and you can end up losing not only the problem employee but other good employees as well. So, when you encounter two or more employees feuding, our recommendation for you is to find out as quickly as possible who seems to be instigating the problem, as well as determine which of the two employees is the most productive, and to quickly nip it in the bud.

Normally, when a feud is going on, other staff members have either been involved or have observed it in one form or another. It usually bothers them as well, even if they are not directly involved. What we recommended to practice owners is to interview these peripheral staff and get a more neutral opinion of what’s going on and who is really causing the problem. Also, interview the staff involved and get their respective sides of the story. From this you should be able to find out who the real problem employee is.

ACT FAST! The longer you let something like this linger, the greater the odds that you will lose not only the problem employee, but the good employee and possibly other staff members who are sick of being involved in that type of work environment. If you act swiftly on such matters, you will keep your employees happy.

There’s another very important point: the longer this kind of thing is allowed to continue in your office, the more likely it is that other staff members will start to feel that their workplace is not safe. They will also feel that the owner is not in control of the office and that they may want to find a better environment to work in. You could end up losing a really good employee because you didn’t confront the problem and act swiftly and appropriately.

Having the right office policy and job descriptions in place to govern acceptable and unacceptable behavior in the workplace will give you an important foundation to stand on when handling this kind of situation. Lack of such policy can make the workplace less than harmonious. And don’t forget to document, document, document the non-optimum issues in writing and what was done to handle the people involved. Without documentation, you can open yourself up to potential legal issues.

The “staff infection” is a term that I came up with long ago to discuss the effects that a negative employee can have on a team and how fast it can spread. Similar to how the “Staphylococcus Infection” is dangerous to the body.

The “staff infection” starts in various ways, such as with a staff member that often rolls his or her eyes at staff meetings. This staff member engages in rumormongering and can be counted on to “stir the pot” in the office. This can be the idle staff member or the person who always seems to be busy but gets nothing done. You get the idea. This is the employee that you are “just not sure about.”

What would you think of a doctor that did not practice good sepsis control and permitted Staphylococcus germs to fester in or on his or her equipment? It simply does not make sense, does it? Nobody would do that. Preventing any sort of infection in a patient is more than second nature to any doctor. What would your opinion be of a doctor that was aware that his or her patient had an obvious staph infection but did nothing about it? Enough said.

How do you handle the “Staff Infection”? Read the final half of this article by filling out this form.

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Looking Toward the Future: 10 Steps You Must Do Before Selling Your Practice

In the course of your career, you might decide to sell your practice. There are ten important aspects of your practice that you should consider NOW, so that when the time arrives, you will have developed a truly marketable practice.

1. MAINTAIN STRONG REFERRAL SOURCES

Professional respect has value. Do you have good relationships with other professionals in your community? You should. If so, are those relationships so strong that you can transfer them to a new owner?

For example, if you have several professionals who continually refer patients/clients to you, you would want to ensure that those referral sources will continue to send patients/clients to the new owner. Otherwise, the buyer might want to discount the practice price by the amount that would be lost from not getting referrals from just those few sources.

Most professionals will continue to refer to the practice after your departure, as long as they are assured that those clients/patients they refer will receive the same good care that you currently provide them. It is also important for your referral sources to know that the new owner will reciprocate with referrals to them (assuming that is the type of relationship you currently have).

Keeping up with and then transferring these relationships will help your patients/clients too. That maintains continuity and quality of care for them, which will help them to always think well of you.

2. MAINTAIN FACILITIES AND EQUIPMENT

Everyone is inclined to pay more for something if it looks attractive. The same principle applies to buying a practice. If your facilities are pleasing to the eye, you might be able to command a higher price. While a clean carpet is only just that, it might demonstrate to the buyer that every aspect of your facility and practice is probably well maintained.

Well-maintained, state-of-the-art equipment also speaks well of you. It says that you have a growing practice that is keeping in step with technology.

3. INCREASE YOUR GROSS SALES

The best indicator of the value of a practice is its cash flow. Your successor will want assurance that he is acquiring a reliable income stream. Now is the time to concentrate on reactivation of old patients/clients, increasing your marketing budget to attract new patients/clients, setting goals for the staff and moving the practice toward maximum productivity.

4. IMPROVE YOUR BOOKKEEPING RECORDS

Part of selling a practice requires that you develop and present an accurate picture of what you have accomplished. You will want to be able to disclose good financial figures. Plan to have at least five years’ worth of good financials because the buyer wants predictability. Have an outside professional prepare “compiled statements.” That adds credibility. The practice buyer will find that well-maintained, accurate accounting records help with forward planning. Additionally, good records can even help you explain a slump period.

5. DEVELOP A TRANSITION PLAN

Very few practice owners supply the buying owner with a transition plan. If you were to do that, you will be far ahead of other owners who want to sell their practices. You should develop a plan because it not only can increase the worth of your practice, it can make life easier for everyone. Put the transition plan in writing, then review and outline all the systems and how they work. The marketing plan, referral sources, management policies and accounting systems should all be put down in narrative form.

Indicate a time frame in which the practice will be transferred to the new owner. That will give him an idea of how long he will have to learn the ropes. Don’t expect to make the deal and run with the money. An adequate time frame to transfer a practice in which you will be working side-by-side with the new owner, will range from 30 to 120 days, depending on the size and complexity of the practice.

Part of an effective, valuable transition plan can involve a good loan package. It shows that you have put together a transition plan that is easily understood by a third party. It indicates that you have a good relationship with the bank. That can enhance the value of your practice, since the banker knows that the systems will remain in place and generate cash flow to repay any loans.

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