A Doctor's Story

Could It  BeYours?

Retiring - Going out the Top

You can build your wealth as a practice owner in many ways.

For example, Dr. Lee works hard and spends 10 years building his practice. He hits $70,000 collections per month without managed care and with less than 55% overhead. He goes through two associates before finding his match with Dr. Chris. He pays Dr. Chris 33% of her collections while spending hundreds of hours grooming her to take over his practice.

Over the next five years, Dr. Lee cuts his work week to 40 hours and stops working weekends. Dr. Chris builds her production from $25,000 to $50,000 to $75,000 per month. Although Dr. Lee's personal production drops to $55,000 per month, his profit increases because he skillfully manages the practice. Dr. Chris then pays Dr. Lee $190,000 for half the practice. As his partner, she begins to accumulate her own wealth. Dr. Lee spends less time at the office to pursue his passion to provide free medical service to the less fortunate. The staff and patients love Dr. Chris because she walks in Dr. Lee's shoes.

After the 10-year partnership period ends, the two doctors finalize their buy-sell contract. Dr. Chris pays Dr. Lee $220,000 more and takes over as sole owner. Dr. Lee works a few hours per week for 50% of his production. He continues to advise and support Dr. Chris for three final years. Dr. Lee then moves to Kentucky to build a base for the third world charity he envisions. Because he is only 55 at this point, he starts another practice as well. Dr. Chris also thrives.

If the people who work for you are effectively managed, you have all the options. You can build a group of doctors. You can create satellite practices. You can form strategic partnerships. You control the game.

Retiring - Going out the Bottom

Without management skills (Do not mistake “management” with a “forceful dictatorial” ham-fisted style), the practice owner’s income is limited to their own production.

For example, Dr. Fred graduates with Dr. Lee, but with better grades. He opens a practice down the road from Dr. Lee and focuses on his technique. Although he is a better technician and more talented than Dr. Lee, Dr. Fred ignores or doesn’t take the time to focus on, or understand the business end of his practice. After 10 years, Dr. Fred hits his production peak average of $45,000 per month. However, staff members feel used, do not feel valued, have no stability or consistency, and there is no communication about future plans, if any, from Dr. Fred. He tries to work with an associate, but fires him for being an idiot. Another associate takes a dozen patients with him when he quits. Dr. Fred decides hiring associates is a bad idea.

Dr. Fred then tries a partnership with a colleague who hates management more than him. Together, they get less done with more stress. The resentment builds and builds until patients and staff hate coming in. Dr. Fred is relieved when the new guy leaves. He vows to work alone forever. During the next 25 years, Dr. Fred develops many hostile employees and production slowly dwindles to $25,000 per month. At 65, he decides to sell his practice. Unfortunately, his equipment and patient base is so old that he can't find a practice broker to help him. His employees leave for “greener pastures.” He sells his patient files to Dr. Chris for $10,000 and moves to Arizona because the cost of living there is less.

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