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Is 2023 The Right Year To Open A Practice?

Podcast
December 28, 202214 min read

Is 2023 The Right Year To Open A Practice?

We've been getting a lot of questions on whether or not 2023 will be a good year to open a practice. The answer is, as it often is, it depends. In this episode, Scott McDonald goes through what signs to look for in a particular area to know if it is good time or not for that location.

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A Note from Scott McDonald on This Week's Episode:

Knowing where to go and whether or not the state/city even wants you there can be a very challenging thing for many doctors to discover. Our Site Viability Report creates answers to that question along with consulting with our research professionals.   

Doctor Demographics is there for you, no matter what type of practice you are considering.

Read the Transcript Here:

Scott McDonald: Welcome to the Perfect Place to Put a Practice podcast by Scott McDonald and Doctor Demographics, the best source of demographic psychographic and marketing information for professionals.

 

Scott McDonald: Hello. This is Scott McDonald of Dr. Demographics. And today we're talking about timing of when you should enter the market. We're calling it waiting for the right moment to make your big move. Now, I'm getting a lot of calls these days about people trying to say, is now the right time, should I make this move? But that really is the wrong question. And let me emphasize what I mean. You are evaluating or not, whether you should purchase a practice or startup based upon the demographics of the site. So in order to evaluate that, you need to get a practice site viability report or something else that will give you the metrics on the area. With that in mind, I'm going to suggest I have a tendency to want to move on a practice opportunity if the pricing and financing appears to be a good idea. But it may not be, and that's why I'm recommending you talk to Mike Green as soon as possible so he can gather the facts about the area and really review its potential with you. That is not an easy thing to do, but it is worth your time and your effort to get this done. And to get it done quickly. Now, as I said, sometimes weeding is a good idea and sometimes it is not. And that is why getting an outsider's help to deal with the essential issues of value and interest rates is a good move.

 

Scott McDonald: I'm going to tell you, in some cases you have to wait. And that is a very hard thing to do. I know it would be easy if I just said go for it now, but. There are risks. Now, our present question deals with the timing of getting into the market because of those risks. There are signs of a kiss of death. In short, you can lose your shirt the way transitions are going right now. So I'm not going to say absolutely go or stay away from the market. I'm just going to say it's something to keep in mind. Now, there is nothing that is forcing state and regional economies to contract right now. At this point, it is all manmade. Cities, states and counties tend to die by suicide. You do not need to be part of that cycle of failure just to say, Oh, I'm in the market. There are good reasons not to do that in California and New York state right now. I'm really reluctant. And the same thing is true of Illinois. Now, Dr. Demographics has the numbers on where you should be looking. That is right for you. Now, remember, the decision to open a practice has got to be your timing in your risk has to be appropriate for you. There is a highly individualized set of facts. In other words, in Florida and Arizona, Colorado and Utah.

 

Scott McDonald: They may have the market conditions now to make this the right time to enter the market. And these trends are not nationwide. So the answer may be, if your location is in Utah, I say go for it. If it has to be in the Northeast, I kind of say probably not in California. Definitely. No. Just keep in mind what I said. There is nothing that is forcing state and regional economies to to contract shrink right now. At this point, there are man made negatives that are driving down the markets, for example. Congress recently passed a pork filled budget of more than $170 trillion. What the heck are they doing? The American public will be paying this off for at least three generations now. Cities, states and counties tend to die by suicide. No, they they die because they want to. They lose the will to live. Now, if there are droughts, wars, famines and plagues, these tend to be the things that are responsible. Not Congress or a legislature. Inflation, however, is real and should be considered. And what I'm saying. Uh, is that it's an act of political will that is hurting the nation and is likely to hurt the area. You're thinking of going to policy decisions are what is the real enemy. And they can turn on a dime. In other words, the political will to all of a sudden pay off.

 

Scott McDonald: Big debt may be there, but it may not be. You do not need to be part of the cycle of failure. So do not feel I've got to move right now unless the practice site is so specific and shows signs of growth that you want to. But that's what the practice viability report is all about. Caution is advised and good research is the nature of the demographics and politics in your area. The employment and the economic trends should guide your investment decisions right now. The point is that the economy is being well mandated. It is not allowed to grow or to shrink naturally. So what is making me cautious is there's someone's hand on the scale, the thumb, so to speak, that will make places good or bad. It's not a natural occurring process. Timing, in other words, is being worked. So I don't like that. I don't like it when people outside the market tell me what the market is going to do. I don't like it, and that makes me cautious. Now, Dr. Demographics has the numbers on where you should be looking right now. For you now, it's an individualized decision. So I want you to talk to Mike and our other experts on what is a good set of facts for you to consider. Yes, it is confusing, but the decision to enter the market depends largely on local factors, not on national trends.

 

Scott McDonald: What local priorities and trends will be most applicable to be you? Well. That varies. Now, it could be abstract or as abstract as the price of fertilizer or the cost of fuel in Louisiana. This is mattering a lot to me in Texas and Florida. These commodity prices and market trends are important. There may be there may be obvious reasons and there may not be determining the success of health care practices that you are considering. Or they can just have a pretty strong influence on them. So like in Louisiana. Fertilizer and fuel costs will matter a lot, a lot more than, say, in Kansas. But in Kansas, the price of fertilizer is going to be a very big deal. I believe that certain states like Tennessee are going to really take a hit if the fertilizer prices go up, and that will make purchasing a practice in that area, well, frankly, dangerous. Will there be growth in future development in the area that you are considering? Now, let me go back a line and have you think about something. One of your long term priorities right now is to find a place that is not trying to kill itself because, as I said, locations, cities, states and counties die by suicide. Long term priorities are the place has got to want to live it. It should be against shriveling up and blowing away in the wind.

 

Scott McDonald: And right now, the worst place I would say, in the United States is the Bay Area in California, New York and New Jersey are kind of sketchy right now. Where will there be growth in future development? That's going to depend very much on what the housing market is doing in various areas, and we've got the facts for that. There are places that do not want to die or allow for restrictions on housing. Believe it or not, we can tell where these areas are found and can give you advice on what's happening in the market in that area. So that's what our our research arm and Dr. Demographics really can do. We can look at what the market trends in the areas are and to determine whether it is good or bad for your practice. Now, as for growth, I do not want to have you go to a place that is restricting its growth artificially. This is an example of restrictions on housing permits. The price of building supplies is mostly national. But when it comes to figuring out whether they're going to allow a new development or not, it's an act of political will. And there are some places that simply say, nope, we're not going to allow new growth. Do not go there. You want sites that encourage risk and reward of success. Now we've got several of them for you to know about.

 

Scott McDonald: We can tell you if the area you're thinking about is one of those. You've got to have a place that will allow risk. When you take risk away, you are also taking away any potential reward from the area. And that is deadly. So do not go with that type of area. The ideal sites for practice offer a reasonable, not perfectly sanctioned risk of never losing your money. There has to be some risk for you to make a profit. Unrealistic growth and rewards are equally to be avoided. When the flier that you see on a site looks too good to be true, it probably is. So when there are guarantees. That's not a good thing. That's what I'm telling you. Now, remember, you want places that encourage risk and reward success. We don't know whether or not this is true is the tax code. It's the best indicator of these sites. Never will get rid of any place that says our taxes will never go up because they will not develop. If a place is only guaranteed with a reward, you know, that reward will be very small. So avoid those sites. Now, one of the long term priorities is they don't want to die. It's a matter of political and cultural will not just remember something I said. The tax code is a very good indicator for you to know how scary an area is. Believe it or not, that's a demographic fact.

 

Scott McDonald: And it's one of the things that Dr. Demographics tracks. Now, the next best indicator for you to know how risky an area is is the birth rate. If the birth rate is only going down or if they are actively discouraging births and if they're actively discouraging immigration, go somewhere else. Reparations are right now, a thing that several communities are getting into. It's the kiss of death indicator and it's on the right now. Sometimes it is on the name called Social Justice. People have been damaged by political wrongs of the past and they want to fix them in California. It's an example that says they actually want to do that. It will never live up to the promise of leveling the playing field when you hear it that it's a ruling party party policy. Run the other way. It is a political mandate that goes against the market forces. And we're seeing more and more of this going on. It's not good. Trust yourself, Doctor. Less regulation is always better. You know better about how to run your practice than politicians. And they have their own agenda for raising of lowering interest rates and making a market good or bad. Look for places that will allow success. And frankly, I believe that when there's limited regulation, that's a good thing. Now, let me be specific. Idaho is one of the best states when it comes to limited supervision by the government telling you what you can earn and can't.

 

Scott McDonald: New Hampshire, Rhode Island, Vermont and Maine are good sites for that. You know, where locations that are not good as far as your freedom is concerned. California, New York, Hawaii, and Illinois. There is every indication that these large states are going to hurt you. Now, I know may sound funny, but I believe they each have a death wish and they're trying to prove to each other who is the better state or place to live. I would rather you go to a small or mid-sized state that allows you to be free. Now I want to read the tea leaves. I want to tell you the future. When is the right time to move into a market? Let me predict it. The smart money says not yet. So in short, I'm telling you something that lenders and banks and brokers may tell you otherwise. But I don't think this is a good time for most people to get into the market. The expected slump in value. In other words, intangible assets like practices is coming. It is likely that many practices will lose their their value. Not all, but many are. Prices on practices are going down, but the fundamental value which you bring to the community, I mean value that you as a doctor in your practice will bring will actually make the area you're considering go up in value.

 

Scott McDonald: When you and your efforts and experience. Are more value than ever then even a place that is just good on one side and bad on the other. You will always be better off by saying I'm going to take the plunge and make it better. Remember, you are an active force in the economy of a local area. You may not see it yet, but it's there. So have a little faith in yourself and your neighbors and the practices that you're considering. But I'm just going to say be very careful about timing, because I don't think now is the time to make that move. I do not think this is the time for easy profit. Some people are saying, Oh, you can make just a killing on a practice acquisition right now. This is free money that's going to come to you without any effort. I think that's horse crap because it's now is the time to invest in long term projects. It is time for prudence. It is time for a little practical research. And if you need to move to an area for a week or two. To see what the area is really like. You're better off. This is the time to get your demographic reports because data is coming in right this second. That will help you get an advantage over your competitors. Now is the time for wisdom and patience and solid research.

 

Scott McDonald: The opportunities are there for the doctors who are looking for them. You should be looking at three or four areas that have potential characteristics I've mentioned and drop the many locations that lack them. I believe that sometimes doctors get influenced by family members where they want to go. Or we could be close to my or my cousin lives or I went to college nearby. That's not enough reason to go to a site now. Doesn't mean you shouldn't go to the site. If you have personal experience, But I'm going to say, look, you've got a lot of facts together. Now is the time to get them. And a lot of people are just going by what practices are for sale or what they have heard at meetings? I don't like that. Now, if you want to talk to that doctor, demographics, it's 808 490499 or just visit a doctor demographics dot com. We have a consultation service that can gather data just for you. It's a very good idea and I hope you'll take advantage of good research. It's there's plenty of time. But if you're going to put yourself in a position of delaying too long, it's not going to be there forever. This is Scott McDonald. I want to thank you for listening. I'm sorry this is confusing, but give us a call and let us talk about how this is going to help your particular opportunity.

 

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Scott McDonald

Scott McDonald is the founder of Doctor Demographics, LLC, a firm specializing in marketing analysis services and research for professional practices. The company has been serving general and specialty practices for over 30 years and is the largest provider of detailed demographic and marketing analysis to healthcare practices in the United States. Scott also runs Scott McDonald & Associates, Inc. which is the speaking/consulting arm of Doctor Demographics. Programs are offered to study clubs, component and constituent societies of organized medicine and dentistry as well as consulting firms, national vendors, and government organizations. Scott is the former Marketing Manager for the California Dental Association. He helped start organized dentistry’s first efforts in public relations and advertising shortly after the regulations of professional marketing changed in 1977. Since that time he has worked with healthcare practices and associations across the U.S. and Europe. During his career, Scott McDonald has set the standard for market research, demographic and psychographic applications for dentistry. He has written many articles for the professions as well as for national and state dental organizations on the topic. As a lecturer, facilitator and moderator for dental organizations, Scott has helped volunteer leaders in more than 200 societies and associations with strategic planning and organizational communications. In 2015 he was a featured speaker at the American Association of Orthodontics national meeting as well as the American Veterinary Medical Association annual conference. At national and regional meetings he has addressed the topics of site analysis, demographic trends, and referral base promotional activities. Scott received his Master of Arts degree from Brigham Young University in Mass Communications. His thesis was on the theories and best practices of professional practice advertising, public relations, and site analysis. He resides with his family in Lehi, Utah. Scott is the father of 5 children (and grandfather of four). He is the Past-President of the National Speaker’s Association, Sacramento Chapter. Other programs include “Healing the Breach: Broken Referral Systems,” “Gripe! Gripe? Gripe! Getting Along With Difficult People,” and “Professional Practice Persuasion Techniques and Theories.”

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Our Leadership

Scott McDonald

"Demographics is more than just facts and figures. It is the foundational story in which we develop the right strategy and plan to create successful practices over the long-term. Markets change, economies fluctuate, and internal goals differ. Our goal at Doctor Demographics is to provide you with not just the data, but experienced analysis to help you create the practice you've always dreamed of having."

Scott McDonald

Founder - Doctor Demographics

Mike Green

"Coming from a marketing background, demographics and psychographics are the foundation that all successful practice strategies are built. Knowing how to use that data in the implementation process of a practice is the difference between an average (or failing) practice and a successful practice in the same area. We've done thousands of studies over the years and have helped doctors find, establish, and market in nearly every state and situation"

Mike Green

Owner - Doctor Demographics