If you miss one of these pillars when deciding on practice placement could literally cost you millions over the course of your career.
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Yes, you had a magical experience as a child vacationing on the beach of California – and you promised yourself that you would live there when you became an adult. Now, you’ve grown and it’s time to open your own practice. Should you go back to that magical land in the California sun? We dive into that and show you the keys to selecting the right site for your practice in this week’s newsletter.
A Common Problem in Practice Placement for Doctors
For most doctors, deciding on a site location can be one of the most stressful parts of owning a practice. So much is at stake! You certainly don’t want to leave it to luck. Yet, every few weeks I end up on the phone with a new doctor who has longed to open a practice in this city or area because of some sort of past magical experience that they had there. Now, before I go any further – I want to acknowledge the importance of you being happy in the area where you will be living/working. There certainly is a human element to all of this, and I am a huge proponent of work/life balance for doctors. That said, there is nothing that can ruin your lifestyle faster than a practice that is not producing in the way you had hoped. Or, and this is often the case, doctors can get to the point where they simply hate going to work every day due to the environment they are in or the people they are treating or working with.
Trust me when I tell you that you don’t want to be in that situation, and while it may seem irresistible to pass on that ‘great deal’ you’ve found – you want to make sure you are playing a game that you can win consistently.
Pillar One – Demographics for Practice Placement
The first question that you need an answer to when evaluating an area to open a practice is quite simply “Do you want them?”. Are these the type of people that you will enjoy being around 8 hours a day 4 days a week? You see, when a person starts to hate their job and their life every morning when they drive into the practice – that feeling carries over to the staff and to the patients. They pick up the non-verbal (and sometimes outright verbal) queues and will shortly find another office to visit every 6 months. You may be able to put on a happy face for a few years, but eventually, more bad days will string together and you will start asking yourself some hard questions.
While this is a complex question to answer, our approach is to detail the demographics of the area you are considering in order to come to a conclusion of the question “do I want them?”. Age, income, employment, education level, and housing status, are some of the key areas we look at in communities to see if they are a good match. Now, I should make it clear that no person, including us who has been studying demographics for over 30 years can answer that question for a particular person. It needs to be carefully considered by you and your family.
We usually recommend spending a few weekends in the community you are considering – going to the grocery store, Starbucks, local gyms, and other areas of public interest to get a good feel of the community. Doing that backed up with an understanding of where the demographics are trending will set you up for success for many years to come.
Pillar Two – Psychographics for Practice Placement
The second key question that you need to have an answer to is ‘Do they want you?”. Now, that may seem like a silly question and I can almost hear you saying – “Well if they have teeth they are going to need a dentist!”. The truth is, and you’ve heard this before, people buy things with their hearts way more than with their brains. You might be the most qualified doctor in the lower 48. The most experienced, the best tech in the office, but – if they can’t sync up with you on an emotional level – they Will find another provider. You may lure them in with a promotional deal for a little while, but eventually, they are going to find someone who they can buy with their hearts.
Now, at Doctor Demographics – we answer this question by studying the Psychographics of the community surrounding your potential practice area. Don’t let me lose you with that word Psychographics. A really easy way to understand what Psychographics are is this: If Demographics are what a person is (age, income, marital status), Psychographics is what a person feels. What do they get emotional about? What do they value? What do they hate? What line will they not cross? Until you can answer those questions, you really can’t answer that key question of whether they will ‘Want you or not. From culture to politics, religion to recreation, all of these areas need to be considered when looking at an area. Quite simply, people do business with people they can relate to and trust. If you are not a match for the community where you are opening a practice – you will find yourself in a constant uphill battle of patient retention. Most practice types are too commoditized to win that battle in the long term. Can you market your way out of this? Yes, but it will take a significant amount over a very long time to do so, in our opinion.
Pillar Three – Logistics for Practice Placement
Now – let’s say that you’ve found an area that is a resounding yes to both of those questions. Again, they were: Do you want them, and do they want you? That leaves you with the final area of consideration – the nuts and bolts of the deal – the logistics. How much does the practice cost, how much is the real estate, how big is the current client list, how active are they, are you acquiring a staff from the previous doctor and are they going to need to be replaced, how old are the building and equipment? All of these questions and a thousand more are the purpose of having a great broker to help you put the deal together. It is akin to getting a home inspection done on a used home you are purchasing. The more gremlins you can be aware of before you put ink on the paper the better off you’ll be in the long run. Remember, just because the kindly older doctor who is wanting to ride off into the retirement sunset told you they have 2,500 active patients, does not mean that is all the way true. It’s likely not and needs to be looked at before you make your final decision.
The challenging part about logistics is that it is often the starting point and ending point of a new practice owner’s research and due diligence. They don’t spend the time to answer the first two questions thoroughly with confident answers. After 30 years of helping thousands of doctors answer these questions, and quite often trying to help doctors get out of situations where they didn’t spend enough time on these questions to start with, we would recommend taking the necessary time and energy to protect your investment, your work/life balance, and your own mental health.
I hope this has given you some things to think about as you approach your practice purchase. This is Mike Green with Doctor Demographics – you can reach out to me at email@example.com or visit us on the web at doctordemographics.com
We’ll see you next time –