Chiropractic Associates can be a bit of a mystery for doctors who plan to retire, sell or slow down in the next 3-5 years. You’ve heard the rumors of how things can go wrong and for most chiropractors who would like to have their associate doctor to be part of their exit strategy, you need to seriously consider the potential solution or sand trap you have in your backyard.
Even if you’re a little further out than 5 years, there are good reasons to avoid going down the road with chiropractic associates that will eventually lead you to the wrong destination or a dead end.
While it is not the subject of this article to debate whether or not an Associate Doctor would be presently valuable to your practice, I do want to force you to spend time looking at the future of your practice, in respect to your any potential Chiropractic Associates you may consider.
The Dead End
From working with our Chiropractic Transitions Consulting clients, one thing is very apparent: Too many owner DC’s realize much too late in the game that their current Associate is a dead-end. Some realize in an untimely fashion that they have their chiropractic associates in a compensation or buy-out structure that is not going to work moving forward – for either doctor.
There are three basic reasons for failures like this: the Associate is not (a) interested or (b) able or (c) motivated to take over their practice someday. Let’s examine these three problems which all lead to a dead end unless you can fix them fast:
Not Interested – For a variety of reasons, the Associate could be simply not interested in transitioning into an ownership role. Perhaps the doc has no entrepreneurial spirit and just wants to be a salaried Associate; perhaps they don’t really want to live where you practice; perhaps you don’t have enough the type or size of practice that interests them. The reasons can be many, the result is the same. This Associate is a sandtrap to your transition plans. You think you’re playing a good game of chiropractic and when you find out your Associate has no interest, suddenly you realize that your ball is in the sand and it’s going to take a whole lot of extra effort to get it out and get back to your original strategy – which was to transition the practice to an Associate.
Not Able – Typically, there are three major reasons why an Associate is not able to transition into the practice.
a) No Money – The first is that they have no money to buy-in, purchase or become a partner. This is actually quite common but it can be successfully navigated…with proper planning.
b) No Ability – Detecting if your Associate has no ability usually takes some time. But let’s face it, if you have been shoveling patients their way for years and they haven’t generated a single NP of their own, they may have no ability to actually run a practice. Unfortunately, there are also some Associates who masquerade as having “no ability” only to rise to the occasion and do fabulously well in their own practice. In that case, there was not a lack of ability, but motivation.
c) No Way to Overcome Obstacles — most obstacles that get in the way of your chiropractic associates purchasing your practice are financial. But sometimes, it’s not the fact that they don’t have money – it could be their massive debt load (which is absolutely an obstacle that they can overcome by getting to the right bank) or worse, past bankruptcies or bad credit (both potentially can be worked with too). Occasionally, it’s a personal obstacle, such as the fact that their spouse doesn’t want to move, that they need to be close to family, etc.
Not Motivated – the classic Associate job opportunity starts something like, “We can pay you $X per month, with a performance bonus when you hit our goals and a chance to buy-in or even purchase the practice from me down the line, as we are looking for a long term relationship.” The problem is that many Owner DC’s fail to define the bonus, the terms of the buy-in or put any sort of concreteness to the “someday this will all be yours” dangling carrot. And so, when things begin to go sour a possibility is that the Associate has no motivation because he or she sees no future in your practice. At times, YOUR plan is there and it is clear, but their motivation is lacking because you have made their present position a little too comfortable. I see this with docs who begin to slow down, let their chiropractic associates take more of the patient load and suddenly the Associate is making $200k per year just showing up to the office — sometimes more than the owner! So when you ask them if they want to buy, they are not very motivated to change their situation because being a well-paid associate with little or no responsibility sounds better than the owner, especially if they do not stand to increase their compensation much by owning the clinic.
The Associate Solution
All of the above (and several variations) will produce essentially a “dead end” for both you and your Associate. But it doesn’t have to be that way.
Your Association can be the solution to your transition strategy – and there are several good reasons to make them just that. Here’s why:
1) They already know the patients – and will help reduce those “lost” in the transition shuffle.
2) You have more time – generally, when you want to sell, you are ready to quit (although this is generally also a bad strategy). With an Associate, you can groom them for years towards that end.
3) You are on familiar terms – if you sell to an outside buyer or take on an outside partner, they don’t know you and the potential of the practice as well as your Associate.
How to Take Your Associate to the “Next Level”
In order to maximize the time with your Associate, you need the following:
- Your Transition Plan — Where do you want this relationship to go? Are you planning on retiring and selling? Slowing down? Pursuing the Hybrid Partnership (as detailed in my Ultimate Chiropractic Exit Strategy program)? Any and all will affect how you cultivate the Associate towards that goal.
- Time Frame – Most Associates are young and haven’t spent 20 years in a particular career path. So when you say that you’d like to retire in 20 years, that seems a bit unfathomable. But you need a time frame to be established for your Associate plans to work best. Don’t limit yourself to the traditional buy/sell (unless that’s what you are certain you want. There are many options out there that may suit you.
- Cut Your Losses. If and when you figure out that you and your Associate are not on the same page, end the relationship quickly (or better yet, don’t even start). Far too many docs hold onto “dead end” positions (from either side) for far too long. Let’s face it. If the Associate hasn’t generated 1 single new patient in the 3 years they’ve worked from you, they are not a slow learner. Years 4, 5, and beyond are going to produce the same results. On the other hand, if you’ve got a winner on your hands, how long does it take you to figure that out and work to keep them?
Ultimately, the choice is yours on whether your Associate is going to work out as a potential solution to your transition plans or as a sand trap you’re going to spend too much time digging out of. And for Associates reading this, the choice is the same: the owner you are working for is either just going to pay your bills (hopefully) and you have no future or they are going to be part of your long term success plan in chiropractic.
The sooner both sides figure it out, the better.
To help you in that direction, you may want to consider our FREE WEBINAR: Chiropractic Practice Transitions: Myths, Realities & Maximizing Value