One of the concerns most often expressed by potential buyers in a chiropractic practice sale or transition scenario is simply that the buyer is afraid that patients will leave after the seller is gone.
While fears run high on the part of the buyer (and sometimes the seller too), there is little objective evidence to support some of the numbers that are thrown around. Well-meaning but clueless colleagues (and your own worst nightmares) may feel that “half the practice will leave when you are gone!” But there’s a lot of subjective and personal opinions thrown in that stat by your buddy (who wants to beef up your ego) and your own brain (which runs straight to fight or flight mode).
If you look at the business of practice sales at large, medical practice brokers may quote numbers as high as 20-40% patient attrition. Dental practice brokers generally cite lower figures – as low as 5% and up to 20%. And Vetetrinary practice brokers typically come in the lowest, with animal patient attrition virtually nil (apparently, animals are quite as picky as humans).
Dig A Little Deeper
Over the years in working with chiropractors in their practice sale or transition, we have dug a little deeper to discover three key components to the patient attrition and retention puzzle.
- Attrition Happens – one important consideration to keep in mind is that attrition happens…even under current ownership. In other words, there are some practices that are great about keeping their patients. They have lots of patients who have been in the practice for many years, they have great PVA’s, many maintenance patients and regular recall programs to ensure that patients stay in the business. If you are worried about what attrition will be like after the sale, the first place you should look is how the retention is before the sale. Practices that have solid systems in place for keeping their patients in the practice before the transition will generally see much lower attrition rates afterward.
- Context Matters – on the flip side of every patient retention nightmare is some context that is likely missing. And here’s what we’ve found out. In 90% of the cases where patient retention was low after the sale, there were generally two problems: either the sale was handled entirely by the chiropractors themselves (both of whom had little to no experience in practice sales) or the sale was poorly coordinated (because the seller was desperate, the buyer bought a “bargain” instead of a business and/or the doctors philosophy was too different.) Of course, no one sets out to make these mistakes, which is where counsel, experience and proper procedures really make a difference.
- Proper Procedures – put simply, there is a right way and a wrong way to transition your practice to minimize patient attrition. The buyer who is too eager to get in and kick out the seller may skip steps or try to shortcut proper procedures that lead to good retention and, in their haste, end up with bad attrition. We have found that our simple Three Phase Retention Plan(TM) significantly reduces patient attrition and helps alleviate the fears of both the buyer and the seller.
Skip The Opinions, Go For the Bottom Line
Interestingly enough, while everyone may have an opinion on what patient attrition may look like in your chiropractic practice sale or transition, you can head straight for the bottom line that no one ever seems to address and one very important opinion: the bank.
Obviously, the bank who is lending money on your chiropractic practice sale is very interested in the buyer paying them back. And they understand patient attrition very well. In fact, the bank’s bean counters probably have patient attrition down to a science, but they are just not as forthcoming on the formulas.
But even if a bank won’t tell you there “secret sauce” for calculating patient attrition, you can probably take a good guess if you are geeky and observational like me.
For example, in dentistry, banks will commonly lend 90 to 100% of practice value. If a bank thought that 50% of dental patients would walk out the door, there’s no way their lending trends would be so high. Similarly, chiropractors enjoy fairly high lending ratios and it’s not uncommon for banks to lend 70-90% of the practice value. Again, if “half the practice will leave” was true, the bank would be in trouble.
One More VITAL Perspective
All outsider opinions aside, the vast majority of patients will remain with the chiropractic practice so long as the transition is handled properly. In order to understand why patient retention after your chiropractic sale can be so high, let’s examine a practice transition from the patient’s perspective, which may be the most important one yet!
In a typical chiropractic practice sale scenario, the patient receives a letter from their chiropractor announcing the sale of the practice. The letter introduces the new practice owner, gives a hearty endorsement of their abilities, and ensures the patients they are in good hands.
The patient now has two options: (1) give the new doctor a chance and continue being treated at the chiropractic office where they are accustomed to the location, operating hours, staff, collection/insurance policies, etc. OR (2) begin the process of locating a new chiropractor where they are unfamiliar with all aspects of the practice.
While a handful of the seller’s close friends, family members, and long-time patients who have been traveling a significant distance to see the seller may decide to find another chiropractic office that has a more convenient location, the vast majority of patients will heed the seller’s advice, give the new doctor an opportunity, and continue their loyalty to the practice.
As long as the patient has a positive experience during their first visit following the sale, the likelihood of retaining the patient is very high and the horror stories can be left where they belong…in Hollywood.
Want to learn how to sell or transition your chiropractic practice the right way? (And learn how not to). Join us for our upcoming FREE WEBINAR: Sell, Switch or Slow Down: How to Maximize the Value of Your Chiropractic Practice Sale or Transition and Minimize Costly Mistakes (click for more info)