Reader’s Career Conundrum
“My business conundrum is how to fade out my private practice. My goal is to cut back to halftime or 2 days a week when I turn 60 which is in 2020. I have one psychiatrist partner who is also interested in doing this. We would like to continue to work at least until 70 years of age but maybe longer…
“Our practice is unique in that we have about 14 employees. Each of us have three nurses that work alongside us to increase our efficiency as physician extenders. … We do medication-assisted opiate use disorder treatment, TMS, and Spravato.
Our overhead is great but our revenues make up for it while we work 4 days a week. As I’m sure you’re well aware that when we decrease our reimbursable hours worked it is difficult to proportionally decrease our overhead therefore our pay decreases disproportionately.
The two obvious solutions would be either bring in another psychiatrist or hire nurse practitioners, neither of which is appealing to us because we want to simplify our lives and not complicate it. Our past experience in bringing in other psychiatrists to this unique practice has not been successful and we lost money each time.
We’ve been located in are current practice location for about 20 years. Moving to a smaller location nearby would save money in the long run but be expensive in the short run and also lose our benefits of being in an optimal, well recognized and established setting.
If money was the only object we probably should close this practice or try to find a buyer and become employees for someone else however we enjoy our autonomy and excellent support staff, many of whom have been with us for 20 years.” – Anonymous
Thanks for sharing your career conundrum. From what you write, you’ve made many wise decisions in your life and are approaching your upcoming desired change with forethought. You’re giving yourself enough time to investigate and ponder your next career step.
You and every other reader may wonder what gives me any standing to give anyone advice about anything. It’s a question that deserves an answer, and I have two. First, I share with you a decision-making method I use in business and personal life. It is this method that gives me some ability to identify where in the process of change a person may be getting stuck and what they can consider doing to get unstuck. And second, I don’t tell people what they should do but rather guide them through this method so they achieve greater clarity.
Jack’s Decision-Making Method
The decision-making method has these generic steps.
- Formulate Problem/Opportunity/Goal
- This first step is crucial and a place where much decision-making goes off the rails. If a person is not clear or even wrong on the nature of the problem that needs solving, the opportunity one can pursue, or the goal one wants to achieve, then reaching those outcomes is in doubt. There’s a saying, “It doesn’t matter how fast the train is moving if it’s taking you in the wrong direction.”
- Consider Options
- One simple way to organize one’s options is to place them all on a single continuum. On the left end is “No change.” It’s always good to remind oneself that “No Change” is an option and sometimes the best one. On the right end of the continuum is “Maximum Change” and here you would place the most extreme change you can imagine, an option you will rarely avail yourself of, but that helps you expand the range of options you consider. In between the two extremes you add options that lie between.
- Conduct Due Diligence
- In this step you investigate what each option would entail. Ask yourself what the outcome of taking and succeeding at that option be like? And what would it take to get there successfully? Also, at this step of investigation, you are likely to become clearer on the options you listed in the previous step. Some may need revision, some may become non-viable, others may rise in attractiveness, and new ones may come to mind. Also, you may become clearer on the nature of the problem, opportunity, or goal. So, steps 1, 2 and 3 are iterative and you can circle around until you truly understand your options.
- Choose an Option
- This is the step in which you choose your option and commit to begin executing on it. It is at this point that many people freeze up. This is normal, natural, and common. So don’t beat up on yourself if you get “cold feet” and don’t consider it a personal flaw. Two pieces of advice on how to succeed at this step: first, the more you fear committing to a course of action, the more likely you did not achieve clarity at steps 1, 2, and/or 3. Go back, especially to step 3. You may need more information. And second, when you commit to a course of action, you should plan one that will not “bet the store,” that is, if your choice doesn’t work out, it doesn’t lead to irrevocable disaster.
- Develop a Plan
- When you have clarity on your chosen option, then a plan is needed, one that outlines step-by-step how you get from where you are now to where you want to be. Make the plan specific and attach completion dates to it.
- This is where you begin to act on your plan. As a reminder, this step almost always requires communicating with others – your significant other, family members, coworkers, boss, friends, etc – because the important people in your life deserve to know what’s going on with time to process and come to terms, and because you will usually need their help. Clear and compelling communication helps you build a team. Change is hard; change on one’s own is harder.
- Monitor and Adjust
- As you proceed on your path of change invariably you will learn much; you will have successes and stumbles. As you proceed your knowledge, skill, and perspective changes. This usually leads to a course correction, one that may require small tweaks or wholesale reconsiderations of your goals. This is not a bug but a feature of making life changes. You and the world around you are evolving and change is ever dynamic.
Application of Decision-Making Method to Reader’s Career Conundrum
- Formulate Problem/Opportunity/Goal
- You’ve done a good job here identifying your goals: you want to ease back, continue working for a decade or longer, and do it on your terms.
- Consider Options
- You mention the following options 1) bring on an additional psychiatrist or 2) hire nurse practitioners, neither option is attractive because it would complicate your life and has not been successful in the past. You also mention the option of 3) closing the practice or 4) selling the practice and then working for someone else. These are all possibilities but there are more possibilities I’d add: 5) reducing the size of the practice to reduce its overhead burden. This would allow you to stay with staff you’ve known for years and enjoy working with. You say your “overhead is great,” meaning it is high and, thus, not great. Still another option, perhaps one already ruled out is to 6) sell the practice to your partner. Sounds like you both want to ease back in tandem.
- Due diligence
- I see a lot of opportunity for you in this step. Since you are at least open to selling the practice, investigate what would it take to get the best price for it, the different types of buyers who may be interested in buying it, and what your personal exit strategies could be. There are medical practice brokers who specialize in optimizing selling price – since they make a commission based on it – and in finding a buyer. Medical practices are not all worth a lot because there is a shortage of clinicians and a surplus of patients. Thus, anyone can open a practice next door and succeed in building a caseload. However, it sounds like you have a well-run machine, and that is where the value lies, because it would be expensive, time-consuming, and effortful to recreate it from scratch.
- Another option to investigate, one you didn’t mention, is in reducing the size of the practice to reduce your overhead. Sit down with your partner and your accountant and identify the sources of your overhead and personnel costs. Cost out what your revenue and compensation would be for a minimalist practice, that is, just two clinicians, you and your partner, and a minimum staff to support you. It is sometimes amazing how little additional profit a practice makes with many additional clinicians because of the resultant large increase in overhead costs. It may be that just the two of you working with a minimal staff and minimal overhead, could make as much or nearly as much as you do now.
- Another related version of the above option is to move to a direct-pay model. This type of practice eliminates need for a lot of overhead. There is no clinician time spent on filling out insurance forms, talking with medical necessity reviewers, and so forth. And there is no need for complex billing and collection procedures.
- Once you know how much you could derive from selling your practice versus how much you can make with a minimalist practice, you are clearer on the financial aspects of your decision. And you can perhaps do both – sell your practice and walk away with X number of dollars AND have a minimalist practice you set up elsewhere. Usually, a buyer will want a non-compete clause, but these have both time and geographic limits. For example, you might negotiate a 5 or 10-mile radius outside of which you can start a new practice. Also, if you have an interested buyer, you could negotiate continuing to work at your own practice at reduced hours and without any administrative responsibilities.
- The other area of due diligence is in knowing what you will do instead. Since your practice is well run and you have a partner, consider one or several extended periods of time off (like one month) to explore other life options. If you feel hesitant doing this, regard that as a prompt to ask yourself “why?” After all, if you want to sell the practice for a good sum, the place must be able to run well without the benefit of your ever-watchful eye. That’s what buyers are looking for. Extended periods of time off can expose problems that can be fixed. But, of course, the main reason to take time off is to explore (without commitment) other life options. These may include something completely unrelated to work, like hiking in Patagonia, or something career-related, like taking some administrative or business courses or working in another medical setting. Also, if you tell me you can’t afford to take time off for financial reasons, I would question you on how much profit your practice generates. With a practice this large it should be substantial. If not, then maybe it’s not worth keeping it in its present configuration. And also, in this case, it’s not of much value to a potential buyer.
- Another area for due diligence is in holding detailed discussions with your business partner. Both your constraint and your strength is in having one. Your plan must be one in which both you and she agree and cooperate. To get to a clear and final plan you can brainstorm and investigate options together. It’s so great that you have a good relationship because this will make your and her transitions that much easier and more likely to succeed.
- Choose an Option
- This is what you will arrive at based on results of previous steps. The more comprehensive your due diligence, the easier and better will be your choice. With good due diligence, sometimes the right decision almost makes itself.
- Develop a Plan
- When planning you may find that you may need – or prefer – more than a year to transition. For example, a major part of how a business is valued is based on a multiple of annual earnings, such as 3 to 8 years of earnings. Earnings, by the way, mean profit, which does NOT include what you and your partner are paid for doing 1) patient care, and 2) administrative work because a new buyer would have to pay someone else to do that work. So, business brokers will often try to increase your medical practice selling price by optimizing profits over a period of about 3 years. This communicates to potential buyers that profits are stable and not a one year fluke – or based on deferring needed operational maintenance or upgrades. Thus, you may find that you can either sell your practice quickly or instead invest in optimizing it over a longer of period in return for a potentially substantially higher price. These ramifications should all have become clear in the Due Diligence step and the results will affect your choice and detailed transition plan.
- This is where the rubber hits the road. Stay strong.
- Monitor and Adjust
Clarity on your desired outcome and flexibility in reaching it or an alternative that becomes clear in the course of transition are both crucial to a happy outcome. Transitioning in life is a journey whose outcome and steps along the way can never be fully foreseen. The beauty and anxious abiding of the unknown are always in tension as we undertake major life transitions. You are approaching your journey thoughtfully and I wish you much success. Please be in touch as you undertake each step.
“Have a bias towards action – let’s see something happen now. You can break that big plan into small steps and take the first step right away.”
“Planning is bringing the future into the present so that you can do something about it now.”
“But Mouse, you are not alone,
In proving foresight may be vain:
The best laid schemes of mice and men
Go often askew,
And leave us nothing but grief and pain,
For promised joy!”
Robert Burns (English translation from Scottish)