Getting “Up and Out” of your clinic
Clinic owners have a unique disadvantage putting pressure on their hourly rate. When they aren’t seeing patients, they are managing other people’s ability to see patients. This is often less profitable, more emotionally draining and ten times more time consuming than just seeing patients themselves.
The clinic owner’s dream is to eventually work less and to benefit from the fruits of their risk, labour and vision and yet, most clinic owners see more patients than their associates and somehow have to support their associate’s practices too.
The problem isn’t integrative medicine specific. Dental offices and medical offices where the owner isn’t getting their “hands wet” on a weekly basis are not as valuable as a business, have less goodwill and can be harder to sell.
How can clinic owners successfully transition from seeing the most patients to seeing the least? Three things need to be true for this to happen, and in our experience can take 12-24 months to successfully transition.
1. You need to be paying yourself like an associate.
Clinic owners notoriously take home whatever is “left” in the business at the end of the month. It’s not uncommon for that to be a lower percentage than what they’d make as a high powered associate in someone else’s clinic. Their associates take home their cut, typically 60%, (the accuracy of this number is a topic for another day) and owners take home less than 60% of their own patient billings while they float the overhead of the office. They do this, waiting for that magical day where they’ve grown into their expenses and they can be rewarded for all of their pain.
Your clinic can’t be bankrolled by your patient visits and you start to decrease your patient facing time. You can’t be the financial safety net of your exploding expenses and you take more vacation. You can’t get “up and out” until you untangle your personal practice from the revenue of the clinic. The clinic needs to stand on it’s own two feet before you can even consider pulling yourself out.
Try taking home 60% of your billings. What does it do to the functionality of your office? It’s a good sign to figure out how close you are to reducing your hours.
2. You need to stop saying yes to every patient (and give your associates a freaking chance)
You are the brand. You are the draw. But you also have to be willing to stop that if you want to get out of the day to day of your office. It can be a big ego hit for practitioners to attract a patient and then send them to someone else. It can be uncomfortable to let a gap live in your schedule while you send a new patient to someone else. It can be hard to say no to a direct referral when you know you’re not the best fit for the patient.
No associate can thrive in an office where the owner takes all of the new patients. Even if you are the star of the show, it’s not helping your bigger vision to feed your ego on a random Tuesday. Growing someone else’s practice with the patients you attract takes a mindset that is hard to foster when you’ve spent most of your career worried about making rent. If you never move into the leadership role of owning your clinic and supporting your associates, you’ll never be able to step away.
3. Your expenses need to justify you not working.
Similar to number 1, when an owner is raking in a surplus of cash, rather than saving, we tend to “reinvest” in our businesses. Medium sized clinics are hard to float. They often have the expenses of a large clinic, without the patient flow of a large clinic. It can mean that one expense (whether it be rent or staffing costs) is higher than is needed if the owner stops working. Rather than constantly thinking about growth, the last 24 months before you scale back your hours needs to be focused on expense refinement. How can you get the same amount of work done with less staff hours? How can you utilize your space better when you reduce your hours? (and for the love of God, don’t move to a larger space). How can you increase your average spend per patient per year, without constantly increasing your ad spend?
Reducing your expenses while you try and reduce your hours makes sense, especially if you are the primary income driver in the clinic. And yet, most clinic owners are always looking for “growth opportunities” which could be rephrased as “ways to increase expenses while we cross our fingers and hope for more revenue in the future”. It’s hard to simultaneously reduce your patient facing time while you “grow”. Try refining. See if you can save some money by refining your expenses.
4. You need ultimate clarity on what your pay cheque needs to be.
Why do we all struggle to answer “how much money do you want to make?”. Apart from our money trauma from our baby boomer parents, I think that clinic owners struggle to answer this question because their income has always been so unpredictable. Could you “get by” making almost nothing? Sure. You’ve done it before. Could you “do” with a few extra thousand dollars a month? Sure! That’s happened a few times in your career too.
Without knowing what your income needs to be to give you the life you want to live, you’ll never know when it’s time for you to get “up and out” of your clinic. If your clinic only profits enough for you to draw an extra $20,000 on top of your own patient visits, you have to ask yourself if you can live on that. It’s common for clinic owners to reduce their hours, realize that they can’t live on the 20k their clinic brings in per year and then feel caught between going back into patient care or spending 23 hours a day building their associates’ practices. (Which is arguably less fun than just seeing patients themselves).
If you truly want to reduce your hours and get “up and out” of your office, you need to take a hard look at the financials of your clinic, your mindset about the change and then plan for 24 months of a rocky road while you implement. It’s possible (I did it), but it’s not an overnight flight to the land of passive income. It’s a strategic game of chess that you might not even win when the game is over.
With the right coaching, clinic owners can become business owners. Just because you are the best clinician in your neighbourhood doesn’t mean you have the tools to become a successful business owner. The good news is, you can still learn.