A Therapist Walks Into a Bar . . .


How to get advice for your transition.

By Deb Gulbrandson, PT, DPT

Imagine that you are attending a Private Practice Section (PPS) event and after hours you decide to enjoy a libation. As you enter the bar you notice a group of physical therapists (PTs) sitting over by the fireplace enjoying a glass of wine. They motion for you to join them and as you make your way over you notice some familiar faces.

Jim Glinn of California introduces you to the group. “Patrick Myers from Kentucky, Bridgit Finley from Oklahoma, Kevin Hulsey from Idaho, Randy Johnson from Washington, Sandy Hilton from Chicago, and Rich Larsen from Minnesota—we were just discussing the fact that in one way or another, all of us have transitioned our practices in the past couple of years.”

As you listen to them talk, you start formulating an idea. You have been thinking about your business and what the next phase will look like, and you now become keenly aware of the opportunity before you. “Say, would you guys mind if I picked your brains a bit about your experiences?”

They all nod in agreement. (Maybe it is the wine.) “So it sounds like some of you have sold your practice outright and others are still involved. Could you tell me a little bit about your stories?”

“Sure,” says Kevin Hulsey. “I started my practice over 15 years ago and grew it to 16 clinics with a number of partners. I always felt that I would sell my interest to those partners, but it became clear that as the company grew and prospered the value increased to a point that it exceeded their ability to buy it. I wanted to have a succession plan in place. One day we received a cold call from a major rehabilitation company and we began talking. I felt a high level of trust with them and we ultimately negotiated a sale of 51 percent of the company. I still am in charge of my clinics. I have what is called a ‘put’ option and at some point in the future I will sell the remaining 49 percent to them.”

“I had a similar experience,” says Bridgit Finley. “I always knew I wanted to have partners so when I started my practice, I quickly brought partners on board and we grew to 17 clinics. For several years I had been having the ‘What happens if I get hit by a bus?’ scenario with my partners. None of them wanted my job as chief executive officer (CEO), nor did they have the means to buy me out. I also wanted to provide an exit strategy in 10 to 15 years that would allow me and my partners to realize the value of the practice. We made the decision to partner with a firm that included a number of roll-up entities into one common holding company. In fact, I wrote an article about that experience for Impact last year. [See “Navigating Practice Transitions,” Sept, 2015.] Now, a year after that article, I can still say it is a win-win. My original nine partners have ownership in all 18 clinics and I still run my company just like before. Only this time I have resources and people to push and challenge me in ways that I previously never had.”

“My experience is vastly different,” says Sandy Hilton. “I was a military spouse, traveling around the country, usually staying a few years in one place. We landed in Ann Arbor, Michigan, with the idea that we would be there until our kids graduated high school. I worked at a hospital and decided to open a cash-based practice on a part-time basis. I wanted to practice real physical therapy, not insurance therapy. It went really well. And then my husband was transferred again, to Chicago. Since I had moved so much, I did not want to just close the doors. So I picked a buyer. An occupational therapist at the hospital and I had similar values, and I convinced her to buy it. I appealed to her passion for patient care. I helped with the financing and the loan was paid off in 2013. I am happy to say it continues to do well. She has put her own spin on it, but I feel the legacy that I started is continuing. I have since opened a private practice in Chicago with a partner and am having the time of my life.”

“I was not actively thinking of selling,” says Randy Johnson. “I kept kicking the can down the road about an exit strategy for my 24 clinics. I thought we would just keep getting bigger and bigger. One day I received a phone call from a corporate entity and honestly they gave me an offer I couldn’t refuse. The sale was a large and complicated process but I do not think I would really change anything. I currently am involved in a number of nonprofits in the fundraising arena. I consider myself still in transition and am finding that there is life after being a practice owner.”

“Well, let me add my story,” says Patrick Myers. “I own four clinics and I felt like we were middle schoolers—old enough to know better but just at that age to get ourselves into trouble. We either needed to grow significantly bigger or get much smaller. At our size we could not take advantage of economies of scale yet our revenues were struggling to keep pace with our expenses. Even though the business was growing, payments were decreasing. Several years ago I looked around at options, and I received a nice offer from the hospital for an executive role in their corporate structure. However, I could see the writing on the wall and realized what it took to get the job done in that environment. I have an 11-year-old son and my priority is work-life balance right now. At Combined Sections Meeting [CSM] I started a conversation that ultimately ended up with us merging with a holding company. To me it was like we became Kanye West with two big bodyguards. It has given us the option to remain in private practice with muscle. We also have great access to leaders in our industry, from insurance-related contracting issues to awesome continuing education programs.”

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“I really feel I got lucky,” says Rich Larsen. “I owned my practice from 2007 to 2012 with four locations. I was offered a research position at Mayo clinic, which was where I graduated. At about the same time I was approached by two of my employees who expressed interest in buying my company. The process only took about four months and the outcome could not have been better. It was a very serendipitous experience.”

“Well, my story is the same and different,” comments Jim Glinn. “Same from the standpoint that we were always trying to figure out ways to share ownership. We started the company in 1999 and grew to 20 clinics with 11 physical therapy partners. The problem was in looking at the next 10 to 20 years. We would have to keep growing the business; otherwise it would not support itself. We looked at phantom stock but that did not work for us.

“An elegant solution was an ESOP [employee stock ownership program], so we began in December of 2014. It has allowed us to create that ownership culture in our employees. Overall I have learned a lot and it has been a fun process . . . outside of the attorney fees. I think we may be giving a presentation on this at Private Practice Section [PPS] Annual Conference this year.”

Wow, you think to yourself, there is a gold mine of knowledge and experience here. So you decide to ask the ultimate question. “What advice do you have for someone thinking about their own transition?”

Kevin: “If you want to stop working in 5 to 10 years, now is the time to begin the process. Most buyers want an owner to stay on for a period of time. If a buyer is willing to purchase a practice where the owner is leaving, usually the owner will not get near the value that he or she would if starting early.”

Bridgit: “Position your business to sell even if you do not think you will. Clean up finances; bring in a partner. A sole owner may be a red flag for some potential buyers because they may feel the owner may not be invested in growing the business. Develop your people. Do not let fear make your decisions.”

Sandy: “You can look at the sale of your business in a couple of ways. The emotional standpoint where it is your garden and you have grown and nurtured it. You want that growth to continue in the way you ‘designed’ it. On the other hand, there is the business standpoint. You want to get the best possible price and/or benefits. It is important to know what is important to you before going into the process. And if you are just starting a business, think about your end game and try to anticipate the questions that you may ultimately ask. In my current clinic I now have a partner. What happens if one of us decides to leave and the other wants to continue? Those kinds of questions are best figured out beforehand.”

Randy: “Cross off the word ‘retire’ from your list of options. Private practice owners are not the kind of people to sit around and play golf or read all day. We want to help people, create solutions, and make a difference. Try to figure out what you are going to do next before you get there because you will be putting a good portion of the energy that you used in running a private practice toward your next phase. Determine what your strengths are. Read the book StrengthsFinder. Also strategize with your spouse or significant other. Whether or not they were active in the business they had a huge hand in the process and their concerns need to be appreciated and understood.”

Patrick: “Try to ‘pre-litigate’ before the attorneys get involved. We spend a lot of money with attorneys to avoid problems later on. If you can do work ahead of time discussing potential issues, talking to lots of people at conferences, listening to their ideas, etc., you can save money. I also talked to corporate sales companies but the number one resource was my spouse. You are living with that person for a reason, right? If it does not work for them, it does not work for you. It is also extremely important to be able to walk away. If it is the wrong culture or fit, you have to have the courage to walk away. Envision yourself in five years and make sure these are the people you can sit down with and make great decisions for your patients.”

Rich: “Identify what you value and what your end goal is. I admit that I did waffle a bit back and forth between selling and wanting to keep the business. At the end of the day I was surprised. As an owner you invest everything into your business: time, money, energy. But as I transitioned, I found that life goes on. It is not about me. It is about taking care of the patients and the employees.”

Jim: “There are a lot of options out there for owner transitions. Educate yourself to find the best fit for you and your team. In the end, we all want to leave a legacy.” 

Note: A special thanks to all the members for the willingness to share their personal journeys. I am deeply grateful.


Deb Gulbrandson, PT, DPT, is a PPS member, Impact Editorial Board member, and owner of Cary Physical Therapy in Cary, Illinois. She can be reached at deb@caryphysicaltherapy.com.

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