Build Your Practice and Build Value
The importance of goodwill.
By Michelle Collie, PT, DPT, MS
Most physical therapists start their practice eager and excited, with objectives and goals that revolve around growth and success. However, even from the first day of business it’s important to have the end in sight.
Eventually, you’ll need to leave your practice behind, whether you’re retiring, moving, or going in a different direction. If you want your practice to live beyond your ownership (instead of closing the doors when you leave), then you should have a succession plan for your practice. The most important part of the succession plan is your business’s success: making sure you have a great and thriving business that a buyer would find attractive.
Attractive practices have assets. And while physical therapy practices don’t have many tangible assets— equipment, accounts receivable, and leasehold improvements pretty much round out the list—they do have value from intangible assets, or goodwill. Goodwill is the value derived from the likelihood that a practice will continue to perform as it has in the past. For a practice to be valued appropriately, a buyer must have the faith and proof that that practice’s success does not rely on you alone. This is extremely important for any buyer, and because it is somewhat subjective, it is the area that results in the most controversy in negotiations.
Making sure your practice runs smoothly now and can run without you later means you’re setting your practice up for current and future success. In doing this, you strengthen the likelihood that your employees will be able to keep their jobs, your hard work won’t be for naught, and that you’ll be able to sell your practice for enough money that you can have the relaxing retirement you deserve!
Consider these marketing strategies to ensure success today and into the future:
- A practice needs new patients to survive and succeed. Ensure your practice has a solid marketing plan, with specific goals and tactics that do not simply rely on one person going out and meeting and greeting doctors.
- Have diversity in physician referral sources. If over 10 percent of the referrals come from one physician, imagine the financial ramifications when this person retires or moves. Track where your physician referrals come from and do not rely on one physician or one group. Keep a master list of the referring physicians, their contact details, and referral history.
- Have diversity in referral types. Track and follow where patients are coming from and how they find you, over time. For example, online search, mailings, community events, word of mouth. This allows any potential buyer to see the opportunities available and changes over time, allowing strategies to be put in place to prevent a decrease in new patients after an acquisition.
- Gather contact information. Patient lists, which include addresses, phone, date of birth, and email addresses, are extremely valuable for any acquirer, allowing ongoing marketing strategies to be used to ensure patients return, even if there is a change of ownership in a practice.
- Track and record practice management statistics. Practice management statistics over time will allow you to advocate for the goodwill value of your practice. Measure conversion rate of referral to an actual patient, visits per episode of care, early dropoff and arrival rates. To be successful, your practice needs a solid system in place that shows these statistics stay within a certain range.
- Build your online reputation. Online reviews can help or hinder your valuation. Building your online reputation can take many years, so it’s important to start early. Develop a plan to ask patients to provide reviews.
- Use social media. A strong and active online community helps to demonstrate brand awareness and loyalty. Choose which social media platforms align with your practice and then make a plan to build your online community. It’s better to have a strong presence on one social media platform rather than a poor following on all.
- Add specialty programs. Consider the community you serve and the value of services. Additional specialty programs that cater for the elderly, women’s health, and other areas can add value to your practice if the population you serve can support it.
- Be known. Make sure your brand, name, and logo are well known. Showing your practice is well known in the community adds to the value of goodwill.
- Focus on growth. Measure, show, and potentially prove your growth over time. Consider using three-month and 12-month trailing reports and graphs to demonstrate trends, growth, and the potential sustainability over time of new patients and total patient visits.
Building your practice with the end in mind might feel strange but doing so will not only make you successful at the end of your time with the practice—it will also ensure more success during the journey itself.
1 Coombs W. How much is your physiotherapy clinic worth? CPA Private Practice Division.
2 www.ppsapta.org: Review the Practice Management’s Marketing Resources section, including the Marketing 101 videos, the 99 marketing ideas, and more.
Michelle Collie, PT, DPT, is the chair of the PPS PR and Marketing Committee and chief executive officer of Performance Physical Therapy in Rhode Island. She can be reached at email@example.com.