Practice purchase advice

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Hi Y'all,

I'm thinking of buying a practice but there are some BIG problems.

The previous chiropodist has left but is 'selling' the goodwill of the patients. However, there are no clinics booked and any goodwill is likely to be evaporating to other chiropodists.

The previous chiropodist still has many of the old clients notes.

The business cannot be classified as a going concern because he no longer practices in the area (he is emigrating).

The practice is based at an Osteopath clinic.

He is asking for £10,000 - but I ask 'what exactly am I getting for my money and why can I not just step in where the previous chiropodist has been'.

I am reluctant to buy a business for the above reasons and would be grateful for other members opinions/advice.

Dolan.

 

Hello Dolan,
If you are an SCP member there is a wealth of information on the SCP site (in the Members section) on just this subject and there may be a Branch or Private Practice Network in your area that can give you support. Additionally there is a Professional Practice Officer that can help you and she is available at SCP offices.

Buying a chiropody practice is no different to buying any other business. You need to see audited accounts in the first instance. If there are no patients booked and the client base is slowly leaking away it can hardly be called a "going concern", or as you quite rightly point out, have much "goodwill". It looks like you may have to start from scratch.

If you are sharing with someone else this will certainly cut down your overheads but chiropody has more stringent requirements for a clinical environment than osteopathy. Do the premises meet HPC standards?

You'll certainly need to do some number-crunchiing on this one. Work out how many days a week you want to work, how much you could charge, what your fixed and variable costs will be, do you have receptionist support? etc etc. From what you say £10,000 sound a rip-off if you don't really know what you are getting for your money.
Dido

 

What you have is an area where previous patients are not serviced, Simply set up and they will try you.

Goodwill is dubious anyway, and in the case you cite, non-existant.

 

Johnpod,
I am absolutely appalled that you would give such ill-thoughtout and irresponsible advice.

Dolan,
The Insolvency Helpline www.insolvencyhelpline.co.uk gives 65 reasons why small businesses fail, so you will need to do your "homework" carefully.
Good Luck!
Dido

 

Thanks Dido for your helpful advice. I did some 'number-crunching' based on the weekly rent the previous chiropodist paid. It is for one day per week with between 15 & 25 patients @ £25 per appointment. However, this is at 4 patients per hour (a bit too fast- - I would aim for 3). I could calculate it as such minus 30% potential drop-off. Nevertheless with no clinics booked I have no forthcoming figures to work with.
My gut instinct is that if they want a chiropodist to work there I would not turn it down but ... to buy it - no way.

Dolan

 

Hello Dolan,
I think your gut instinct is right on this one as it sounds a bit nebulous. I do not think a 15min appointment for £25.00 represents value for money from the patient's point of view. Even if patients were prepared to pay the fee, and with full clerical support you could not sustain such a pace for long. It allows no time for any unforeseen problems, medical emergencies, writing referral letters, etc.etc.
Certainly if they need a chiropodist one day a week and you can strike up a beneficial arrangement with them that might be OK.
If you are an SCP Member pm me and I will put you in touch with the Private Practice Network Facilitator in your area.
Dido

 

Hello Dolan

There are any number of variables involved in setting up in pp. For example what is the patient base? If the area has a small catchment area, then this must be considered too. What is the equipment like? Your back is valuable and unless you are provided with electronically controlled couches/chairs this might add to your expenditure. What is the 'footfall' like?

My basic advice would be to:

i) contact your local branch if you are a member of the Institute; you will find a wealth of information/advice

ii) check if there is space available in a local GP practice

I wish I had done no. ii) when I started!

Good luck

Bill

 

Hi Dolan,

Good luck whatever you decide but beware.

A local Pod here sold a 'going concern' (single chair practise) to a married couple of Pods & they created 2 chair clinic 2 years ago & she now advertises in same area for doms.

Charmed I'm sure.

Buyer beware every time.

 

Hi Dolan

I write as someone who manages a practice that was initially purchased as a going concern and I can say for all involved that this was an extremely wise move.

But we new exactly what we were buying - a run down property in much need of renovation; worn out fixtures and fittings; 7 months of advanced bookings - fully booked 2 weeks in advance at take over point, plenty of bookings for several weeks hence and sparse bookings to end of year; 3 years worth of audited accounts and 35 years worth of absolute top good will.

The building was purchased way below its market value due to the 1989 housing crash but the goodwill was purchased at exactly the price asked because we knew we were getting value for money. It was there in black and white, nothing hidden. The building could be repaired gradually, the equipment replaced but the challenge was to maintain and increase the goodwill.

My advice would be to steer clear of the Podiatrist who is trying to sell his already eroded goodwill and talk to the Osteopath. I am sure that he/she is finding their own goodwill also being affected if one service provider has left the practice, with no continuity to patients being offered. Not good business sense by the emigrating Podiatrist.

Try and find out if there is any contract in place between osteopath and podiatrist before offering your services to the clinic. It is just a case of checking out ownership of goodwill. At the moment nobody owns it with this 1 day practice no longer being a viable option. I bet you anything there is no contract in place.

As has been mentioned before look into all the other business aspects - what equipment, what facilities, is the premises suitable for HPC standards (assuming you are HPC registered), look at populus, nearest competition before even committing to offering your services. Consider your own financial situation and what monetary investment you may need to make. Check out if there is a chance of expansion or are you going to be restricted to 1 day per week.

I have to agree with Dido, Johnpod is offering poor business advice. You cannot "simply setup". Commencing practice is not just a case of setting up in an an area that is not serviced and they will try you.

Whichever professional body you belong to, seek advice but don't expect it to answer your doubts. Also look into local business advice. Most local authorities offer advice via business enterprises which is free and often provided by bankers, accountants and solicitors. We have obtained fantastic business advice from these resourses and picked up the odd patient or 3 from these contacts!

Johnpod, I just hope you offer your FHP's, on course completetion, far more business set up advice.

GB

 

Twirly,

You will find that there is nothing you can do to stop a selling Podiatrist from doing this. At the point of contract exchange you can slap a covenant which limits setting up practice for 2 years within a specified radius. Quite honestly, this is only worth the paper it is written on as court costs could exceed the goodwill you paid in the first place should you take the contract defector to court.

Another good reason for Dolan to consider and thanks for flagging it up.

GB

 

One question!
If a Chiropodist walks away from a business dos that practice cease to belong to him? At what point doe he forfeit the 'goodwil' of the patients?

 

Dolan

I think the situation you have described is more one of "duty of care". The podiatrist has ceased, in his duty of care, to provide footcare from the premises he rented from an osteopath and therefore has relinquished any rights to goodwill. The business element of this practice belongs to the osteopath.

The podiatrist is attempting to sell his good will which is not a business but somewhat of an enigma in the fact that there is no continuity of income from product sales.

If you belong to a professional body, you should be able to seek Employment Relations advice and therefore a legal take on this situation.

My advice, for what it is worth, if you have such grave doubts just walk away.

GB

 

I think this just about brings this thread to a close. I will continue to look for responses and will let you know of any developments. Thanks to all who ahave contributed.
D

 

Hi Dolan,

I would like, if I may, to offer a further two items to that excellent list of advice already offered:

Not sure if you are newly qual'd or not, but if so you really need to gain some practical experience before opening a Practice on your own. Assistantship/Associateship (if you can find this in your locale) is a good way of gaining practical experience, as of course is working in the NHS for a spell.
My own view is that doing an NHS stint, followed by an Assistantship in a busy Private Practice will give you the best possible pre-Practice-ownership experience. It's what I did (a few years back) and the transition from newly-minted chiro to Private Practice Owner was painless.

Find or develop a "specialty" which makes you and your Practice stand out from your colleagues. This need not be Surgery or Biomech, it could be something as simple as providing a friendly and inexpensive nailcare service within your Practice.

The only other thing I can think of which has not been covered on this thread is that you should look out some Chiropractic articles on running a Private Practice. They are usually very switched on business-wise.

Good luck!

Cheers,