If you’re: (1) in a solo practice grossing up to $400,000, (2) fed up with the isolation and responsibility of running a solo practice, (3) ready to share management and emergency duties, as well as weekend treatments, or,  (4) looking for an avenue that would help sell your practice, you might want to consider a merger with a neighboring practice.

Surveys and comparable data analysis demonstrate that mid to larger practices (grossing in excess of $600,000) are more profitable than smaller practices because the fixed costs become a smaller and smaller percentage of the costs.  The same data reveals that practices larger than $400,000 are more salable.  Therefore, for the small practice, a merger with another small practice (or with a larger practice) can result in more profit as well as a much more marketable practice when the time comes to sell.

The fixed costs (such as legal, accounting, utilities, rent, some insurance costs, etc.) can be saved if two sites are merged into one, especially if one location has sufficient existing capacity to “house” both practices.  Many do.  Additionally, most practices have the excess capacity in terms of personnel to absorb more clients without significantly increasing some of the staff costs such as practice manager, bookkeeper. This can provide the opportunity for even greater profitability and increase in practice value.

Thinking about these issues will help make a smoother transition during a practice merger:

1. Do you have a compatible philosophy of business, medicine, personnel management and client service?
2. Your autonomy and independence must give way to compromise and cooperation.
3. Practice systems must be reconciled and merged (financial and tax accounting, computers, software, staff compensation, benefits, policies and procedures, etc.).
4. The staff and the clients must understand why and how a practice merger will help them.
5. Careful and thorough planning with all stakeholders can assure success.

The process of merging should be slow and methodical with lots of forethought and planning.  Make no mistake, it can be difficult. But, quality of life and financial well being can both be enhanced for those practice owners who thoughtfully plan and fully implement a merger of their practices.  Could there be a merger in your future?