Best Practices
A practice-wide approach to succession planning
Staff members need to be ready to step up when the need arises.
By Bruce Maller
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Bruce Maller is president and CEO of BSM Consulting, in Incline Village, Nev., and Scottsdale, Ariz. Resources discussed in this article are available at www.BSMCafe.com. |
Succession planning is a process that aims to provide an orderly transition of the ownership, leadership and management of a business. Given the relative importance of this exercise, it is fair to question why so few ophthalmology practices commit the time and effort necessary to get this right.
In my experience, many reasons exist for the lack of attention to this effort. Most notably, practices tend to focus on day-to-day operations and not take a long-term strategic view of their business. Also, many practices associate succession planning with the transfer of ownership in the event of the death, disability or termination of a partner. Although this is an important element, practices need to take a broader view and consider how best to integrate a succession plan within the context of overall strategic planning. An important component of this process is to project the future talent, skills, knowledge and competencies necessary to support and sustain the practice.
NOT A SINGULAR EVENT
A common mistake many practices make is to focus on succession planning as a singular event requiring the hire of a physician or surgeon to replace a key producer. Practices are better served taking a more global approach that focuses on having a proactive plan that addresses succession throughout the organization.
The loss of any key staff member — practice administrator, marketing director, front desk or billing office supervisor — can have a significant impact on a practice. It is vital to have a plan that focuses on developing staff members to be ready to fill important supervisory or management roles when needed.
Investing in a management and leadership development program for the key practice stakeholders is an essential element of succession planning. Not surprisingly, however, most physicians and practice employees lack the requisite experience and skill sets to effectively lead or manage a business. This is largely because most lack formal leadership and business acumen training. Actively initiating and promoting an internal career development program as part of a broader strategy will help a practice anticipate and meet future needs.
STABILIZE THE FUTURE
Why is this important? From a business perspective, much of the economic value associated with a typical ophthalmology practice exists in ancillary assets such as an optical dispensary, ambulatory surgical center and real estate holdings. The viability of these assets and the ability to command a “market multiple” is most often dependent on having a successful practice that can “feed” these profit centers.
| Is it time to recruit my successor? |
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It is challenging for many physicians to know the “right” time to recruit a successor. Most are not eager to cannibalize their clinic or surgery volume. Instead they often choose to hang on until it is absolutely necessary to transition their patient base. I normally recommend planning to recruit a successor at least five years before the anticipated transition date. This should allow adequate time to find a candidate with the necessary skills and who can fit well into the practice culture. While some physicians are cynical about finding a successor because of generational and work-ethic issues (and there may be some truth to this), I believe that one needs to adjust expectations and invest the time in educating the next generation of physician practice-leaders. Although there is never any guarantee of success, the answer is in having a thoughtful plan and process that focuses on the development needs of the individual. |
So, even if one argues “my practice has limited value” in the current environment, enhancing the return from other assets is a function of maintaining a stable practice base that will continue beyond the working life of the founder or partners.
Potential buyers or partners generally focus on whether the practice can sustain the current book of business in the future. Buyers will avoid or significantly discount the value of a business where they see a lack of planning or risk associated with replacement of a key manager or producer.
Practices that adopt a practice-wide approach to succession planning — including all key leadership/management positions, not just the physician/owners — will be in an excellent position to stabilize the future by making key personnel changes in a seamless and orderly manner. OM
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