ISCPS Turnberry Isle Resort –
December 2004 Symposium


“Top 10 Reasons To Have An Practice Transition Plan and Exit Strategy From Practice” was the topic of the presentation by John Downing of Downing Associates Inc. & Cosmetic Practice Transitions LLC consulting firm with headquarters in Valley Forge, PA.

The undisputed # 1 reason is…you’ve spent a lifetime building one of the most significant assets you own that can be converted into a meaningful financial return to you with the proper planning, timetables and execution of the right strategies!

When the attendees were surveyed to determine their level of awareness about “the need or perhaps the opportunity” of having a practice exit strategy while also receiving compensation for the practice assets, there were really no surprises, at least to John Downing. Downing asked by a showing of hands the number of attendees who have some level of personal estate planning in place, of which 100% responded they had. However, when asked how many had some provision to include the subsequent transition or dissolution of their practice assets, 100% hands dropped!

This response certainly expresses the need for greater industry awareness and education about the opportunities available to plastic surgeons to plan, prepare or act in transition while they are still on top of their game or at the twilight of their careers. A word of caution about the twilight career thing…almost every surgeon assumes that they will just work until they stop but that is as far as it goes. The key to creating a happy ending is directly linked to planning a good start.

Let’s look at the fundamental issues of developing a business continuation plan and transition of a plastic surgery practice.

WHY TO TRANSITION – This is an especially important question that creates the foundation of your core transition message and concept, and embodied in your marketing and promotional strategies. Although there are a myriad of reasons why one would chose to acquire a successor to transition over time, here are the most common factors.

• Lessen overhead burdens
• Allow more time off
• Mitigate call obligations
• Pending medical disability
• Early retirement or career change
• Practice sale for return on investment

It is important to have a thorough understanding of one’s own motivations and expectations before attempting to figure out the best solution to achieve the desired outcome.

HOW TO TRANSITION – There are fundamental concepts inherent to the transfer of ownership between a buying and selling entity, however a “soft approach” versus a “hard sell” may allow for a more enjoyable experience and outcome for all parties involved. For instance, we all have heard of the dreaded fire sale or bargain basement transactions. As such, buyers always seem to be suspect of seller’s motives, while striving to reach common agreement. To help avert some of the doubts of a younger surgeon while building confidence in one’s transition negotiations, consider adopting these concepts early in your planning stages.

• Focus on the transition of your business versus selling off assets

• Showcase practice, infrastructure and staff in the most positive way

• Create an environment that converts versus competes for patients

Another issue discussed was the myth about cessation of surgery when one decides to transition out of practice. Nothing could be further from the truth, in that the senior surgeon will be required under most circumstances to continue with consultations and surgery throughout transition to help retain patients, cash flow and business infrastructure which are key ingredients of your business continuation plan and success.

WHEN TO TRANSITION – The timing of any transition initiative should be well though out with a realistic timeline for events to occur. In some ways it’s like to question of when is the right time to purchase life insurance? Or for instance, when a senior surgeon has procrastinated without sufficient time to extend a transition, then a fire sale is likely. Although there can be unusual or extenuating circumstances, a complete plan allows time to search for a successor, time to negotiate arrangements and time to work together during transition.

• It is never to early to have a transition plan in one’s overall estate plans

• Allow a minimum of (2) years to locate and negotiate with a successor

• Start your planning (3) to (5) years prior to anticipated retirement date

Senior surgeons may elect to extend the transition term especially in consideration of perhaps working two weeks on and two weeks off, or one month on and one month off reduced schedule, etc.

Finally, the question of how to get started is best answered by where it is that you want to be.

First and foremost, is to “assess yourself” and to define your own objectives and agenda.

Next, you will then want to define the most viable scenarios and type of successor who would best complement your opportunity and then negotiate fair terms that meet your needs.

And lastly, be open to all viable contracting and financing models to appeal to the widest number of parties interested in your practice and geographic location.

These factors are crucial aspects of your planning that sets the stage for everything else to follow.

For further information contact John Downing at (610) 344-3200.