Does this exit strategy suit your practice?

Thomas Cooper, principal of Cooper Consulting of Ohio, has been using several criteria or filters to determine which of his clients are good candidates for an exit strategy. The following types of practices typically may be a good fit:

• Primary care practices in rural areas.
• Small-to medium-size groups (i.e., four to 10 physicians). Large groups are typically in growth mode, which means that they are adding new doctors or trying to attract new patients. These practices rely on healthy cash flow, which is often disrupted when implementing an exit strategy. “Also, the larger the group, the larger your chances of having an outlier, or a physician who is not on-board with this exit strategy,” Cooper says.
• Specialists rather than primary care physicians (PCP). Patients whose plans require that they choose a PCP “gatekeeper” who signs off on referrals could be reluctant to have an out-of-network PCP because they might fear that they would not be able to see the specialists that they want.
• Practices in which the payer mix includes a lot of PPOs, point-of-service, or other nonexclusive plans. If HMOs dominate your payer mix, this might not work for you because you simply won’t be paid anything out of network.
• Practices in areas where the competition is low. If there’s a lot of competition in your area, an exit strategy may not work because your patients could easily pick another physician with the same specialty.
• Mature practices. This involves the physician age mix in the practice. More mature practices have a loyal patient base. These physicians also tend to be at the tail end of their careers, so they can ride out financial bumps along the way.

About the Author

Reed Tinsley CPA

This article is written by Reed Tinsley, a Houston, TX-based CPA with over 30 years of experience advising physicians and medical practices across Texas and the United States. Reed holds certifications as a Certified Valuation Analyst (CVA), Certified Healthcare Business Consultant (CHBC), and Certified Financial Planner (CFP), specializing exclusively in the healthcare sector. He is a published author, nationally recognized speaker, and trusted advisor to physicians on accounting & tax, practice management, and financial planning. Schedule a Free Consultation.