GETTING STARTED

This section includes three articles. The first, “How to Create a Personal Organizer and Financial Statement” by Haeger, describes how to go about organizing your personal estate, detailing various accounts, and developing an updated personal financial statement. You should start filling out the downloadable Word document (www.jco-online.com/media/36835/personal-financial-template.doc) that accompanies this article even before you find a location for your office. The roundtable hosted by JCO Editor-in-Chief Robert Keim, “Starting a New Practice,” covers location, financing, marketing, office design, and staffing, as well as general steps to follow as you establish a new practice. The third article, “Practice Acquisition: Financing and Related Issues” by Hill, discusses the details of loan financing, alternative financing structures for buying into an existing practice, employment agreements, and letters of intent. It also compares the likely financial outcomes of practice acquisition vs. startups.

A handful of variables that can impact the purchase price of an existing practice are not covered in these three articles:

• How much are contracts receivable? They should equal six to nine months’ worth of collections in a healthy practice.
• Is the practice growing or shrinking?
• How many pretreatment patients are in the practice waiting to start someday?
• How many patients are still in treatment with zero balance remaining on their contracts? This is work you will need to perform but which the seller has already paid for.
• What is the dollar value of contracts still processing for patients in retention? This is money coming in without any work to be done.
• What is the EBITDA for the office? This provides an overview of the practice’s profitability.
• How much will it cost to improve the facility to your minimum standards? More full-scale renovations can wait until cash flow increases.

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