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Practice Reorganization / Sale

The Problem

The sole shareholder of an ENT group practice desired to sell his ownership stake to several of his employed physicians within the group practice.

After a practice assessment, MDmanagement advised our client that the practice – in its current state – was not worth the desired sale price. The overhead was approximately 83%, the collection of patient and insurance accounts were neither timely or efficient, and there were no financial controls in place.

The Solution

In order for the owner to receive the desired value, MDmanagement recommended – and received permission to implement the following initiatives to improve the equity in the business:

  • Recruited for, interviewed, hired and mentored a new practice administrator and business office team leader. Restructured the responsibilities and duties of both positions;
  • Implemented business process protocols to accelerate cash flow and reduce operating expenses;
  • Redefined job descriptions for the entire staff and implemented a performance-based appraisal system;
  • Placed a moratorium on all non-revenue producing spending for the practice;
  • Implemented a labor productivity management system; and
  • Established ancillary revenue systems within the practice (allergy testing, audiology, hearing aid sales, and office-based CT)

The Results

During a two year engagement, MDmanagement achieved the following results:

  • Reduced days in accounts receivable from 150+ days to 45 days or less
  • Created a high performance management team that ensured staff accountability
  • Lowered the practice overhead to 53%
  • Increased new patient volumes 25%
  • Increased surgical volume by 40%
  • Increased shareholder equity in practice by $2,400,000 – as documented by net proceeds of sale to employed physicians
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