Dr. Donald Carter had a successful medical practice in Denver for over 30 years before deciding to hand over the reigns and sell his practice.
How did he come to this difficult decision? And how did he pull it off?
“Keeping it in the family,” Dr. Carter sat down with his daughter Elle—Fundera’s Senior Operations Analyst—and answered a few of her questions on how he kept his practice running for so many years and what made him finally decide to sell it off.
1. Why did you decide to start your own practice instead of joining an existing practice, or even working at a hospital?
I finished my surgical residency in 1981, and after considering my options, I decided to start my own practice. Private practice, at that time, afforded the most opportunity in both my personal and professional life. After being in a rigid residency training program for 5 years, I felt it would be refreshing to be my own boss. I wanted the experience of running a small business, since that also presented a new set of challenges to me.
Medical education provides a rather narrow scope in education. Unfortunately, medical school and medical training provided me with no knowledge about how to run a small business. Learning business skills, including finding the funding to start a small business, was quite challenging. Managing employees was something with which I had no experience. Benefits, payroll, and promotions were areas where I was unprepared.
I was able to find good consultants to help with the startup. These people had years of experience in assisting physicians set up a new practice. I also wanted to stay in Denver where I had done my training. It was very important to research and find where there was the most need for an ENT physician in the geographical area.
3. How did you balance the “entrepreneur” life with your personal life?
Most physicians feel that their first loyalty is to their practice. Having this attitude actually interferes with your ability to practice your profession, as there is really no way to separate the two. If you do not pay appropriate attention and prioritize your personal and family life, both will suffer. I don’t feel that having a balance is that difficult! It’s a necessity to be a successful businessman. You need to make your family an equal priority—or everyone will suffer.
4. You decided to sell your practice. How did you come to this decision?
Small medical practices are becoming a thing of the past. Corporate and government control of medical care is here to stay. This really has nothing to do with improving medical care, but only about controlling a larger part of our economy. I decided to sell in order to adapt to the changing times.
During my 30 years in practice, regulatory and government intervention has grown exponentially. Recognizing this fact, not only in my business but in every business, is the key to continued success.
Analysis told me that it was optimal for my patients, my employees, and myself to sell to an organization that had the infrastructure to more efficiently deal with the changing bureaucracy in medicine. This let me spend more time with patients rather than addressing regulations and paperwork. At some point in every business it makes no sense to buck the trend.
5. What was the hardest part of the selling process?
I sold my practice to a hospital organization. Integrating my private practice employees into the corporate structure was somewhat challenging and probably the most difficult part of the process.
Relinquishing part of one’s autonomy is always hard. However, after weighing the plusses and minuses, it wasn’t a very hard decision to make.
6. Despite selling your practice, you still work there. What’s that been like?
Medical practices are service businesses. You can’t just sell your practice and walk away. The physician is the business. As a physician, we bring enormous value to the corporation. Even though we “sold” the practice, the physician is still in charge of the patients, and therefore, the revenue created for the corporation. Leveraging this fact allows for the physician to maintain his high level of practice. Not having to be responsible for the overhead expenses anymore has made it much more enjoyable, as well.
7. What advice do you have for entrepreneurs looking to start their first business?
Starting a practice as I did 35 years ago is a risky business in today’s changing medical arena. Be very careful and be sure to know your market, and don’t under-capitalize yourself. Have a solid business plan and know how to implement it.
My advice, if you want to be an entrepreneur in medicine, is to avoid being a physician that merely provides patient care. Invent something. Join the corporate world of medicine. Get a broad overview of where medicine is going, and take advantage of it. If you want to be an entrepreneur, being a practicing physician will not do it.
8. What advice do you have for entrepreneurs looking to sell their business?
First and foremost, understand your value. Then, negotiate a fair deal. Hire good consultants to help walk you through the sale.
A physician’s biggest financial asset is his or her ability to generate money for someone else. Virtually, no expenditure in the medical field can occur without the physician’s direction and consent. In today’s medical economic structure, that creates a large amount of revenue for everyone but the physician.
However, the physician assumes all of the responsibility that the patient’s care is appropriate. This downstream revenue production is where today’s opportunity lies for the physician. This fact is how you can maximize the monetary value of selling your business. The most successful entrepreneurial seller needs to recognize this fact.