Selling a Practice

Settling Credits Before Listing Your Practice

By Jen Bennett, Practice Transition Specialist

You’ve made the decision to sell your practice, and with that comes the to-do list of tasks that can often feel daunting. One important task that is often overlooked is settling patient credit balances.

What are credit balances and where do they come from?

In many cases, a patient will have a credit on their account when their insurance pays more toward their treatment than anticipated or you estimated a patient portion to be higher than was necessary and collected accordingly.  In these instances, patients paid more out of pocket than necessary; therefore, the difference will show as a credit on their account and on your accounts receivable report or unassigned credit report.  Credit balances can also result from patients mailing in a payment or making an online payment on a balance that they have already paid.  These are duplicate payments typically made in error.  When this happens, we recommend contacting the patients and advising them of the duplicate payment before posting it to their accounts.  Many patients will request that you return their duplicate payment to them and some will elect to leave the credit on their account if they have upcoming treatment planned.  If they have upcoming treatment planned, this can be an effective way to get them on the schedule. It can be difficult to reverse an online payment and, in those instances, you may have to post it to the patient’s account.  In other cases, patients may pay upfront for larger treatment plans and due to unanticipated circumstances, they were not able to complete their full treatment, or perhaps less treatment became necessary.  If you have a practice where patients with insurance are required to pay their patient portion due at the time of scheduling their appointment for treatment, then credit balances will appear on the patient account until the procedures are posted and until insurance has paid their portion, this is just the normal course of collecting patient portions upfront.  The same applies to patients without insurance if you collect the patient portion upfront.

How should I be handling credit balances?

To keep your credit balances at a minimum I would suggest you come up with an efficient protocol with whoever is in charge of your accounts receivable, whether it be your office manager, bookkeeper, or yourself.  Credit balances are typically handled by an office manager.  It is our recommendation that your accounts receivable report or unassigned credit report be reviewed monthly.  If there are outstanding claims on an account, no refund is due yet.  If there is a credit balance and there are no outstanding claims, we recommend contacting each patient and advising them of the credit balance.   And again, if they have been treatment planned for procedures ask each patient if they would like to keep the credit balance on their account and get them on the schedule for treatment.  If they have no upcoming treatment, it is typically best practice to refund the patient as soon as possible to keep your accounts clean.  Make sure to document these conversations about credit balances in patient notes.  This will serve you well in the long run when reviewing your reports each month for credit balances.  Some practices choose to monitor patient credit balances quarterly; however, if you are preparing to sell your practice, we recommend that you do this monthly.  You’d be surprised how quickly credit balances add up and how often they are overlooked.

One important note of caution!  When reviewing the credit balances on patient accounts, do not assume that the refund always goes to the patient!  You want to look back to the last zero balance on each account and look at patient payments made and insurance payments made.  Insurance companies make mistakes and sometimes they overpay and sometimes they make a duplicate payment on a claim.  In these instances, the refund is due to the insurance company and not to the patient.  Some insurance companies catch these errors quickly and request a refund in writing.  Others do not catch them so quickly and they have up to a year to claim their refund (this may vary from state to state).  Pay attention to this detail when reviewing accounts.  Remember to make notes in patient account notes so you don’t have to repeat your efforts every month.

I have not been settling patient credits on a regular basis, I have thousands of dollars in credits now what?

Follow the detailed recommendations above and get your accounts with credit balances cleaned up.  It is essential to do this leg work prior to the sale of your practice.  Make every effort to contact your patients to refund any monies due to them.  If the refunds are due to insurance company overpayments, contact them and ask that they send a request for refund letter.  If you are unable to reach patients with credit balances due to them, these credit balances in many states must be reported to the state in which your practice is located.  For example, in the state of Washington, credit balances over a certain dollar amount must be documented on an “Unclaimed Property Report” and filed with the state before November 1^st each year.  Do some research and find out what your state’s unclaimed property reporting requirements are.

*Disclaimer: The information above is not legal advice. Each state has its own rules and regulations. Be sure to review all rules and regulations as circumstances may vary.

Are You Ready to Sell?

Are you ready to sell your veterinary practice? This is always a difficult question to answer for most veterinarians. You may still love practicing but want less stress. How is your body holding up? Do you have enough money to retire? How much is your practice worth?

Contact your transition consultant/broker and have a heart-to-heart about your practice, goals, and options. We have lots of experience to share that may be beneficial to you. We can do a complimentary quick look to give you an idea of what your practice may be worth and of course a full valuation will need to be done to determine the final value.

Once you have an idea of what you may be paid for your practice and associated real estate, you can talk with your CPA and financial planner to know what retirement looks like for you and plan what to do with your sales proceeds. You may have practice or real estate debt to pay off at closing, or you may have a retirement plan you can utilize to save on taxes.

Many veterinarians don’t know if they want to sell their real estate with the practice. In our experience, the best person to own the space is the veterinarian working in it. If you happen to have a lot of rentals and enjoy that, maybe this is an option for you, but if your buyer leaves, empty veterinary spaces can be difficult to sell.

Sometimes veterinarians believe their practice is worth more than our valuation and want to stay on to increase collections that may have waned a bit due to slowing down. You can certainly do that but know that banks look at the last three years of tax returns so if you want to increase collections to increase practice value, you will need to increase and work another three years.

If you still love being a veterinarian and want to sell and stay on part-time, you need to start thinking about how much you want to work and how you will build a practice that can maintain a schedule for more than one veterinarian. This can be done, but you need to have a plan and your transition consultant can assist with this.

Are you ready to sell? Give it some serious thought after talking with your advisors and make the decision with confidence. Contact us today.

Are You Ready to Sell?

Are you ready to sell your veterinary practice? This is always a difficult question to answer for most veterinarians. You may still love practicing but want less stress. How is your body holding up? Do you have enough money to retire? How much is your practice worth?

Contact your transition consultant/broker and have a heart-to-heart about your practice, goals, and options. We have lots of experience to share that may be beneficial to you. We can do a complimentary quick look to give you an idea of what your practice may be worth and of course a full valuation will need to be done to determine the final value.

Once you have an idea of what you may be paid for your practice and associated real estate, you can talk with your CPA and financial planner to know what retirement looks like for you and plan what to do with your sales proceeds. You may have practice or real estate debt to pay off at closing, or you may have a retirement plan you can utilize to save on taxes.

Many veterinarians don’t know if they want to sell their real estate with the practice. In our experience, the best person to own the space is the veterinarian working in it. If you happen to have a lot of rentals and enjoy that, maybe this is an option for you, but if your buyer leaves, empty veterinary spaces can be difficult to sell.

Sometimes veterinarians believe their practice is worth more than our valuation and want to stay on to increase collections that may have waned a bit due to slowing down. You can certainly do that but know that banks look at the last three years of tax returns so if you want to increase collections to increase practice value, you will need to increase and work another three years.

If you still love being a veterinarian and want to sell and stay on part-time, you need to start thinking about how much you want to work and how you will build a practice that can maintain a schedule for more than one veterinarian. This can be done, but you need to have a plan and your transition consultant can assist with this.

Are you ready to sell? Give it some serious thought after talking with your advisors and make the decision with confidence. Contact us today.

Are You Ready to Sell?

Are You Ready to Sell

By Megan Urban, Practice Transition Advisor

Are you ready to sell your dental practice? This is always a difficult question to answer for most dentists. You may still love doing dentistry but want less stress. How is your body holding up? Do you have enough money to retire? How much is your practice worth?

Contact your transition consultant/broker and have a heart-to-heart about your practice, goals, and options. We have lots of experience to share that may be beneficial to you. We can do a complimentary quick look to give you an idea of what your practice may be worth and of course a full valuation will need to be done to determine the final value.

Once you have an idea of what you may be paid for your practice and associated real estate, you can talk with your CPA and financial planner to know what retirement looks like for you, as well as plan what to do with your sales proceeds. You may have practice or real estate debt to pay off at closing, or you may have a retirement plan you can utilize to save on taxes.

Many dentists don’t know if they want to sell their real estate with the practice. In our experience, the best person to own the space is the dentist working in it. If you happen to have a lot of rentals and enjoy that, maybe this is an option for you, but if your buyer leaves, empty dental spaces can be difficult to sell.

Sometimes dentists believe their practice is worth more than our valuation and want to stay on to increase collections that may have waned a bit due to slowing down. You can certainly do that but know that banks look at the last three years of tax returns so if you want to increase collections to increase practice value, you will need to increase and work another three years.

If you still love doing dentistry and want to sell and stay on part-time, you need to start thinking about how much you want to work and how you will build a practice that can maintain a schedule for more than one dentist. This can be done, but you need to have a plan and your transition consultant can assist with this.

Are you ready to sell? Give it some serious thought after talking with your advisors and make the decision with confidence. Contact us today!

What To Do with Your Practice If You Are Sick Or Dying?

Most of us have a vague notion of what retirement might look like but that’s where our planning usually stops.  Getting sick or receiving a terminal diagnosis isn’t something that is easy to think about and is even more difficult to talk about.  Nobody wants to contemplate their last moments in this world.

Sadly, we have all witnessed peers who have been thrown a curve ball and had an illness or untimely death.  The aftermath of these events places a huge strain on our families.  However, these stresses can be lessened with some discussion and at the very least, taking the steps now to get the right people in place when you need them.

An unexpected sickness can occur at the height of our professional careers.  Depending on the prognosis, it’s critical to get our affairs in order as quickly as possible.  Staff might suspect that something is amiss, and you can ask them to keep health issues confidential.

If you haven’t assembled a team already, start searching for a reputable estate-planning attorney and CPA.  Also include the often-overlooked professional; a practice transition broker who can assist with the transition of your practice and can begin the process with you as soon as possible.  Most widows/widowers are not thinking that the responsibility of selling the practice will fall on their shoulders.  We recommend starting these delicate conversations with your spouse now, so they are not left to deal with this in addition to emotional stress.

If you are still able to work at your practice, we can begin to market the practice heavily but discretely so we can find a buyer as quickly as possible.  The best medicine for you is to heal and take care of your family.  Selling might seem short-sighted if you expect to make a full recovery, but there are many other options available if you still want to continue to work after you heal.

However, for those doctors who pass unexpectantly, word of mouth tends to get ahead of any marketing and the reality is that your practice will be marketed without a doctor and thus the practice value can decrease substantially.  Some of the most difficult challenges that we have encountered are in serving spouses who are left to deal with quickly selling a practice when the doctor is sick or has passed away.  The value of the practice drops sharply and is often valued at 30-40% less even after just one month without a doctor.

Prepare for the unexpected.  Assemble your professional team and get your estate planning documents in order.  Most importantly, make this information accessible and communicate your wishes with your spouse.

Life is short, spend your days doing what you enjoy and take care of your health.