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Survive to Thrive: Strategic Succession Planning
For many physician owners and groups, the pandemic's continued impact highlights the importance of practice durability and sustainability. The key to an organization's ability to demonstrate sustainability is, of course, the leadership team's strength. With an increasing number of practice owners and senior leaders considering their retirement options, many practices are facing the same challenge, asking, "How do we map out an effective succession plan for our practice?"
Choosing a Path
Succession and strategic planning are not separate and distinct but interwoven and interdependent. Despite the unknowns ahead, embarking on a rigorous strategic planning process will help retirement transitions become part of a larger strategy, ensuring future practice sustainability. Here, we identify some of the key considerations that will help shape a successful strategic plan for practices facing the transition of their senior leaders.
- Another physician assumes leadership. Historically, this is the most common transition seen in both large and small practices. This model requires significant forethought and time to select and groom future leadership.
- Merge the practice. Over the past five years, we have seen a significant increase in practices joining forces with other symbiotic practices. This is an excellent choice when the merging organizations align culturally, operationally, and at a leadership level.
- Sell shares or the entire entity. Hospitals or corporate partners are often well-matched buyers for physicians looking to sell. Another option is to sell part or all of the practice to investors, such as private equity management organizations or investment groups.
- Close the practice. It is less common for owners to work until retirement and simply shut the practice's doors, as most wish to see the practice, employees, and patients endure. Typically, owners also wish to see a return on their investment and bestow its financial value to successors who can benefit for years to come.
Mapping Your Route
For owners looking to prepare the practice for their departure, the next logical step is to create as close to a "plug-and-play" practice model as possible. By mapping out your unique protocols and processes, you can facilitate the growth of revenue and profitability. Furthermore, your plan will be a type of living will for your business that serves to direct your successors' immediate or future actions.
First, you must work to assure your investors/successors that they are making a sound investment by creating a practice roadmap with standard operating procedures (SOPs). Use the following list as a guide to create documents and processes that will demonstrate your practice's value.
- Organizational charts with clear lines of reporting
- Clinical operations manual
- Administrative operations manual
- Recruitment and onboarding plan
- Employee handbook
- Performance management plan
- Training and development plans
- IT manual
- Key meeting agenda
- Leadership development plan
- Compliance plan
While the above list of SOPs is extensive, each component should be developed over time with purpose, focus, and intention. Once established, SOPs must be reviewed and updated annually; many practices build in audits as part of normal operations. Developing and using these materials to execute against the organization's goals will create clear-sighted and truly accountable teams that will sustain long after your departure.
Guiding Future Success
As a leader, you have a fiduciary responsibility to ensure the organization's future well-being after your departure. Hopefully, those of you who had not yet considered the critical role a succession plan plays in your overall practice sustainability are now ready to begin mapping out your practice's future. Regardless of whether your succession plan found its genesis in the pandemic, a well-thought-out road map will provide reassurance, focus, and direction for future successful physician exits.
START MAPPING YOUR SUCCESSION PLAN TODAY! Engage with us and find peace of mind when you build a thoughtful, strategy-based plan that meets your transitional goals.