An owner at the Practice Owners Conference thought their Practice was worth $100K. Their wife had already done the planning. After the sale, they would need to work nine more years to reach their retirement goals.

When Sachin and Todd unpacked the structure, the Practice should have been worth $600K to $700K. The problem was not the medicine, and it was not even the business. It was a billing structure designed in the 1980s by an accountant who has probably since retired into the same situation.

The associateship model makes one thing very clear: whoever built it was thinking about keeping 100% of their personal billings, not about what the thing would be worth when the time came to hand it on.

 
What you’ll get from this episode:

• Why the associateship structure is engineered to produce a Practice worth nothing at exit
• Todd’s ready reckoner: average Practices trade at 3-4x on a 6-8% margin. Project X Practices run 10-15% margin and sell closer to $1.5M on the same billings
• How loss aversion keeps doctors trapped in a structure they know is wrong
• The 18-month versus 3-year restructure roadmap and what determines which path you take
• What to say to your fellow owners first, and why this conversation takes six to twelve sittings, not one
• The doctor who sold her stake for $1, walked away, and built a Practice worth over $3M