“I’ve got an opportunity to buy some patient files from another chiropractor, but I think the price is high. How do I know how much to pay?”

Good question. Let’s assume for the moment that buying files in general is a good idea. (I think it is.)

Valuing a practice – or any business – can be quite complicated. There are companies and professions dedicated to the process, and most are reluctant to “give away the cow” as they say. Between that and the fact that there’s no single, correct answer, it’s tough to find good info online.

Business values are affected by many factors, such as profit, revenue, the economy, real estate, debts, goodwill, branding, patents and assets to name a few. Let’s assume we’re just talking about files for the moment – you can always get some advice from your accountant or lawyer on equipment and other assets.

I can’t tell you how much to pay from your question alone, but I can tell you what makes files worth more, and what makes them worth less. These factors apply to just about any alternative health practice – nauturopathic, TCM, acupuncture, massage, homeopathic, etc.

Age
The longer since the last visit, the greater the chance that it’s a “dead” file, and you won’t see the patient. A patient who was seen last week is worth more that one who hasn’t been in since last year.

Visit frequency
A full house beats three of a kind, and a patient who comes once a week beats one who comes once a month.

Acute vs Preventative vs Chronic
Patients who come regularly for good health are worth more than those that just come for a back pain, or a car accident. And of course, though it sounds opportunist to say it, a patient with a long-term chronic condition is worth more to you than the one-time acute visit.

Competition
If you’re the only game in town, the files are worth less because a) the patients have nowhere else to go and b) the other chiropractor has no one else to sell the files to. Conversely, if there’s a lot of competition, the files are worth more to you – they’ll help your practice, and keep those patients at your office instead of your competition’s.

Practitioner similarity
If you’re a subluxation-based chiropractor, for example, and you buy files from a chiropractor who isn’t, your modality may not jive with the patient, and you could lose them. The closer the other chiropractor is to you in terms of treatment modality, the more success you’ll have converting the new patients.

Vendor participation
The more willing the doctor selling the practice is to assist in the transition, the higher your conversion rate. A doctor who wants to hand you a box of files and walk is not as helpful as a doctor who will help transition the patients, and give their “blessing” to the new arrangement.

Referrers
Patients who refer are worth their weight in gold. This is generally tough to tell, but some chiropractors track their referral sources.

Now the big “but”: it’s generally very difficult to get the information I’ve mentioned from vendors. So what tends to happen is a lot of talk about “gross this” and “net that” and “two years this” and “x percent of that”. This is where many CAM practitioners start running for the door.

Is there a way to simplify things? I think so…

Next time: crunching the numbers. (Part 2)