Startup Option: Consider the Purchase of an Existing Urgent Care Center
Mistake #19: Ignoring the possibility of assuming the location or purchasing an existing urgent care center
In working with scores of startup urgent care centers that are clients of Practice Velocity urgent care software and billing solutions, we have found that there are multiple ways to assume the ownership of or to purchase existing urgent care centers. Entrepreneurs using these techniques are generally much more successful while suffering much less financial difficulties in starting their urgent care centers.
So what are you looking for? Research the clinics and urgent care centers already existing in and around your target community. Maybe one of these types of clinics might be available for purchase. It never hurts to look around and ask a few questions.
- Purchase a marginal hospital urgent care center: What if the hospital owns a minimally successful urgent care center and you are sure that you can operate it successfully? If the problem is a lack of patients, make sure that you understand why. Is it due to poor reputation, poor location, too much competition, over-staffing, overpaying staff, poor signage, or some other reason? If you are quite sure of the reason for the urgent care center's failure, then make sure that you understand what it will take to turn around the urgent care center and be sure that you can rapidly effect changes to turn it around. Of course, if the urgent care center is in a poor location, it would be unwise to purchase the urgent care center. If, however, the hospital administration is willing to meet with you, you may be pleasantly surprised. Rather than charging you hundreds-of-thousands of dollars for the center, the hospital may be willing to give the urgent care center to you at no charge, providing that you assume the lease and allow the hospital administrators to sell the transfer to private ownership as a positive for the community. To the hospital administration, giving you the urgent care center may be an easy way to erase hundreds-of-thousands of dollars of red ink from their books. At the same time, the hospital administration will be able to avoid a public relations fiasco, as the hospital will not be seen as abandoning the community's need for urgent care services.
- Urgent care center goes out of business: If an urgent care business is vacating space in a local shopping mall or some other building, the landlord may be happy to let you assume the lease on the day after the other urgent care business abandons the premises. One entrepreneurial physicians jump started her urgent care enterprise by assuming the lease of three centers on the same day. It was a bold undertaking to train in advance and fully staff centers with physicians, nurses and receptionists to hit the ground running on day one. But it was a success. With significant patient flow from day one, the total investment amounted to only two months operating expenses for three centers. Compare this to the typical urgent care center that does not experience a break even month during the initial twelve months of operation. Even better, the urgent care center purchase price is free.
- Purchase an existing urgent care center: If you are willing to relocate to another part of the country, starting your own urgent care center may be similar to buying a house. The seller of the urgent care center may be willing to finance the purchase and allow you to pay back the purchase price from earnings on the urgent care center. This is often a particularly good arrangement, as the seller may be willing to work with you to help ensure a successful transition. Remember, the seller only gets the purchase price of the urgent care center if you stay in business, so the seller has a vested interest in making sure that you are successful.
- Purchase an existing primary care practice and convert it into an urgent care center: This technique has been used very successfully in recent years by some Practice Velocity clients. The existing patient flow of the purchased practice covers the cost of operations from day one. The staff is already trained to handle patient flow. If you purchase the accounts receivable, you will have an ongoing source of cash flow from day one. The technique has been used to dramatically reduce the investment needed to start an urgent care center.
- Assume the management of or purchase an occupational medicine clinic: Once again the principle of existing patient flow and revenues helps you avoid big losses in the startup. Many occupational medicine clinics that are privately owned or owned by hospitals have suffered significant financial hardships as states have implemented stingy fee schedules and workplace injuries have been significantly reduced. Thus, an occupational medicine clinic may be available for you to assume. One point to recognize is that you are not bound to the location of the occupational medicine clinic, as companies are more tied to relationships and levels of service than they are to a location. Thus, if the clinic is located in a less-than-ideal location for an urgent care, you can simply move it to the new location of your urgent care center. Make sure, however, that you take great pains to clearly communicate with the companies and let them know how they will benefit from the additional hours that your services will be available in the urgent care center.
One resource to find urgent care centers for sale are the classified advertisements on the website of the Urgent Care Association of America.