With demand exploding for behavioral health treatment, and trends in technology and care modalities changing the industry, it’s more important than ever for practices to have a strong growth strategy.
Significant opportunities exist for mental health practices that are ready to expand. Many communities remain underserved when it comes to mental health providers, and welcome additional treatment options. At the same time, telehealth and other digital technologies have revolutionized clinicians’ abilities to deliver care to wider audiences.
Meanwhile, payers are moving toward value-based care reimbursement models. This means that practitioners who can put client outcomes first will realize the most success in the industry.
If you already have a thriving practice, you may be considering how to grow your existing practice organically. Or, you may want to fast-track expansion by purchasing another behavioral health practice and integrating it into your own. Both types of behavioral health growth strategies can be fruitful in the current mental health climate. But how do you know which route is best?
Like many aspects of practice management, the answer is: it depends. It depends on your vision for the practice, your financial situation, your personal goals, and many other things.
Here’s how to assess whether to “build or buy” in order to grow.
Building Your Practice Organically
If you don’t have the capital to purchase another business, don’t want the trouble of integrating another organization into your established routine, or simply feel that your existing practice is ready for quick expansion on its own, then growing what you already have may be the best option. However, you’ll need to prepare for challenges along the way.
Pros of growing your practice organically
- Complete control over all aspects of the practice, including your workflows, your staff, your treatment offerings, your target audience, and your physical space.
- May be cheaper than purchasing a practice. Hiring new staff and increasing program offerings can be done gradually to match the pace of your revenue growth. If you plan to launch a new practice location, your startup costs for rent, furnishings, staff, etc. should be manageable. In contrast, purchasing an existing practice may come with a large price tag.
Cons of growing your practice organically
- You’ll have to grow your patient population through diligent marketing, whereas an acquired practice would bring much of its patient population with it.
- Growth may feel less “immediate.”
- You’ll have to put in the work to vet and hire new staff yourself.
- If you expand to new locations, you’ll have to do the leg work of finding and furnishing an additional space.
Strategies for Success To Grow Your Practice Organically
Get a strong start to growth by taking all the right steps up front. With meticulous planning, you can overcome bumps in the road and be on your way to rapid growth.
- Conduct market research to understand the patient demographics and mental health needs in your area. How will your growth fit into this market landscape? Is there a hole in the market that needs to be filled? Does your practice operate in an underserved area that needs more practitioners?
- Boost your brand. Consider working with a marketing professional or agency to create a marketing plan for your expansion.
- Let your network know. Let your referral sources, patients, and other providers know that you’re growing. If you’re expanding your treatment offerings, let them know.
- Choose the right EHR to support your workflow. The right EHR can make practice management easier and your business more profitable. Shop around for software that streamlines common processes and helps you stay organized.
- Create or review your business plan. Any big change to operations merits an updated business plan.
Buy an Existing Practice
On the other hand, perhaps you’d like to acquire another practice and integrate it into yours in order to achieve the same kind of growth. This option, too, has its pros and cons.
Pros of buying an existing practice
- Your new practice will bring with it an established patient population. You will be increasing your revenue stream immediately.
- Existing infrastructure. Your new practice will have staff and work processes in place, which could save time and money compared to starting a new location from scratch.
- Information about practice profitability. You already have information about the practice’s profitability in its current state, as well as how it fits into the local market.
Cons of buying an existing practice
- The purchase price of an existing business may be steep.
- The buying process might be lengthy or complicated. You’ll need the input of a business broker and other professionals, and may have drawn-out negotiations with the practice owner.
- Some sellers try to hide the negative aspects of their business during the sales process. Hopefully, you’ll conduct due diligence on the practice before finalizing a deal, to minimize this possibility.
- You’re inheriting established workflows and expectations from employees, and these can be difficult to change.
Strategies for Success When Buying a Mental Health Practice
With the right know-how, you can set yourself up for a smoother purchase experience and position your new practice for greater success.
- Identify the right type of behavioral health practice for you. What type of patient population are you currently serving, and/or would you like to expand your patient population? Become clear on those goals, and then find a practice to acquire that fits within that plan.
- With the help of a professional, conduct rigorous due diligence before finalizing a deal. You’ll need a valuation of the practice’s market value and an understanding of any existing problems, potential risks, or liabilities. This will limit unpleasant surprises post-sale.
- Identify areas of growth and improvement for your new practice. No matter how strong the business seems, don’t be afraid to look for ways to improve. Sometimes, a fresh set of eyes can facilitate new growth.
- Develop a business plan. You need to understand how this business functions currently, and how it will thrive and grow as part of your existing organization.
- Build relationships with existing staff and providers. Ideally, you want employees to feel that you’re coming alongside the practice to make it better. While not every decision you make will be popular, having the general goodwill and trust of employees is important.
Weighing the Decision: Build or Buy?
Looking at the big picture, choosing the right growth strategy comes down to a few important factors.
First, what financial resources do you have available? The cost of buying a business makes that option prohibitive for many. This will factor heavily into your decision.
You also must consider the work that goes into integrating another practice into your organization. Your new location will come with its own EHR, its own staff, its own established workflows, and its own set of patient expectations. Changing these things can be difficult and time-consuming.
Perhaps you want a new patient population and a new source of revenue quickly. In that case, acquiring another practice might look more appealing.
The demands of your particular marketplace may also influence your decision. If your mental health market is already saturated with clinics, absorbing an existing practice and its patients might be more realistic than trying to attract new patients as you grow.
Remember, it’s important to consult with experts when deciding how to proceed with your growth strategy. You may need the input of a healthcare consultant, a financial advisor, a business broker, a marketing expert, and others. Managing your growth strategy is not a solo endeavor.
Find the Behavioral Health Growth Strategy That’s Best for You
Building a bigger practice or absorbing a new one are both good strategies. There is no right or wrong answer that works for everyone, so find your best way forward based on your unique situation. By carefully examining pros and cons, conducting market research, and exploring your own goals and desires, you can develop a growth strategy that works for you.
For a little extra help getting started, check out resources on developing a business plan for your mental health private practice.