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Practice Management: Winter 2004

A question I’m commonly asked by clinic owners and therapists looking to associate in a clinic is how to determine a fair agreement.


September 28, 2009
By Donald Dillon

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A question I’m commonly asked by clinic owners and therapists looking to associate in a clinic is how to determine a fair agreement.

The answer can be complex and depends on several factors, including the costs of doing business, what knowledge and skills each party brings to the table, and the long-term relationship you wish to develop. We’ll look at each in this article.

To create an agreement that truly meets the interests of both parties, you will need a model that focuses on the merits of the agreement, and not the rigid positions of the negotiators. It’s important to negotiate effectively so a wise, long-term agreement can be reached. In this article, we’ll look at an effective model for negotiating agreement.
PM.jpgCosts of Doing Business
As a clinic owner, before you can negotiate a fair agreement with a potential associate, you must first know your costs to be in business. Your monthly bookkeeping should clearly outline costs for lease space, linen and lubricants, equipment and office supplies, reception and staff, utilities such as phone, hydro and water, property, income and excise taxes, cleaning, marketing, and any other costs associated with running your business.

You may be surprised to know, if you haven’t been tracking this before, that it can cost you anywhere from $1800 to $2500 a month to operate your sole practice. One of the benefits of bringing on an associate is to help you off-set those costs. Other benefits include the ability to offer more diverse therapies, longer clinic hours and weekend appointments and exchange ideas, techniques, and treatments. And since you will take home more income, you can invest more in professional development.

If you are looking to associate in a practice, you will want to weigh the costs of association with the opening of your own location. To open your business may involve further costs including renovations, security down payments on utilities and final-month’s lease, and a high amount of marketing to establish your new location. You should be prepared with some equity on hand to ride the times of scarcity until you get established. Some of the benefits of association include coming into an established business with tried-and-true systems and location, lower entry-costs to start a practice, opportunity to glean skills and experience, and spill-off from main therapist.

Knowledge and Skills
When I began practice in 1991, I paid 55 per cent of my earnings to the owner of a chiropractic clinic. I became to resent this arrangement, feeling I was giving too much away. I later learned, by leaving this clinic and opening my own, that I wasn’t paying enough.

The high rent was for more than linen, lotions, .00 treatment plinth, utilities, reception and space. The rent reflected my dependence on the chiropractor for marketing, signage and experience in practice-building. In effect, I was paying for business skills and knowledge that I did not have. I spent the next 12 years earning far less income until I developed my business skills and knowledge. I learned that the more business skills and knowledge I have, the less I will depend on others to provide these essential skills for me.

If you are looking to associate, assess your business knowledge and skills. Do you enjoy meeting people and telling them about your business? Do you have a clear idea of your target market and how to build relationships with them? Do you have skills in accounting, marketing, planning, organization, leadership and management? Do you have equity to put into professional development, marketing, and any necessary renovations or equipment you will need?

If your skills and knowledge are low in these areas right now, you may be better to associate until you develop in these areas. You may do better in a spa, or in a health professional’s clinic that refers patients directly to you. Be prepared to pay for the services of referrals and marketing in your lease agreement.

If you are higher in business knowledge, skills and resources, you can choose a business with more personal autonomy and negotiate a lower lease.

If you are the business owner looking for an associate, assess what you are offering. Do you have practice-building knowledge and skills that you can provide a new associate? Will you set aside time to develop and nurture a relationship with this new associate? What can your business honestly offer a potential associate? The clearer you are on the strengths of your business, the greater you can identify the value you bring to the relationship.

Investing in the Long-Term Relationship
I’ve heard feedback from a number of clinic owners that having an associate is just a big bother. I believe one cause of this viewpoint stems from a sponsoring thought that the associate is here to serve us. We’ve created the business, we’ve put in our hard work … we figure they should fall over backwards to serve us. If we apply this approach however, we often get stonewalled, frustrated and angry. The truth is, we are here to serve them.

Serve them? As incredulous as this may seem, I encourage the reader to stay with this concept and examine the clinic owner’s role here. When a therapist moves beyond a sole practice and welcomes an associate, that associate is in a strange new place. They are excited and frightened at the same time. The role of the business is to provide services to the associate – a space to provide treatment, equipment such as a plinth, lubricants, audio, linen supplies, phone and utility services, and maybe other services depending on your agreement.

The associate is paying you to provide those services, but most associates are also looking for something a little less tangible. They’re looking for a place to grow, to experience the results of applying their trade, to feel a sense of accomplishment and self-actualization. The clinic manager’s role is really one of coach or mentor, to provide the physical needs of providing care but also to cultivate the mind and soul of the associate

When I make the shift from me to you, my whole perspective changes. I’m not so concerned about ‘what’s in it for me’ but for ‘how can I serve you.’ Read the literature from any of the religions or humanistic philosophies, they describe the need to serve: ‘do unto others as you would have done unto you’ is a common and universally accepted principle. The magic of this is, once you take your focus off coveting your advantages and instead help others to reach their goals, they automatically are more open and responsive to helping you meet your needs.

Getting To Yes: A Model For Reaching Agreement

A model I have found most helpful is outlined in Getting to Yes: Negotiating Agreement Without Giving In by Roger Fisher and William Ury. The authors describe how we commonly bargain over positions, instead of working together to ensure each other’s interests are satisfied. They outline a four-point method:

1. Separate the People from the Problem
2. Focus on Interests, Not Positions
3. Invent Options for Mutual Gain
4. Insist on Using Objective Criteria

What if they don’t want to negotiate with you? What if they say “take it or leave it.” Fisher and Ury recommend several strategies in dealing with difficult or powerful negotiators. They recommend that, before you enter any negotiation, make sure you have a BATNA with you.

BATNA is an acronym for Best Alternative To a Negotiated Agreement. While we always hope there is a win-win agreement possible in every situation, sometimes it’s better to not accept the conditions of the negotiation and go with your next best option. Before you negotiate, always consider what option you might act on should the negotiations not go well.

Let me make two last recommendations. If you are the clinic owner, your interview process should be designed to weed out the fence-sitters – those whoare half-committed always looking for greener grass on the other side. Take the time to find associates willing to exchange dollars for the opportunity and experience to work in a functional learning environment.

I have a three-part interview process that allows me to get a pretty good idea on where a potential associate is coming from. I look at it this way … I’m investing good time and money in this person, so I better choose the right one!

As an associate, don’t be pressured into accepting agreements that in the long term do not meet your interests. You’re investing a lot of time and energy into building a practice foundation, so insist on using a principled model of negotiation like Fisher and Ury’s.

In determining your agreement, whether clinic owner or associate, you will want to clearly identify your costs of doing business, the knowledge and skills you bring to the table, and your investment in the long-term agreement. Insist on using a principled model of negotiation so you and your negotiating partner can ensure the interests of both parties are met.

Sidebar:
What do you consider a fair agreement? Send us your stories and ideas on how to create a better agreement. We’ll send you an example of the Getting To Yes model as applied to a therapist situation. Send your responses to ddillon@MTSeminars.com.


Donald Quinn Dillon established MTCoach to provide seminars, business coaching and tools to massage therapists. He can be reached at the Massage Therapy Canada website via www.mtseminars.com, or through MTCoach at www.mtcoach.com


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