13 minute read
Timing Your Next Real Estate Transaction
By: CARR Healthcare
Real estate is the second highest expense behind payroll for most healthcare practices. The benefits of capitalizing during lease negotiations can include a healthy raise through increased profitability, reduced debt, a nicer office and more. On the contrary, if negotiations are not handled properly, the result can be decreased profitability, resulting in the need to produce tens to hundreds of thousands of additional dollars just to pay the same bills that should have cost dramatically less. While there are many key concepts and strategies you should always do prior to and during any lease or purchase negotiation, there are an equal or greater number of mistakes you should avoid. Having represented thousands of healthcare professionals over the last decade, we have gathered some of the most common mistakes healthcare professionals make during lease and purchase negotiations with the goal of helping others avoid the same mistakes. Here are three of the most common mistakes:
Advertisement
#1 BELIEVING THE LANDLORD OR SELLER WILL SIMPLY OFFER THE BEST TERMS
Landlords and sellers are in business to make money. They are no more likely to voluntarily reduce lease rates or give up any extra money through concessions as you would be to voluntarily reduce your reimbursement from an insurance company or cut your patient fees if you didn’t have to. While it sounds pleasant to hear a landlord talk about giving a ‘fair deal’ or ‘reasonable price’, your odds of getting either are bleak without truly understanding the market, entering the negotiation process with multiple other options and having the needed guidance to capitalize. Trusting a landlord or seller without the help of professional representation will most likely result in the forfeiture of tens to hundreds of thousands of dollars that could have stayed in your checking account. Case in point: If you were about to sell your home and a fair price was $400,000… but your agent told you a buyer would pay $500,000… what would you list or sell it for? The “fair” price of $400,000… or the most you could get for it? Exactly. You would sell it for the most you could. Your landlord will treat you the same way. They will charge you the highest they can while giving you the least they can get away with.
#2 DETERMINING MARKET VALUE BY ASKING WHAT YOUR NEIGHBORS ARE PAYING
Several years ago, we were reviewing the lease terms of a doctor who had been in a building for 20 years. In looking at his lease, he was paying $30 per SF, and had not received any free rent or tenant improvement allowance in his last negotiation. When we posed the question: “Do you believe $30 per SF with no concessions is a good deal?”, his response was: “I believe so.” “Why?," we asked. His response: “There are four other healthcare practices on this floor. We all know each other and talk about our leases. We are all paying $30 per SF and the landlord has told all of us they don’t give free rent or tenant improvement allowances.” Our response: “We understand the logic behind that approach… but what if we told you we just did a lease with a brandnew tenant on the first floor at $21 per SF ($1,800 per month in savings if it were your lease rate), while also obtaining three months of free rent and over $100,000 in tenant improvement allowance?” The bottom line is that landlord got away with convincing five different practices the market was far higher than it really was and that they didn’t deserve any concessions. Imagine finding out that you have been overpaying by $1,800 per month for the last 5-10 years and forfeiting money that could have completely renovated your space? This scenario happens every day to uneducated tenants who consult with other uneducated tenants and compare terms that were the result of having no posture, no knowledge of the market and not applying leverage through representation.
#3 NOT KNOWING MARKET AVAILABILITY AND COMPS
The foundation of a successful negotiation starts with understanding what your other viable options are, how they compare to each other and how to execute on them. When dealing with landlords or sellers, many healthcare providers try to bluff their way into and through negotiations. A savvy landlord or seller can often read a bluff from a mile away. Here is the problem with this approach: it communicates you are too busy, you don’t know who to hire and you don’t know what you could achieve. Trying to wing it in these scenarios will not work! This approach typically results in less respect from a landlord and the exact opposite results you were hoping for. Also, overly aggressive offers or unrealistic requests can compound the problem, as can emotional responses to the conflict inherent in most high-dollar negotiations. If you are going to be successful in your next negotiation, understanding market availability and comps is the first place to start. You can hire representation to do this for you, or you can invest dozens of hours yourself into the process. These are just a sample of the more common mistakes you should seek to avoid when looking at your real estate decisions. Unfortunately, there are several more you need to avoid. SUMMARY Don’t be taken advantage of during your next purchase or lease negotiation. There is too much on the line. Losing tens to hundreds of thousands of dollars affects your income and can also impact the quality of care you provide. Hire professional representation to level the playing field, start the transaction at the proper time, know the market and top available options, and negotiate with multiple owners. If you do these things you are very likely to capitalize on your second highest expense.
CARR is the nation’s leading provider of commercial real estate services for healthcare tenants and buyers. Every year, thousands of healthcare practices trust CARR to help them achieve the most favorable terms on their lease and purchase negotiations. CARR’s team of experts assist with start-ups, lease renewals, relocations, expansions, additional offices, purchases and practice transitions. Healthcare providers choose CARR to help them save a substantial amount of time and money, while avoiding costly pitfalls and ensuring their interests are always first.
Collect What You Produce: COMMUNICATION SKILLS
By: Cathy Jameson, PhD | Part 6 of a ten-part series
As we all know and appreciate, the world has changed. There is a “new normal.” How things worked in the past may not work exactly the same today. Adjustment is now an everyday requirement. However, there is one thing that hasn’t changed: the value of excellent communication, including financial communication (as discussed in Part 5 of this series). There has never been a time when excellent communication is more important.
While there are many kinds of communication skills, none is more valuable, important, and healing than the skill of listening. The fear and anxiety created by losing a job, being furloughed or temporarily laid off, having insurance benefits changed (or lost), experiencing money issues, and other such setbacks cries out for someone to just listen. You have been working diligently to stay connected with your patients throughout the past few months. Continue to do so. Believe it or not, you can listen your way to practice stability and practice growth.
As you listen to your patients try to ascertain what is happening in their lives. Determine their wants and needs. As you stabilize your patient family, you stabilize your practice. At the same time, you must also grow your practice. Doing both will take diligence and attention in having your patients proceed with your treatment recommendations. You can facilitate this by introducing new options to your existing patients, introducing new patients to existing procedures in your practice, and introducing new procedures to your new patients.
RETENTION It is imperative that you retain your existing patient family both through your hygiene program and through contacting patients who have dentistry diagnosed but incomplete. Get your patient family back into a system of regular care. Then, reeducate, re-motivate, and re-activate them to move ahead with previously diagnosed and planned treatment. In addition, you have the opportunity to introduce new options for treatment. As discussed in previous articles in this series, you should use your cameras and your before/after photography at every appointment.
MARKETING There has never been a more important time to market your practice. People want to know how something is going to benefit them, so send messages to your patients that stress the benefits of your services. Each message needs to focus on just that: how you and your services will benefit the patient.
Through your marketing (including social media) introduce your practice, your team, and your strengths of service to your patients. If you have listened carefully to your patients, you can respond to their “felt” needs. Take careful notes as you speak with patients to find out what’s on their minds. Whatever their concerns (insurance, finances, time away from work, infection control, safety/security, etc.), listen as a team without judgment. Develop responses such that patients know you are listening, that you care, and that you are responding with empathy to make sure that their health, well being and financial comfort are all at the forefront of your intentions.
LISTENING When you integrate effective listening into your repertoire of communication skills, you truly involve the mind in a dynamic process rather than using only the ears in a physical process. You reach out to the sender of the message (your patient) with your own message of caring and acceptance. If you use only your ears to hear the words but not your mind to understand what is being said and felt, the communication process fails.
Listening involves four aspects: body language, tone of voice, passive listening, and active listening. Body language accounts for about 60% of the perception of a message whether you are the sender or recipient. Tone of voice accounts for about 30% of the message. Passive listening involves the use of responsive words or phrases (“I see,” “Really,” or “Uh huh,” etc.) that encourages a person to continue providing additional information. Active listening, on the other hand, is paraphrasing what you think the other person has just said – feeding their message back to them to assess whether you have heard their message accurately. The sender can then either confirm or deny the accuracy of your understanding of the message. This process not only allows you to be absolutely sure you understand what is being said, but it also provides a sense of empathy and acceptance for the one delivering the message. The old saying, “God gave you two ears and one mouth so that you could listen twice as much as you talk,” is pretty good advice.
No matter what the specific goals and objectives of your practice are, every day involves an exchange of content and emotion -- both verbal and nonverbal. This is the essence of communication. You should put the greatest single management tool you possess – your listening skills -- to work for you. The better you listen to your patients the better they will listen to you when it comes time for you to present financing options or treatment recommendations.
DISCUSSING MONEY While it may be natural to some patients to open a discussion with questions about cost, they don’t yet know what they are buying. Discussing money too quickly can be detrimental. And quoting a fee too early may be worse than not quoting a fee at all.
If a patient asks you about money at the beginning of your consultation, you should gently refocus on the desired goals of treatment. Acknowledge their concerns, but defer the money questions until after the clinical presentation. If you discuss finances first, the patient will not hear a word you say. They will only be thinking about the cost.
Once the financial agreement has been made, record it and file a copy in the patient’s record. Provide a copy to the patient for his or her own reference and records. Just because someone says they understand or will remember the
particulars of the financial agreement does not ensure that they will. Your records are vital. Anyone in the office should be able to access a patient’s financial agreement as necessary and verify the payment method in place and how much is to be collected each visit. Every time the patient comes to the office, collect the agreed-upon amount and reconfirm the patient’s financial responsibility for the next visit.
No one should ever leave your office without an appointment either with the hygienist or the dentist for the next phase of preventive or restorative care. In addition, no one should ever walk out your door without paying for the day’s service and being very aware about their financial responsibility for the next visit. Remember: Collect What You Produce.
PRESENTING A PATIENT FINANCING PROGRAM Patient financing is a great service to patients and to the profession. However, you may encounter some objections from patients. Tom Hopkins, a noted speaker on communication training, says that an objection is a request for further information, which indicates that the person is interested in your proposal. In other words, if they don’t ask questions You should identify those “normal” objections you might hear, and determine effective ways to handle and overcome them with positive responses. Build the patient’s confidence by presenting the value and benefit of the program. Acceptance will be in direct proportion to the quality of your presentation.
Since a person’s behavior is often driven by self-interest, present your financing program in terms of how it will benefit the patient. Moreover, what you say may not make as much of a difference in decision-making as how you say it.
SUMMARY The way you communicate makes all the difference in the world. It is the bottom line to your success (or lack of it). Financial communications with your patients should be very personal and private conversations. Once you become involved with a patient financing program, learn how to present it, explain its benefits, and work to address and overcome any patient objections. The end results of these efforts will be higher levels of case acceptance and greater personal satisfaction.
ABOUT THE AUTHOR:
Cathy Jameson, PhD, is the founder of Jameson Management, Inc., an international management, hygiene, and marketing firm which offers proven management and marketing systems for helping organizations improve in a positive, forward-thinking culture. Jameson holds a doctorate in management from Walden University where she focused her research on transformational leadership. She has been inducted into the College of Education Hall of Fame and is a Distinguished Alumna of Oklahoma State University. She serves on the Board of Governors there. Jameson has been named one of the top 25 Women in Dentistry and has received Lifetime Achievement Awards from the Excellence in Dentistry Organization and from the Academy of Dental Office Managers. She was a finalist for the Stevie Award for outstanding entrepreneurial women. She is a member of the American Association of Female Executives, National Speaker’s Association, Academy of Dental Management Consultants, National Society of Leaders and Success and Chi Omega Women’s Fraternity. Jameson has lectured in all US states and in 31 countries. She has had over 1,500 articles published throughout the US and the world. She is the author of eight books, including the 3rd Edition of her bestseller, Collect What You Produce and Creating a Healthy Work Environment. These can be purchased from Amazon.
For more information on Dr. Jameson’s lecture or personal consulting services, contact her at Cathy@ jamesonmanagement.com. For more information on the consulting services of The Jameson Management Group, contact www.info@ jamesonmanagement.com or
www.jamesonmanagement.com
