Practice Premises – maximising value (and “minimising” time)
Maximising “value” is a common objective for most practitioners in one way or another. “Value” can include the value provided to patients. On the other hand, it could be the economic value of the practice and its income stream or the value of the practice ‘brand’ and the exposure received.
Whatever form the “value” might take, the premises from which the practitioner practices are a major influence in maximising the value – both to the patient, the practitioner and the staff.
Perhaps second on the list of practitioner’s concerns is minimising the amount of time they spend doing things they would rather not be doing. How can the practitioner manage their time better? How can he or she have more time to see patients? Again, practice premises can play a major role here: how the practitioner occupies the property they practice from can either save or add a huge amount of extra time.
Of course, it is often a balancing act between maximising value and minimising time spent undertaking those tasks we would prefer to avoid!. The ideal scenario for most practitioners (and indeed most people) would be to maximise the value in as little time as possible, leaving more time to take that trip abroad they’ve been dreaming about for the last few months.
However, whilst we might strive for the “maximum value – minimum time” model, the reality tends to be closer to either ‘maximum value and maximum time’ or ‘minimum time but minimum value’.
How can you maximise value and minimise time spent doing ‘less desirable’ tasks?
The way in which you occupy your practice premises may have a significant bearing on this – and we will consider the following options in support of this goal:
- Paying for a private consulting room on a sessional basis;
- Buying and occupying property as an owner/occupier – by means of either buying new premises specifically for your practice, or converting property you already –
Aside from the initial capital outlay required to buy or convert a new property, many of the considerations we consider below will apply equally to either scenario; and - Occupying as a tenant under a lease.
Private consulting room – minimising time but limited ability to maximise value?
Paying for a private consulting room is arguably the least time-consuming option of the three arrangements. The set up time is minimal as all essentials should be provided by the landlord, meaning you simply need to negotiate the terms of the arrangement and turn up! You are able to use the room at the times agreed and.as soon as you’ve finished you leave and the room reverts to the “landlord”.
The “landlord” deals with maintenance and repair issues – and probably provides most, if not all, of the equipment you need. They should ensure the premises are fit for purpose throughout your period of occupation – and you don’t have to go through the process of selling the property when you want to leave.
All in all, paying for a private consulting room tends to be the most low-maintenance and least hands-on arrangement of the three mentioned above.
However, because the “landlord” retains ultimate control of the room, you have limited ability to maximise the value of it. You can’t renovate or even re-decorate it to project the “brand” or “image” you want to provide and you might not even be able to re-arrange the room to better suit your patients’ needs. You certainly won’t want to expend significant money on it – and as you won’t have anything to sell when you ultimately leave, you will have lost the opportunity to provide for a nice capital injection for your retirement fund!
So how else can you try to maximise the value of your practice when you pay for the use of a private consulting room?
Top tips for maximising value:
- Decide where you want to practice.
Location can say a lot about a practice. There are premium consulting rooms and there are lower budget consulting rooms. If your “image” is an important marketing tool for your practice, the extra cost for a room in a premium location might be worth it in order to maximise the value of your brand going forward - Keep “overheads” low
Whilst you will have limited ability to develop the premises and project your ‘brand’ as you don’t own the property, you might more than make up for your lack of control if you have negotiated a good deal on the fee for the room and you don’t have to pay for many other costs towards the upkeep of the building or equipment - Invest your saved time wisely.
The time you save form this arrangement can be used bringing in more patients through investment in marketing, thereby bringing in more income.
Owning your own premises – maximising value and maximising time?
At the opposite end of the spectrum from paying for a private consulting room, is owning your own practice premises. This is a very “hands-on” approach to dealing with the property from which you practice. Whilst there is of course an initial capital outlay if you buy a new property, owning your own premises provides you with the greatest opportunities to maximise the value of your practice.
From the outset, you can develop the practice to your specification, which will enable you to project the “image” you want. You can also raise money from it, both income by granting a lease to another practitioner, and ultimately, capital, by selling the property at a future date.
However, all of this takes a lot of time. In the first instance you would have to acquire and perhaps convert the premises (which could include the requirement to secure planning consent etc.). And ongoing maintenance and repair of the premises can be both time consuming and costly. It would be your responsibility to ensure the premises are fit to practice from and up to regulatory standards.
But there are ways to reduce time spent on these tasks and further maximise value.
Top tips for maximising value:
- Buy the right property.
Is the location right?
Make sure you’ve carried out appropriate due diligence before buying – is the property structurally sound, is it free from contamination?
Is it preferable to spend more on acquiring a property which has already been converted for practice use and only needs minor tweaks or would you prefer the challenge of tackling the completer modification of a building which you can re-design exactly to your own specification? - Consider ways to make an income.
Can you grant a lease of part of the premises i.e. a designated room to another practitioner to receive a regular income? Alternatively, could you allow a practitioner to use a consulting room at your practice for a regular licence fee? You should be aiming to “sweat the asset” and allow any spare space to provide you with added income when not in use by you - Project your brand
Make sure the property projects the image you want to project. Make sure it is fit for purpose and in the best condition it can be. Not only can this be a marketing tool and help bring in more patients, but it may also increase the value of the property when you choose to sell.
Occupying as a tenant under a lease – the middle ground?
Occupying as a tenant (other than in certain areas of London) is not an overly common way for private practitioners to occupy their premises. It is something of a middle ground between the two options above.
‘Middle ground’ is probably seen by many practitioners as a negative – it neither maximises value as much as owning your own property, nor saves as much time as paying for a private room on a sessional basis.
However, the reverse may be equally true. A tenant under a lease has more ability to maximise value than someone paying a licence fee for a room on a sessional basis, and is more likely to minimise time spent on administrative tasks than an owner/occupier. It is certainly an option worth considering.
Top tips for maximising value:
- Negotiate the lease to be as flexible as possible.
Unlike paying for a room on a sessional basis, a lease will usually allow you to redecorate and make alterations to the property (with or without the landlord’s consent). This allows you to maximise your brand and project the image of your choosing in a similar way to an owner/occupier. - Remember a lease can have a capital value
Whilst you won’t be able to “sell” a “short” lease for as much as you could sell a freehold or long leasehold property, a lease does create a legal interest in the property and therefore has a value. A lease can usually be “assigned” to a third party and may attract a significant payment. Furthermore, the security of tenure it provides in the premises should enable you to maximise the value of your practice at the point of sale. - Consider ways to make an income
Many leases will allow you to grant a sublease to, share occupation with, or to grant a licence to another practitioner – all of which can generate an income.
How can you maximise the value of your practice and “minimise your time”?
Premises are a key consideration for any practitioner and can be a major way of maximising the value of your practice.
The aim for most practitioners is to practice from premises in a way which strikes a balance between maximising value and minimising the time required to do so.
If you are considering starting out in private practice (or relocating from your current practice premises) you should carefully consider how you wish to occupy the new premises from which you will practice.
And even if you are already occupying premises under one of the arrangements above, this article has hopefully highlighted some of the issues you could consider to enable you to maximise the value of your practice and minimise the time required to do so.