One way that dentists become owners, is by buying an already established dental practice. This can prove to be a very successful endeavor, or it can completely fall apart. I have seen what happens when there are bad transitions, and patients end up running for the hills and the dentist who thought they would have a full schedule from day one, ends up standing in an outdated office, wondering what happened.
On the other hand, I have seen offices transferred to a new dentist with an almost seamless transition. Business just carried on as usual. So, what is the difference, and how can you not lose your a** through this process?
Below is a list of items you will want to look at, but before you do that I would also suggest hiring a business consultant (who specializes in dentistry) or a transition consultant. Do not just rely on what the broker says, or if you meet with the selling dentist, do not listen to what they say. By working with someone who is looking at all the things you haven’t had to look at before – 30/60/90 day reports, profit and loss statements, and help navigate what a dated practice to really cost you, the risk on your investment can go down.
#1 What does the office look like on the inside? Unfortunately, most offices are for sale because the owner dentist wants to retire. Depending on his business philosophy, he might not have updated recently or at all since he first opened his practice. Will you have to replace the flooring? Nothing like stained blue carpet in the hygiene rooms to scare a patient away! That pink wallpaper, might need to go. As exciting as remodels are, they cost money and unless that was figured into the purchase price, you might have to live with the chipped counters, and mustard yellow bathroom fixtures for awhile.
#2 Meet the staff. Are they friendly, are they welcoming. How long have they been there. On one hand, having staff that has been there for a long period of time can help, because patients know them. On the other hand, which we will discuss a little later on in another post, is they can stay stuck in how things were done, and not want to move forward. But initially, do you think that you’d be able to work with them? Or do they give you a cold shoulder right away?
#3 Where is the office located? Are you buying a building, or just the business? Is the building rundown, who are the neighbors? What is parking like? These are things that if you were building an office, you want to consider before making a move.
#4 Reports! If you can, look at the accounts receivable (A/R) report. What are collections like? What does the schedule look like on a daily basis, is it full or are there lots of holes? There was a practice that was purchased, and when we looked at the 30/60/90 day report found tens of thousands of dollars that had never been collected and was way past the 90 day mark. That is not just money that you will get, that is a headache waiting to happen. These might not be able to collected on, especially if there are outstanding dental claims to insurance – they have a time limit to be processed! Beware of A/R!
#5 Check that equipment! There are so many advancements in dentistry these days, and a big one are the cool toys (equipment) that are coming out. New curing lights, digital x-rays, cordless drills are just a few, and not the most expensive. Now, we can agree that excellent diagnostic equipment can be the answer to helping patients to understand their treatment needs. Want to offer same day crowns? Although a great benefit to patients, it will hit you in the pocket book for sure. So, really look at what is currently I office. I can remember walking into a treatment room and seeing what had to of been one of the very first curing lights ever made. And the year was now 2018. My heart hurt for the new dentist that was so excited about his practice, but clearly had no idea on just what the cost of updating was going to be.
#6 How helpful will the selling doctor be in the transition? Many times the retiring dentists has owned the practice for many years, and because of the relationship driven nature of dentistry, will know his patients like family. So, having him leave abruptly can be a shock to many. Is the dentist willing to stay on a few days a month for a period of time? Can you put a picture of yourself and family a the counter, as a slow introduction? What about sending out a letter to patients, giving them a heads up of this great change? In a nutshell, you want the dentist to pass the torch and be your advocate. Trust me, when the dentist leaves suddenly or is ousted, patients will run for the hills.
#7 Lastly, do not just look at the number of patients in the database, because that does not mean much. I met a dentist who was telling me he was buying a practice that had 4000 patients in it, but I new that the schedule was rarely full. So where were those patients? You need to know active at least in the last 2 years, this will give you a better idea of the number of patients you actually have the potential to see.
Regardless if you buy your build, there’s going to be a lot that has to go into it. Developing a brand culture, advertising, team building, equipment updates and more will add up quickly. Do your due diligence, this is a business investment, get some guidance!