Business side of dentistry: Does the practice make sense to you?
Editor’s note: This is the fifth article in a series exploring the business aspects of the dental profession, from starting a practice and marketing to hiring staff and finances.
A lot of the times we put so much emphasis on the productivity numbers of a practice that we forget other aspects of it. This is a discussion on the other features of a practice that can help you decide, along with the numbers, if it’s a good fit for you long term.
- Growth: Think of your overarching vision for the future. Maybe the practice as it stands today is not your dream practice. The important thing is its ability to become your dream practice. One of the things I always like to ask about is the square-footage of the practice. If it is a rental, it could be about extending into a neighboring office space, or perhaps the office has five equipped ops and two others plumbed, therefore there is ability to grow. Most new dentist owners that we have interviewed at New Dentist Business Club list their No. 1 “wish I knew before” concern as “the need for expansion, and that I’d quickly outgrow my space.”
- Clinical reproducibility: Maybe the seller dentist places implants, offers IV sedation and full-mouth rehabilitations, and all of that accounts for 50% of his/her practice revenue. And you are a new dentist with two years of experience under your belt, you’ve taken your implant course and just placed five to six implants in private practice. Maybe you plan to take a course on sedation and ultimately perform full-mouth rehabs but are not there right now. Does this practice seem a good choice for you? You may have to re-adjust your net income expectation based on your reproducibility of their revenue. At least at the beginning, you will not be at the speed and skill level of this seller dentist. Would you still want to buy the practice?
- Hours of operation: Is the practice open seven hours a day, 7 a.m. to 7 p.m.? Are these hours and days amenable to you? I heard a well-respected dental podcaster once said that your patients come to your clinic because of the services offered at your clinic and over time they get habituated to that. Services does not mean just dental treatment offered. It means team culture, smiles at the front office on checking in, beverages, cleanliness, music and hours of operation. Changing a seven days a week operation and slashing their hours into half will be met with confusion and disappointment by not only patients, but also staff. It might also dissuade people from coming back to the practice.
- Team: A team can either make or break a practice. Find out how long the current team has been in place. Has the seller dentist had significant trouble retaining team members? If not, why not? Is there something particularly difficult about the practice or the location that team members want to leave? Having tenured team members like long-term hygienists, usually speaks very highly about the practice. As an associate at a very busy and successful practice, I’ve found how attached some patients grow to their hygienists. Many come to the office only to see their favorite hygienists! Having a long-term hygienist leave the office because of a new owner is not only common, but can spell trouble for retention of patients.
- Office interior and location: Is the office interior something you can live with for the next few months? Do you anticipate having major remodeling down the road? Consider that when evaluating a practice too. It is an added cost to your purchase price. What about the location, is it in an area you are OK commuting to? Is it located in an area where nobody can find it? Is parking easily available? One of the first things I do after seeing a practice come up on the market is do a drive-by and think from the perspective of a patient. Can I find it easily, is parking available? Is the area around it clean? What is the neighborhood like, would I be able to raise my family here? One of my mentors came to our Business Club gathering and said it is important to live in the community where you have your practice. This is so that you can really feel the pulse of the community. You will know how to market and who to market to, based on the time spent in the community. Understand its people better. I couldn’t agree more! This is why most bankers recommend you buy a house after your buy a practice, though of course life happens, and sometimes you may do it the other way around. And that is also OK.
Know that this list is by no means complete, but these are some of the bigger aspects to consider in a practice purchase. At the New Dentist Business Club, we meet twice a month to discuss topics exactly like this, email us at firstname.lastname@example.org to listen in to our next meeting.
Dr. Sampada Deshpande is a general dentist based in Seattle. A foreign trained dentist from India, Sampada earned her DDS from the University of Washington in 2018, where she is also a current LEND trainee. Outside of clinical dentistry, she enjoys teaching at the New Dentist Business Club, biking with her husband, and reading books on Finance & Management. You can reach her directly at @dr.deshpande on Instagram or visit her website www.sampadadeshpandedds.com for more information.