In the dental industry, it is widely believed that confidentiality is crucial when a dentist chooses to sell their practice. This notion is strongly advocated by dental brokers and has been adopted by numerous dentists. In fact, a few dentists have stated that they had minimal or no communication with the buyer of their practice until the transaction was finalized.
The logic goes that there are several things that will happen as soon as anyone knows your practice is for sale:
All of your patients will leave
Your staff will leave to work someplace else
Your competitors will actively poach your patients
These are all legitimate concerns. However, if the community knows that a dentist is considering selling their practice, there can be benefits to that transparency. Let’s examine the concerns one at a time.
Will all your patients really leave?
Some might, but those are likely patients who were considering leaving for other reasons. Research suggests that insurance acceptance and convenience (location and hours) are the most common reasons that patients switch practices.
The majority of dentists considering selling their practice are planning to retire. Patients know that a dentist in their sixties is going to retire someday. Is it better for patients to find out through a postcard after you are already gone – or worse, to call for an appointment and learn you are no longer working?
In fact, being upfront with patients may prompt them to finish out a treatment plan before you leave because they trust you to do the necessary work.
As the Great Resignation reaches dentistry, it may exacerbate existing access-to-care problems — possibly leading to declining oral health, more dental emergencies, and even an increase in heart disease and other serious health problems.
A July report by the ADA’s Health Policy Institute found that 74% of private practice dentists say that it is currently “extremely challenging” to recruit qualified dental hygienists, and another 19% say it is “very challenging.” Similarly, 84% of dentists say it is extremely or very challenging to recruit dental assistants. We recently looked at ways that practice owners can retain their knowledgeable staff who have built relationships with patients.
However, dentistry is also seeing another side of the Great Resignation: many older dentists are accelerating their retirement plans.
At ADA Practice Transitions, we’re seeing another trend: young dentists are embracing the opportunity to step into established practices and take proactive steps to retain hardworking staff. In many cases, these dentists can tap into programs, such as the National Health Service Corps, that forgive student loans for dentists providing care in underserved communities.
Many dentists reach a point in their careers where they are done with owning a practice. Some are tired of managing the financials, dealing with payers, chasing down suppliers, and all the other headaches of practice ownership. Others have physical limitations that make daily practice difficult. And some want to capitalize on a hot market for practice sales.
These doctors are not always done with patients, though. They love the art and science of dentistry. They still get a thrill from solving a tough case or restoring a smile. They just don’t want to do it five days a week, or they don’t want to manage a business anymore.
However, they know that if they start scaling back production in their own practice, the bottom line will decrease. Staff may leave if they’re not needed — and we know how hard it is to find/retain good staff right now! Patients will go elsewhere if they can’t be served in a timely manner due to a reduced schedule. All this will eventually lead to a lower sale price.
That’s why some dentists choose to sell sooner, while the value is high, and continue to work in some capacity. This can take many formats:
Sell the practice, but stay on to work part-time as an associate
Work in a community clinic, FQHC, or other setting on a more relaxed schedule
Teach, mentor, or pursue less physically taxing ways to practice
At ADA Practice Transitions (ADAPT), we speak with many dentists contemplating their next steps and trying to plan how and when to retire. If you’re thinking about retiring in the next five years, consider exploring some of these options.
The Great Resignation has reached dentistry — especially as hygienists choose not to return to the profession. In fact, a new study co-authored by the American Dental Hygienists’ Association and the American Dental Association found that the COVID-19 pandemic has resulted in a contraction of about 3.75% of all hygienists, representing a loss of approximately 7,500 hygienists nationwide.
Without these critical staff, many dentists aren’t able to see as many patients, especially since new COVID-19 infection control protocols require more staff time than before the pandemic. 32.3% of owners say that trouble filling vacant staff positions prevents them from running a full schedule — leading to longer wait times for patients who may wind up skipping preventive care altogether or allowing simple problems to become serious. Over time, this may lead to more dental emergencies and a potential increase in heart disease, digestive trouble, and other serious health problems.
And the problem is only getting worse. In October 2020, 51.8% of owners said that it was “extremely challenging” to recruit hygienists. By November 2021, 75.6% of dentists made the same claim.
Meanwhile, driven by COVID-19, many dentists are choosing to retire earlier than planned. The average retirement age for a dentist has dropped to 67.9, down from a peak of 69.1 in 2018. Through my work at ADA Practice Transitions, I help these retiring dentists find like-minded buyers to ensure patients continue receiving care. However, buyers taking over a long-standing practice have their own challenge: retaining that long-term staff through the transition to provide continuity for patients.
That’s why it’s essential that owner dentists take steps to retain their most valuable resource: long-tenured, knowledgeable staff who have built trust with patients.
Why hygienists are leaving the workforce
When dental practices closed at the start of the COVID-19 pandemic in March of 2020, many staff were sent home. Even as practices began reopening, many of the 98% of practicing dental hygienists who are female found themselves juggling child care challenges and needing to stay home. Dental work has no “remote” option, and dental schedules inherently lack the flexibility to pivot when a child has to stay home unexpectedly due to a COVID exposure.
As a result, many hygienists began to exit the profession entirely. Even as the pandemic has eased, many hygienists have not returned — nor do they plan to. An August 2021 study found that 74% of hygienists not working had left the profession for voluntary reasons. While some say they are “waiting out” the pandemic, a full 37% say they have decided to retire.
Some of those remaining are leveraging the shortage to improve their circumstances, whether finding jobs closer to home or negotiating for greater flexibility, higher pay, or better benefits. By May 2021, 70.7% of practice owners had raised pay for their dental hygienists.
Hygienists’ career changes mirror the larger Great Resignation in which an October 2021 Gallup poll found that 48% of US workers were actively job searching or watching for new opportunities.
There is no such thing as a typical dental practice. They can range from standalone rural spaces to sleek urban offices, with everything in between. When trying to nail down your ideal, some factors are easy to identify: treatments offered, schedule, and target compensation.
Other factors fall into gray areas, where an “ideal” is harder to articulate. In these cases, you need to think about what sounds most appealing to you.
Ask yourself these questions to begin deciding what kind of practice will suit you best.
Are you a relationship- or volume-driven dentist?
Some dentists build their practices on patient relationships, while others focus on driving volume. The approach is reflected in the practice’s policies and patient expectations.
A practice built around patient relationships may have processes that ensure no one ever waits more than 5 minutes beyond their appointment time. These dentists tend to spend more time with each patient and nurture each relationship rather than delegating this function to staff. These practices may be entirely fee for service and often charge in the top 1%.
By contrast, a volume practice may run multiple treatment rooms simultaneously by delegating as much as possible to auxiliaries. In this model, staff members are the primary relationship builders while the dentists work on doing their tasks as efficiently as possible. These practices tend to accept insurance and make up for lower fees through increased volume.
Both practice styles can be professionally and financially rewarding, but they are typically incompatible.
Everyone is happier when their pay is appropriate for their work. Yet I hear from far too many associates who don’t understand how their compensation is calculated – or how much it can vary. .
It’s relatively easy to understand a straight salary, typical for those working in public health, academia, or government agencies. It gets more complicated for those paid in whole or on some percentage of their overall productivity in the office, which is the more common scenario for dentists employed in private practice or DSOs. Pay is typically based on total production, billable production, or total collections in these cases. To understand how variable take-home pay can be, let’s start by defining a few key terms:
Total production: the amount the practice can be paid based on the practice’s fee schedule
Billable production: the amount the practice can collect (dictated by a third-party payor)
Collections: what the practice actually collects for the procedure
Collection percentage: (collections/production) x 100
You should first consider the total production versus billable production. If the total production is equal to the billable production, it can be assumed that the practice is not a participating provider with PPO or DMO plans. If these numbers are quite different, it will be important to ask a few questions:
How will patients be distributed in the office? Will the associate see all the PPO/DMO patients while the practice owner sees fee-for-service patients primarily?
How does each plan pay? Does the practice struggle to collect from specific plans? Do some reimburse at lower rates? Is there an opportunity to renegotiate or potentially drop the lowest paying plan(s)?
An example of associate pay
Ms. Smith comes in for a crown. The practice’s fee schedule for a crown is $1,500. This is the total production. Ms. Smith’s PPO allows a maximum of $1,000 for a crown and the practice CANNOT collect the difference from the patient. That makes the billable production $1,000. Per the plan, the payor pays $500, and Ms. Smith’s practice bills $500. She pays $450, and the practice writes off the final $50. That means the total collection for this treatment was $950 out of a possible $1,000, for a collection percentage (of billable production) of 95%.
By Dr. Suzanne Ebert. Dr. Ebert built a successful dental practice from scratch. After selling her practice, she became the dental director of a federally qualified health center where she provided high quality care to underserved populations. She joined ADA Practice Transitions (ADAPT) as the ADA Advisor to provide real and tangible benefits to dentists as well as helping to address access to care issues across the country. She is currently ADAPT’s VP of Dental Practice & Relationship Management.
In 1994, Kiss.com, the first modern dating website, created an entirely new type of experience. When Kiss.com launched, we could not have imagined how our routine interactions would change from face-to-face to digital over the years. Artificial intelligence (AI) was still science fiction. In less than 20 years, AI has changed how we shop, how products are delivered and how we find our life partners.
Dental practice transitions have traditionally been accomplished by a low-tech process, just like dating used to be.
By using a primarily digital environment, today’s dentists can now find the perfect match (whether practice or person), manage the evaluation, and complete a transaction with greater efficiency and success. AI has the potential to uncover great opportunities a dentist may have overlooked, similar to Netflix, StitchFix, Priceline, or other tech-first companies.
By integrating AI into practice transitions, dentistry can achieve three goals:
Reducing the cost of the average practice transition
Providing coaching to help dentists navigate their transitions
Why it’s vital to find the correct match
Picture your dental utopia. Now imagine what happens when your utopia clashes with established office norms. Perhaps you expect the office to run highly efficiently with shorter appointments, but your patients and staff expect you to listen to all the details of their personal life. With that kind of mismatch, someone is bound to be unhappy. You may dread going to work, your staff may quit, or your patients may go to another dentist.
It is why a dental practice transition model should be rooted in matching dentists with shared philosophies of care.
In talking with dentists, I have heard far too many stories of those who settled in a practice that wasn’t quite right, only to leave a year or two later. When that happens, everyone loses: the practice, the staff, and the patients.
Blending technology with a human touch
At ADA Practice Transitions (ADAPT), when you create a profile to buy, sell, join, or hire, you fill out an in-depth questionnaire that enables you to share your personal preferences. A series of filters then process the profiles to show the (human) ADA Advisor several potential matches and rank them according to how well the profiles align. Next, the Advisor validates the suggested matches, applying feedback and additional input they have received from you and the other dentists, ultimately enhancing the matching algorithm with a transition expert’s human touch.
By Dr. Suzanne Ebert. Dr. Ebert built a successful dental practice from scratch. After selling her practice, she became the dental director of a federally qualified health center where she provided high quality care to underserved populations. She joined ADA Practice Transitions as the ADA Advisor to provide real and tangible benefits to dentists as well as helping to address access to care issues across the country. She is currently ADAPT’s VP of Dental Practice & Relationship Management.
The answer to “what does it actually cost to sell a dental practice?” is as you’d expect – it depends.
Numerous factors play into selling a dental practice and make each sale unique, impacting the total cost. This article will discuss some of these factors, offer a range of costs, and explore ways to minimize or avoid those costs.
First, let’s consider an example I’ve encountered of a very low-cost and frictionless dental practice sale:
A dentist in the Midwest was starting to think about owning his own practice after working as an associate for a few years. The first step he took was attending a CE event about an hour away from his home, where he spoke to some supply reps about his interest in owning a practice. They mentioned that a nearby practice had been closed for about six months, which he checked out on his way home before calling the owner dentist. Both agreed it seemed like a good fit and decided to see if they could come to an agreement. In the following weeks, they negotiated a price, drew up all necessary documents, and completed the transaction without needing a broker or valuation. The negotiations were collegial and both sides were satisfied with the outcome. The buyer spent an estimated $2,000 on legal fees and the seller relied on the documents that the buyer and his lawyer created.
Having described his story as a “fluke,” the buying dentist is unaware of any other dentist who shares his experience. He considers himself very lucky for how smoothly his acquisition played out. Despite being on opposite sides of the transaction, taking the risk to trust the selling dentist resulted in a valuable mentorship opportunity. Meanwhile, the selling dentist was relieved to find the right person to carry on his small-town legacy.
I’ve also heard of situations where trusting the negotiating partner didn’t end well. The vast majority of dentists say that transitioning practice ownership is complicated and full of uncertainties. Unsettling questions arise, such as “Is this the right decision for me?” “Is this a fair price?” or “Are these numbers accurate?” As a result, many dentists end up going to companies like ADAPT or a broker for help. And most also engage some combination of lawyer, accountant, and bankers.
That being said, the primary cost drivers for an owner when selling a practice are consistent no matter the approach.
In my work, I talk to dentists from across the country who are preparing for career transitions. Some are retiring and taking the next step on their long-planned path, but others face outside forces that make them rethink their priorities and goals.
The reasons can be positive, like spending more time with loved ones or pursuing other passions. Other times, it is a significant life change such as health issues, divorce, or burnout.
It can be too easy to get overwhelmed by fear and stress, but that can often lead to rash decisions that cause regret. It’s human nature and all too easy to panic when facing change.
Luckily, the dental industry has many options. You need to explore the choices methodically and evaluate all the information. The first step, consider asking a trusted colleague or family member for their opinion. They know you best and can be an objective listener.
Here are two tales of what happens when “life happened” to two dentists without transition plans.
Ignoring the problem
Dr. Arthur’s dental practice thrived on complex, intricate cosmetic procedures. His stellar reputation among local practitioners resulted in patients waiting months to book an appointment. He had enough business to bring in an associate or partner but preferred working solo. He felt no one could meet his exacting standards.
In his early forties, he began to experience numbness in his dominant hand. It was worse on days when he performed more prolonged procedures. He tried anti-inflammatories and icing it, but mostly, he ignored it.
After four or five years of this, his condition deteriorated rapidly. He could no longer hold a handpiece, and a hand surgeon diagnosed him with advanced carpal tunnel.