By Matt Zolfo, merger and acquisition consultant, Professional Transition Strategies.
Dentists and all other types of healthcare providers who operate one or more offices as a business will reach a point when it’s time to make a career transition. It could be because a dentist with a solo practice wants to sell the business and retire. Or maybe a dentist wants to expand into new locations, join a dental group through a merger or acquisition deal or sell the practice to a dental service organization (DSO).
In every case, the actions the dentist takes prior to the transition will ultimately affect the outcome by creating or losing practice value. The value of a dental practice is always in motion; it is either gaining or declining in value, never static. So, to enter a transition period in a position of financial strength, dentists need to identify a practice transition timeline and maximize practice value at the right time. Here are some factors to consider to build value.
Optimize Your Practice With Greater Productivity
Increasing practice productivity is one way to add value, and there are two ways to do it: Welcome new patients to the practice or offer more services to existing patients. Whether you intend to scale up by expanding to new locations or are looking to improve practice value, it’s critical to optimize efficiency at your current location before taking any other steps. Your choices for optimization will depend to some extent on your current physical facility.
Your location’s size, layout and diagnosis infrastructure like CAD/CAM, lasers, radiography, etc., are relevant because in theory, a practice that focuses mainly on preventive dentistry needs two full-time hygienists to drive demand for restorative work. In a solo practice, five operatories are ideal because they allow the dentist and hygienists to take care of scheduled patients and have room to manage emergencies, overflow whitening, walk-ins, etc.
The average facility varies by region, but generally speaking, if you add professionals (dentists or hygienists), you must have the infrastructure in place to support their work. If that’s not possible in your current location, you can either upgrade the current infrastructure by expanding the facility or adding office hours to offer more appointments (early or late weekday hours, weekend hours, etc.).
Find the Right Work-Life Balance
Another factor to consider when thinking about ways to maximize practice value is that some choices entail trade-offs that can affect your work-life balance. For example, if you add professionals to your team and/or expand into new locations, you’ll spend more time managing people and facilities. It’s important to make sure you’re okay with that by identifying your personal quality-of-care threshold and being mindful of it while making decisions.
Some highly successful practices are owned and managed by dentists who willingly accept a higher level of fixed overhead in exchange for more personal time. Some extend their reach by adding partners, hiring more support staff and/or keeping longer office hours so they can work shorter shifts to have more family time. It can work well if everyone agrees on the priorities.
The bottom line is that each dentist needs to find their own equilibrium, and many factors are critical in finding that balance, including the number of people you manage and the types of procedures you perform. The practice will require capacity to achieve the right balance, so identify your comfort level and act accordingly.