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Articles

The Professional Advisory

  1. Is it Time to Move?
  2. Staging A Dental Practice
  3. The High Cost of Dying
  4. Deal-Busters
  5. Patients - Attract and Retain
  6. Should I Stay or Should I Go?
  7. Is There a Buyer for Every Practice?
  8. Good, Better, Best - The Market has Spoken
  9. Smooth-Sale-ing
  10. Buying Time
  11. Patients, Patience, Patients
  12. A Real Patient
  13. Why Do a Practice Valuation? I'm not Selling
  14. Irrational Exuberance or The New Normal?
  15. Do dental equipment and dental technology affect a practice value?
  16. Finding and Being a Mentor
  17. Bigger is Better
  18. Daves Top Ten List for Buyers (Vendors should read this too!)
  19. How Well Do You Know Your Practice?
  20. Dave
  21. What will happen to dental practice Values in the next 10 years?
  22. Your Premises Lease is an Important Asset
  23. What are Associates Thinking?
  24. There is Life Outside the GTA
  25. When Is the Right Time to Sell My Dental Practice?
  26. Mergers are a Viable Option
  27. Is Your Associate an Asset or a Liability?
  28. Has your Practice Facility Kept Up With Your Billings?
  29. The 100 per cent of Gross Myth
  30. The Past, The Present and The Future
  31. Caveat Emptor
  32. Overpaid Long Term Staff
  33. Selling your Practice in Stages
  34. A Potential Pitfall of Selling Shares
  35. Value in Your Practice Through Balance
  36. Only Trusted Staff Can Defraud You
  37. To Own or Not to Own Practice Real Estate? That is the Question.
  38. Coping With A Large Patient Base
  39. Successful Dental Practice Transitions
  40. Taking Care of Business
  41. The Investing Dentist Phenomenon
  42. Two areas to focus upon that could negatively impact the value of your practice
  43. Organize your Debt in Order to Sell your Practice
  44. Having a Better Team
  45. How Do I Prepare My Practice For Sale
  46. How Do I Prepare My Practice For Sale? Part 3
  47. How Do I Prepare My Practice For Sale? Part 2
  48. How Do I Prepare My Practice For Sale? Part 1
  49. Advice to My Son or Daughter Graduating from Dental School
  50. Transition - What to Expect
  51. Discussion on Digital X-Rays
  52. Partnerships and Shotguns
  53. Strategic Planning - How to Get Started
  54. Calling All Vendors - Practices have Gone Up in Value
  55. Purchasers: Expect to Pay More for a Practice because of Lower Professional Corporation Tax Rates
  56. Matrimonial Practice Valuations
  57. Purchaser's Guide to Affording a Practice
  58. Location Improvements Throughout Your Career
  59. Small Practice Valuations
  60. Partnerships – The Best and The Worst
  61. Changing Location When the Opportunity Comes Along
  62. Visual Presentation of Your Practice
  63. Presentation of Charts
  64. Your Premises Lease Can Be Your Worst Enemy
  65. How to Select an Appraiser for Your Practice
  66. How Are Your Billing Ratios?
  67. It Pays to Invest in Your Tangible Assets
  68. The Importance of Separate Financial Statements
  69. Five Time Frame Levels to Sell a Practice
  70. 12 Suggestions to Safeguard Computer Data
  71. How to Buy a Visible Practice
  72. Why is there a shortage of good practices today?
  73. The Importance of Equipment in the Purchase of a Practice
  74. The Balanced Practice
  75. Will My Practice Be Saleable in The Future?
  76. Buyer Be Aware
  77. Excess Profit - The Second Key
  78. Patients and Profits are the Keys
  79. Plan Ahead

Volume 2: Patients and Profits are the Keys

Download the PDF version now!

What makes up the bulk of the value of your practice.

  1. PATIENTS: the number of patients, economic level of the patients, the relative location of the patients to the practice, the frequency of treatment , the dental I.Q. of the patients, age distribution of the patients, number of new patients.
  2. EXCESS PROFIT which I will address in my next article

PATIENTS: The number of patients in a practice relative to the billings is extremely important in understanding the practice. A practice billing $600,000 with 1,000 active patients is a very different practice from one which has 2,000 active patients and is billing $600,000. Knowing the difference is important to the purchaser. Typically the former practice is well tuned and the patients are well educated relative to their requirements for dentistry. Generally speaking they would require a more experienced purchaser to follow the vendor practitioner. Whereas the latter situation could be followed by most practitioners although a more recent graduate (which make up most purchasers) would require the vendor to stay on for an extended transition period in order to continue to treat that number of patients.

To relate to a practice with 1,000 active patients billing $300,000 the recent graduate dentist would be able to cope with that number of patients with only a limited transition period. In fact there would not be enough patients for the vendor to stay on for a longer transition period if the purchaser wished to work full time at the newly acquired practice. There would probably be disappointment if the vendor thought there was room for him in the long run. This is where you hear of vendors being terminated by the purchaser after closing. Not a happy event!

Many purchasers like to purchase a practice in a solid middle class, middle economic community or higher. Seldom do I get requests for poorer communities even though there are great practices in lower economic communities.

Typically the more senior dentists have their patients spread farther afield than newer practices and the patients tend to be older on the average. This has advantages and disadvantages – the more mature patient base would require more crown and bridge whereas newer practices tend to have more young patients. Know what you are looking for!

The frequency of treatment (3-4 months for periodontal treatment, 6, 9, or 12 month recall) is important to understand how the practice is relating to the patients and the response the patients have to the recommendations of the dentist and the dental team. Practices which focus on education of the patients and the team including the dentist are generally the practices which tend to be the most successful.

Lastly, I would like to draw out the unimportance of the new patient count per month. If the vendor practitioner is older, a purchaser should not expect the new patient count to be very high maybe as low as 3-4 per month. Referrals from current patients tend to slow when the dentist “looks like” he or she may be retiring soon. This should not be of concern as the new patient count should improve if there is an effort on the part of the younger dentist to attract the new patients and the facility is attractive.

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