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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 4: Buyer Be Aware

Download the PDF version now!

There are many fundamental steps in purchasing a practice, the purchaser should complete all of them. Purchasing an existing practice cuts down the risk of failure when compared to starting from scratch but there are risks. In the next few articles I will cover what I consider are the key steps in purchasing a practice regardless of whether the purchase is through a broker or you are dealing directly with the vendor.

The number one rule in purchasing a practice is to count the charts. Do not believe anyone! Not even me! You should set aside up to three or four hours to review the charts. Take another dentist with you to assist in the count but remember all the information is confidential and no specific information such as name, address or telephone number is to be written or taken away. In fact, a confidentiality letter may be requested.

As you would have read in Article 2 "Patients and Profit" are the keys to value. Your accountant will review the profit for reasonableness and sustainability but you are directly responsible for the documentation of the quality and quantity of the patient base you are acquiring. Remember, you are generally purchasing a patient base and the location and equipment simply are used to facilitate the treatment of the patients.

When reviewing patient files, to better understand the patient base, attention should be paid to the following top ten list:

  1. How many patients have received treatment in the past 24 months? (If they have not been in for more than 24 months they are of limited value)
  2. What percentage of patients receive treatment at least annually?
  3. How many are new patients who have not had a return appointment in the last year? That is, a subsequent visit after the initial visit or series of visits.
  4. Do the patients work or reside within a reasonable distance from the practice?
  5. Are the fees charged reasonably consistent with the O.D.A. fee guide?
  6. Does the practice accept assignment and does the doctor collect the coinsurance from the patients?
  7. What percentage of the patients are paid by social services?
  8. Can you read the charts, is the writing legible?
  9. What treatments are being performed in the practice and do you feel comfortable performing them i.e. orthodontics?
  10. Alternately, what procedures are being sent out to specialists, that you could perform to increase the fees?
  11. If there is a noticeable ethnic base in the practice, is it one that you are comfortable with?

Subsequent articles will discuss other steps in the purchase of a practice.

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