Dental Practice Mergers: Another Approach to A Practice Transition
The term “Practice Transitions” has come to mean many things over recent years. In fact most advisors readily add the term to the list of services they provide; whether or not they really know what it truly entails. But what does this really mean?
The classic definition of a practice transition is when an owner dentist is looking to sell their practice, but would rather not just turn the keys over to someone in a brokered transaction. The goal is to bring on the future buyer as an associate and work together over a period of time to transfer ownership or perhaps form a partnership. While this model is still an extremely effective way to sell your practice and ensure that patients and staff are well taken care of; there are many more options available to practice owners in the current dental environment. Not to mention there are several strategies to strengthen the typical practice transition if this is your goal.
Dentistry has been moving towards the bigger is better model in recent years; putting huge pressure on the small independent practitioner. Insurance companies, cost of technology, corporate dentistry, and increasing regulations all require constant vigilance and adaptive strategies on the part of the practice owner. The good news though is that the private practice model is far from dead; contrary to what some advisors are preaching! Quality of life; clinical freedom, financial reward and the benefits of business ownership are still alive and well to today’s practice owners. However we know that many owners are working hard to grow their practice and finding it difficult to do so if they are in an area otherwise saturated with dentists and competition. Others may they have an associate on board and are growing, but just not fast enough. Many are just tired of carrying the load alone and would love to have the collaboration of working with a partner, but feel their practice could not support another dentist. If you find yourself identifying with any of the above, and have the drive and determination to do something about it, there may be opportunities for you to meet your goals.
Towards this end, merging practices is becoming more and more common between like-minded practice owners looking for the collaboration and coverage that comes from a larger, multi-doctor practice. We have helped numerous dentists achieve this outcome. It is not for everyone though, and there are multiple areas you need to look at in determining if this is a viable option. Systems, staff, clinical philosophy, partnership mechanics, insurance plans, value, practice software, physical layout, the geographical area of the practices and many more aspects of your situation, must be looked at carefully with the help of a knowledgeable advisor. The rewards of a successful merger are huge, but the risks of a poorly planned partnership are even greater. So doing one’s due diligence is essential, and ideally both parties considering merging practices would see the value of having a third-party practice transition strategic preparation and planning advisor help them with this process.
Other practice owners may find themselves with the facility and staff/Doctor capacity to grow substantially, but lack the patient flow. For these doctors the possibility of acquiring a 2nd practice or patient base that would be “merged” into your practice can be a phenomenal strategy to grow rapidly. Again many of the same issues that face mergers must be addressed. Ideally the exiting owner will work for you for a period of time that will vary based on the situation. Is your clinical philosophy similar? Even if you are not forming a partnership; what are their patients used to? How will the transition go for them? How will you compensate the owner doctor? How would you determine a fair value for the purchase? Again all very critical questions that must be answered as the rewards of a well planned and executed acquisition are substantial.
Whatever your situation, if you see the value in growing your practice then know that there are options! These are not things that happen overnight, but they have to start with a vision and clear intent. From there, getting the right guidance to understand the possibilities and the correct approach is essential. Make sure your practice stays as strong as it can be. There is a reason that outside money and corporate investments are pouring into dentistry. You have the benefit of a great business model and a growing industry. So make sure you are the one to take advantage of it; not someone else!