You’ve signed on the dotted line, exchanged handshakes, and sipped champagne.
Congratulations, you’ve just purchased an existing dental practice. You have a beautiful vision to take the office to new heights. More patients, new technologies, and a fresh coat of paint of the walls. How could it possibly go wrong?
It can fail miserably.
Sorry to bum you out a little, but just because the previous owner enjoyed success doesn’t mean that you will be guaranteed the same unless you avoid certain pitfalls. I’ve spoken with countless dentists about practice transitions and have even witnessed a couple personally. Here’s a compilation of the lessons other new owners learned the hard way…
(1) Make a lot of changes, rapidly
Chances are that if you are buying an office these days you will see a few technological advances that are lacking. Check out this post for some of my explanations why. Digital radiographs, practice management software, upgrading equipment in the operatories… the list goes on.
Some of these esthetic changes may be embraced by the staff and patients. An old bathroom that gets a makeover will surely be a crowd-pleaser. But you have to be careful of doing too much too soon.
First, it’s expensive. Wait a few months so you can see what the actual cash flow will be. Even if a bank will lend you the money for the improvements, you need to make sure you can pay off the loan. Second, your base of patients will like to see the place spruced up, but too much change will remind them that the business is under new ownership. Don’t make them feel like strangers in a place that used to be comfortable.
(2) Replace key staff members
Even if you are the most perfect and amazing dentist in the world, your new patients don’t know that yet. They will learn how wonderful you are but it takes time.
Before they discover your greatness, your patients will rely on the relationships they’ve forged with your staff. Front desk, assistants, and hygienists often have major loyalty with patients, especially if they’ve been there for a long, long time.
Make sure your new staff likes you. Be generous and keep an open door policy. If you think someone needs to be terminated, be very, very careful. When you let those key staff members leave, you may find patients leave with them.
(3) Change the practice model
Here are some axioms that will seem obvious, but I assure you I’ve seen new owners break them. And it gets ugly. Here they are, written in stone:
If you bought an insurance-based practice, you cannot change it to fee-for-service overnight.
If you bought a practice that has built relationships with specialists, you cannot sever those ties and do all the dentistry yourself.
If you bought a community-based practice, you cannot live far away from that community.
You get the idea. Part of your evaluation of a practice you want to buy should be its practice model. Don’t just look at a spread sheet of new patients per month and net profit and blah, blah, blah. That stuff is important, but you also need to get a real sense of how it works. How does the current owner get those new patients? If they get patients by running a $10,000 per month radio campaign, then you’re going to have keep paying for that. If they get patients by being involved in the local Chamber of Commerce, then you’re going to have to clear time to go to those meetings. And so on.