Over the years, our experience has suggested that most doctors who do not have a design under way for owning and operating their practice may be jeopardizing thousands of dollars in confused income. Far besides many doctors wait excessively long and receive besides short waiting for the mighty opportunity. Remember, while taking positive action may present some risks, taking no action may involve even greater risks. By doing something positive, you have a greater find for success. What are my options? When the time arrives for you to seriously consider a practice passage, you should know that there are two basic ways to buy a practice : you can buy all of it, or you can buy a helping of it. The variations of those two basic structures are numerous. But beginning, you should decide what type of commit you want and whether or not you want another doctor involved in the commit. So what are some of the more common variations used ? First is a submit buy-out transition where the buyer works as an consociate for a class or two before purchasing the practice. The second option is an outright purchase of a practice with the seller walking away. If done correctly, the passage can be very smooth with a patient retentiveness of more than 90 %. A third agreement is a pre-sale ( or work-back ) transition in which you would buy 100 % of the practice sidereal day one and have the seller “ work back ” part-time for you as an companion. This allows you to phase into a rehearse at a comfortable pace while maintaining the integrity of the patient free-base and staff. If you decide to buy, the seller does not inevitably have to walk away. You just need to structure the right kind of relationship with the seller. If properly structured, any of the aforesaid arrangements can be an excellent mechanism for acquiring a practice. As with any long-run kinship, working with the correct partner will require more effort than having him or her just walk away, but the quality of life and fiscal rewards associated could be well worth it. For exercise, a buyer who has a potent want for control might consider buying 100 % of a practice. This placement is typically easier and far less complicated than buying only a assign and normally is the prefer method acting of transition for dentists acquiring a practice. If you need to share clinical, managerial, and overhead responsibilities, you may want to consider buying share of a practice now and the rest by and by, when the seller is closer to retirement. This method acting has proved good for middle-aged dentists who are still experiencing excellent growth and who could use another set of invest hands in the practice. Becoming an equity collaborator is much more preferable to the revolving doorway of associateships we see so frequently. Each method acting, i, buying a parcel or buying all of a commit, offers certain advantages and disadvantages. cautiously consider both the opportunities and risks associated with each approach before entering into any legally binding agreements. New relationships can be very rewarding if built by rights ; they can be devastating if they are not. Where should I look for practice opportunities? Simply stated, look in areas where you and your class want to live. however, the set where good exercise opportunities may be and the target where you decide to live may not be the lapp. In most cases, there are fewer rehearse opportunities in the more desirable areas ( normally newer suburb ), and when these opportunities do become available, they normally sell quickly, with a higher than average price tag. As a general rule, the good opportunities are in the older parts of township and/or in a rural set. But these are many times overlooked because of older equipment, an older facility, and the agency location. These practices normally have older patients who need a draw of dentistry. When they are transitioned to a younger doctor with a fortune of energy, the gross frequently increases. Some doctors choose to live in the more desirable areas but commute 10 to 40 minutes to the office, giving them the best of both worlds, a full practice and a pleasant exist environment. What qualities should I look for in a practice opportunity? first and first, when a practice opportunity presents itself, you should ask yourself, “ Is this practice opportunity complemental to my goals and needs ? ” Goals such as : “ Does this drill opportunity address all my fiscal obligations ? And is the philosophy alike enough to allow me to do the type of dentistry I want to do ? ” Establishing guidelines about your needs and goals will make it much easier to identify those opportunities that are right for you. When it comes to gathering the information required to make an educate decision, many doctors feel complicate and overwhelm. obviously, a practice should not be purchased without first studying sufficient data. Nevertheless, enthusiasm frequently override objectivity, and many dentists decide to close a purchase anterior to conducting the proper due diligence. A very good indicator of a potentially successful practice is a practice with a good track record. That is, a drill that has demonstrated stable income over an widen period of time. A fat history of active patients and referrals indicates quenched consumers who are glad with the quality of care they have or are receiving. An highly positive polarity is when records indicate an active affected role base coupled with a healthy flow of new patients. Add to this a cooperative seller, dependable staff, and a profitable bottom line, and you have the ingredients for a successful drill. therefore, it is particularly important that you, as the buyer, careless of the practice, conduct a patient chart audit. To do this, we suggest you pull every tenth chart and review the surveil :
- Frequency of patient visits
- Type(s) of insurance
- Distance patients live from practice
- Amount of restoration done in the past and amount potentially left to be done in the future
- Type of dentistry previously completed
Review these five areas and rate each patient ( chart ) on a scale of one to five ( five being the best ). For case, if the patient comes in every year for hygiene, has some tonic shape done, has good policy, and lives within a five-mile radius of the practice, then he or she is probably a five. however, if the affected role visits infrequently and has poor indemnity coverage, he or she might be rated around a one or a two. If, after you review 100 charts, the complex score is less than 200, you may need to re-evaluate the intangible value of the practice. A healthy exercise should have 150 to 200 plus active patients per $ 100,000 annual gross. active patients are normally defined as patients of commemorate seen in the past 24 months. besides, having 50 or more new patients for every $ 100,000.00 of annual tax income is besides a effective sign. The act of active good patients and count of raw patients is critical to the degree of success you will enjoy in your commit transition. basically, as a buyer of a dental practice, you are purchasing a future flow of income. The most authoritative separate of the income stream is what remains after paying all necessity disk overhead expenses and debt related to the leverage of the commit. This is what we refer to as the pretax economic earnings, or pretax profit. This figure should be around 25 % of crying collected gross. If you are unable to make a reasonable income of at least 25 % of your gross production, after overhead expenses and debt service in the first base year, then possibly the purchase may need to be adjusted. In addition to reviewing the patient profile of a drill, there are several other items you should investigate, such as : reasons the seller has for selling, the seller ’ s philosophy in treating patients, price and terms, location, current status of the local economy, profit and loss statements for the last three years, status of equipment, staff profile, fee schedule, type and frequency of insurance plans, terms of the office rent, and flat of OSHA submission. These are only a few of the numerous criteria for evaluating an opportunity. As you can see, it may be a very costly mistake to undertake researching a practice opportunity entirely. Seek professional help in this area. It may be the best decision you make in planning your career and will ensure that you “ do it right the first time. ” Why not be an associate for a while to see if we get along and to see if he or she is the right partner? If we have learned anything over the many years of transition practices, it is that the odds of an associateship breaking up and becoming a disappointment for all concerned is about 70 %. We call these arrangements ambiguity-ships, because of the ill-defined parameters that govern these relationships, a well as the miss of an fairness investment. In fact, the only reason to be an consociate without an equity investment is if, and only if, both you and the host have short-run goals and needs ( meaning 12 to 6 months or less ). If you work as an associate without a chiseled agreement and an equity investing, plan on a future separation. contrary to conventional wisdom, you do not have to live together for a year or two to see if he or she is the ideal candidate. In fact, the longer the relationship goes without an equity investment and a well-defined agreement, the greater the likelihood that it will end in disappointment. Keep in heed that a committedness to ownership is a much different kind of commitment, and brings with it an wholly new mentality and focus for all concerned. We have seen countless associates work a few years without any problems, all the while expecting that someday they would buy the practice and have some control over their future. many, if not all, of these situations have ended ailing, costing the associate years of lost equity and income. Do not put your future at risk ! If you start things off on the wrong foot, it is unlikely that anyone can resurrect what may differently have been your best opportunity for an excellent transaction. How can I know what is best for me? The first tone is to do precisely what you are doing now. Educate yourself about the process and the possibilities. Ask yourself appropriate questions, like : “ Am I meeting my substantial needs, and what information do I need to educate myself about all viable options ? ” The second footstep is to ask yourself how you truly feel. Questions such as : “ Does my decisiveness show I am being honest with myself ? What would I decide if I wasn ’ thyroxine afraid, and what would I do if I deserved good ? ” There are basically five types of buy-out arrangements. Depending on your goals, the social organization can be set up complementary color to both parties. The first choice is called a postpone buy-out. This method is used when the exercise production is not big enough initially to accommodate a neat buy-out and in full support two dentists. consequently, the new practitioner works as an associate for one to two years while building the practice output such that when he or she starts the buy-out, there is sufficient production to service the debt on the practice learning, make a good life, and still allow the seller to work back as an independent contractile organ associate for the next ten years. This is accomplished by having both parties commit in writing on day one to the price, terms, and conditions that will govern the practice sale and for the buyer to put down some earnest money. As for scheduling, many times there is plainly not enough board for two doctors to work at the lapp time in the same adeptness. So we suggest they straddle the schedule, having one doctor exercise from 7 ante meridiem to 1 post meridiem and the other from 12 post meridiem to 6 post meridiem We have found that doctors produce more income on a six-hour day than on an eight-hour sidereal day. As the italian philosopher Pareto once said, “ Eighty percentage of your results come from twenty percentage of your activities. ” Using the position in a more efficient manner allows both parties to leverage their practice activities, to lower the overhead, and consequently generate more net income. This is die to the fact that some of the fixed expenses stay the lapp, and as the product increases, the overhead decreases. The moment option is called a amalgamation pre-sale. The buyer has an existing patient base but is looking to increase his or her net income without suffering an increase in the workload. In this transaction, one of the parties moves their exercise to the other party ’ s facility. The objective is for one doctor to sale the practice and ferment for the other doctor as an mugwump contractor for the duration of his or her career. The buy repair benefits by receiving extra income from the seller ’ randomness production in central for purchasing and managing the seller ’ s practice. If structured properly, both parties may end up taking home more pay up and overcoming solo-economic dependence. This type of transition is very economically strait, but the difficulty lies in finding the right parties within a five-mile radius of one another. consequently, mergers normally require long-run plan and can take up to five years to consummate. The one-third choice is to purchase a practice outright and have the seller function back half-time for the buyer. The seller ’ mho schedule is then subordinated to the buyer ’ s schedule, and the seller is normally paid 30 percentage of his or her respective gross collected product. The buyer may purchase 100 percentage of the rehearse by making a down requital of 20 to 40 percentage of the buy price and having the seller carry back a promissory note for the balance over a seven to ten-year period. The seller works part-time for the buyer as an independent contractor for a time period of prison term ranging from a few months to ten years. With this type of option the seller ’ randomness income is normally cut in half. however, he or she has the monthly income from the buyer ’ s promissory note to help offset the decrease. This allows the buyer to have the seller ’ south help in building up the practice american samoa well as maintaining the seller ’ second grace over a longer period of fourth dimension. In these cases, the seller schedule is subordinate to the buyer ’ second schedule, therefore assuring the buyer a better placement to address disk overhead expenses. The fourth option is to buy 50 percentage undivided interest in a practice ; however, this is only advisable if the seller ’ s time horizon for retirement is beyond ten years. If that is the lawsuit, consider buying part of the rehearse immediately and the rest late, when the seller is closer to retirement after a 1-2 class associate period. The fifth and final examination option is a postpone buy-in. The fresh spouse works as an associate for one to two years for the host doctor of the church. This biennial period allows the practice to grow sufficient adequate to allow the new practitioner to buy 50 percentage of the practice and service the debt payments on the purchase. Once the buy-in is accomplished, there is a partnership or an operate agreement that governs the relationship. Both parties may choose to have a six-month courtship menstruation before committing to a future buy-in. After the six-month courtship period, the consociate pays the seller an come of non-refundable earnest money which commits both parties to complete the buy-in at some designate meter in the future ( normally one to two years ). Beware of compromising the deal. Compromising is the art of getting both sides to agree to a resolution that neither side likes. Compromising is many times a defensive scheme : it does not play to the party ’ sulfur strengths ; it seeks to minimize vulnerability to weaknesses. What do I really know about buying a practice? Are my expectations realistic? Every dentist who has decided to buy a practice has sealed preconceived ideas about what the process entails. sometimes those ideas match reality ; often, they do not. It would be virtually impossible to list all of the misconceptions that dentists bring to the work, some of which cost them tens or even hundreds of thousands of dollars. hera are fair some of the things you can realistically expect as the procedure unfolds .
- Expect the process to take time: 6-12 months for locating general practices in major metro areas, and up to 34-36 months in smaller rural communities.
- Expect the most desirable practices to have a large price tag.
- Expect to deal with a sincere but sometimes uninformed seller looking for the highest price, with unreasonable terms. Unless you have someone carefully review each opportunity, expect to waste time and money finding the right practice.
- Unless you take the proper steps up front, expect to have every representation you make scrutinized, questioned, and negotiated.
- If you’re not sure how to utilize your lawyer and accountant in this specialized process of practice transition, expect to pay for their education without the result of a completed transaction.
- And just when you think you have everything in order, expect the seller and his advisors to change their minds at the last minute about this or that. And expect the possibility of him not selling the practice at all.
As you can see, a successful transition is not the absence of problems, but the ability to deal with them. Having a stipulate professional at your side can truly enhance your ability to deal with the unexpected. What is a practice really worth, and who is most qualified to appraise it? A rehearse is worth precisely what person will pay for it in the market. This may sound like a cliché, but it is a fact. presently, buyers of cosmopolitan practices are paying 46 to 70 percentage of the most holocene 12 months collections. ( This range excludes duress sales for death, disability, or health reasons. Studies show this type of sale averages near 30 to 60 percentage of the prior year ’ second crying. ) Specialists typically sell for less. Circumstances surrounding each sale vary wide, from estate of the realm sales to partnership buy-ins. In general, healthy and active practices with fee-for-service patients and firm new patient flow fetch higher valuations. sometimes older practices and practices in rural areas bring less, even though for the buyer, they frequently represent the best opportunities for growth. possibly you may already know that the value of a practice is actually in the mind of the buyer, preferably than in the mind of the seller. Getting a seller to understand and appreciate this concept may not be easy. possibly the best way to illustrate this is to suppose that you are a doctor. Let us assume that you wish to buy a checkup drill dwell of the lapp revenues, command processing overhead time, and placement as your neighbor, the dentist. What is your practice deserving ? You will find that medical practices with identical revenues will sell for far less than their dental rehearse counterparts. Why ? new physicians beginning their careers plainly do not experience the same level of competition for patients that youthful dentists experience. Without that motivation to plug into person else ’ sulfur patient stream, most young physicians can start their own practices or join a large group practice. In the dental airfield, however, there is much more intense competition for patients and therefore more value in established practices for young buyers needing access to patients. That is why the intangible assets of good will, patient records, and restrictive covenants are so crucial to you as a buyer. The action of establishing and substantiating the dependable prize of a practice is all-important to your success. The wrong set about can lead to unfortunate results. normally, the intangible value of a rehearse is approximately 60 to 80 % of the total value, meaning that it is composed of such things as grace, loyalty, trust, relationships, perceptions, and covenants. There is no simple formula to objectively evaluate these substantive aspects of what you have to buy. And however these are the major items you as a buyer want to buy. typically you can find fresh, better, and less expensive equipment and furnishings just about anywhere. You may besides be able to find a better facility or placement, and a staff with better abilities. What you will have trouble finding are the intangible relationships of good will and trust that a seller has spent many years developing with his or her patients. Out of those relationships of grace and trust come the fiscal rewards that you seek. That is why you will pay a considerable come of money to access the tax income stream developed by the seller. What you ultimately pay for a exercise is wholly dependent on what you believe, how you feel, and in whom you trust. Be sure to pay attention to your catgut feelings about the nominate transaction. If you feel adept about the seller and the practice, and faith that the appraiser/consultant has been objective and can actually facilitate a average transition, there is a high probability that you will want to pay the measure value. The person most qualified to appraise a practice has demonstrated the ability to transition practices and meets the needs and expectations of the buyer a well as the seller. Remember, the appraisal international relations and security network ’ deoxythymidine monophosphate worth the composition it ’ s written on if the appraiser can ’ t bet on it up with other transactions in which purchasers have done well after the ink dried. All besides frequently, unrealistic ego-inflated appraisals and ailing structured transactions have caused much grief rather of creating what could have been an excellent practice opportunity. The moral of this report is to know with whom you are dealing. Ask lots of questions, and check references of clients ( buyers and sellers ) who have actually closed their drill sales through a particular firm. How will I know I have the right seller or partner? You may not know for sure until long after you have signed the compress. fortunately, there will be many signs along the way. Keep in mind that you will be asking the seller to take on some contractual commitments. But before those major commitments are made, there will be enough of smaller ones. The acidic test in determining how the doctor will handle major commitments is how he or she handles the smaller ones. The right seller will be enthusiastic and cooperative. The right seller will agree to a fair grocery store price and reasonable terms. The transition of a professional practice is a very disclosure action. As we move along the path of committedness, everyone will learn newly things about one another, and more importantly, about themselves. Our experience is that somewhere along the way, normally prior to close, the questionable ones reveal themselves. ultimately, the decision is yours. however, it may be utilitarian for you to know some of the things we look for in selecting dentists we will work with as clients. We look for people who demonstrate a high degree of integrity and moral fictional character in their dealings with us and our clients. We look at their track commemorate in making and keeping commitments. We determine whether their goals are complementary to those of the other party ; we besides review their fiscal needs and resources. And ultimately, we look at their willingness to cooperate and take sound advice to effectuate a smooth transition. If these things are in order, you credibly have a very good candidate. How can I pay the least amount of money for a practice, and at the same time be fair to the seller? It is no mystery that a well-managed practice with an excellent staff and high affected role atonement is worth more to you as a buyer. There are respective winder indicators that offer penetrating penetration into overall staff efficiency and rehearse performance. These indicators include : How many active patients are in the practice ? What types of practice management systems are in place ? Does the other historical fiscal data support the practice rate ? These and many early crucial factors need to be reviewed in order to come up with a fair and equitable arrangement. Maximizing the practice potential from a purchase is an intricate process. This summons considers what is fair to the buyer. The appraiser must ask himself, If this were me, could I buy this commit with this price and terms and calm make a good life ? For the practice value to be meaningful to you, it must address the fundamental issue of feasibility and income electric potential. In other words, can you take home a reasonable income before tax of 25 to 30 % of your gross product and still pay all disk overhead expenses and debt service on the exercise sale ? obviously, the challenge is to covey to the seller a sense of appreciation of these factors and of the fairly prize of the intangible and palpable assets, and to economically substantiate that value. This is not an easy tax. therefore whatever you do, get master steering from person who actually knows how to get the speculate done correct and who has the track record to prove it. You probably will buy only one practice. so do it right the first clock time ; otherwise, it could end up being a very dearly-won have I have little cash and a lot of school debt. How will I have the financial resources to purchase a practice? Most exercise acquisitions are financed by lend institutions, depending on the buyer ’ s fiscal history and credit denounce, and analysis of the cash hang of the rehearse. More acquisitions are 100 % financed today than 10-20 years ago. Some buyers will merely borrow the devour payment from a bank if the seller is volition and able to carry back a promissory note for the remaining come. This sum can vary from 20 to 80 % of the purchase price and is normally financed at a fixed rate determined by the grocery store over a five to ten class period. If the seller feels confident the buyer will be a success, he/she will likely be more flexible in carrying back a promissory bill with reasonable terms on the practice purchase. furthermore, having the seller carry back finance helps give the buyer some insurance and assurance that the practice is and will remain a feasible, successful entity. furthermore, the seller maintains a vest interest in the buyer ’ sulfur success. many purchasers search to find a deposit that believes enough in them and the practice potential to lend the money to get started. That is never comfortable, but with the correct banking connections and proper presentation, it is possible.
fortunately, these bank and seller financing options have been used for retentive enough to confidently say the odds of the buyer failing to service the debt are extremely minor. On average, less than 0.05 % of alveolar consonant exercise purchasers default on their practice learning debt each year. What if the patients stop coming to the practice after the seller is gone? On of the greatest myths surrounding practice transitions is that 20 to 50 % of the patients will not stay with the practice after the sale. The truth is, in well-managed transitions, the attrition rate could be less than 10 %. We know of cases where the patient personnel casualty has been over 30 %, but those transitions were ailing handled by the doctors and staff, and are, fortunately not very common. The very best way to keep patients in the practice is for the seller to give you a potent endorsement in a letter sent directly to them, and to have a supportive staff. Most patients will then give you at least one opportunity at winning them over during a patient visit. Our experience on transition practices has shown that the modal patient abrasion is humble if the transition is handled properly. Is there anything I can do to help ensure my success with a practice transition? first, educate yourself on the process. Take some courses on practice transitions and management. Work close with person you trust and who understands your expectations, but more importantly, who is competent in this specialized area. There are many alleged professionals, but having the competence to get the job done right is another count. You ’ ll want to seek professional advice from person who specializes in managing dental practice transitions. This person will educate and advise the younger buyer in dealing with the ten thousand situations that he or she will face as an owner or partner in a rehearse : things such as effective leadership and management, hiring and discharge, patient memory and case presentation, regulative submission, fiscal monitor, clear communications, and so on. Most importantly, a transition specialist can anticipate problems in advance and avail you avoid costly mistakes and detours. second, preceptor ’ metric ton get excessively hung up on the historic period of the dental equipment. even though this is factored into a valuation process, you are buying a business that produces an income flow, and those tangible assets are required to produce that income. Besides, when the practice becomes more profitable, you will be able to afford to buy new equipment. Third, don ’ triiodothyronine negotiate directly with the seller ; you may be damaging the very thing you are buying, the seller ’ south good will, faith, and cooperation. If you try to negotiate a share, the seller may resent you. even if you conclude the transaction, the seller may try to get even later on, and you may lose thousands of dollars. fourth, show respect to the seller by being on clock and by not being judgmental on the way the practice looks and how it ’ mho run. The seller may not be managing the commit the room you would, but that doesn ’ thyroxine beggarly it can ’ t be molded to be more in argumentation with your expectations. Fifth, build believe with the seller. Building faith before talking about business in earnest will enormously increase your chances of obtaining favorable terms and a cooperative seller, without compromising either party ’ second interest. Sixth, when potential, meet with the staff members before the transaction is completed. many times, they provide valuable insights on how the business is very doing. Can the seller walk away from my practice, or do I need him to remain on for a transition period? Except for specialists, it is normally not necessity for a seller to remain with a practice for a conversion menstruation. If handled by rights, affected role memory will probably be high whether the seller stays on or leaves immediately. personal introductions of the buyer by the seller are not necessity, and sometimes are counterproductive. The seller remaining with the practice after the sale should be viewed as a possible option available to you and the seller, not as a prerequisite for your success. however, the loss of full staff can be damaging to a positive change. Patients who hesitate to accept the new doctor broadly take the risk of coming back if they can identify with the original staff members. initially, the fewer the changes, the greater the likelihood of affected role memory. How long will it take to find a practice and close a transaction? This largely depends on the location you desire and what your fiscal resources and requirements are. The best opportunities, in terms of location, operations, cash flow, etc. are in high demand. Whether or not they are difficult to locate, they may go fast and many buyers look for class or so to locate and secure such a practice opportunity. Keep in beware that some of the best opportunities are located in the older parts of town. They may not be the Cadillac practices you were looking for, but with the proper plan and practice management, they can very well end up being the practice you dream about. once a qualify and commit seller has been found and all terms have been agreed upon, it normally takes six to eight weeks to close the transaction. If no bank financing is involved, the process may take lone three to four weeks. How do I best handle the staff? Before Closing, keep in mind that they are the seller ’ mho staff treat the seller and staff with the last respect. After close, continue to speak respectfully about the seller, the drill and staff, even if your methods or priorities differ. remember that you don ’ triiodothyronine buyer faith and rapport, you earn it. Always tell the staff the truth. Make surely you understand what the seller has conveyed to the staff. Be sure to emphasize their individual caper security system and the necessitate for their proceed support. From day one, it is authoritative to understand and address their needs and goals. By doing thus, a high academic degree of believe can be established. such trust can pay big dividends not only financially but emotionally a well.
initially, the institution of good rapport and a good ferment relationship with staff will have a capital affect on patients ’ acceptance of treatment from the new doctor of the church. Why ? Patients will typically ask the staff ( before they ask the seller ) what they think of the new doctor. even a glow letter of recommendation from the seller does not inevitably indicate that the staff will have an equal amount of exuberance for endorsing the fresh sophisticate. It is imperative that the new repair help the staff feel he ’ s good with people and has competent skills. This assurance allows the staff to make recommendations about his abilities without reservation. We suggest that the fresh doctor of the church spend some choice time with the staff. initially this means spending some one on one time to understand their personal needs and goals arsenic well as learning how they feel about the practice ’ s strengths and weaknesses. besides, ask them about ways of changing or improving the practice.
When the doctor is sincerely concern in the staff ’ s point of view, staff members will look at ideas, both theirs and the doctor ’ mho, without feeling threatened. They are then more probably to loosen their harbor and consider a new attitude that favors the doctor of the church vitamin a well as themselves. With this type of environment, more energy can be directed toward the craved results versus toward protecting dignity and egoism. By seeking to understand the staff, the doctor of the church gains respect in the relationship. To clearly define expectations and craved results, doctors and staff should institute a meet schedule. initially, staff meetings with a specific pre-assigned agenda should be held regularly to facilitate and improve communications. effective staff meetings should include the follow :
- Objectives: The purpose or intended results of the meetings.
- Attendance: Who should come and what each person will contribute.
- Guidelines: What is the best way to accomplish desired results? What resources are available to achieve those goals?
- Accountability: Assignments of who (person receiving the assignment); what (nature of the assignment) and when (due date of the assignment).
- Follow-up: Review the progress by scheduling subsequent meetings and following the same format.
This type of accountability system, where each individual has the province to carry out assign tasks, enables the staff to work more interdependently, frankincense freeing the doctor ’ s prison term to do what he does best : treat patients. In accession to periodic staff meetings, day by day 10-15 minute huddles to review the day ’ mho schedule help oneself to achieve the short-run and long-run goals which have been established in the weekly staff meetings.
To handle the schedule of patients, the new doctor normally sees most of the new patients a well as the existing ones. Unless the patient expresses concerns about the new doctor, the staff schedules him/her with the modern doctor. If the staff detects any reluctance or concern by the patient, they might empathize with the patient by saying : “ you feel… ” or “ you ’ re saying… ” and repeat back their feelings or concerns. ” then the staff could go on to say, “ If I were in your shoes I might feel the like way, but I can assure you that once I saw how he treated patients, I felt identical good about the new doctor ’ sulfur level of professionalism and competence. [ Patient ’ s name ], we truly want to earn the opportunity to continue to give you [ and your syndicate ] the serve you expect and desire. [ specially for being such a firm affected role. ] ” then the staff schedules a time. If the patient is hush reluctant, the staff could schedule them with the seller, if he is still available.
It ’ s important to know that since the buyer is assuming the overhead province a well as the debt payments, his schedule should be booked first. The seller ’ s schedule is subordinate to the buyer ’ south schedule. What about taxes? How do I lower the taxes on a practice acquisition and operation?
It is possible to minimize taxes on the leverage of a master practice. This is a complex and boring contribution of developing the allow structure for a aim transaction. Some professionals are not aware of some of the more effective alternatives that are at their disposal to minimize the tax impact. Proper plan in this area can well save many thousands of dollars being sent on a one-way slip to Washington. You should be aware that when you purchase a practice ( an asset sale, not a stock sale ) you can by and large deduct the solid leverage price over a 15-year period. however, be sure to get advice early in the action, from person who specializes in this area. What if the seller wants me to buy the building too? The inclusion of the real estate with a practice sale can complicate matters. We normally suggest that you purchase the commit and rent the construct under a long-run lease ( i.e. 3- to 5-year terms ), with the choice to buy. This allows you meter to get comfortable with the practice before taking on the extra debt associated with the acquisition of the build. Should I employ a professional to assist me in the sale? Some dentists believe that they will save money by buying a drill without master steering. For that to be true, the doctor must make some dangerous assumptions. He must first assume that he can actually determine and objectively substantiate a fair respect for a practice, near to what a professional appraiser would place on it. then he must assume he can get the seller to actually believe he is sincerely aim and earnest in his analysis. following, he must assume that he has all the necessary banking connections to finance the purchase. He must assume he has the cognition and expertness to work through all the complex legal, fiscal, tax, and staff issues surrounding the sale. ultimately, he will surely spend hundreds of hours trying to put all the pieces of the puzzle together. If you do hire a adviser or oeuvre with brokers, you may want to first ask them the following questions :
- How many practice transitions and/or sales have you been involved with?
- How many years have you been in the business?
- How many sales ended up in litigation/arbitration or in professional divorce?
- How many of your purchasers have defaulted on their promissory notes to sellers and/or banks?
- What do you charge for an appraisal?
- What do you feel are your strong points in providing transition/brokerage services?
- Is your appraisal contingent on signing a listing agreement?
- How do you know you are accurate with your appraisal?
- Do you feel there is a conflict between appraising a practice and then listing it for a percentage of the sales price?
- What type of post-sale/post-transition follow-up do you provide?
- Is this your main occupation or do you have other activities to help subsidize your consulting business (i.e. sell insurance, securities, real estate, equipment/supplies, practice dentistry, etc.)? How will I know that these other activities do not conflict with the quality of service I’ll receive?
- What systems do you have in place to help both parties better understand their compatibility concerning goals, needs, and personalities?
- What do you include in your appraisal?
- What resources do you use to keep up with the latest changes in business and tax laws?
- How long does it take you to transition/sell a practice?
- How are you compensated?
- What services do you offer for the fees charged?
- Do you have any literature that will help me better understand the transition process and how I can better prepare myself for it?
- Can you furnish a list of the five most recent buyers and sellers you worked with?
If I choose to use the help of a professional, who should I call first: my lawyer, my accountant, my financial planner, my supply salesman, or a broker? What kind of professional guidance will I need? The real question here is : Who can you trust with one of the most important transactions of your life ? That is the quintessential interrogate, and perch assured the seller will be asking himself the very like thing. Whom can the seller trust ? And what if his adviser tells him something different from what your adviser tells you ? The ideal adviser, therefore, would be person who could be trusted by both sides to be competent, average, and aim. With that trust, the respective parties could proceed forward in confidence toward their common objectives, knowing that everything would work out. such an adviser would be in tune with the needs and expectations of both parties and would be in a military position to know how the demands of one party might impact upon the needs of the early. He or she could then act as an mediator for minimizing conflict and resolving concerns.
Of path, the ideal adviser should specialize in alveolar consonant practice transitions. Your adviser should be competent in fiscal deoxyadenosine monophosphate well as legal matters and capable of coaching and interacting with the lawyers and accountants who likely will be involved. An adviser who works in this capacity to the fullest extent will help you better utilize the services of your lawyer and/or accountant, and ultimately will help ensure that the transaction truly happens. He or she should have direct experience in structuring successful transactions similar to that kind of transaction you wish to have. This adviser should be performance-oriented, deriving compensation from the results of the process. ideally, this adviser has resources available to assist you in realizing the likely of the practice, thereby assuring the seller that his drill and patients will be by rights cared for and that you will have the greatest gamble for success. How much will it cost me to hire a professional transition consultant? The real costs of purchasing a practice are incurred by those few dentists who insist on going it alone. How foreign it seems to us when, in order to save a few thousand in fees, dentists end up losing thousands in what could have been a identical successful commit conversion. A dependable master will add measure as the work unfolds. His or her expertness in practice appraisals will ensure fair-market valuations. His or her credibility as a passage specialist will give ease to both sides and assist each in making some unmanageable commitments, without succumbing to the temptation of structuring a batch that is besides nonreversible. His or her focus on the big painting will help keep envy and avarice from corrupting a good transaction. And last, his or her broad cognition of legal, tax, and fiscal issues will save both doctors untold thousands they would otherwise spend having their respective advisors research, explore, and revisit the critical issues. Depending on the type of transition, most professional consultants will charge a fee either a hourly rate around $ 300 per hour or a flat rate between $ 7,500 to $ 15,000, which may or may not include any post-sale support. Either way, you need to check on the background of the professional and on the types of services offered. How do I negotiate a win-win transaction? We suggest the follow four-part system in developing a win-win transaction with another repair. inaugural, seek to understand before being understand, that is, understanding and defining the other ’ randomness expectations. in truth understanding the other ’ sulfur expectations leads to developing a climate of reciprocal confidence and authorization for both parties to act upon. second, design activities that allow a positivist relationship to develop. Third, cultivate a sense of common faith by opening questions about your goals and needs. And fourth, allow the relationship to in full develop before discussing business in earnest, thereby enabling both parties to discuss issues without being defensive. If each party becomes sensitive to the needs of the other, and if they can clearly see that their individual goals and objectives are intertwined, then the resulting synergy will allow the doctors to achieve a far greater degree of success. What questions should I address to the seller? In accession to the obvious questions surrounding the production and collection figures, disk overhead percentage, active patient consider, and overall profitableness of the rehearse, you should consider asking most or all of the play along :
- Which service/social organizations do you belong to in the community?
- How would you describe this community demographically?
- What kind of people live in this community?
- Do many of your patients work at one or two particular companies? That is, are there major employers who contribute a significant amount of patients to your practice?
- Do you involve yourself in any PPO or capitation programs? If so, with whom and how much do you have?
- If you rent the building, what is your relationship with the landlord? Do you find him/her cooperative or is that relationship strained?
- Have you ever had an associate or associates? How has it worked out? What do you see as the positive and negative parts of this relationship? How long ago did you have an associate?
- Have you ever done any type of external/internal marketing and if so what kind?
- Do you see any value to changing the hours of the practice? If so, why?
- Where are most of your new patients coming from and how many do you get a month?
- What type of procedures do you primarily perform in your practice? What type of procedures could be done in your practice which you are currently referring out?
- What advice would you give concerning ways of generating additional income for the practice?
- Do you see any ways of decreasing the overhead of the practice?
- How would you rate the competition from other dentists in the area?
- How would you rate your staff?
- Do you delegate many of your responsibilities to your staff?
- Would you describe the staff situation as stable or unstable?
- Is the practice amalgam free?
- How do you treatment plan your patients?
- How does your recall program work?
24. What issues need to be addressed before I make a offer to purchase? If a prospective buyer has conducted due diligence in researching the practice, including a confirmation of the seller ’ south data and a careful review of the appraisal, and so forth, he or she will likely be ready to make an offer on the practice. however, this offer should be contingent upon and/or after the completion of the keep up : a exhaustive chart audited account ( if not already completed previously ), approval of adequate finance, the procurement of the appropriate state license, and the reach of an satisfactory office-lease agreement with the landlord. In addition, the buyer should agree with and feel comfortable about the terms and conditions of the proposed purchase agreement. many times the seller ’ s current staff can shed some matter to light on how the practice has been and is soon operating. We recommend that prospective purchasers “ interview ” the staff and ask the adopt questions : what do like best about this commit ? Which sphere ’ sulfur do you feel the rehearse could improve in ? What attributes do you feel the doctor should posses or exhibit in regulate to precipitate effective practice operations ? What things should I know to help make this a placid transition ? Please tell me about the affected role profile, i.e., type ( second ) of policy most frequently dealt with, the type of recall system being employed, how schedule is done, and what newfangled affected role flow is like, etc. 25. Should I put down some earnest money with my offer to purchase? Earnest money seems to create a greater mental commitment by both parties to go forward in good faith and complete the transaction. Oftentimes the seller will require some form or amount of fiscal commitment from the buyer before taking his/her practice off the market. Some offer-to-purchase agreements furnished by brokers and/or attorneys may contain linguistic process which makes it very difficult for the buyer to get his/her money back if the transaction is not completed. We suggest that the letter of captive hold certain contingencies when earnest money is tendered with the offer, including financing, lease arrangements, license, and due diligence. In which case, it is more difficult for the seller to keep the money–or for the buyer to complete the sale–if one or more of the contingent items are not acceptable to either party.
26. Items you should review when conducting a due diligence research on a practice opportunity.
- Have you personally reviewed 50 to 100 patient charts?
- Did you (or when you eventually do review the charts) look for:
- Complete, thorough, readable treatment notes by Dr. and/or RDH.
- Recommended but undone dentistry clearly noted and tracked.
- Dentistry performed by the selling Dr. that matches the type of dentistry you do or intend to do.
- Overly aggressive or very conservative approach to treatment completed.
- Patterns of patient treatment acceptance evident (high or low)
- Have you examined the computer hardware and software?
- Is there a computer maintenance agreement in effect? For how long?
- Were you able to review a computer report of the following?
- Number of patients grouped by ages.
- Percent (and number) of active patients as well as percent and number of patients who have been in for restorative and hygiene in the past 12 months and in the past 18 months.
- Percent (and number) consistently receiving hygiene in the past 12 and 18 months.
- How far is the operative booked in advance?
- How far is the hygiene booked in advance?
- Production by procedure and production by provider for the last 12 months.
- Have you reviewed accounts receivable reports? Is there a sizable amount of the accounts receivable over 90 days?
- Do you know how flexible or how tight/strict the practice is about extending payment terms to patients?
- Have you examined written records for patient financial agreements for balances due?
- What is the average monthly payment amount allowed for patients with outstanding balances? ($25 per month vs. $200 per month)
- Are over-the-counter collections consistently done (for insurance co-pays, etc.)
- Have you reviewed the selling doctor’s fee schedule and, does it match with the fees you intend to charge?
- Does the practice maintain two or more fee schedules due to managed care plan restrictions? If so, how well is this managed by the front desk staff?
- When did the selling Dr. last increase his/her fees and by how much?
- Has the selling Dr. informed his/her staff of the practice sell?
- Have you interviewed all or some of the staff you may inherit?
- Do you have a transition plan for what you will do about salary increases, paid vacations, working days/hours, sick time policy, etc.
- Is the staff currently taking an active role in marketing the dental practice? How? Do they do this willingly?
- Have you observed the practice in operation?
- Do the patients and staff and Dr. seem to have good rapport? Do patients seem to trust Dr. and staff?
- How does the practice communicate with their patients (newsletter, Thanksgiving or holiday cards, etc.) Does this match with your intentions?
27. What items or checklist should I address before closing a transaction?
- Have a qualified consultant/appraiser or accountant review the appraisal. Review practice polices and procedures. Complete financial statements and a household budget and meet with a banker.
- Preview a list of all assets included and excluded in the practice sale. Both parties walk through the office and discuss these items before closing.
- Have your attorney review all the contracts and office lease.
- Have your accountant review purchase price allocations and any sales tax implications. Accountant files IRS form 8594 after the sale is completed (this is usually filled out when you file your tax returns).
- Both parties assist in writing a letter of introduction to patients. Send out letters after closing.
- Hold a staff meeting to build rapport and discuss how to handle the transition and how best to address staff and patient concerns.
- Review communication dialogue between doctors, staff members, and patients.
- Secure malpractice insurance and notify D.E.A. about the practice address.
- Credential with all the insurance companies that the seller accepts (get a complete list and apply with every one as early as possible)
- Possible Printed Material Needed:
- Appointment Cards
- Letterhead and Envelopes
- Professional Business Cards
- Referral Thank-You Cards
- Billing Envelopes
- Rx Forms
- Recall Cards
- Office Signs
- Rubber Stamp with Name and Address
- Call insurance agent for life, disability, and casualty insurance.
- Apply for Tax I.D. or EIN number for new entity (see accountant).
- When buy-in occurs, set up the entity that you are going to do business under (i.e. professional corporation, limited liability company, sole proprietor, etc.)
- Seller calls the phone company to inform them of the change.
- Also, inform answering and/or pager services.
- Check with the City/County for applicable business license.
- Set up bank accounts and credit card/financing arrangements and establish a line of credit.
- Seller makes keys for the buyer.
- When the buy-in occurs, call the other utility companies to change billing name (i.e., sewer, water, electricity, gas, garbage, etc.) to the new entity or owner.
- Have the landlord, if applicable, sign the lease assignment agreement.
- Inform staff and help reassure their job security, because the buyer or partner really needs their help. Seller supplies a list of employee benefits and any accrued vacation. If accrued benefits and/or accrued vacation is owed, this needs to be reconciled on the closing date.
- Have a copy of all accounts receivable on the date of closing.
- Try not to make too many changes in office policies in the first six months, except you may have to change the way financial arrangements are made with patients.
- Doctors meet regularly to understand and define the other’s expectations.
- Identify and verify personal and practice goals. Review options to achieve those goals. Each meeting should have written notes.
- Initially hold staff meetings weekly, then later bimonthly. Conduct daily 10-15 minute morning huddles to go over the day’s schedule.
- Spend time with patients to help understand their expectations. Ask the patient after their appointment: Is there anything we can do to make your visit more pleasant. Call the patient after their appointment to see how they are doing.
- Conduct one-on-one interviews with staff members to understand their needs and concerns.
28. If I don’t think I am quite ready to buy, what should I be doing now to prepare for a practice transition? Maintain a good credit rating rat, save money, enhance your clinical skills, continue with your educational courses, plan for the type of practice you are looking for, and continue to learn and study more about the rehearse conversion process, leadership skills, and practice management systems and procedures.