Dental Practice Transitions: Is it Time for Partnership?
Many different factors may bring you to this question about bringing on another partner or partners to your dental practice. It’s important to evaluate the state of the dental practice in order to come to a solid conclusion. Ultimately, partnership can be advantageous for both doctors, and it’s important to have a clear outline for the structure of a potential partnership. Even within the preliminary phases of contemplating a dental practice transition, it’s advisable to consult with a local dental practice broker.
One primary matter is the question: Can the practice sustain more than one dentist? In other words, are there sufficient patients and enough revenue to support multiple doctors?
Here are a few means of gauging the answer to that question:
- Capital: How much capital is in savings? For example, would the practice be able to pay the new doctor up to $8500 per month for the first five to ten months while cultivating a more robust practice? How much is owed on the practice? Are there upside-down loans or extensive debt? What percentage is overhead? If the expenses are over 65% of the practice, you’re probably not ready for a partner just yet.
- Agreement: Are the partners in agreement about the dental practice transition? Specifically, when the new partner or partners come on, are all parties on the same page when it comes to hiring additional staff, improving equipment, and advertising to increase patient flow? It’s critical to make sure there’s consensus to avoid problems in the future. Are all parties in agreement about how the new partner(s) will be compensated. In other words, will the new partner(s) draw a salary or be paid a flat fee or will they be paid a percentage of their gross production? There are pros and cons to both approaches. Consult with your NAPB dental practice transition broker to discuss the options.
- Patient Queue: Are there patients on the schedule for months to come? Confirm that the existing dentist has an adequate patient base and make certain that all parties are confident that the team will be able to build on a solid foundation.
- Overall Transition: When bringing on a new partner or partners, the practicing dentist should anticipate a decrease in their take-home pay, at least during the first nine to eighteen months (or until the new partner(s) increase in business and efficiency improve the overall status of the practice during the dental practice transition.
This is a new reality. In the past, adding partners seemed to increase patients sort of in the vein of If You Build It, They Will Come. However, this is no longer the case (especially in locations where there are multiple practices and/or where lots of doctors want to make their living).
If you already have more patients than you can treat, then consider yourself the exception. In this case, it’s probably the perfect time to add new partners to your dental practice. Taking stock and examining these elements with the help of a local dental practice broker can help make for a successful dental practice transition.