Lately, we have seen more dentists thinking about buying or opening additional dental practices. They see the successful expansion of “corporate dentistry,” or what is more commonly known as dental service organizations (“DSOs”), and wonder how they can emulate that success. 

Before you take that leap of buying a second practice, here are four questions you might want to consider before moving forward:

1. Why do you want to own a second (or multiple) practice(s)? If your primary motivating factor is money, you may find that insufficient. Too many dentists impulsively decide to buy a second practice as their idea of “getting rich quick,” only to be disappointed. Recall why you chose dentistry as a profession in the first place. Success usually follows people who are passionate about what they do and do it for the betterment of others. Someone who is only interested in making money without helping others along the way usually finds success to be short-lived. Those who happen to make money as a side benefit to doing what they love, while genuinely caring for and helping people, will find success in abundance and perpetuity. At this point, you might also ask yourself how you define success.

2. What financial risk will you be facing? Buying a second practice usually involves leveraging your investment through debt by borrowing funds from a bank to acquire the practice. Additional debt obligations could mean a strain on the cash flow if there is a bad month. Furthermore, many lenders have tighter financing requirements when lending for a second practice. Besides having a thoughtful, well-laid, and written plan for managing more than one practice, the bank will also want to see a considerable savings cushion, possibly $100K or more parked in a business savings account. 

3. Are you willing to give up discretionary time in your life to commit to managing a second practice? If you already own a practice, then you know investing in a practice is not like parking your money in a mutual fund and then sitting back and watching it (hopefully) grow. Andrew Carnegie suggested you put all your eggs in one basket and then watch the basket. The important part of Carnegie’s advice is to be sure you’ve got the right basket (i.e., the “right practice”) and make sure you watch the basket very carefully (i.e., “manage the practice properly”). This type of business requires time, effort, resources, attention, management, and a fire extinguisher constantly on stand-by. If one practice requires all that, a second practice will too. Ostensibly, you could be looking at twice the time, twice the effort, twice the attention, and twice as many fires to put out when it comes to managing two or more practices. At a minimum, you will probably need to spend an extra five or more hours a week overseeing the operations of the second practice. 

If you regularly review your current practice statistics and financial statements and are continuously studying up on ways to be a better practitioner and practice owner, then running another practice, even though it may complicate your life, may be of value to you. Moreover, if you are currently running a successful practice and can implement efficient processes and systems, and are able to motivate and keep staff, it is possible you could duplicate this success in another practice. However, if you have little desire to regularly review all your practice stats and to study more about how to effectively lead and run a successful practice, then owning a second practice will most likely be a burden you wish you had never gotten into. 

4. Will you be able to easily find, maintain and/or replace associate dentists to work for you in the practice? Attempting to work two practices yourself only doubles your stress and overhead without doubling your revenues. The only prudent course is to hire another dentist to work for you in the second practice. Many doctors who own more than one practice find retaining quality associates more challenging than expected. And if you want to increase production while keeping fixed overhead expenses as low as possible, it is better to acquire a practice that can accommodate two associates working full-time, which means finding two good associates. Plus, you will want associates who are willing to adopt and integrate with your processes, systems, and practice philosophy and have the right clinical and productive skill set to produce at a reasonable level, and, of course, excellent interpersonal skills and a good chair-side manner. And there is always the risk that once you have found the “right” associate, they may eventually leave to buy or start a practice of their own. 

While there are certainly advantages to multiple practice ownership, owning more than one practice is commonly outweighed by the challenges and risks. For some, it has been a way to create more wealth and income. It may have also given them a worthy goal to work towards and filled them with a sense of accomplishment. However, many dentists have pursued a second practice only to find it is more than they can handle, or it is not complimentary with their preferred lifestyle and becomes more of a headache than it is worth to them. 

A second practice may be a great move for you and your career, but before you make that decision, know what you are getting into and–perhaps more importantly–be very honest with yourself about why you want to go this direction in the first place. It would be well-advised for you to talk to other dentists who have owned more than one practice and get their take on it before acquiring additional practices. If you are looking to build some wealth through practice acquisitions, then reconsider your motives by asking yourself a lot of questions. For example, how do you truly feel about putting in the additional work and assuming the additional risks associated with owning and managing another practice? If you are up for the task and want a challenge as well as an opportunity to make a positive difference in the lives of more people, including associates, staff, patients, and the community, then perhaps it will be worth it.