Dentists reach a time when they want to retire or do something else. Too often, they then find themselves with a practice they cannot sell.
Part of the problem can be attributed to the fact that dental schools are graduating approximately 1,000 fewer dentists a year than are actually retiring or leaving the practice of dentistry. To further complicate the problem, the population is growing very rapidly, creating an additional demand for more and better quality dental service. The result is we have a tremendous, growing need for dental health care, and yet a shrinking supply of dentists to perform these services.
We are also in a time when numerous large, private dental practices are being formed. These groups are extremely well run, very efficient, and capable of paying dentists large sums of money to practice dentistry in their offices. It is not uncommon for a dentist to earn more than $150,000 a year working in one of these practices. This allows group practitioners to earn a very nice income without incurring a large debt.
I have been involved with dentistry for many years and have brokered many dental practices. I am finding it increasingly difficult to find buyers who are willing to go to smaller communities. They prefer to locate in large metropolitan cities. In Indiana, for instance, dentists are interested in purchasing practices in Indianapolis, or at least within a half-hour drive.
Because of these problems in finding a buyer, many dentists wishing to retire from their rural or smaller metro practices are finding it necessary to just discontinue practicing dentistry. They are forced to sell off or dispose of the assets of the practice.
If closing a dental practice or discontinuing the practice of dentistry becomes necessary, the owner should review all of the local, state, and federal laws — including the Health Insurance Portability and Accountability Act (HIPAA) — governing the discontinuance of a dental practice.
The tangible assets, such as dental and office equipment, etc., may be sold to another dentist, a company that specializes in purchasing used equipment, or donated to a charitable organization. If you decide to donate it to a charitable organization, all or part of it may not be tax-deductible. Check with your accountant.
As owner of the dental patient charts, you have the responsibility to maintain the patient records for a period of time. You may be able to entice a succeeding dentist- colleague in the area to take over the responsibility of maintaining these charts. The benefit to the dentist taking over the patient charts would be gaining some additional patients and income.
If you transfer the patient charts, be sure you comply with local, state, and federal laws, including HIPAA. Since we cannot include all of the states in this limited space, you should consult your State Dental Practice Laws. As an example, here are some of the requirements of the state of Indiana for dentists discontinuing a practice: in part, the State of Indiana requires:
1) Notify all active patients in writing, or by publication once a week for three (3) consecutive weeks in a newspaper of general circulation in the community, that the dentist intends to discontinue practice in the community.
2) Encourage patients to seek the services of another dentist.
3) Make reasonable arrangements for the transfer of the dentist's records, or copies thereof, to the succeeding practitioner, or, at the written request of the patient, to the patient.
These requirements do not apply to dentists engaged solely in internship, residency, preceptorship, fellowship, teaching, or other post-graduate, dental education or training programs.
If you intend to sell your practice, it will almost have to be in a metropolitan area or in a very good rural area, be very clean with up-to-date equipment, and have a good cash flow to attract a potential buyer or to prepare for closing in an organized manner.
Professional appraisal of a practice can accurately determine the final practice sale price. A professional appraisal is the foundation of any successful practice transition. Many lenders will not fund a practice sale, and most astute buyers will not buy a practice, without a professional appraisal.
By separating the myths from the facts, you should be able to plan for your successful transition.
Roy Berry has more than 40 years of experience in the dental profession, and is owner of Roy Berry Consultants & Practice Brokers in Indianapolis, Ind. The firm engages in consulting, appraisals, evaluation, and brokering for dental practices. Berry is a member of American Dental Sales, Profession Valuation Study Group, and is listed in the American Dental Association's book on Dental Practice Appraisers and Valuators. He can be reached by phone at (800) 659-6117 or by e-mail at email@example.com.