In the course of a year, we will receive several calls from a grieving spouse or staff member, informing us that the doctor has suddenly passed away. The spouse or staff member has been given our name by other dentists, the dental society, the dental association, or the dental board. The question is always the same: how can we help them and how quickly can we get involved? Sometimes, the call comes from a dental office that has a “Memo of Direction” on file with us. I’ll explain more about this later.
The problems for the callers are many:
· What should we do about the patients who are scheduled for treatment?
·What should we do about patients who are receiving treatment and whose procedures are not completed?
·What should we do about disposing of the practice?
If by chance they have been contacted by parties interested in purchasing the practice, how should they proceed and what is the practice worth? (We have heard of potential buyers contacting the office or the spouse before the funeral!)
In many situations, peers of the deceased call and offer to help out. Certainly, they can finish up any work in progress and handle emergencies. These offers to help are only for a short duration, because these friends have their own practices to operate. In fact, one of our services is to provide a temporary dentist to cover the practice.
In these situations, we prioritize what needs to be done and work with the staff or spouse to value the practice in an expedited manner. We also do all we can to advertise the practice as quickly as possible, employing all the avenues available to us, including the Internet, local and regional publications, and direct mail. In these circumstances, confidentiality about the practice being for sale is not critical. Most of the area dentists will know that it is available and, quite often, we recieve calls asking us if we are the listing agent. Information about the volume of the practice, net incomes, and other particulars must be disseminated with care and only after the appropriate disclosure agreements have been signed. This is something that the staff or spouse will likely want to delegate to us.
Do practices of this nature sell? Certainly, they do! Do they bring the same price as they would if the dentist was living? They rarely do. Do they deteriorate very rapidly? That depends on many of the above factors, with the most important being if the office has a fill-in dentist and if the staff is committed to pulling together until the practice can be sold. Whether or not the staff is willing to stay on following the sale and if hygienists will continue to see recare patients also play a major role in maintaining practice value.
How are patients notified of the doctor’s passing? In a small town, most will find out quickly by word of mouth or the local newspaper. In the city, many will not learn about the doctor’s death until the practice is sold. Should a letter be sent to the patients soon after the owner’s passing or should it be delayed? What should the letter say? These are things that we routinely deal with and are part of our service to the doctor’s estate.
There are several myths about what happens when the doctor dies. Some prospective buyers have told us they are reluctant to purchase the practice because all the patients have left. We do not find that to be the case. We find that patients show a lot of loyalty to the office, the spouse, and the staff, especially if the office is open and they believe a new dentist is going to take over the practice.
Another myth is that the practice will provide very little value to the estate. That is directly related to many of the factors we have discussed here. Was the practice covered by a fill-in dentist? Are there hygienists who continue to see patients? Can the spouse continue to operate the practice with hired dentists and for how long?
What can be done proactively to plan for such an eventuality? Groups of dentists can get together to form an association to cover for each other in case of death or disability. An agreement is made among eight to 10 dentists to cover the practice. Then, a schedule is created to make sure the practice is well supervised. A “Memo of Direction” can be drafted and placed with the spouse, the attorney, the accountant, or a designated friend who will provide guidance to help the participants make decisions regarding the practice. This document would notify them to seek out individuals, such as ourselves, to assist them.
There are ways that forward-thinking doctors can plan for the unforeseen, just as they can purchase life or disability insurance. Some of the best insurance to have is a plan for the emergency sale of the practice in the unlikely event of premature death.
Evan Myers is founder of Evan Myers and Associates, a dental brokerage, appraisal, and transition consulting firm. He has worked in the dental industry for 35 years. He is a founding member of American Dental Sales, and a member of the Practice Valuation Study Group. Contact him at (800) 311-2039, or email@example.com.