Making plans for smooth transitions
Life is a journey. That journey includes making the best deicisions for your dental practice. If a dental practice transition is in your future, start planning now.
Life is a journey. The decisions you make today will lead you to where you are tomorrow, so it's important to have long-term vision and goals with your desired destination clearly in focus.
My father, Bill Blatchford, DDS, helped me develop my own personal vision (which continues to evolve), and has coached me through several transitions, including into coaching and consulting. For most dentists, once we make the first big transition from student to practicing dentist, there are typically three more key transitions we make that directly impact where our personal and professional journey will lead us-initial practice ownership, practice expansion, and retirement.
Let's take a look at each of these transitions and uncover ways dentists can make choices that better enable them to meet their long-term goals.
Transitioning to practice ownership
After graduating from dental school, young dentists may choose to be an associate or work in a corporate-owned practice to gain experience. At some point, most dentists will choose practice ownership to gain better control over the dentistry, the patient experience, their revenue, and their personal lifestyle. As a practicing dentist, I've found one of the most rewarding aspects of being in dentistry is how patient relationships develop and deepen over time.
For dentists to enjoy the rewards of these patient relationships, their goal would be to purchase a practice for the long term. They would choose a community where they want their families to live for the next 20 to 30 years, and where there is a sustainable patient base. A few factors that might influence the choice of community include its proximity to extended family, school districts, and a spouse's employment opportunities.
To identify a sustainable patient base and future growth potential, evaluate the community's supply of dental practices compared with demand or its population growth trends. It's important to know how many other dental practices are in the community competing for the same patient pool. Once location is determined, dentists have two choices-invest in a start-up and create the practice from scratch, or purchase an existing practice from a dentist ready to transition out of dentistry.
Most dentists will opt to purchase an existing practice, often the one where they have been working as an associate, because a start-up requires more upfront investment and has no existing patient base. This can make it more costly and risky.
When considering the purchase of an established practice, it's important that the buying doctor take the time to critically analyze existing systems, processes, assets, and patient expectations. Does the existing insurance mix align with the buying doctor's philosophy, and how do the PPOs contribute to the growth of the practice? Is the selling doctor of the opposite sex, and if so, is that important to a large percentage of existing patients? Has the doctor been too lenient in collecting accounts receivable, and do patients have unrealistic payment expectations?
Is the selling doctor ready to make a clean transition? Is the technology in the practice up-to-date, or will it require a significant upgrade and financial investment? Finally, can the purchasing doctor do procedures, such as endodontics, that the practice is currently referring out? If so, this sets the foundation for immediate growth opportunities for the buying doctor. If, after careful consideration, a practice meets the needs of the buying dentist, the transition to ownership is easier when the dentist is supported by a team consisting of a consultant, an accountant, and an attorney.
Once the practice has been purchased, keep in mind that people are often resistant to change. Transitioning patients from the retiring dentist to the new doctor takes planning and thoughtful communication. Here are a few tips that might help:
• Retain the practice team members with whom the patients are familiar for a period of time, even if there are role redundancies.
• Don't make significant changes immediately, especially when it comes to patients' time and money.
• Be proactive in creating relationships with the patients. Have an open house.
• Personally call the practice's most loyal, long-term patients, and those who have a history of referring friends and family.
When it's time to grow, a dentist can choose to open a new practice located away from the existing one or purchase a practice that serves the same community. Similar to transitioning to practice ownership, a start-up requires a large investment in resources, including time and money. Having a second building basically doubles overhead and marketing needs. The other option-purchasing a competitive practice that serves the same market and migrating all patients to the better of the two locations-is often more efficient and effective. Even if additional space is needed to absorb the patient base, remodeling and remaining under one roof will still be less costly.
Because there is a small probability of the perfect practice becoming available for purchase at the same time the doctor is ready for growth, the doctor should start looking for opportunities as early as possible, even two or three years out.
Transitioning to retirement
After a dentist has enjoyed two or three decades of changing smiles and changing lives, he or she might begin looking toward the next phase of life. The timing of transitioning out of dentistry is different for every doctor. We recommend that dentists "retire as they go," meaning they take the time to do the things they want to do while they're still in practice.
Many doctors we work with take 12 weeks of vacation a year to devote to activities and hobbies outside of dentistry. If you retire as you go, then retirement is not a destination; it is merely a transition when the hobbies become full-time. But before that time comes, the dentist will need to make sure he or she optimizes the sale of the practice by making it as attractive as possible to potential buyers.
Potential buyers will want to know if the practice has established, efficient systems. They will look at the practice finances. Is there fewer than four weeks of production in accounts receivable? Is cash flow consistent and healthy? Does the practice have a variety of payment options, including a health-care credit card, so patients have solutions that work for them without the practice assuming the cost and risk of accounts receivable? Do patients show a history of being willing to pay appropriate fees for their dental needs?
Dentists should not rely on revenue from the sale of their practices to be the sole sources of their retirement funds. As soon in their career as they can, they should begin eliminating debt and funneling revenue into investment accounts as they become more profitable. Transitions can be smooth when they are purposefully planned and when dentists make choices early in their career based on their long-term vision of success.
After careers in fashion merchandising and commercial interior design, Christina Blatchford, DMD, went back to school to become a general dentist. She bought her first practice right out of school and doubled the production in two years. She bought a second practice and merged it in 2014. Dr. Blatchford and her father, Bill Blatchford, DDS, are co-CEOs of Blatchford Solutions, dental business coaching for dentists. Her favorite part of being a coach is helping doctors achieve and exceed their goals while maintaining optimum balance in their lives.