2 red flags you should never ignore when buying a practice
One of my favorite practice purchase stories is that of Jim Dores, DMD, of Dores Dental in Longmeadow, Massachusetts.
Case study: Jim Dores, DMD
One of my favorite practice purchase stories is that of Jim Dores, DMD, of Dores Dental in Longmeadow, Massachusetts. He bought his practice with the cards stacked heavily against him. But through determination and significant changes, he was able to overcome seemingly insurmountable odds.
In 2007, Dr. Dores and his wife purchased their "dream home," perfect for raising their young, growing family. But shortly thereafter, the dentist Dr. Dores worked for experienced a downturn in his business and reduced his days.
"It was also during this time that I noticed an increased strain in my voice-to the point where I felt self-conscious when talking to my patients," Dr. Dores says. He was diagnosed with spasmodic dysphonia, an incurable voice disorder that occurs when the muscles of the throat freeze or go into spasms. This would be devastating news for anyone, but especially for someone whose livelihood depends on verbal communication with patients.
Dr. Dores decided it was time to take the leap and purchase his own practice. In 2010, he found a practice for sale. However, there were two major red flags: First, the dentist-owner would not allow him to meet the staff prior to purchasing the practice. Second, there were fewer than five new patients coming into the practice per month.
"Believe it or not, I thought this was still my best option," Dr. Dores says. "I went ahead with the purchase. Little did I know, my vocal challenges were just the beginning of my worries."
Fast forward to 2012. By that time, the bottom had fallen out. Dr. Dores was experiencing rapid declines in monthly revenue. The staff was difficult and unresponsive. The environment was increasingly hostile. There was no trust in Dr. Dores or his vision for the practice.
The business wasn't the only thing suffering. "When you own your own practice and it's sinking into the abyss, it is bound to spill over into your home life," Dr. Dores says. "I was completely preoccupied with the troubles at the office and the financial mess I was in. I often couldn't afford to pay myself, couldn't enjoy a vacation, and couldn't sleep. The business seemed doomed. But there was something inside of me that wouldn't allow me to give up."
In the midst of the storm, he received a postcard from the Scheduling Institute. Dr. Dores was curious to see how his staff would perform on the "5 Star Challenge," an exercise that shows how a practice's staff stacks up against similar practices. The result was alarming, to say the least.
Feeling hopeful, Dr. Dores scheduled a New Patient Generation training for his staff. "There was significant resistance from a lot of the staff immediately after the initial onsite training," he said. "It got to the point where I was threatened and blackmailed by a longtime staff member. She became irate while patients were present and I had to call the cops to have her removed from the property."
Crazy as it sounds, Dr. Dores didn't want to get rid of staff members because he was afraid patients would leave, too. He thought he could lose everything.
However, Dr. Dores was determined to succeed. He finally resolved there was only one course of action left to take. "It was time to get rid of this obstacle in the way of carrying out my vision. Despite my best efforts to incentivize and train the current staff, they would not budge. So I made the very difficult decision to let all but one of the original staff members go."
As it turned out, this was exactly what his practice needed. With a new team, things started to change (figure 1). At its lowest point in 2012, the practice had $350,000 in annual collections (down from $500,000 when he bought the practice). In 2013, it grew to $706,758. In 2014, it grew to $973,330. Then, in 2015, it reached $1,307,334 (up 25% from 2014!). Annual referrals grew from 18 in 2012 and 99 in 2013, to 228 in 2014. Annual new patients grew from 60 in 2012, 287 in 2013, 734 in 2014, to 984 in 2015.
Dr. Dores saw growth in the business and in himself as a practice owner. "I finally felt that I was no longer just a dentist, but I was also a brand. I began intentional marketing, I upgraded all of my space and equipment, and I concentrated on the patient experience in my office."
With the business flourishing, he began to give back to his community and got involved with Dentistry from the Heart (dentistry fromtheheart.org). "Being able to give back was the best payoff possible," he said.
"All of the growth and success really changed how I looked at all of my hardships. I knew that I couldn't control the diagnosis of my vocal condition, but I wasn't willing to accept things. Thanks to this experience, I now have confidence in myself to lead my team. My vision for the practice is my compass."
What obstacles are holding you back? Are there red flags that you never overcame? With Q1 of 2016 already gone, are you on track for success this year?
If you are off track-or have no track, take the same free assessment that started Dr. Dores down the path to success, the 5 Star Challenge. Visit 5starchallenge.com.
Jay Geier is the founder of the Scheduling Institute and creator of the world-renowned five-star telephone training program that has revolutionized the way dentists attract new patients to their practices. He is finally revealing his secret for record-setting results, 600+ new patients in one week. Visit schedulinginstitute.com/DE to learn how he did it.