We ask two experts the same question on a complex issue.
Question:
I want to buy a practice and the selling dentist employs his wife as the office manager. I plan on keeping him employed for about a year after the sale. They both seem quite nice, but I’m worried they might manipulate the numbers to improve the doctor’s collections. Am I being paranoid?
Tom Snyder, DMD, MBA
First and foremost, if you have any concerns about the doctor’s or spouse's integrity, why entertain employing them at all after the sale? I’m assuming there is an adequate supply of patients to accommodate both you and the seller. Conversely, if that is not the case, there may be a possibility that the seller might try to have the staff schedule more complex and profitable procedures for him, which may be more difficult to control, especially if his wife is the office manager and oversees appointment scheduling.
If this is a real concern on your part, simply place restrictions on scheduling that will prohibit abuse. However, it’s a good idea to discuss this scenario prior to the sale. Retaining spouses is not necessarily a bad thing as long as the team understands that you are the boss and that you sign their paychecks. To address your concerns about the seller’s spouse manipulating collections or any systems in your practice, be mindful that she is now your employee and as such is employed “at will,” so there should be no long-term guarantee of her employment. So, if you discover a problem, you can dismiss the spouse immediately.
As a business owner, you need to review essential practice management reports generated by your computer software. Collections can be manipulated, so you need to invest adequate time to review certain reports on a regular basis. You should generate an end-of-day report, for example, that summarizes daily procedures as well as payments made. This report can be compared against daily deposits to ensure that there is consistency. Two other key reports are an end-of-month, showing all services provided, as well as an accounts receivable report. These will give you adequate information to track individual provider production as well as the anticipated collections that the seller may receive. Staying on top of your practice’s financial activities will help you develop good practice management habits that will serve you well for your entire career.
Tom Snyder, DMD, MBA, is the director of transition services for Henry Schein Professional Practice Transitions. He can be reached at (800) 988-5674 or [email protected].
ANGELA BAKER, MBA
A buying dentist can’t ever be too paranoid about the transition of the practice. It is important to verify all the numbers from the beginning to actually make sure the financial analysis holds true. In order to protect yourself, you need to make sure you build a strong, independent team to represent you and your transition. The team usually consists of a lawyer, accountant, consultant, and a bank.
As far as the office manager is concerned, every transition is different, and it is necessary for the buying dentist to interview each employee to make sure it is a good fit and there is synergy in the practice. The office manager is often replaced unless there is a very strong connection with this person. Depending on the size of the practice, the buying dentist can take over some of the office manager duties or transition to a new office manager, which can take up to 45 days.
Due to various reasons, there is usually a shift in philosophy, dynamic, strategy, and operations when the buying dentist takes over the practice. The employees need to be OK with this shift or else the business can be at risk. Once the seller’s wife transitions the new office manager, the paranoia should subside.
Angela Baker, MBA, is vice president of the Professional Practice Group at Village Bank & Trust, a Wintrust Community Bank. She has been working with dentists for more than 15 years, helping them with financing for their practices. She has a master’s degree in business administration from Dominican University in River Forest, Illinois. Contact her at (847) 385-7011 or [email protected].
