A growth strategy for gaining 1,000 new patients
Right in your town, maybe right down the street, a practice is ready to change hands. The patients care about their dental health, and the doctor, young or old, has reason to sell.
By Bill Blatchford, DDS
Right in your town, maybe right down the street, a practice is ready to change hands. The patients care about their dental health, and the doctor, young or old, has reason to sell. The practice will sell to a young competitor, or you could be the owner with 1,000 new patients coming to see you within the year.
Increasing your net is always the goal. We may phrase it as reducing overhead or finding greater efficiency, but we all want to take more money home for our efforts and time. If you purchase an additional practice in your town and merge it into your existing practice, 65% of the additional practice gross will be your increase.
One thousand new-to-you patients come in the form of four to five days a week of hygiene being added to your practice. The majority of production in any practice comes from new patients. All patients in a newly purchased situation are new to you and your team. These 1,000 patients add tremendous awareness and vitality to your practice. Why struggle when you can add patients who already see the importance of dentistry?
There is strong competition in cities for new patients. Adding a practice is a smart move. You must continue to market and brand yourself. Social media and the Internet carry your message, keeping you in the forefront of people's minds.
This amazing growth strategy is sitting in your town, and someone other than you may be the winner. It should be you, an established dentist with team, systems, skills, and commitment already in place. Just do the math and you’ll see the advantages for you. For easy math, you are producing $1M and your net is $400K. You find a practice doing $800K with a net of $350K. Sixty-five percent of $800K is $520K, making your new net $920K. Why the big increase? Because the only increased expenses you’ll see are 20% for team, 10% for lab, and 5% for supplies. All other expenses remain the same. Your payment to the bank on a five-year note at 4% is $176K a year.
Not seeing the big picture for profitability and service, your first concern is how you can make that work. Will you need to purchase the building? What if the practice is larger than mine? What if the dentistry is not the same as mine? ... and more. Worrying about this will stop all decision-making and action. You will miss opportunities.
There is a supply and demand issue with fewer-than-expected boomer doctors putting their practices on the market, and demand is high. Prior to 2008, prices were steady at 18 months of net. Presently, the selling price is two years of net, and dentists are bidding over the asking price. In most of these sales, the sellers have the advantage because the number of practices is limited.
A practice purchase will come in all different forms. This may be a retiring dentist or someone retooling. Family health may require a move. The very best avenue is to be friends with your local dental colleagues, and to be available to dentists who are thinking of making a move. Others who may be in the know are a local lab, dental supply rep, broker, or other sales reps working the area.
Your job is to find the practice. Since each one is different, share your keen interest with the selling dentist. Make no promises initially. Work with an advisor who has handled dental sales. If you have no business advisor, call me, as you do not want to walk through this one on your own.
Some pitfalls might be allowing the selling doctor to stay indefinitely, not paying attention to the numbers, or repelling new patients with pressure sales. Also, you want your existing practice to have your house in order with leadership, communication, skills, numbers, and systems.
Watch for Blatchford Transitions Nos. 2 and 3 articles in the coming months.
Bill Blatchford, DDS, respected for 25 years in coaching dentists toward more net, more time off, and more joy, has written Playing Your 'A' Game, Blatchford BluePrints, and No Nonsense Transitions. He produced Blatchford In A Box and The Business of Hygiene. Reach him at (888) 977-4600 or by email at firstname.lastname@example.org.
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