"The kiss of death"
I purchased a practice from a retiring dentist several months back. The practice is in a very good location, and I felt it had lots of potential to grow with some good marketing.
By Dianne Glasscoe Watterson, MBA
I purchased a practice from a retiring dentist several months back. The practice is in a very good location, and I felt it had lots of potential to grow with some good marketing. I made some changes that included raising fees and treatment planning comprehensive dentistry. The former owner was what I'' term a "patch and fill" dentist. Two long-term staff members have left, including a hygienist who had been with the practice for 10 years. The active patient count was around 1,600 patients when I purchased the practice. Now, eight months later, the active patient count is down to 1,200. Needless to say, I'm very concerned about patient attrition. It is primarily a fee-for-service practice with minimal PPO participation. Can you give me any insight on how to stop the patient attrition?
– Dr. Brad
Dear Dr. Brad,
Buying an established practice is smart from a business standpoint, because you have a steady stream of patients from the very first day. Start-ups can take months to build a large enough patient base to keep the doctor busy. However, new owners sometimes injure their newly purchased practice by invoking sweeping changes soon after taking ownership. Too much change too quickly can be the kiss of death.
Patient loyalty does not automatically transfer to a new owner. Please remember that it takes time to build relationships with the patient base. They first need to know they can trust you. Patient trust is critical to developing loyalty.
If your treatment philosophy is dramatically different from the previous owner, there is the risk of driving patients away with aggressive treatment plans. If the former owner was conservative in his treatment philosophy, the patients are accustomed to more single-tooth dentistry and small treatment plans. This is especially true with older patients. Even if it goes against your grain, it is better to keep patients in the practice and restore their mouths over time than to scare them away with high-priced treatment plans.
You did not mention how much you raised fees, but even if the fees were terribly low, it would have been advisable to keep things steady for six to 12 months, especially since the practice is mostly fee-for-service. When you do raise fees, it should be in small increments and not large, one-time increases that are sure to cause sticker shock at patient checkout.
When the owner leaves, patients are comforted when they see the familiar faces of staff members with whom they have built relationships. The departure of long-term staff members sends a message to patients that something must be wrong.
You certainly have reason to be concerned. You have lost around 400 patients, which is 25% of your patient base. Some patient attrition is to be expected when ownership changes, but 25% is excessive. Under normal circumstances, an attrition rate of 3% to 5% in a year is typical.
In purchasing a dental practice, you buy equipment and all kinds of tangible goods necessary to do dentistry. However, the true value of any dental practice lies in the patient base. After all, without patients, we have no way to survive financially. It costs a lot more to get new patients in the door than it does to keep the existing patient base solidly in place. It should be the goal of every new owner to do everything within his or her power to maintain the patient base and spend some time earning the patients' trust. My advice is to try not to force practice growth in the early stages of ownership with aggressive treatment plans and fees that scare people away. The "bleeding" is not likely to stop unless you change your approach.
Dianne Glasscoe Watterson, MBA, is a consultant, speaker, and author. She helps good practices become better through practical on-site consulting. Her book, "Manage Your Practice Well," is available at www.professionaldentalmgmt.com. For consulting or speaking inquiries, contact Dianne at email@example.com or call her at (301) 874-5240.
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