10 staff considerations for a smooth transition

Sept. 24, 2013
When sellers hit the twilight years of their practices between aggressive growth and the sale, they want to be comfortable and not face hassles or be hustled.

by Randy Marie Daigler

When sellers hit the twilight years of their practices between aggressive growth and the sale, they want to be comfortable and not face hassles or be hustled. Staffing is generally the biggest angst that doctors have, and they make every effort to be comfortable when they build their teams. With employee costs being perhaps the largest single expense to a buyer, a seller needs to keep this in mind well in advance of the sale. That translates into three simple steps.

Seller side

  1. Ask yourself, "Knowing what I know today, would I hire these folks?" Be honest and take the appropriate action. You'll be happier and so will the staff; they may even be relieved.
  2. Determine the appropriate staffing level. Doctors often become overstaffed because it's easier, and terminating people is difficult. Depending on the office manager, the doctor may be too disconnected from the operational side of the practice to be aware of the real needs.
  3. Don't give "goodwill" raises; use a bonus system instead. Building in staff overhead hurts the buyer and takes away from the bottom line and ultimately the sale price.

One of the buyer's biggest worries is matching the compensation package, especially medical insurance. Buyers want and need the support of staff. Cutting wages or benefits doesn't engender positive feelings toward a new employer, especially one the staff didn't select. Buyers worry staff will leave.

Buyer side

  1. Interview each person. Get to know them, their expectations and needs, and share yours for the practice.
  2. Determine staffing needs for your operational style. You may need more staff if you're bringing in your own patients, or less if you want to run leaner.
  3. Review compensation packages with the seller. Many selling doctors have been very generous and it is difficult to match some packages. Find out which staff really needs what benefits. Medical insurance is often a set amount rather than a full benefit. Suggest a modest decrease in hourly wages and put the difference into medical benefits. That way staff benefit on pretax dollars and the employer saves payroll taxes. Creative thinking can help both the doctor and staff.
  4. Do a cash-flow projection to help you determine what, if anything, needs to be changed.
  5. Remember the psychology of the game Fear Factor? Not knowing was worse than the actual knowing and doing. Inform staff as soon as possible about any changes in their compensation package.
  6. Determine the staff's level of support, and remember, earning their trust takes time. Until then, rely on the seller's trust in you.
  7. Engage staff in passing on the excitement (and not the stress) of the transition to patients.

During a practice transition, the most important tools employees can share are loyalty and support. Staff is the repository of patient trust until the new doctor earns acceptance. Patients can tell if the staff has confidence in the new doctor.

A "gut level instinct" about lack of support is usually right. Regardless of how valuable an employee is perceived to be, if the person does not enthusiastically support the new doctor, he or she must go, and the sooner the better. A new employee will hurt a practice less than one who is sabotaging the transition.

After a period of being in a glide pattern with the former owner, it can be exciting for the staff to be part of a new beginning and resurgence of energy. Patients feel that eagerness, and the vibrancy is translated into renewed focus on them and the practice. Getting the staff excited about the benefits of a growing and vibrant practice makes everyone's jobs easier.

Randy Marie Daigler, Transition Manager of the DBS Companies, has served financial and transition needs of Michigan dentists for more than 25 years. A respected author and speaker, she participates in ADS, and is a member of Practice Valuation Study Group. Reach her at (888) 419-5590, ext. 989 or [email protected].

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