According to recent ADA figures, only 6 percent of dentists in America today can comfortably retire at age 60. Such information is sobering and warrants the question: What measures are you taking to ensure the independence and freedom you desire upon retirement, particularly as you begin to approach retirement age?
Most dentists are self-employed and do not have the luxury of tapping into corporate-sponsored retirement programs. Unless you begin early and discipline yourself to set aside a portion of your income in a 401 (k) or other tax-deferred retirement plans, you will likely find yourself among the 94 percent of dentists who are unable to retire at age 60 or anytime soon thereafter.
Another sobering figure released by the ADA revealed that almost 40 percent of dentists over 50 practicing today wish they had chosen another profession. We believe this dissatisfaction can be traced to the internal business-management aspects of running a practice.
If your desire is to retire within the next five to 10 years, but you are financially unable to do so or if you enjoy practicing dentistry, but dislike the business-management side of owning a practice, there is a solution that may be worth your serious consideration.
Sell your practice to a reputable Dental Management Service Organization (or DMSO) and negotiate a favorable employment contract, including benefits. A reputable DMSO will give you a fair market price for your practice, and the money you receive can then be invested in a safe investment portfolio. (At 7 percent, the amount invested will double over a 10-year period.) The DMSO will bring operating efficiencies and management skills to your practice that will increase your production, collections, and, ultimately, your take-home pay.
Another important benefit of the dentist/DMSO relationship is the elimination of the day-to-day stress that comes with the administrative and business operations of the practice. You are free to practice dentistry, and the DMSO provides the administrative and business support, including payroll, accounts receivable, accounts payable, human resources (including hiring, training, and coaching the staff), and supply and equipment procurement.
A reputable DMSO will provide you with a state-of-the-art facility and the necessary equipment and technology to give your patients the highest standard of care possible. In addition, it will provide:
• Practice analysis, including recommendations to optimize daily operations, enhance communications, and increase patient retention.
• A customized plan to address the specific needs of your practice.
• Leadership training to help build better relationships and promote team development.
• Support systems and coaching from an experienced management team to help incorporate recommended protocols into your daily operations.
Preparing a practice for acquisition by a DMSO requires strategic planning to receive maximum value for your practice. The prudent dentist will analyze the strengths and weaknesses of his or her practice, then make any necessary changes before selling. It may be helpful to bring in a qualified dental-management consultant during this process. The consultant can assist you in developing a strategic plan and implementing any necessary changes so that you will receive maximum value for your practice.
When analyzing the strengths and weaknesses of your practice, here are some guidelines to consider that will help you determine those areas where your practice needs improvement:
• Is your office modern, attractive, and welcoming to patients?
• Do you produce between $500,000 and $700,000 per year?
• Are your adjustments under 20 percent of your production?
• Are your collections at least 90 percent of your adjusted production?
• Do you have detailed protocols and job descriptions in place, with the ability to monitor for improvement?
• Are your employees happy, and is your staff turnover less than 10 percent a year?
• Do you use a strategic electronic appointment calendar to schedule production?
• Is your dental equipment less than 10 years old?
The benefits of affiliating with a DMSO are numerous. If you would like a free strategic outline of how to maximize your practice's potential, along with a list of qualified dental-management consultants and reputable DMSOs, please contact us.
Kirk Peery has over 35 years of experience in the dental industry. He is the founder and president of Practical Solutions, Inc., a company that specializes in building practices for a profitable sale. Practical Solutions is located in West Jordan, Utah. You may contact him at (801) 561-8490 or email firstname.lastname@example.org.