Practice Transitions | W. Paul Radman, DDS
As they finish graduate programs and residencies, young dental specialists are confronted with the same dilemma every young dentist faces. Should I open and start a practice from scratch or join an existing practice? If joining an existing practice, it can be purely as an associate or as an associate with the option to buy either a part or all of the practice at some future date. Opportunities also become available to purchase a practice due to the death or serious illness of a senior doctor, or because he or she feels the time has come to fully retire.
It is in the young dental specialist’s interest to consider and investigate all of the above options with an open mind so he or she can make the right choice. Our opinion is that the choices are much different for the specialist than for the generalist. One reason is because of the increasing number of people entering specialty programs and the increasing ratio of specialists to generalists. As stated in an article by Dr. Eric Solomon in the February 2005 issue of Dental Economics® titled “The Future of Dentistry,” between 2000 and 2020, the percentage of specialists in dentistry will increase from 20 to 27 percent. As recently as 1970, only 10 percent of all actively practicing dentists were specialists. This is further negatively impacted by the advanced training that the undergraduate dental student is receiving, especially in endodontics and in some cases, with implants. With the total number of dentists remaining fairly static, that means fewer generalists to refer to more specialists. This is not a favorable prognosis for the young specialist.
The young specialists are congregating in major metropolitan areas, especially in the southern United States. This creates a saturation of the marketplace and makes it difficult to become established and have a successful practice in the early years. As a result, many young specialists are finding a better avenue is to enter an existing practice with some level of assured income, usually with the opportunity to own part, if not all, of the practice later. The days of the young specialist opening anywhere and being immediately busy are rare. When it does occur, it is usually in the smaller cities and northern parts of the country.
If the senior doctor is leaving the practice completely, he or she should stay around for 4 to 12 weeks (usually without compensation) to transition the practice to the new doctor. In addition to the obligatory introduction of the new doctor to the principal referrers of the practice, there are operational issues to be learned. This is the selling doctor’s obligation and part of the transfer of goodwill. When done properly, the new doctor can expect to retain the overwhelming majority of referring doctors in the practice if he or she maintains the quality of personal and professional care that patients have received in the past. New doctors who lack these professional or personal skills will have difficulty here, just as they would if they opened their own new offices. While many young specialists are concerned about the debt of buying a practice in addition to school debt, this is usually not a problem.
With this information, the dental specialty resident should be better prepared to evaluate a scratch start-up as opposed to an existing practice with known cash flow. Prior to the practice purchase, the entire future structure should be agreed to contractually. This includes a competent appraisal of the practice so that the price is established prior to increased value. This price and the date of the purchase should be in the initial contract. The new doctor should receive competent business, legal, and tax advice, with the emphasis on competent.
Given the information about the demographics and the saturation of specialists in metropolitan areas, the safest way to enter specialty practice in a major city would seem to be to join an existing practice. Using competent advisors, young specialists should be able to find favorable practice opportunities that provide for their short- and long-term goals without the prolonged “starvation” period often encountered with start-ups. In spite of these obstacles, some young specialists may do well by establishing their own practices, but the probabilities of success decrease each year. The choice is yours.
W. Paul Radman, DDS, practiced endodontics for 39 years prior to establishing W. Paul Radman & Associates, Inc., an endodontic transition firm. He has been on the faculty of three schools and has lectured nationally and internationally on endodontics and more recently on endodontic practice valuations and transitions. He is the national endodontic representative member of American Dental Sales.
