Five years into his dental career, Dr. Jerry has a very clear vision of his ideal practice. He has perfected his skills and is ready to buy. He knows he wants to stick to high-end cosmetic procedures. And he does NOT want to be beholden to any insurance companies for payment.
Now comes the hard part: finding the right practice. Since Dr. Jerry and his wife plan to relocate across the country to be near her family, he must rely on numbers to decide which practices are worth pursuing during his limited visit time.
Right now, he is torn between two practices.
Let’s look at some of the variable expenses against Dental Economics industry benchmarks to see what we can learn about these practices and which one may be a better fit for Dr. Jerry’s vision:
|
Practice A |
Practice B |
Industry benchmarks |
|
|
Overhead |
52% |
55% |
55 – 65% |
|
Salaries |
18% |
32% |
20 – 25% |
|
Clinical supplies |
5% |
9% |
6 – 8 % |
|
Lab fees |
15% |
6% |
7 – 10% |
|
Advertising |
2% |
8% |
1.5 – 3.5% |
|
Active patients |
520 |
2,500 |
1500 |
|
New patients per month |
8 |
54 |
20 - 25 |
Judging by the numbers, Practice A likely has fewer operatories. The staff is probably smaller and may only see two to six patients per day for treatment. Long new patient exams are the norm. The doctor may not utilize the full range of allowable procedures by staff, preferring to do more of the work his/herself. Overall, the doctor and staff probably know the patients on a more personal level. Practice A also uses labs quite often, indicating a heavily restorative/implant practice or one that does not rely on in-office CAD-CAM units. That’s certainly a point of conversation!
Practice B probably has a larger footprint, with a highly efficient staff that ushers more patients through shorter appointments. This is a BUSY practice that relies on volume and lots of marketing to bring in new patients. The doctor may rely heavily on the larger team to provide a personal touch to the patient experience.
Choosing between two great practices
These are both great practices – for the right doctor.
To choose the right one for him, Dr. Jerry needs to understand his preferred way of working. He should reflect on the practices he has worked in so far, including during internships and residency, and ask:
- Do I like a faster pace, or would I prefer to spend more time with each patient?
- Do I want to manage a big, bustling team and office, or a smaller office and staff?
- Do I want to get to know my patients on a personal level or keep my interactions more professional?
As he evaluates the financials to determine cash flow and insurance mix, Dr. Jerry should ask the sellers for more information and arrange a visit to both practices. Ideally these visits should be in person, but video can do in a pinch. He should evaluate:
A sample schedule for a week or two. With a representative sample, Dr. Jerry can validate his assumptions and see how long each type of appointment is scheduled, what is done at each visit, and how the staff is allocated.
The new patient experience. Dr. Jerry should ask how new patients are onboarded and consider whether it fits his vision for his ideal practice.
The “feel” of the office. By spending a little time in the office – ideally during business hours – Dr. Jerry can assess the pace, atmosphere, and other less tangible aspects of the practice.
The equipment: He should observe what is being used and note how well it has (or hasn’t) been maintained to determine if capital improvements are immediately necessary.
A few charts: Dr. Jerry should observe the quality of treatment being delivered and understand the systems currently in place.
Don’t overlook the communities
The two practices are about 90 minutes away from each other, so Dr. Jerry should work with his wife to carefully evaluate each area. Can they see themselves living in either town? Which one has the amenities their family needs? How do the cost of living and schools compare? Where are the nearest bike trails, religious institutions, medical specialists – whatever matters to them? See tips on starting those conversations and 5 must-ask questions for determining the best fit for a family.
It may turn out that Dr. Jerry’s ideal practice is already in his ideal community. If so, that’s great! But even if Practice A is the better fit but Practice B’s town is preferred, Dr. Jerry has options:
- Buy Practice A and rent a nearby home while he gets a better feel for the area
- Buy Practice A and live in a nearby town that has what he needs
- Take the leap with the almost-right Practice B and gradually mold it to his desires
- Continue his search
No matter what he decides, it’s smart to understand how looking at the numbers can offer insights into how a practice functions.
Which practice would you choose?