When a doctor considers buying a practice, they look beyond the building and the equipment. After all, the patients and staff make a practice!
A strong, loyal patient pool is the most valuable asset in a sale, and long-term, well-trained staff are worth their weight in gold.
But if staff are unhappy with a transition — even if they stick around — patients are more likely to leave. So how can a new owner retain staff and patients after the transition?
Let’s explore how one mishandled transition led to a flood of staff and patient defections. See how you can avoid similar mistakes.
When Dr. Mario sold to Dr. Zelda
Dr. Mario built a 4-operatory practice over thirty years, eventually treating the children and grandchildren of his original patients. The practice was productive, and the long-standing team was beloved by patients. The office was a bit dated and needed some new equipment — and a new paint job — but as the only owner selling in the area, Dr. Mario had several interested buyers.
Dr. Zelda had been looking to buy her own practice for a while. When Dr. Mario’s practice hit the market, it seemed like a great fit: the perfect size for her ambitions, with a loyal patient pool. Best of all, the seller was willing to negotiate a price that left her financially able to update the entire practice to her tastes.
Yet within two years of the purchase, Dr. Zelda was considering closing the practice. Her two best hygienists had quit, as had the most experienced assistants. As a result, patients were canceling hygiene appointments left and right and calling to have their records transferred to other dentists in town.
So, what went wrong?
Dr. Zelda asked for candor as she conducted exit interviews. Some staff members were politely evasive, but others told her the truth: “There’s just been too much change,” one hygienist said. “The patients see all the fancy new equipment, the new chairs, the computers. Everything’s suddenly digital. Then they realize that we dropped their insurance and they have to pay a lot more.
“I’ve been here twenty years,” another said. “I know these patients – I even went to school with some of them. I know which ones need a little extra handholding and which ones want to chat. But the new scheduling system is so tight I don’t have time to give them the attention they expect, the attention they deserve. And then I get in trouble for running behind.”
The part-time receptionist said, “You may want to listen in on [the main receptionist]. She makes comments about the changes. They’re subtle, but the patients pick up on them.”
How could Dr. Zelda have avoided this mess?
Investigate what needs to change before the sale — and work with the seller
During due diligence, Dr. Zelda passed Dr. Mario’s financials directly to her accountant without examining the details herself. After all, the seller kept saying he had another doctor interested. But when she studied the books after the sale, she found messy collection policies. Many patients didn’t pay for three, four, even six months after treatment. The practice accepted a bewildering variety of insurance policies — some of which didn’t fully cover the costs of treatment. And fees hadn’t been raised for eight years. She instantly made changes to set the finances and collection policies in order.
At the same time, she moved forward with her planned updates, replacing chairs, adding computers, and bringing in new equipment. She got rid of the dated wallpaper and remodeled the entire space.
Patients assumed their higher fees were paying for all the new stuff.
Sellers who examine and adjust practice financials, collections policies, and fees before listing may even draw a higher asking price.
To avoid this shock to patients, buyers and sellers should closely examine practice financials, collection policies, and fees before they close the sale. Patients are more willing to tolerate increased fees from their long-standing doctor. Proactive sellers who make changes that put the practice on stronger footing before listing may even draw a higher asking price.
If a buyer realizes these issues prior to the sale, they can adjust the asking price accordingly and make a plan to incorporate necessary changes in a way that will not shock the current patients and staff.
Roll out changes gradually
Every doctor wants to put their own mark on a practice. But the key is to slow down and prioritize. Ease patients and staff into changes rather than scaring them away with a practice that suddenly looks nothing like they remember.
Plus, after working in a space for a couple of years, the new owner may discover a better way to arrange the space for smoother patient flow.
Dr. Zelda might have started by addressing the inadequate collections policies and insurance situation to improve cashflow. While she sorted that out, she could have continued to use the well-maintained but dated equipment and simply repainted rather than immediately replacing everything. (That wallpaper really had to go, though.)
Involve the staff (and patients) in the transition
Dr. Mario had not told anyone that he was planning to sell and retire immediately. In fact, he announced the news to his staff the morning after the deal closed, just an hour before Dr. Zelda arrived to be introduced to her new team. The staff felt blindsided and feared for their jobs — especially after Dr. Mario told them that they would have to be officially terminated and rehired as part of the sale.
Long-standing staff who have earned patients’ trust should be part of the transition. After all, they helped build the practice and know what makes the place tick. Given the opportunity, most would love to help guide the transition.
Staff and patients deserve honest communication about the transition.
Ideally, this starts long before a sale. Few staff members are truly surprised when someone late in their career wants to retire. To smooth the transition, sellers should tell staff as they begin the process of evaluating buyers while assuring them that they will work with the buyer to retain the staff. A smart seller will even ask senior staff to join the interview process to ensure they “click” with the buyer. Sellers should also consider holding joint treatment planning sessions with the entire team. By walking through a few cases together, everyone can see that they can trust their new leader.
Patients deserve the same communication and honesty, too. If long-time patients ask when you’re planning to retire, consider saying something like, “I’m starting to look for my successor. But it has to be the right person, so it may take a while. I want to make sure I’m leaving you in good hands.” When you find that buyer, write a letter to patients explaining why this person is right for the practice, highlighting their education and experience. You could even decide to work side-by-side with them for a few weeks to introduce them to patients and referring specialists as well as other medical professionals. And at every step, convey your utmost confidence in their skills.
Read Shhhh, I’m Selling My Dental Practice for more on how transparency can lead to more successful transitions.
Watch for staff satisfaction
When Dr. Zelda came on board, she should have watched for signs of unhappy staff so she could take action. While many people actively strive to avoid confrontation, their actions can hint at their displeasure:
Tardiness: A person who is always late may be unhappy with their work
Undermining the new doctor: A staffer who is not on board with the changes may undermine the new doctor through their words or actions. Listen for statements like, “That is not the way Dr. X did it,” or, “Dr. X was always easy to work with.” Dissatisfied staff members may also bypass the doctor.
Gossip: Staff members spreading rumors — with other staff or patients — will make things worse.
Even if you don’t notice any such issues, it’s important to check in with your team to ensure they’re adjusting to the changes. Ask how the new hours are working for them. Maybe they had a long-standing unwritten agreement to leave early on Wednesdays to lead their daughter’s Scout troop, or they took a long lunch on Fridays to run errands. Resentment may fester if these expectations are left undiscussed.
Engage the team in the new methods, and explain your rationale. If they understand why you are making changes and have an opportunity to offer their input, they are more likely to accept the changes.
And most importantly, ensure that they see you doing quality work in the patient’s best interests. If they perceive that your treatment is inferior to the seller’s, or that you’re upselling things patients don’t need, you need to work hard to change their minds before they can spread that attitude to the patients.
Start your own successful transition
Want more resources? Check out our recent Coffee Talk webinar, How to Manage & Retain Staff During a Practice Transition. Dr. Betsy Shapiro, ADA Director of Practice Management and the ADA Center for Professional Success, and I talked about our own experiences with managing staff through transitions. Watch the webinar to learn how to:
- Involve staff in the practice transition process
- Write a smart job description
- Retain, hire, and terminate staff during a transition
- Conduct joint treatment planning sessions that build trust between the new dentist and existing staff
As you approach a transition, a few key steps can help retain the staff and patients that are the lifeblood of any practice. When you create a free ADA Practice Transitions profile, you’ll get expert guidance and resources you need for a successful transition.
See other posts in our What Went Wrong series!