One of the most important lessons I want the attendees from my Practice Ownership seminars to learn is the ability to find opportunities which others may overlook. We teach this through providing a real world example of two potential dental practices for sale. We give attendees the information that they will likely receive from the broker and/or vendor and go through the steps that we would use to analyze practices ourselves.
Perhaps one of the most important and easy to capitalize on opportunities is purchasing a practice that is underworked. That is, a practice that may not be treatment planning ideally or treatment planning to a standard that would be expected of a Dentist by the majority of their peers. As a generalization, these practices are typically owned by a single owner operator Dentist approaching retirement age. These vendors generally limit the procedures they undertake and may lean towards patch-up dentistry as opposed to ideal dentistry. There may be scope to grow the practice just by offering additional clinical procedures where appropriate.
So how do we know if the practice is underworked? This is where the items fee report is important. This is a report that explains the amount of each item number being performed over a certain period of time. Often people ask what happens if the practice has manual records and no software? Obviously, it is difficult in these scenarios. However, I typically suggest to collate a 2-week period of items being performed and use this as the basis of the report. We compare this items fee report against the demographics of the area to see if there is a procedure/s not being performed. For example, in a mid to high SES area we would expected a certain level of fixed prosthodontics being done and a low number of 6XX codes may indicate an opportunity. Similarly, a low number of 4XX codes may indicate endodontic procedures are being referred out. This thought process can be applied to other item numbers as well. This is not to suggest one needs to over treat but more so not to under treat and start to offer the best options. This needs to be done in a way so as not to offend the existing patient base when you take over and there is also a skill in communicating treatment needs without disparaging the previous dentist whom many of the patient base would have built great trust with.
I firmly believe that great profits can be made at the time of purchase. If you are able to see opportunity that other potential buyers are unable to or that the vendor themselves may not know and have already capitalised on, then this can lead to incredible growth when you become the owner.
An underworked practice relative to the type of treatment being done is is but one example of finding opportunity. There are many others. Can you think of any?
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Our last practice ownership seminar for the year is coming up in Melbourne on the 12th and 13th of October 2019. We cover this topic and go into further depth as well as provide much more information on everything to do with buying or starting-up a dental practice, these seminars have sold out in previous years so please register ASAP.
We also offer a practice purchase assessment which will do this analysis for you as well as other expert guidance in various areas of practice ownership. Please see the below link for more information.