Selling or buying a practice can be one of the most exciting times in a dentist’s career. When a dentist is considering selling or buying a practice, there are several myths about the transaction and potential misunderstandings. We previously covered 4 myths (see article ). Below we address another set of false beliefs.
A state-of-the-art shiny practice can be very attractive for a potential buyer, as the environment appears modern and streamlined. Updates are critical in dentistry for items like HIPAA compliance, technology, chart documentation, and patient care.
However, purchasing an existing practice that needs some updating can be a win because the purchase price may be more affordable. The new owner dentist can choose what updates are necessary and then bring in technology and design that fits their skill set, training, and vision to make it their own.
Many local banks have options for loans and lines of credit. You may find that your bank policy requires a down payment of up to 20% to afford you the loan. However, there is good news for buyers in the dental field when looking to own a practice and potentially the real estate.
Several banks working with ADS have specific loan programs for owner health care providers. These teams specialize in getting the buyer up to 100% dental practice financing. Dentists and dental practices are a great investment, and our bankers want to support you in your future success. Reach out to your ADS broker and ask for an introduction and get 100% financing today!
We all know dentists come in a variety of egos and personalities. Dentists are great at dental treatment and patient care, yet may not be the most savvy business experts when it comes to selling their legacy. Starting the practice transition engagement may seem easy and pretty basic, but there is a significant amount of information to cover in a practice purchase contract. Both the seller and the buyer need:
What is not in the contract can be open to interpretation. Emotions can come into play during the transition process; your broker can make sure decisions are made in a fair and logical manner, which is a win for all involved.
Selling a dental practice to a DSO is a personal preference. Many DSO offers to Sellers sound too good to be true. With respect to minority partnership, it is often misunderstood, and the idiom in this case is appropriate. When selling a dental practice to a DSO, part of the sale payment comes in a check, part comes over time based on your contract, working years and production/collections requirements.
Finally, as much as 20% can be allocated to minority partnership shares in the DSO. How do you realize these funds? You cannot sell shares for cash from the DSO; you cannot sell or transfer these shares to another person or entity.
If the DSO sells its entire entity to another DSO, you could receive a small payout depending on the value of the transaction, and it probably won’t fund your retirement. Read the fine print, know what you agree to and talk with your financial advisor before signing a DSO contract.
PPO reimbursement can be the bane of your practice; fee schedules and payments continue to fall behind cost of living and inflation. Dentists should be continuously looking at reimbursement numbers to determine if staying “in-network” with a dental benefits carrier is financially appropriate and viable.
Many experienced dentists are considered Premier in networks like Delta Dental, and the fee schedule/reimbursement for younger dentists, paid as PPO providers, is significantly less than their senior peers. However, a younger dentist can have a great career despite PPO status. Newer dentists may have training in updated treatment and technology, and have expanded skills like clear aligners and laser treatments.
The purchasing dentist may consider limiting the number of benefit carriers in which they participate. They may even work toward going non-par. There may also be an opportunity to add hygiene, working hours, or days to the schedule, increasing overall production. The great news – PPO reimbursement is only 1 factor in the financial success of a dental practice. There are many other opportunities to achieve your financial goals and successfully navigate dental practice sales myths along the way.
Christine Mason MS DDS
Dr. Mason has been a practicing clinical dentist for over 25 years. She was a partner in a group practice for many years, and then purchased a solo practice which she ran successfully until selling to her associate. DBS was her broker for all her purchases and sales; she joined the DBS sales team in 2023. As a business owner Christine has insight into the working numbers and the practice as a business entity. As a dentist, she understands the emotional side of transitions as well. Her experience provides both sellers and buyers a unique perspective and allows her to address business decisions logically while acknowledging the personal sentiment in one of a dentist’s biggest life decisions.
