Merging an Existing Practice
If you already own a practice, have you ever considered buying an existing practice located close to your first practice and merging them together? If you ask most doctors, they will say the best way to build a practice is through taking care of your patients and bringing in new patients via word of mouth and marketing. And, they would be correct. However, acquiring a second practice and merging the two together makes sense in many ways.
First off, have you ever calculated the cost of acquiring a patient via old fashioned word of mouth? It requires a lot of work if you include everything from building your brand, training your staff, maintaining a spotless, high-tech practice, etc., the cost could easily be $1,000 per patient. The cost of acquiring a patient via marketing is even more. Acquiring a practice with existing patients can typically run from $800 per active patient to $1,000 per active patient. Slightly less to maybe equal of acquiring a patient through a normal channel. However, you get a high volume of patients very quickly.
Secondly, you acquire a stream of revenue at a near dollar to dollar relationship. If the selling practice is producing $500,000 per year, you should be able to repeat the $500,000 in revenue by merging the practices together, or worst case, slightly below the $500,000. The good news, is you don’t bring over all of the expenses of the selling practice. You typically can save in a number of ways including reducing staff of the selling practice, utilities are not double as the practices merge to one location, there is only one rent payment (more on that in a minute), only one set of books, so only one payroll service and one bookkeeper and accountant and several other services can be eliminated. So, while getting the majority of the revenue to increase your practice collections, you only get a portion of the expenses. This increases the income of the practice owner – you!
Regarding rent, you may initially have to bite the bullet and take on an additional rent. A perfect scenario is when the seller is month to month on their lease, or a short period left on the lease. But, if there is a longer period of time left on the lease, you can evaluate the location to determine if it can be sub-leased. Another scenario may call to take on the second location for a few years while the lease runs out. This dilutes the savings, but still allows you to increase your collections.
How Dental Practice Consulting Can Take Your Practice to New Heights
What is Dental Practice Consulting?
Running a successful dental practice takes a lot of work, much of which may not be immediately apparent. Expert consultants, such as those at OMNI Dental Practice Group, will evaluate each practice to determine the best course of action necessary to take that practice and turn it into a profitable endeavor. A detailed analysis is performed and a plan is developed to increase practice production and collections, as well as developing prospectus, compiling management reports, helping with financing and lease assignments, and more. For those looking to sell their practice, or those who already have a buyer, OMNI Dental Practice Group can act as a transitions consultant as well.
How Can Dentists Benefit?
Through dental practice consulting, a detailed analysis looks at all aspects of the practice in question, from which suppliers are used, to the management team, and everything in between. An expert team then evaluates the dental practice’s needs and goals to find out where the practice may need assistance. The information is used to develop a plan of action that will ultimately improve the overall success of the practice. The coaching experts at OMNI Dental Practice Group have averaged a 20% increase in practice production and collections for their clients.OMNI Dental Practice Group has helped hundreds of doctors not only buy and sell their dental practices, but they have also helped to grow practices into profitable businesses through their dental practice consulting services in Washington, Oregon, and California. OMNI Dental Practice Group are a leading provider of practice transitions and sales, valuations, consulting and real estate services, specializing in creative dental practice transitions and consulting.
For more information on how OMNI Dental Practice Group can help to grow your dental practice through their consulting services, or to request a free consultation, please our team of highly trained and dedicated professionals. OMNI strives to ensure each clients’ success, through detailed formal training and certification.
Your Brand is Showing
A brand is everything about your practice. From the look, feel, sound, smell, texture, color, to your voice, answering the phone, etc. You go to your office every day and probably get complacent about your brand. Spring is a great time to clean up your brand. You can start outside. Is your parking lot clean and freshly striped? Is your landscaping clean and professional? Enter your office. What are the sounds, smells, colors, paintings – everything you sense? How does the front desk answer the phone? Is it cold in the office? Are there cracks in the paint? Are your paintings from 1972? Are your windows clean? Continue through the practice as if you are the patient. Are the bathrooms kept cleaned and monitored throughout the day?
Put together a checklist and have your staff do the same exercise. Your brand gives out a perception of your dentistry. A dated practice = perceived dated/tired dentistry.
Time for spring cleaning!
Determining True Active Patients
So, how do you get the real number of active patients?There are a couple of ways to get close to the number of active patients.
1. You can take a day and go through each chart or the patient files on the computer to see when they were in last. If they have been in the last 18 months, that counts as an active patient. This would take you a long time.
2. You can also do an estimation. For a medium-size practice ($400,000 to $500,000 in annual production), you can pull a hundred charts. You can go through the charts to see which have been in the past 18 months. You can then divide that number by the percentage of charts you pulled. If you pulled 10% of the charts, divide by 10%.
3. A third method and much quicker is to look at the number of recall appointments for the year. Divide that number by two and that will give you the number of active patients.
4. The fourth method is to take take the average number of hygiene patients seen per day. Multiply that by the number of hygiene days per month and then multiply that by six months.
The number of active patients makes or breaks your practice. Be sure and have confidence in that number. If you think you are buying a practice with 2,000 active charts when there are only 500, you will have overpaid for your practice. Spend the time to figure out the active patient number in your due diligence.
Managing Your Staff
You have purchased your dream practice. Everything is going great, your production is growing, overhead is going down and new patients are lining up at the door. Then, the inevitable happens. The staff starts to complain about being overworked. Or, they complain about each other behind each other’s backs and morale goes down the toilet. What do you do?
You have several options to choose from:
- One of the best ways to boost morale is to implement an incentive-based system in your practice. This gives the staff incentive to work together to improve production. Staff incentives mean more money for the staff. They say money cannot buy happiness, but it sure helps.
- Another tip is to keep lines of communication open. Hold your morning staff meetings and let them know what is going on with the practice. If you have exceeded your goals, let them know how well they are doing and that they are appreciated.
- Show your appreciation with a staff lunch, an afternoon at a Mariner game, or a $50 gift card to Nordstrom. It will make them feel good and not cost too much.
- Have quarterly or semi-annual one-on-ones with each staff member. Give them positive feedback along with areas they can improve. If one of your staff members is known as the one who gossips too much, you can carefully give them that feedback. At the same time, you can tell them how good they are doing. Remember to give positive feedback with negative and make it constructive negative feedback so they can improve their performance.
These simple 4 items can be the difference between a gossipy staff with an attitude and a staff signing from the same book.