Captivating work, Hammer. Just wanted to thank you for this effort, and I look forward to your upcoming posts.
Let's Buy a Dental Practice
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I did something very similar to this. Pretty much all the numbers with the exception of salaries were open to the staff at any time. We would usually have a big staff meeting every quarter where we would review the numbers from the previous quarter and talk about it.
If you staff feel that what they do has an impact on the practice and that they will benefit from it then you will have a very motivated, self-empowered staff.
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That is a great article which I would definitely recommend reading. I haven't heard of a cap at $375,000 for new grads. That seems a bit low as most of the practices that a new grad would be looking at would be priced around that range.
The only difference that I would have over a new grad getting a loan would be that because I have experience at running a practice the lenders might lend me more money. But as the article you posted said dentists are a sure bet whether they are old pros or new grads.
Exactly.
Did you pay out incentives based on the performance of the practice as a whole, by individual performance or some mix of both? In my opinion, there are merits and drawbacks to each.
Performance of practice:
+ helps promote a team environment
+ easier for everyone to focus on the practice's mission
- top producers may feel that others ride their coat tails
- more difficult for individuals to influence
Performance of individual:
+ more direct relationship between production and pay
+ easier for employees to track themselves
- more difficult to keep the team focused on the bigger picture
- employees may work against each other for personal gain
Did I miss it or something? All I see is $5. Not that that's much at all, I just don't see it free anyway. I saw a free "sample".
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Bummer! I got it on kindle for free a couple of weeks ago and I just checked it and it is $5. Sorry!
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I do both. In February I do "performance reviews" where I assess each member of the practice on what I perceive as their strengths and weaknesses. I also tell them what I expect specifically from them, what I specially hold them responsible for and how and with what I intend on measuring their performance. I write all of this stuff on a piece of paper and give a copy to the staff member. Then I put a copy in their file.
In July I do "Salary Reviews". Out comes the piece of paper from the employee's file and we look at what they have accomplished. How much of their goals they have achieved is what I base their pay raise on. Let's say that I will raise them $1 an hour if they have achieved all the goals on the list or at least made significant progress towards them. I then start deducing from that $1 per hour for anything that they did not show progress on. It is not a perfect method but its simple and it works for me.
Too often doctors are vague about what they want and how they measure an employee's performance. All too often there is no useful feedback to the employee and incentives and raises are viewed as ambiguous goals with no clear steps to take to achieve them. This increases stress amongst the staff and decreases productivity. It also makes it extremely hard to implement effective change.
I also do "corporate" bonuses for the entire staff. Usually these are for meeting specific production goals and are more of a team building staff motivator aimed at raising morale than specifically achieving a goal. It is a gift from me to get everyone excited and working together to achieve something as a team. An example would be one year I told my staff that on the day that we collected $1 million I would give them all $1000 in cash. I started the game in January and I had made projections based on the previous years that we would probably hit the $1 million collection point in mid-December. Well my staff really wanted that money for Christmas shopping so we actually hit it in early November. It cost me $6000 but I made about another $100K over what I was expecting to make so for me it was money well spent.
And also a side benefit of doing this kind of stuff is you get a reputation in the dental community as a good boss to work for so you are always getting resumes on the sly from people who would like to work for you.
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i worked as an assistant for 5 years, and i absolutely hated being involved in the buisness side of the dental practice. i found it (and still find it) disingenuious and unfair. here are the problems that i saw w/ the office's financial goals being linked to bonuses:
1) there are only 2 things that drive production in dental offices, 1-the dentist working hard and smart and 2- the dentist managing the staff efficiently.
2) assistants work really hard, but at best make the practitioner's day smoother/ faster/ easier. any financial effect that is produced is only indirect and also at the discretion of the doctor. some dentists feel their days lighten up and don't then use that flexibility to produce more, and therefore negate the "bonus effort" of the assistant.
3) turning focus towards profit as an office can take a little away from putting out quality, ethical dentistry. now obviously a caveat to that is that all private practices are run for profit, but that is best kept (in my opinion) at the level of the dentist. i don't want any "up-selling" going on that may be misleading to patients, and end up with unethical practices going on inside of my office.
4) i want the front office focused on scheduling per my directions, not cramming in extra procedures at the end of the month or talking patients into coming in a less convienient time for them, in order to "make their goal".
5) its really not the staff's concern whether you meet your relatively arbitrary financial goals. they have 1 primary concern, and that is to get paid. bonuses and incentives are great, but to tie that to what really entails your personal fincancial situation is not something i'm really comfortable with. your staff will probably leave your office if they can get a higher paid job. that is the stone cold fact of the matter, and they should go make more if they can. if you value them as employees, then show it by paying them what their worth (or what they think they're worth).
6) there is nothing worse than working as hard as you can, only to fall short of your office goal and not reap the reward. the open management style is destined to have lots of months when you are not making goal, regardless of the efforts of your staff. that is unless you make it eay to hit, in which case why have it at all?
anyways, just my thoughts on the subject.
1) there are only 2 things that drive production in dental offices, 1-the dentist working hard and smart and 2- the dentist managing the staff efficiently.
2) assistants work really hard, but at best make the practitioner's day smoother/ faster/ easier. any financial effect that is produced is only indirect and also at the discretion of the doctor. some dentists feel their days lighten up and don't then use that flexibility to produce more, and therefore negate the "bonus effort" of the assistant.
3) turning focus towards profit as an office can take a little away from putting out quality, ethical dentistry. now obviously a caveat to that is that all private practices are run for profit, but that is best kept (in my opinion) at the level of the dentist. i don't want any "up-selling" going on that may be misleading to patients, and end up with unethical practices going on inside of my office.
4) i want the front office focused on scheduling per my directions, not cramming in extra procedures at the end of the month or talking patients into coming in a less convienient time for them, in order to "make their goal".
5) its really not the staff's concern whether you meet your relatively arbitrary financial goals. they have 1 primary concern, and that is to get paid. bonuses and incentives are great, but to tie that to what really entails your personal fincancial situation is not something i'm really comfortable with. your staff will probably leave your office if they can get a higher paid job. that is the stone cold fact of the matter, and they should go make more if they can. if you value them as employees, then show it by paying them what their worth (or what they think they're worth).
6) there is nothing worse than working as hard as you can, only to fall short of your office goal and not reap the reward. the open management style is destined to have lots of months when you are not making goal, regardless of the efforts of your staff. that is unless you make it eay to hit, in which case why have it at all?
anyways, just my thoughts on the subject.
Hey Hammer -
Great thread. Thanks for sharing all of your knowledge/experience.
Anyway, I've been following this discussion for a while now because it's interesting and a good boredom cure/time-killer, as I'm several years away from dealing with many of these issues (starting in 2 weeks). A few posts back everyone was discussing office software (Dentrix, etc...) and I was browsing online and stumbled across this:
http://www.curvedental.com/
I was just curious what you and others on here thought about this web-based software. Seems like it would save a lot of money and it looks really slick from the videos. So, if anyone has some time to chime in, I'd be interested to know what you all think. Is it the wave of the future?
Great thread. Thanks for sharing all of your knowledge/experience.
Anyway, I've been following this discussion for a while now because it's interesting and a good boredom cure/time-killer, as I'm several years away from dealing with many of these issues (starting in 2 weeks). A few posts back everyone was discussing office software (Dentrix, etc...) and I was browsing online and stumbled across this:
http://www.curvedental.com/
I was just curious what you and others on here thought about this web-based software. Seems like it would save a lot of money and it looks really slick from the videos. So, if anyone has some time to chime in, I'd be interested to know what you all think. Is it the wave of the future?
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I think the kid who started curve was on the cover of DentalTown a couple of months ago...
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I think that eventually this will be the wave, I just don't know if I would want to surf it just yet. The good thing about having your own software is that unless your computers go down you can always access your records and keep the business going. With an online based software you are at the mercy of their servers, their network provider and your network provider. For me that is too many possible opportunities to have something go wrong. But I think that it is a great idea and I do think that in the future you will see more and more dentists and MD's go to an online practice management format.
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Sorry I have been AWOL from this thread. I have been trying to nail down the final details in my practice purchase. The contract for the purchase is 65 pages long (jeez louise) so it has been nightmare having three way conversations with my lawyer, my accountant and the bank.
I am also flying to the UK today to visit one of my Pankey pals who is trying to start a Pankey style program in the UK so I probably won't be posting until next week sometime when I get back to the USA. I hope that someone will bump the thread until I get back.
I am also flying to the UK today to visit one of my Pankey pals who is trying to start a Pankey style program in the UK so I probably won't be posting until next week sometime when I get back to the USA. I hope that someone will bump the thread until I get back.
Do you feel differently about the business side of dentistry now that you're training to be a dentist? I'd be curious to know how you plan to structure your practice.
Production is only part of the equation, though. Expenses are another factor. I also believe that the staff plays a key part in a dentist's production.
I agree that fit between office staff and the dentist is very important. Hopefully the dentist has surrounded himself/herself with a team that shares a similar vision and objective for the practice.
Excellent point and one that must certainly be managed. Who on your staff is going to be doing any up-selling, though? Squash that problem before it ever becomes one and leave no doubt about who the captain of the ship is.
Same scenario as above. Don't let the tail wag the dog.
I'd want a staff that was concerned about the financial goals of the practice and hire accordingly. I'm not saying everyone else should do the same, but I believe that the best practice is one in which everyone is fully engaged in all aspects of the business. Pay is certainly an important component. I'd want to establish a salary/incentive combo that would allow a superior team to earn superior income. I don't believe that a stand-alone salary would be nearly as effective as a salary/incentive combination.
You don't have to create a bonus program with various tiers. You could just as easily tie the incentive into all production so that everyone is assured of reaping their rewards.
I appreciate the insights. Your perspective is much different from mine, so I am enjoying viewing this from a different angle.
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@8snake:
well, the buisness side is still my least favorite part of dentistry, a neccesary evil if you will.
the staff DOES play a key role in production, but since they do not really produce themselves (excluding hygiene which only produces a relatively fixed amount) the effect on the office's production in mostly indirect. expenses are another factor but the broad majority of that is fixed as well in the form of payroll and ordering. maybe they could be less watefull, but that isn't (or shouldn't be at least) gonna drive your office's financial goals.
so dentists work hard, and the staff can work really hard as well and get the office running like a well oiled machine, but if the dentist doesn't utilize the benefits of his staff's hard work (ie getting more work/production in) then the "office" will fail to achive financial goals and the staff wont profit from their "extra" hard work, thus the open mgmt goal/system fails to motivate staff.
upselling is done by hygienists, front office, assistants. with the office's financial success tied to theirs, they can attempt to talk the patients into getting elective work done by talking up recent veneer cases, asking patients if they have considered bleaching, or needed ortho (if the practice does some ortho). now, a caveat to that being that to an extent, you WANT a staff to do these things, but i personally want them to do that w/ the PATIENT's best interest in mind, not the office's
as far as scheduling and what not, it happens, and it's human nature to do so. you might not even catch it. staff will do that stuff if you tie your office's financial success to theirs. its not the tail wagging the dog becausein a way, the doctor mandated this change in office philosophy if you follow. the staff will in effect, be coerced into putting patient welfare 2nd to office production.
money cannot be your 1 trick pony for motivating your staff. read the book that hammer suggested earlier "managing people". its pretty good.
again, the problem with everyone's effort being tied together is that 1 person in particular (the doc) is carrying the team, and if the staff thinks he or she is slacking a bit, they'll be bitter towards you, b/c you are the main reason they don't make goal.
no worries! that's what forums are for right?!
well, the buisness side is still my least favorite part of dentistry, a neccesary evil if you will.
the staff DOES play a key role in production, but since they do not really produce themselves (excluding hygiene which only produces a relatively fixed amount) the effect on the office's production in mostly indirect. expenses are another factor but the broad majority of that is fixed as well in the form of payroll and ordering. maybe they could be less watefull, but that isn't (or shouldn't be at least) gonna drive your office's financial goals.
so dentists work hard, and the staff can work really hard as well and get the office running like a well oiled machine, but if the dentist doesn't utilize the benefits of his staff's hard work (ie getting more work/production in) then the "office" will fail to achive financial goals and the staff wont profit from their "extra" hard work, thus the open mgmt goal/system fails to motivate staff.
upselling is done by hygienists, front office, assistants. with the office's financial success tied to theirs, they can attempt to talk the patients into getting elective work done by talking up recent veneer cases, asking patients if they have considered bleaching, or needed ortho (if the practice does some ortho). now, a caveat to that being that to an extent, you WANT a staff to do these things, but i personally want them to do that w/ the PATIENT's best interest in mind, not the office's
as far as scheduling and what not, it happens, and it's human nature to do so. you might not even catch it. staff will do that stuff if you tie your office's financial success to theirs. its not the tail wagging the dog becausein a way, the doctor mandated this change in office philosophy if you follow. the staff will in effect, be coerced into putting patient welfare 2nd to office production.
money cannot be your 1 trick pony for motivating your staff. read the book that hammer suggested earlier "managing people". its pretty good.
again, the problem with everyone's effort being tied together is that 1 person in particular (the doc) is carrying the team, and if the staff thinks he or she is slacking a bit, they'll be bitter towards you, b/c you are the main reason they don't make goal.
no worries! that's what forums are for right?!
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Great thread. Just want to let people know the book is free on amazon kindle edition. You can get it on the kindle app on the iPhone.
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I think you are placing too much emphasis on "the doc carrying the team". I agree that not everyone is motivated financially, in fact putting too much emphasis on the numbers can get employees to tune out. A good running practice "machine" does not involve the doc micromanaging and carrying all the responsibility. Most consultants will tell you, patients often dont trust the doc, in the end its the assistant, hygienist, or financial coordinator who sells/closes the case(and don't get me wrong, Im not a salesperson, but some dentistry is elective). In an efficiently run machine, the doc can come to work and just do the dentistry, treat/diagnose/educate. Your team closes the cases, schedules the cases, manages the schedule, and maintains collection. Your ultimate job is to do dentistry, and watch the books. If you put good hard working people around you, have solid clear practice policies and job descriptions, set a good example and treat your staff fairly with respect, as a dentist you will love your job and certainly not have to "carry the team".
My 2 cents for what its worth coming from two "machines" from opposite ends of the spectrum.
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I hope you didn't come away with the impression that money was the main focus behind my beliefs, because it's not. I've read a lot of books and articles about the topic and know that people are very different about what motivates them. An incentive system is simply a tool that can be utilized and tweaked to monitor the financial goals of the practice while keeping everyone engaged in the operation. If done correctly, an incentive also helps to strengthen the team environment.
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Great idea to build up the team and keep morale high. I have worked in several jobs where the office was primarily staffed by females. From personal experience morale and productivity can be greatly diminished when employees start gossiping and stirring up trouble. Women can be catty (I'm also a female). Before you know it, the staff is divided and productivity goes out the window. Do you have any recommendations to keep this from happening or dealing with it quickly if it does?
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Oracle,
Excellent thoughts! I personally have worked in two offices from different ends of the spectrum. #1 in a single practitioner & associate, as a mentor relationship with little focus on daily production etc. #2 in a corporate office that the primary focus was daily production w/ goals and incentives etc. Yes, I made more $ in situation #2 but felt less personal and professional satisfaction, more aggravation, and significantly more stress than #1. The office in #1 was much more relaxed, an incredibly satisfied staff and the only incentive-driven activity was a visit to the state dental meeting if we met our yearly production goal.
Money is important, but many times is not the best sole motivator... especially in the form of $ direct to the staff.
Now the flip side is that to get to be able to "do cool dentistry" you have to often sell yourself and the services you provide. There is, however, a fine line between this type of selling and that which goes on in offices like aformentioned #2.
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Figure out who the trouble maker is (it won't be hard) and fire them. It is amazing what getting rid of one person who is deliberately causing dissension amongst your staff can do for morale.
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Sorry I have been negligent on this thread. I was in the UK last week and got back yesterday, I'm still dealing with the banks, negotiating the buy out contract and I have an IRS audit tomorrow. I've been a little busy but I promise to post several things this weekend
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Thanks! I'll enjoy reading it on my first day of classes on Monday
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Sorry I have been negligent on this thread. I was in the UK last week and got back yesterday, I'm still dealing with the banks, negotiating the buy out contract and I have an IRS audit tomorrow. I've been a little busy but I promise to post several things this weekend
Are IRS audits normal for businesses in general? Please excuse my ignorance...
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Are IRS audits normal for businesses in general? Please excuse my ignorance...
They happen but if you have a good accountant they are nothing to fear. Mine resulted because I went from a PC to an LLC in 2007 when I sold half of my practice. I also went from one accounting firm to another. The first accounting firm made a mistake in my office equipment depreciation schedule and that is what red flagged the IRS. They are a hassle and a pain but this too shall pass.
Hammer,
To add to the long list of requests
Can you please provide your opinion regarding group practices with multiple specialists. It seems like these establishments are made up of 4-7 GPs, and 3-5 various specialists, and take every insurance plan under the sun to get heads in and take advantage of particular types of insurances. I would assume that most of these practices are opened from the get-go by those with deep pockets or a group of dentists. What do you think of starting out solo w/ 4-6 ops in a space large enough to accommodate at least 10 more ops, and then as pt base increases slowly add associates one by one as well as bring in specialists one by one? Have you heard of this being done and how successful was it? What would be the main obstacles to consider?
To add to the long list of requests
Can you please provide your opinion regarding group practices with multiple specialists. It seems like these establishments are made up of 4-7 GPs, and 3-5 various specialists, and take every insurance plan under the sun to get heads in and take advantage of particular types of insurances. I would assume that most of these practices are opened from the get-go by those with deep pockets or a group of dentists. What do you think of starting out solo w/ 4-6 ops in a space large enough to accommodate at least 10 more ops, and then as pt base increases slowly add associates one by one as well as bring in specialists one by one? Have you heard of this being done and how successful was it? What would be the main obstacles to consider?
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Hammer,
To add to the long list of requests
Can you please provide your opinion regarding group practices with multiple specialists. It seems like these establishments are made up of 4-7 GPs, and 3-5 various specialists, and take every insurance plan under the sun to get heads in and take advantage of particular types of insurances. I would assume that most of these practices are opened from the get-go by those with deep pockets or a group of dentists. What do you think of starting out solo w/ 4-6 ops in a space large enough to accommodate at least 10 more ops, and then as pt base increases slowly add associates one by one as well as bring in specialists one by one? Have you heard of this being done and how successful was it? What would be the main obstacles to consider?
I have looked at a few of these and you are correct about them. They are usually opened by dentists who already have other practices. They take EVERY HMO, PPO and insurance plan and usually have 2-3 GP's, a pedo and an ortho. They have about 4-6 front office staff, 8-12 assistants (who usually do expanded functions) and as many hygienes as they have room for ( I have seen as many as 12 full time RDHs).
These are the type of offices that will be the first to employee Mid-level providers.
To me the problem with this type of office is it is too big and unwieldy. Because of its size it will have enormous operating costs (due to number of employees, physical size of the office, marketing etc). It is also a lot of responsibility for whoever the CEO is. It will also be more vulnerable to dips in the economy.
The dentists who typically do well in this type of practice are the kind that are more interested in running a business than in doing dentistry like Howard Farran.
I ran the numbers on a few of these, one practice in particular was a start up that was doing in excess of $150K their second month in business. What I found was that per GP money wise they weren't doing that great for the amount of hours that they were working. I think per dentist they were doing about $275 in production per hour which is good but not what you would think for a practice producing close to $200K per month.
If you are more interested in the business side of dentistry this is the type of practice I would recommend looking at. You don't even have to buy a pre-existing practice to do this type of office. Here's how I would go about it.
1. Find a good accountant and lawyer who both have experience in medical/dental offices.
2. Create a business plan that includes:
a. A detailed description of the practice model that you will be using
b. A very professional marketing plan with logos, print ads prototypes, direct mailers and a complete "new patient" packet for the practice
c. A professionally prepared regional demographic with household income profiles, traffic figures for the area that you are thinking of locating in, a survey of local industry, profiles of the other dentists in the area and a projection of population growth for the next 10 years
d. A very detailed operating cost estimate and a projection of what your potential for production will be for the next 5 years. This is also a good time to find out what kind of insurance policies you will need for this large of an operation. I would work through an insurance broker for this. They will be able to anticipate your needs and get you the right type of insurance policies for this type of practice.
e. Have a detailed plan for your operating hours, number of employees that you anticipate hiring, what sort of specialists you plan on employing ( in this type of practice an ortho is a must, also a pedo, an endo and an OMFS will pretty much cover all of your bases). Be able to describe very thoroughly exactly what the practice will look like in its day to day operations.
f. Have an Employee Handbook that contains office policy, dress requirements, information about 401k, holidays, rules governing behavior in the office, OSHA, HIPPAA, ADA requirements, job descriptions etc. Basically it is Standard Operating Procedures handbook for your dental office
3. Locate a structure in a retail area large enough to accommodate the practice. I would initially go with a pre-existing structure because it will be cheaper and help with cash flow while you are getting it started. You can go free standing once you are established
4. Work with an architect not your dental supplier to design the floor plan
5. You probably won't be able to get a loan from a bank for this type of start up so I would form an LLC and get investors involved. This is where the accountant and lawyer can really help.
6. Get to know the HR directors for any major employers in the area. Find out from them what plans are most popular in the area. Once the building project is underway start applying to accept those plans
7. Hire an office manager first. Then start hiring the rest of the staff.
8. Once construction has begun on the practice I would launch a big advertising campaign and start soliciting appointments and new patients. Set up a "mini front desk" with one phone line and two roll over lines and a pair of computers loaded with your dental software. Have two people manning the phones 8-5 Mon-Fri and making appointments for two weeks after the office is to be ready to open.
Two weeks gives you plenty of time to familiarize the staff with the facility and to work out any problems that might arise as you start seeing patients. When a new patient calls for an appointment take down their important contact information and sent them a "new patient packet" which includes the patient's health history, insurance information and HIPPA forms. Tell them to have them filled out and bring them with them to their appointment.
9. Once the office is completed and ready to open take a couple of days to do some staff training, go over the employee handbook with the staff and even have a couple of "Test patients" go through the entire new patient experience to familiarize the staff with how the practice will flow once you are up and running.
As I said before, this type of office is really for someone who is more interested in the business side of dentistry rather than the clinical stuff.
Thanks for the detailed outline, Hammer. Lots of excellent advice in there. After I fully explore the options out there, I will certainly need to consider what I ultimately want out of a practice. Im intrigued by both the clinical and business side of things but dont see myself participating in the clinical aspects as much as I get older.
Do you not recommend a periodontist? I was thinking perio would be one of the first specialists added due to the range of procedures they can offer to the adult population, such as implants and various periodontal procedures. Would you instead hire OMFS earlier to cover extractions/implants and refer out perio?
It seems that the first major obstacle would be getting funding for the project from a bank , eg Matsco or BofA, if I opted not to pursue investors. Will this be because of the proposed business plan or the loan amount? I can see the banks not being comfortable with an unconventional plan but they seem to loan out $400-600K to solo dentists without much hassle. If I were to start out solo, with an OM, 1-2 receptionists, 1-2 EFDAs, and 3-4 times the office space of a traditional 4-6 op office, would construction costs and/or lease payments be that much more in comparison, assuming only 4-6 ops are equipped initially?
All else being equal to a fully-loaded traditional solo start up, I would assume extra operational expenses before hiring additional staff would mainly comprise of 3-4 times the normal rent and more marketing dollars. Would that be correct?
Do you not recommend a periodontist? I was thinking perio would be one of the first specialists added due to the range of procedures they can offer to the adult population, such as implants and various periodontal procedures. Would you instead hire OMFS earlier to cover extractions/implants and refer out perio?
It seems that the first major obstacle would be getting funding for the project from a bank , eg Matsco or BofA, if I opted not to pursue investors. Will this be because of the proposed business plan or the loan amount? I can see the banks not being comfortable with an unconventional plan but they seem to loan out $400-600K to solo dentists without much hassle. If I were to start out solo, with an OM, 1-2 receptionists, 1-2 EFDAs, and 3-4 times the office space of a traditional 4-6 op office, would construction costs and/or lease payments be that much more in comparison, assuming only 4-6 ops are equipped initially?
All else being equal to a fully-loaded traditional solo start up, I would assume extra operational expenses before hiring additional staff would mainly comprise of 3-4 times the normal rent and more marketing dollars. Would that be correct?
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A perio would be a good addition but in a practice of this type you are going to be seeing a lot of families. Ortho is a must as is an OMFS for extractions, implant placement and 3rd molar extraction. I also feel that a pedo is a must because the idea is to not have to refer anyone out. If you have to refer a child out it is the same as referring the entire family out.
The only area then that a perio would cover would be perio surgery which is pretty much an adult only referral. If one of the GP's in the office loves to do endo then perhaps you could replace the endo with a perio but you are going to see much much more molar endo in this type of practice than you will perio cases that you would need to send to the periodontist.
If someone needs a root canal they are either going to get it from the endodontist in your practice or the OMFS will extract it for them. Perio patients are more likely to not get the treatment or just have the compromised teeth extracted and have either implants or some removable prosth done.
Getting a loan for the practice that you have proposed e.g. a solo practice with room to expand won't be a problem. In fact I would make sure to include an explanation of what your intentions are in your business plan to make the prospect more interesting to the bank. Doing it as you have planned where you start a practice and then as you are making money begin to expand is a great way of proceeding and will also make getting more money from the bank as you need it easier.
When I spoke of getting investors it was if you decided to start a large group practice up from scratch. It would be a very large loan that most banks might be hesitant to loan to as it would be an unproven business with possibly large unsecured debt. In this case your "investors" should be the other doctors that you would join you in your practice. In this case each of you could get individual loans for the practice and then getting financing wouldn't be a problem as the risk would be equally shared.
And you are correct in assuming that the additional operating expenses would be from a larger space and a larger marketing campaign. Initially your marketing would be more aggressive but once the practice got underway it would eventually be percentage wise not much more than an average practice. In a practice of this size a really good internal marketing strategy will work very very well. The more people that you treat the more people there will be to give you word of mouth advertising which for a dental office is the best kind of marketing that there is.
You have a pretty good vision for what it is that you are wanting to do and you are definitely asking the right questions for this kind of enterprise. Who knows, once you get this juggernaut of a practice kicking ass and taking names I might send you my CV to hop on board.
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OK time to move on. Now that you have found the practice of your dreams and you have decided to buy it here are the things that you need to have BEFORE you apply for a loan.
1. An up to date Curriculum Vitae
2. Copies of your professional licenses and your diplomas
3. A General summary of the transition
4. Production Reports (At least the last 12 months, 2 to 3 years would be better)
5. A Practice Evaluation Profile
6. Tax returns (2 years; full copies, personal and professional from both you and the dentist that you are buying from, 3 years tax returns required if transaction is over $500,000)
7. A Copy of the draft purchase and sale agreements
8. A Personal financial statement
9. A Profit and Loss statement from the seller dentist
I'll try to cover these individually in my next few posts.
1. An up to date Curriculum Vitae
2. Copies of your professional licenses and your diplomas
3. A General summary of the transition
4. Production Reports (At least the last 12 months, 2 to 3 years would be better)
5. A Practice Evaluation Profile
6. Tax returns (2 years; full copies, personal and professional from both you and the dentist that you are buying from, 3 years tax returns required if transaction is over $500,000)
7. A Copy of the draft purchase and sale agreements
8. A Personal financial statement
9. A Profit and Loss statement from the seller dentist
I'll try to cover these individually in my next few posts.
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Excuse my ignorance, but how does one go about finding a good accountant and good lawyer? I understand this is imperative to the process of starting a practice, but it seems like there are thousands of lawyers and accountants out there.
Should we just call local offices and ask them who they use? You obviously couldn't just call up local accountants and attorneys and ask "do you have much experience with dentists?" because their answer would be in their own self interest.
I'll be a new graduate, so I won't know many dentists coming directly out of school. Is it appropriate to call an office and ask this information?
How appropriate is it to ask this information during job interviews, in case you don't get that job, you may still use their advice for yourself or if you work for someone else?
Thanks.
On a side note, have you ever thought about writing a book over practice acquisition? I think you could write one hell of a book, and it could sell well if there aren't any well established books already out there. Are there any books over this topic you could recommend?
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A QUESTION?
I need some feedback. Are you finding the information I am posting in this thread helpful? Is it information that you have already been taught or is it something new to you?
I want to present information that I hope will help you make better informed decisions when it comes time for you to buy a practice so any feedback that you can give me is greatly appreciated.
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Ask any dentist that you come into contact with. Don't ever be afraid to ask any question that you need answering. I found my accountants and lawyers by asking other dentists who represented them in these respective fields.
The only stupid question is the one that you don't ask.
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A QUESTION?
I need some feedback. Are you finding the information I am posting in this thread helpful? Is it information that you have already been taught or is it something new to you?
I want to present information that I hope will help you make better informed decisions when it comes time for you to buy a practice so any feedback that you can give me is greatly appreciated.
Absolutely the most helpful thread in this entire forum. Keep up the awesome work. Like I said, you should consider writing a book.
A QUESTION?
I need some feedback. Are you finding the information I am posting in this thread helpful? Is it information that you have already been taught or is it something new to you?
I want to present information that I hope will help you make better informed decisions when it comes time for you to buy a practice so any feedback that you can give me is greatly appreciated.
most helpful & insightful thread in the 5 yrs of being a member on SDNThis thread is very helpful. Though I am only starting dental school I hope a couple years from now I can look back to this thread and find information that I will be looking for or if anything just better understand all the points you made and why you think that way.
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It is a great thread because of its chronology and breadth of scope. It's unusual for a dentist to log onto the dental student forum and go into such depth. For those of you that like this type of info and find you want more, go check out DentalTown.
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I have been a avid reader of DentalTown ever since I got accepted haha before I had no desire since nothing was set. Anyways, their practice transition forum is helpful and so are the people on that forum but I have yet to see a thread that dumbs everything down for a dental student and new graduate like Hammer has done in this thread. Unless someone can prove me wrong and pull out a DT thread. That would be even better!
Hammer, this thread is by far one of the most useful thread for a dental student concerning the business side of dentistry.
Hammer, this thread is by far one of the most useful thread for a dental student concerning the business side of dentistry.
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I appreciate the kinds words. This thread has been very helpful to me in my situation because many times someone has asked me a question on this thread that I had completely overlooked in my purchase. There are so many things that go into a practice purchase even when you have bought a practice before it is still easy to overlook the small things while concentrating on the bigger stuff.
There seems to be a pretty unanimous feeling about this but do you think one's major matters when applying to dental school, as long as all of the required classes are taken (plus a few extra advanced science courses like biochem, genetics, etc..)?
I plan on switching to a Health and Exercise major from my current psychology major, but honestly it is thought of as one of the easier majors at my school.
I plan on switching to a Health and Exercise major from my current psychology major, but honestly it is thought of as one of the easier majors at my school.
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For me personally I don't think that my major was of any importance once I got to dental school. I had a double major in micro and zoology. I wish that I had had a major in business and accounting.
The only thing that I could imagine that would make one major preferable over another is it probably would be better to have a major in bio or chemistry if you have a 3.0 gpa than the same gpa in a non-science major like film studies
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OK cool, GPA shouldn't be a problem so hopefully neither will the major.
I thought of a question for you last night but I can't remember it lol. While I try to remember, would you recommend this? http://www.amazon.com/Kaplan-DAT-Dental-Admission-Test/dp/1607146592/ref=dp_ob_title_bkI figure it's never to early to start, sometimes I just hear mixed thing about different types of reviews. It looks like the customer reviews are for some reason about all kaplan DAT review books from ~2000.
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Wrong thread
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I really don't have any experience with the Kaplan prep books. I took both the DAT and the MCAT in a one week period without any kind of prep. I would say that anything that preps you for the type of questions that you are going to be asked is a good thing. I know that reviewing old National Board tests help me and my friends immensely in passing both parts of the board. I would see what other people who have taken the DAT more recently have to say about the Kaplan books. I know that there are tons of threads on that here at SDN
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OK back to business. Let's see if we can knock out some of the things that you need to have before you approach a bank for a loan.
1. CV- I think that I covered this pretty well in this thread starting on post #69. Despite the fact that a lot of places that require you to submit a CV now want you to do it online, the banks still want a hard copy in their hands. Take advantage of this and use the suggestions that I have given.
One other suggestion is this. Go and get about 3-4 CE classes on running an office to put on your CV before you send it to the bank. There are plenty of these courses online and ones that you can take "at home". If you have the cash go see Imtiaz Manji at the Scottsdale Center. The banks don't expect any new grad to have any CE. The fact that you have several classes on practice management under you belt make it look like you are prepared to hit the ground running once you open an office. This is what they like to see.
2. Copies of your professional licenses and diplomas- This is pretty self-explanitory, before you have your diplomas sealed onto a plaque go and have several letter sized copies made. Your local Kinko's can do this for you. You will also want copies of your dental license, your DEA license and your CPR card as well.
If you are a new grad and don't have your dental or DEA licenses just yet don't panic. Just include a piece of paper that shows the date that you applied for them and when you expect to receive them and include it with the copies of your diplomas.
3. A General Summery of the Transition: This is a timeline of when you are joining the practice, who is staying and for how long. Don't make it too involved just something that shows what changes you are going to make once you buy the practice. Mine was something like this:
Dr. Hammer will join the practice on September 1, 2010. Currently Dr. Oldguy is working Mon-Thurs 8-4pm. Dr. Oldguy has 2 full time hygienists who work during normal business hours. Dr. Oldguy has 1 full time office manager and 1 full time dental assistant.
When Dr. Hammer joins the practice he will work Mon-Thurs 8-5pm and Fri 7-2pm. He will bring with him the OM from his previous practice and his RDA from his previous practice. He will retain Dr. Oldguy's OM for a period of at least 6 months. He will retain Dr. Oldguy for Tues-Wens 10-2pm for a period of 2 months. He will retain Dr. Oldguys dental assistant for that same period. Dr. Hammer will retain the current hygienist exactly as employed currently. Dr. Hammer will add another hygienist for Friday 7-2pm.
You just need to show that you are keeping on the old doctor and some of the staff so that they can make introductions for you to the old patients. The banks love this.
4. Production reports: These are the monthy production reports from the office that you are buying. Usually you will get these from the owner/seller or the practice broker. Most banks want the last 12 months. I usually want to see the last 3 years. If the practice has consistently been producing the same amount it doesn't hurt to show that to the bank as well.
5. A Practice Evaluation Profile: Once again this is something that either the owner/seller or the practice broker provides. It is just a total breakdown of the practice that includes rent, lab expenses, salaries, percentages of how much operative, fixed, endo etc that the practice is doing, total number of active patients etc. Once you show interest in a practice and sign a confidentiality agreement they will send you a practice profile. This is the same document that the bank wants to see.
More later
1. CV- I think that I covered this pretty well in this thread starting on post #69. Despite the fact that a lot of places that require you to submit a CV now want you to do it online, the banks still want a hard copy in their hands. Take advantage of this and use the suggestions that I have given.
One other suggestion is this. Go and get about 3-4 CE classes on running an office to put on your CV before you send it to the bank. There are plenty of these courses online and ones that you can take "at home". If you have the cash go see Imtiaz Manji at the Scottsdale Center. The banks don't expect any new grad to have any CE. The fact that you have several classes on practice management under you belt make it look like you are prepared to hit the ground running once you open an office. This is what they like to see.
2. Copies of your professional licenses and diplomas- This is pretty self-explanitory, before you have your diplomas sealed onto a plaque go and have several letter sized copies made. Your local Kinko's can do this for you. You will also want copies of your dental license, your DEA license and your CPR card as well.
If you are a new grad and don't have your dental or DEA licenses just yet don't panic. Just include a piece of paper that shows the date that you applied for them and when you expect to receive them and include it with the copies of your diplomas.
3. A General Summery of the Transition: This is a timeline of when you are joining the practice, who is staying and for how long. Don't make it too involved just something that shows what changes you are going to make once you buy the practice. Mine was something like this:
Dr. Hammer will join the practice on September 1, 2010. Currently Dr. Oldguy is working Mon-Thurs 8-4pm. Dr. Oldguy has 2 full time hygienists who work during normal business hours. Dr. Oldguy has 1 full time office manager and 1 full time dental assistant.
When Dr. Hammer joins the practice he will work Mon-Thurs 8-5pm and Fri 7-2pm. He will bring with him the OM from his previous practice and his RDA from his previous practice. He will retain Dr. Oldguy's OM for a period of at least 6 months. He will retain Dr. Oldguy for Tues-Wens 10-2pm for a period of 2 months. He will retain Dr. Oldguys dental assistant for that same period. Dr. Hammer will retain the current hygienist exactly as employed currently. Dr. Hammer will add another hygienist for Friday 7-2pm.
You just need to show that you are keeping on the old doctor and some of the staff so that they can make introductions for you to the old patients. The banks love this.
4. Production reports: These are the monthy production reports from the office that you are buying. Usually you will get these from the owner/seller or the practice broker. Most banks want the last 12 months. I usually want to see the last 3 years. If the practice has consistently been producing the same amount it doesn't hurt to show that to the bank as well.
5. A Practice Evaluation Profile: Once again this is something that either the owner/seller or the practice broker provides. It is just a total breakdown of the practice that includes rent, lab expenses, salaries, percentages of how much operative, fixed, endo etc that the practice is doing, total number of active patients etc. Once you show interest in a practice and sign a confidentiality agreement they will send you a practice profile. This is the same document that the bank wants to see.
More later
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Continuing with the things you need to have before you go to the bank:
6. Tax returns (2 years; full copies, personal and professional from both you and the dentist that you are buying from, 3 years tax returns required if transaction is over $500,000): This is more for the seller than for you unless you have been out in practice for a couple of years. Tax returns are a great way to see just how much the seller has been making at his practice.
7. A Copy of the draft purchase and sale agreements: It doesn't have to be the final draft of the purchase agreement. There may be small changes that you need to make. The bank is just looking for any huge problems that may affect their investment like an overzealous restrictive covenant
8. A Personal financial statement: This needs to come from your accountant and not you. This is a list off all of your assets (like a house) and all of your liabilities (like school debt) it should also include a schedule showing how you are paying off any debt that you have, how your loans are structured and how much you have already paid. You could do this yourself but the bank will want it to be prepared by a CPA
9. A Profit and Loss statement from the seller dentist: Usually the bank will want a P and L from the past two years and one that is current. You should be given this information as well when you are beginning negotiations to buy the practice.
All of the above information you already have or be given when you are beginning negotiations to buy a practice. I would have it all loaded on a PDF file so that when the bank requests it you can immediately email it over and follow it up with a hard copy as well.
When I sent this stuff into the banks that I am looking at working with I also sent them some preliminary print ads, stationary with my new logo on the masthead and a couple of embroidered patches of my new logo. This isn't necessary but it does let them know that I am already looking ahead at the future of the practice.
6. Tax returns (2 years; full copies, personal and professional from both you and the dentist that you are buying from, 3 years tax returns required if transaction is over $500,000): This is more for the seller than for you unless you have been out in practice for a couple of years. Tax returns are a great way to see just how much the seller has been making at his practice.
7. A Copy of the draft purchase and sale agreements: It doesn't have to be the final draft of the purchase agreement. There may be small changes that you need to make. The bank is just looking for any huge problems that may affect their investment like an overzealous restrictive covenant
8. A Personal financial statement: This needs to come from your accountant and not you. This is a list off all of your assets (like a house) and all of your liabilities (like school debt) it should also include a schedule showing how you are paying off any debt that you have, how your loans are structured and how much you have already paid. You could do this yourself but the bank will want it to be prepared by a CPA
9. A Profit and Loss statement from the seller dentist: Usually the bank will want a P and L from the past two years and one that is current. You should be given this information as well when you are beginning negotiations to buy the practice.
All of the above information you already have or be given when you are beginning negotiations to buy a practice. I would have it all loaded on a PDF file so that when the bank requests it you can immediately email it over and follow it up with a hard copy as well.
When I sent this stuff into the banks that I am looking at working with I also sent them some preliminary print ads, stationary with my new logo on the masthead and a couple of embroidered patches of my new logo. This isn't necessary but it does let them know that I am already looking ahead at the future of the practice.
How do you plan to juggle this in your practice? Obviously, the current OM will see the writing on the wall and know that her days are numbered. Does the current OM already know that you're bringing in a new OM?
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I don't know. I usually leave that up to the seller dentist to tell his staff. Luckily his OM and RDA are pretty old and ready to retire. I also figure once I require them to use Dentrix on a daily basis they will decide to retire.
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