Buying a Practice

[cschafdance]

Hello,

I am a current practicing dentist in the state of Michigan. The practice I am working at is a potential buying option for me. My hygienist and office manager want to go in on it with me. However, the state of MI only allows a dentist to purchase and own a practice. Is there any possible way for my hygienist and office manager to go in on the practice with me? Basically, would it be possible for them to purchase owner's equity through me in order to have equity in the practice?

Any advice and help is appreciated.

Thank you.

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[PerioDont]

I do not know.

But why would you want them to? own it yourself. Who will make the decisions and who will have the final say? What will you do if one partner wants to sell out? What if they start sucking at their job and you want to fire them but still have to consult them as they are co-owners? I think owning yourself straight out is a much better option.

 

[allDAT]

Why would you want them to?
There's really no benefit to you at this point to share equity. If you want a partner, get a dentist who does procedures you don't.

 

[cschafdance]

Why would you want them to?
There's really no benefit to you at this point to share equity. If you want a partner, get a dentist who does procedures you don't.

I work in a rural area, and another dentist is not an option right now. I want to share equity with others so they take it seriously.

 

[2TH MVR]

Sure. It is possible. Everything always seems simple and exciting AT THE BEGINNING. The problems will arise when the partnership dissolves for whatever reason. It will be complicated. If you do this .... make sure everything is in writing for the "eventual" exit of said partners. Could be a legal mess where nobody wins except for the attorneys.

So. You have to work this backwards. Discuss future exit scenarios 1st. Everything needs to be contracted legally.

But like others have posted. Not really worth the future stress.

 

[schmoob]

I would not want to share the ownership with a hygienist and OM. Sounds like they want the benefits of ownership based on the revenue you generate. I would say no.

 

[Screwtape]

That’s a big hell no from me. Retention and/or practice production bonuses if you must. I wouldn’t even do that though. Be the boss.

 

[Faris_]

I've only received an acceptance to dental school at this time but considering am non-traditional with multidiscipline experience I'd like to give my 2cents. to me it seems the best way to get hygienist to take the practice seriously is to have their pay partially production-based commission, that way they take THEIR job seriously and not get complacent because they are guaranteed a cut from your production or another hygienist's, if you decide to expand in the future. As for the manager, I wouldn't know much about that as I don't know what would a manager do differently if they are a co-owner versus what they would do when they're hired to do the job which is a status that depends on their performance in previous months.
You never know what's going to happen in the future, how would they perform in their respective jobs 10 years from now, or what changes you would have to make to stay competitive, expand, or to deal with hard times. Adding two owners to your practice who aren't dentists that bring as much production as you do seems like a recipe for a headache and potentially disastrous to YOUR professional future and autonomy for little to no gain.
Also, if you ever try to expand, you'll have a hard time finding a dentist who is willing to partner with a practice that has three owners with one producing dentist.

 

[yappy]

Hello,

I am a current practicing dentist in the state of Michigan. The practice I am working at is a potential buying option for me. My hygienist and office manager want to go in on it with me. However, the state of MI only allows a dentist to purchase and own a practice. Is there any possible way for my hygienist and office manager to go in on the practice with me? Basically, would it be possible for them to purchase owner's equity through me in order to have equity in the practice?

Any advice and help is appreciated.

Thank you.

Please do not do this.

 

[allDAT]

I work in a rural area, and another dentist is not an option right now. I want to share equity with others so they take it seriously.

Sharing equity with partners who are not able to perform the work being sold is a not a good choice unless they're supplying a huge runway of capital which is not necessary for a dental office. You don't need investors.

If you're in a rural area, you're actually a good employer and probably valued by the community because they don't have many options for employment in comparison to a major metro.

To incentivise your employees to work hard and be committed to the practice's success, offer a bonus based on the performance of the practice.

 

[beannaithe]

This has disaster written all over it. Buy the practice yourself and offer a bonus system to the hygienist and OM based on the production of the practice. Remember its easier to fire an employee than to dissolve a partnership. There would be no way to get rid of them if something goes wrong and they would have access to the office's money.

Though, how did they suggest arrangement to you? Are they buying in or just wanting to own equity?

Remember to have your own attorneys/accountants review all documents and practice purchase information. And you may want to look into the books and make sure there isn't any embezzlement going on. Something doesn't seem right here.

 

[cschafdance]

This has disaster written all over it. Buy the practice yourself and offer a bonus system to the hygienist and OM based on the production of the practice. Remember its easier to fire an employee than to dissolve a partnership. There would be no way to get rid of them if something goes wrong and they would have access to the office's money.

Though, how did they suggest arrangement to you? Are they buying in or just wanting to own equity?

Remember to have your own attorneys/accountants review all documents and practice purchase information. And you may want to look into the books and make sure there isn't any embezzlement going on. Something doesn't seem right here

The office is located in a rural area, and I travel 2 hrs round trip everyday. Initially, I was not going to buy the practice because of distance. My hygienist and office manager were going to buy the practice, but you need a doctor to buy a dental practice in MI. Therefore, I decided to buy. I was thinking of owning 50% of the practice, and then they would each own 25%. My dad is a CPA, and he has already reviewed the books. No embezzlement.

 

[doktorinprogres]

The office is located in a rural area, and I travel 2 hrs round trip everyday. Initially, I was not going to buy the practice because of distance. My hygienist and office manager were going to buy the practice, but you need a doctor to buy a dental practice in MI. Therefore, I decided to buy. I was thinking of owning 50% of the practice, and then they would each own 25%. My dad is a CPA, and he has already reviewed the books. No embezzlement.

If you weren't planning to buy b/c of distance dont buy just to do them a solid. This is business. Run away from this

 

[DavesNotHere]

If you weren't planning to buy b/c of distance dont buy just to do them a solid. This is business. Run away from this

Solid advice.

 

[Molar Whisperer]

Hello,

I am a current practicing dentist in the state of Michigan. The practice I am working at is a potential buying option for me. My hygienist and office manager want to go in on it with me. However, the state of MI only allows a dentist to purchase and own a practice. Is there any possible way for my hygienist and office manager to go in on the practice with me? Basically, would it be possible for them to purchase owner's equity through me in order to have equity in the practice?

Any advice and help is appreciated.

Thank you.

I agree with many here foreseeing disaster. From many years of observing and experiencing dysfunction, I believe in KISS (Keep It Simple & Stress-free) principal. Whenever something has too many moving parts whether mechanically or in business, there are too many ways it can fail. Your hyg and OM never went to DS and they don't have a dentist license (hyg has his/her own). The other moving parts don't know what you're going through and when things don't go as planned as always, everyone will be blaming each other. When non-dentists have equity in a dental practice, it is not their license on the line making decisions on how to maximize profit (substandard care, equipment, supplies, staff costs, etc.).

 

[OhioDMD]

It can be done by forming a corporation (see Pure Dental Health Partners) with you as a member (majority ?). This is how DSO’s are able to purchase dental practices. The particulars you will have to research on your own. Unless your hygienist & OM have deep pockets and are looking for alternative investments or you’re looking to start a DSO like business model I really don’t see an upside to this arrangement. At least as far as you the owner are concerned. Partnerships are difficult to maintain over a long period of time and an iron clad exit strategy is a must assuming the worst happens.