cost of buying a practice

[Stephie3]

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how much should you expect to pay for buying a practice (doesnt have to be exact..im just curious the range)?

 

[Istr8nthem]

how much should you expect to pay for buying a practice (doesnt have to be exact..im just curious the range)?

It all depends on the "goodwill" of the practice and how new the facility is (digital x-ray? paperless? newly remodeled?). You also have to factor in whether the owner is selling the building or space that the office is in or whether you would be taking over a current lease. Their are so many variables in buying an existing practice, so placing a value on one without knowing anything about it is nearly impossible. You can find practices for sale for $70,000-$1,000,000 or more and, again, it all depends on the patients (goodwill), current condition of facilities, ownership of space, location of practice, and many other variables.

 

[WilsonJing]

Hi couldnt help but to throw my 2 cents into the discussion.

I was just talking to my dentist yesterday, we go way back. Family friend for 7 years, his is from the same province as my family. Anyways, I was talking to him about why he didnt just buy a practice coming out of school and instead started new. He told me that buying a practice is actually not a great investment (if for space). A lot of people are under the impression of the patient pool created by the dentist before. However, in places with high dentist density many patients will go else where once their long time dentist has left even though the actual practice is still present. Patients dont associate the new dentist as someone who the pre existing dentist has handpicked to take over his/her practice but rather a business deal. Also with a new practice you are able to design the clinic the way you want with the equiptment you want. Overall buying a new practice is just as much work as starting new. So the two biggest advantages of a pre-existing practice, patient pool and less work to start up are really just overemphasized.

Just somethign to think about.

 

[Istr8nthem]

Hi couldnt help but to throw my 2 cents into the discussion.

I was just talking to my dentist yesterday, we go way back. Family friend for 7 years, his is from the same province as my family. Anyways, I was talking to him about why he didnt just buy a practice coming out of school and instead started new. He told me that buying a practice is actually not a great investment (if for space). A lot of people are under the impression of the patient pool created by the dentist before. However, in places with high dentist density many patients will go else where once their long time dentist has left even though the actual practice is still present. Patients dont associate the new dentist as someone who the pre existing dentist has handpicked to take over his/her practice but rather a business deal. Also with a new practice you are able to design the clinic the way you want with the equiptment you want. Overall buying a new practice is just as much work as starting new. So the two biggest advantages of a pre-existing practice, patient pool and less work to start up are really just overemphasized.

Just somethign to think about.

I don't completely agree with this. While some of your points are well-taken, I have to disagree with your statement that "overall buying a practice is just as much work as starting new." I ask you if you have ever started a practice before? It takes months and months of just scraping by while you are paying a high monthly mortgage payment, student loan payments, payments on your new equipment, etc, etc. While some situations may be right for starting a new practice, I don't agree that starting a new practice is easier than buying an existing practice. Very often, the selling dentist stays on as an associate and helps the new dentist transition into the owner/operator. This allows the patients to begin to trust the new dentist and also allows the new dentist to learn valuable things from the selling dentist about practice management. You are also guaranteeing immediate incoming cash flow in your practice!!!! I cannot over-emphasize this! When you have bills to pay and have a decently full schedule of paying patients from day one, it makes it easier and less stressful to live your life.

Do not get me wrong, there are certainly perks to opening up your own shop from scratch. You can design everything yourself, pick your staff, select your ideal location, etc. I just don't want you to give people the wrong impression with your comments. Please think about how long it takes to build-up a good patient pool and don't underestimate just how valuable the goodwill of a well-established practice truly is!!!

 

[Cold Front]

Just like everything else, you have to start with the key ingredients before you settle on the price. Here are few things from the top of my head;

- # of new patients the office gets (50 vs 200 / month)
- services the office provides (just bread and butter vs. cosmetics, implants, etc),
- why is the existing doctor selling the practice? (is the area becoming more saturated or is he simply cutting back on the profession?),
- profit margin (does the business have crazy fixed overhead because of existing finances and other loose ends, or simply something the buyer can adjust?),
- insurance (medicaid vs. ppo),
- age of the patients served (more geriatrics vs. a more balanced mix of all ages),
- how many patients are active,
- and most of all LOCATION (good visibility from street? good parking? etc)

Only after you know these things, you can get an idea what the practice is worth.