I'm looking at purchasing a 100% FFS office because the current doctor will retire. Should I be concerned with a lot of patient's leaving? The current doctor only does internal marketing so it's all from patient referrals and there aren't many new patients every month (maybe 4 or 5 new patients a month). My concern is, the patient's mostly came because they liked the previous doctor so will a lot of people leave when a new face is the doctor? OF course the current doctor agreed to do a 6 month transition period. Also, the current staff is over-payed (by double) so I need to bring a new staff within a year or so. Do I need to start accepting PPO's righ away or should I wait to see how the transition goes?
Purchasing FFS dental office
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When you introduce PPO's you may be losing 20-40% in writeoffs off the top but you will still be paying original overhead and your practice loan is based on a FFS valuation. Also, patients go to their dentist because they like and trust them but they may also have a longstanding relationship with the hygienist, front desk staff, etc. Many NP's come from recommendations of the staff over time. Be careful of completely turning over the entire staff within the first year.
These were considerations presented to me by professionals when I was looking to purchase a practice. Do you have a CPA that knows dental, a practice broker and an attorney? It may be premature but they can help ask questions and give you ideas.
These were considerations presented to me by professionals when I was looking to purchase a practice. Do you have a CPA that knows dental, a practice broker and an attorney? It may be premature but they can help ask questions and give you ideas.
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1. Yes you should be concerned about patients leaving. They stayed with the selling doc, out of network, because they had a relationship with him and the staff.
2. You should not replace the staff. Any of the patients that stick around need familiar faces. I would wait at least a year before slowly replacing.
3. If you introduce PPOs, it will offset some of the patients you lose from the transition. I would introduce one or two at a time for the first ~ 2 years.
See if the selling do is willing to do a 1 year transition period where both of you work so he can introduce you to his patients. This may help.
2. You should not replace the staff. Any of the patients that stick around need familiar faces. I would wait at least a year before slowly replacing.
3. If you introduce PPOs, it will offset some of the patients you lose from the transition. I would introduce one or two at a time for the first ~ 2 years.
See if the selling do is willing to do a 1 year transition period where both of you work so he can introduce you to his patients. This may help.
How do I make sure to retain a lot of these patients? I'll try to keep the employees there for at least a year, but is it normal to give them pay cuts or do I have to honor the previous doctor's pay? Is it better or worse to buy a completely FFS office over a PPO?
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What leads you to believe the staff are overpaid by double?
Sometimes you get what you pay for.
Maybe it is worth it to have reliable, loyal staff who will go above and beyond, and who will vouch for you in the community. The less you pay, usually the higher the turnover, lost time/money in finding and training replacements, more calling in "sick," etc. I think you are underestimating the importance of good staff in a dental practice.
Sometimes you get what you pay for.
Maybe it is worth it to have reliable, loyal staff who will go above and beyond, and who will vouch for you in the community. The less you pay, usually the higher the turnover, lost time/money in finding and training replacements, more calling in "sick," etc. I think you are underestimating the importance of good staff in a dental practice.
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This. There was probably a very good reason an experienced dentist was paying his staff well. Especially with a practice like this where customer loyalty is crucial, canning the veteran staff that the community knows sounds like a great way to start losing patients.
That makes sense. Thanks. I don't want to underpay my staff, but they are currently getting double the average, with pension, and it's totaling almost 200k. It's a lot to spend on only 3.5 employees. Is it necessary to keep the pension plan that they currently have?
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Do unto others as you would have them do unto you...
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From someone who went into a practice with similar staff situations....
You have to look at not just what the staff is getting for full compensation (pay + benefits) but why they are. If it's a situation where they're getting paid far more than the going rate simply because they've been working at the office for a long time and have gradually seen increases in their pay not entirely based on job performance, but also based on longevity, that's a far different situation than if their pay is based mainly on job performance.
Additionally you may also find that the skill set that the existing staff has may not be what you, as the new owner/boss, are looking for, and that could hinder your vision for the practice, and that would be a problem.
You will have to probably do far more "coaching" of the existing staff than you would expect to if how YOU want to practice is different than how they are used to practicing. That may very well result in YOU having to make some changes, changes that they may not initially like because it's not the way that the previous owner did things. Some staff are like this, others. even ones that have been there for years, may be more than welcome to changes because they may not of been happy with how the previous owner did things. You likely won't know how this will all work out for 3 to 6 months, maybe even a year. That is the challenges of being the boss.
As for the existing practice patient base. Some will stay, some will go. that's just a fact of life. Implementing what it sounds like is a NEEDED external market program will likely fall more upon how the existing staff can handle things, and how you want to go about it. Don't be afraid to try new things for the practice, and also don't be afraid to admit that after trying something that may end up not working, that it's time to reevaluate if it really is working, and if it isn't make changes to it
You have to look at not just what the staff is getting for full compensation (pay + benefits) but why they are. If it's a situation where they're getting paid far more than the going rate simply because they've been working at the office for a long time and have gradually seen increases in their pay not entirely based on job performance, but also based on longevity, that's a far different situation than if their pay is based mainly on job performance.
Additionally you may also find that the skill set that the existing staff has may not be what you, as the new owner/boss, are looking for, and that could hinder your vision for the practice, and that would be a problem.
You will have to probably do far more "coaching" of the existing staff than you would expect to if how YOU want to practice is different than how they are used to practicing. That may very well result in YOU having to make some changes, changes that they may not initially like because it's not the way that the previous owner did things. Some staff are like this, others. even ones that have been there for years, may be more than welcome to changes because they may not of been happy with how the previous owner did things. You likely won't know how this will all work out for 3 to 6 months, maybe even a year. That is the challenges of being the boss.
As for the existing practice patient base. Some will stay, some will go. that's just a fact of life. Implementing what it sounds like is a NEEDED external market program will likely fall more upon how the existing staff can handle things, and how you want to go about it. Don't be afraid to try new things for the practice, and also don't be afraid to admit that after trying something that may end up not working, that it's time to reevaluate if it really is working, and if it isn't make changes to it
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Most dentists don't sell their practices when their practices are doing well. They sell because they no longer make the kind profit that they once made when they were younger. They sell because the practice is on the decline and they want to quit. So when you purchase an existing practice, you have to figure out the ways to make the practice profitable again. There are bills to pay and loans to pay back. You have a family to support. You have to worry about yourself first. The staff don't care about you; they only care about getting paid on time. Hard working and highly dedicated employees don't exist in this world. They always want to do the mininum and you always have to tell them to do things for you.
When I purchased an existing practice, that I knew was a dying practice, I did the following to survive:
1. Accepted more insurance plans that the seller didn't accept.
2. Brought in Spanish speaking staff to attract more Hispanic patients.
3. Lowered the tx fee to attract more patients.
4. Cut all the wasteful spendings. I got rid of the useless yellow page ads. By booking more patients per day and working fewer days a month, I only need to hire P/T assistants. I fired a slow existing F/T assistant and replaced her with a faster P/T assistant. I demoted the existing office manager to receptionist position and cut her salary in half after I realized she lacked the desire skills.
5. After 5 years when the lease expired, I negotiated with the landlord to lower the monthly rent.
When I purchased an existing practice, that I knew was a dying practice, I did the following to survive:
1. Accepted more insurance plans that the seller didn't accept.
2. Brought in Spanish speaking staff to attract more Hispanic patients.
3. Lowered the tx fee to attract more patients.
4. Cut all the wasteful spendings. I got rid of the useless yellow page ads. By booking more patients per day and working fewer days a month, I only need to hire P/T assistants. I fired a slow existing F/T assistant and replaced her with a faster P/T assistant. I demoted the existing office manager to receptionist position and cut her salary in half after I realized she lacked the desire skills.
5. After 5 years when the lease expired, I negotiated with the landlord to lower the monthly rent.
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These are all great points!
Dr Jeff- it seems as though the staff has been with the doctor for over 25 years! So they are well taken care of! If I go in there, I can't afford to pay them so much because unlike the current doctor, I will have student loans to add on every month. I wouldn't mind purchasing and then gradually changing the staff, but since it is COMPLETELY FFS, I need the staff to stick around for the patients. So I'm not sure how to handle this!
Now, that brings me to another concern. How do you do marketing for only FFS patients? What are ways I can find them? I know internal marketing is crucial, but what else can I do?
I agree, they sell for a reason! Honestly, I know this office is at it's max right now! So when I come, I need to find ways to bring FFS patients, but I'm not sure how to! If I accept any single insurance plan, it might be the same plan as some of the existing FFS patients so it forces me to stay FFS. Or else I'll dip in production from accepting plans, but I'll have to drastically increase my volume.
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So the office reaches the plateau in production but I am sure it’s far from reaching its maximum capacity in keeping the appointment book full every day. When there is an empty slot in the appointment book, the staff and you pretty much sit around doing nothing and you lose money. The owner wouldn’t sell the practice, if it’s doing well and is solidly booked with patients.
So why let the staff sitting around doing nothing? You actually lose more money by rejecting to treat patients because your office doesn’t accept their insurances. Isn’t it better to produce something than sitting around doing nothing and still have to pay staff salaries, rents, and business loans? At least the low fee treatments help you pay toward the fixed expenses that you are responsible for each month. At least the low fee treatments help you gain more clinical experience and create more opportunities for you to build the relationship with more new patients. The more cases you treat, the more people who will go around saying nice things about you. The more cases you reject to treat (because you don’t accept insurances and medicaid), the fewer referrals you get. Word-of-mouth referral is the best way to grow your practice. You can always drop these cheap insurance plans in the future or hire an associate to help you when your office gets busier.
As a young doctor, you should be at least twice as efficient as the retiring doc. You make more money than the retiring doc by treating higher volume of patients in shorter amount of time. If you feel you are not fast enough, then you should accept to treat more cases to improve your clinical skills. You don’t learn much by sitting around doing nothing. Every patient who walks into your office has friends and relatives, who are looking for a good dentist.
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