As more and more practices established in the 60’s, 70’s and early 80’s come on the market, it seems likely that a good number of them will need to be merged into existing practices in order for the retirees to perpetuate care of their patients and maintain custody of records. With enrollment to local dental schools in our market significantly less than previous levels, a significant number of retirement age doctors will not find buyers to sustain their practices into another generation. Doctors whose revenue is less than $500,000 often find positioning their practices for a merger into another may prove to be the best exit strategy. We have assisted sellers in ten of these in the last five years and have acquired enough data to establish some solid trends contributing to the marketability and successful transitioning of these practices.

Geography will matter: Common sense suggests that the closer the office is to the old location, the more likely it is that patients will visit the new doctor.

Fees and Insurance compatibility: The Buyer needs to review fees and make sure they are relatively close to those in their office. Also, in today’s world, if you do not accept the patient’s insurance, they may go elsewhere.

Letter to patients: The announcement of the Seller’s plans, the introduction of the new doctor and the advisement to the patients as to the custody of their records will go a long way in “laying the sword upon the shoulder” of the new owner.

Retaining staff people: It is no secret that many patients may have more connection with the office manager, assistant or hygienist than they do the doctor and having one or more come to the new office has a powerful effect on patient retention.

Do the math. Even if you score poorly on the previous points, these deals are usually good for all of the parties. While we find that traditional wisdom suggests that 85-90% of patients may be retained by the new owner in a traditional transition, mergers such as these bring a lot of variables and that may not happen. Surprisingly, they can be very successful for the buyer even if a much lower percentage make the switch. While we’re often asked how much a patient record should sell for, the better question might be how much additional revenue the buyer can expect as a result of the transaction. Annual collections of the target practice, a realistic patient count, the production capacity and overhead of the receiver practice along with comparable sales data such as we have accumulated can show just how quickly the payback will occur and what the long-term benefit to the deal will be to a practice.

I’ll let you in on a secret; once someone does this and works through the process, they are anxious to do it again as they realize there is no cheaper or faster way to build up a practice.