One of the most frequently asked questions I receive from prospective buyers is my opinion (or perhaps assurance) on whether or not the current patients and staff will stay with the practice after the sale. Since the perceptions and motivations of these two groups is so different, let’s examine each one individually and determine what might be reasonable to expect.
Timothy Brown, the President and CEO of the largest dental brokerage company in Canada, the ROI Corporation, spoke at the recent ADS meeting in Denver. In discussing the issue of post-sale retention, he pointed out that patients come to a particular office for five reasons. In no particular order, those are:
- Reputation and skill of the Doctor
- Accessible and familiar Location
- Relationships with the Staff
- Office Policies & Procedures (i.e. insurance & financial arrangements)
- Established home of the patient’s Records
In the event of a sale and well-managed transition, how many of those five things will change? The answer should be one, the doctor. If the patients can return to the same location, see the familiar faces of the staff, know that their insurance will still be accepted and that their records are in place, they will agree in overwhelming numbers to see the new doctor. Conversely, those patients that would choose to leave the practice will generally only know the location of any new practice they choose to visit. The other four factors will change. The vast majority of patients will be willing to meet the new doctor and work on developing an ongoing relationship. We believe the one-year retention rate of existing patients will be in the 85-90% range. Some may not like the new doctor (and vice-versa) and will eventually move on but if the practice has a good history of attracting new patients, the buyer will never notice any change in the active patient count.
Granted, any mature practice will have patients that have moved away from the market area of that practice but continue to make an occasional pilgrimage back for routine care. For those few patients, the need to change location may override the other four factors.
Regarding the staff, I can tell you that (most of the time) most of the staff stays long enough to accomplish a successful transition. I think it is safe to say that people working in a dental office are there because they want income and benefits. If it is made clear that those things will stay in place after the closing, most employees will “give the new doctor a chance.” Since the close working relationships in a dental practice demand getting the right people together to suit the doctor’s style and philosophy, it is possible that some attrition may eventually occur. If handled properly, this will have minimal effect on the practice. If you are a seller or potential seller, I strongly suggest you have a conversation with your broker about when and how to discuss a potential transition. Experience counts here as what you think is the “right” way to handle this may be proven not be. Since each office is unique, there is no hard and fast right answer, and given that a significant factor in the value of goodwill is “a trained and available workforce,” this needs to be handled very carefully.
All of this amounts to a long way of saying that if handled properly, patients and staff will stay. Patients need treatment, staff needs employment, and buyers need them both. It should work well for everyone.
Steve Wolff, DDS
UMKC Class of ‘77