At some point in his or her career, every dentist will see the end of private practice approaching. No matter what the timing or the reason, there are many things the dentist can do to make the transition successful for himself or herself, the incoming dentist, and most importantly, for the patients. Here are some important steps to consider on the road to retirement.
Step one. Start with a sound financial plan way in advance of retirement.
A new dentist may be mired in student debt and practice purchase expenses, but it is still important to put aside a small amount of money toward retirement on a monthly basis to simplify the financial pressures of leaving practice in the future. One of the most traumatic issues confronting a dentist in transition is the need to continue to generate income. It becomes even more traumatic if he or she wants to maintain his or her current lifestyle. The transitioning dentist should set up a meeting with a financial expert to review financial goals and objectives and set up a timetable for the future.
Step two. Plan for life after dentistry.
Have you ever connected with a former colleague who seems lost in retirement? Maybe his or her spouse is not happy with so much “togetherness.” His or her dental friends are either still working or off on exotic trips. Boredom can lead to bad habits, deteriorating health and less interest in exploring new opportunities to thrive. Meet with your family before you begin to transition to identify what your needs as a family will be in the future. Identify alternatives to dentistry that interest you. Set up a budget that gives you the flexibility to expand your horizons. You might even realize that what you really enjoy is dentistry.
Step three. Make your practice as presentable as possible.
If you were selling your home, your first job would be to upgrade the property. It is the same with a practice. Take a jaundiced look at the facility. Does it still reflect the quality of your care? From the surrounding businesses to the building itself, does it look modern and welcoming? If not, are there changes that you or the landlord can make that will enhance the curb appeal of the facility? When you enter the waiting room, does it seem fresh and comfortable? Are the operatories state of the art, clean, and inviting? Just as you would with your home, consider staging the practice to bring its best features forward. State-of-the-art does not mean everything new under the sun, but it does mean that everything looks modern and works.
Step four. Realize the team is one of the most valuable parts of your practice.
It is often said that replacing the dentist in a practice is easy, but changing the front-desk person is a nightmare. Most practices find that patients have a strong bond with the members of the team. When planning a transition to a new dentist, it is imperative that the team stays in the practice for at least six months after the transfer. Six months gives the new dentist an opportunity to meet most of the patients as they rotate through a recall cycle. If the practice does not have a high number of patients in regular recall, the value of the practice will plummet as the buyer realizes that he or she will not be able to create a physical bond with each patient. No matter what, the bond of long-standing employees with patients is valuable as a magnet to keep them connected to the practice even as the ownership changes.
Step five. The plan for sale must offer ease of transfer.
If you list the practice for sale with a broker, he or she can give you an estimate of the value of the practice and connect you with potential buyers. You choose the broker, the finances are worked out and the practice changes hands on a specific day. If well-executed, it can work for everyone. If not, the practice can disintegrate quickly as team members and patients find the exchange uncomfortable. An alternative is to bring in an associate and transfer the practice over time with the team. Finding a compatible associate can be difficult. The better the owner understands his or her practice, what it offers, and what it stands for the better the chance of finding compatibility. With a good match, patients and staff members find the transfer comfortable and positive.
Here are a few things to remember:
- If the associate is hired with the plan of taking over the practice at a future time, it is important to set the value of the practice as soon as the compatibility issues are resolved. The practice will grow with a well-chosen associate who is willing to promote the practice and attract new patients. The incentive to build the practice may not be there if the associate realizes that his or her efforts are just making the practice more expensive to purchase. If the value is set early on, the new dentist can build away knowing that his efforts will be rewarded at the time of purchase. At the same time the senior dentist receives the benefit of maintaining the value of the practice even as he slows down himself.
- An associate may buy into the practice, either as a partner or over time. In either case it is important for the senior dentist to realize that it is difficult for the part owner to feel any sense of ownership unless the senior dentist goes out of his or her way to establish that ownership with the patients and the team members. If the associate will be purchasing part of the practice now and the rest later, it is important that there be a specific future date for the remainder of the transaction to take place so that the new owner can make plans for the future.
In each one of these scenarios the success will be closely connected to the details of the transfer. The more that the transitioning dentist can be prepared in advance of the transaction, the better the buyer and seller can concentrate on the surprises that arise. For the patients’ sake, the smoother the transfer of interest in the practice, the better the chance that they will continue to receive quality care.
Dr. van Dyk practices general dentistry in San Pablo, CA, and teaches in the department of Dental Practice at the Arthur A. Dugoni School of Dentistry. He has been lecturing on practice management issues since 1985. He served on the ADA Council on Dental Practice and was instrumental in the development of the ADA Success Seminar Series that has been giving dental students real life information on the
business of dental practice for over 30 years. He can be reached at firstname.lastname@example.org or at BVDDDS.com.