Written by William Adams, DDS Friday, 30 April 2004 19:00
How many times have I heard the retiring doctor say, “When I sell my practice, how long do I need to stay with the practice in order to have a successful transfer of my patient base?”
TRANSFERRING PATIENT LOYALTY
Unfortunately, many purchasing doctors are not privy to the relationship the selling doctor has with the staff. My experience in the field of transferring patient loyalty from one doctor to another has shown that staff/dentist relationships, patient/dentist relationships, and the philosophy of practice directly determine the percentage of patients who will continue to remain with the practice after the sale. Unfortunately, these factors do not show up in the traditional Proforma, patient charts, equipment inventory, and other measurable commodities the selling dentist reveals to the purchasing dentist. It is important to realize that the staff usually understands the subtle and not-so-subtle components that have created and contribute to the overall unique success of the transferring practice.
FINANCIAL AND BENEFITS CHANGES
Another area to consider, and one that is frequently left to the last minute, is the impact of the change for the staff in its present and hard-earned financial and benefits packages. The selling doctor’s employees often ask me how the new employer will handle retirement plans, office schedule and salary issues, annual reviews, and other compensation arrangements. My more successful clients face this issue head on when informing the staff of the expected sale. Introducing the new doctor to the staff as soon as possible following the sale is paramount for the following reasons:
(1) The staff needs to get to know the new doctor to ensure a successful introduction to the patients. Many patients will ask the employees, “What is Dr. New Like?” Does Dr. New have any children? Where does Dr. New live? Where is Dr. New from?” Patients seldom ask if he has any specialty training or where he graduated from dental school.
(2) If Dr. New is introduced early in the process, most employees would rather work for someone they know than begin to look for another job. Most people enjoy change in the abstract, but when it comes down to even adjusting the days worked, I prefer not to change. Many employees will need to adjust personal schedules to accommodate the purchasing doctor’s schedule. However, there is usually more stress and change when searching for other employment opportunities.
(3) It gives the staff an opportunity to discuss its retirement, insurance, or medical reimbursement plans, salary, and bonus plans. I encourage every purchasing doctor not to adjust or change any of the employee’s benefits. Of course, it is imperative for employees to understand that when a business sells and the new owner begins, all contracts and agreements with the employees of that business are renegotiated. Never assume anything will remain the same.
Collections that occur at the front desk and the accounts receivable (A/R) will have to be handled differently, too. This is another negotiated agreement between the new owner and exiting doctor. Changes will need to be addressed in the first staff meeting. If the A/R are purchased by the buyer, then it need not be addressed at all because all money collected goes into the newly created bank account. If the A/R are not purchased, then the front desk or receptionist/bookkeeper simply deposits money into the selling doctor’s old bank account for procedures performed prior to the sale. If the procedure was performed following the sale, then the collected money is deposited into the newly created bank account.
The topic of practice transition is particularly pertinent in view of demographic changes that are taking place. As part of the dental profession, it is important that dentists and staff prepare for these changes. A study done by the American Association of Dental Schools and published in the year 2000 predicted that the ratio of patients to dentists will drastically change by the year 2014. One of the most astonishing discoveries of the study showed that in 1998, we had almost 1,000 more dentists entering the work force than were leaving. In the year 2014, we will have approximately 1000 more dentists leaving the work force than entering. This fact alone clearly will change the manner in which dentistry is currently delivered.
ENSURING A SMOOTH TRANSITION
The transition of a dental practice is often a frightening experience for all involved. The doctors are not certain they made the correct decision, and staff members are concerned about how this new transition will impact them and their daily routine.
Dr. Adams is a graduate of Emory University School of Dentistry and is CEO of Southeast Transitions, which provides services in practice valuation, practice sale, candidate location, and as an associate to buy-in agreements, practice merger agreements, practice asset sale agreements, and negotiation/mediation /practice management. He was a private practitioner in Atlanta for 23 years, where he worked 2 years as an associate, 8 years in a partnership, 13 years as sole owner, and as a host for 3 different associates. He is a member of the Institute of Business Appraisers, Practice Valuation Study Club, and Practice Management Consultants Association. He is a fellow of the Academy of General Dentistry, an alumnus of the Pankey Institute, and a member of the American Dental Association, Georgia Dental Association, Northwestern District Dental Society, and Hinman Dental Society.
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