Dentistry has changed. Over the last decade, the influence of corporate dentistry has been unmistakable. It has changed the way that those of us in private practice look at our businesses and the way we serve our patients. Many of us have even been so bold as to expand our practices through mergers and acquisitions to keep pace with the dental service organizations (DSOs) out there.
There are advantages to this model, including capitalizing on economies of scale. By doing this, DSOs have been able to negotiate better pricing on consumables, lab expenses, and even insurance reimbursements when compared to a solo practitioner.
The need to compete has pushed entrepreneurial dentists into the “If you can’t beat them, join them” mentality. Unfortunately for us, we don’t have the deep pockets that some of these groups have to absorb a bad bet, and the repercussions can be devastating.
Lessons Learned the Hard Way
I have three practice locations. In one of those locations, I have merged in two other practices. Through this process, I have learned a lot about what works and what doesn’t.
The process of practice acquisition is not all rainbows and sunshine. While I am absolutely an advocate of dental practices and patient care being led and driven by practitioners and not by corporations, you must navigate this minefield carefully. Here are my top 10 keys to successfully navigating this process.
First, don’t do it alone. Establish a team of trusted advisors to help you through this process. That team should include a consultant/coach, attorney, CPA, financial planner, and key leadership people in your existing organization.
Second, make sure your current house is in order. Dysfunction breads dysfunction. If you don’t have your current practice running the way it should, it makes no sense to pursue merger and acquisition opportunities, as it will only create more problems.
Third, know your model. There are many different types of practices out there. If you acquire one that is significantly different than your practice, it will create friction and won’t be a smooth transition. Be honest with yourself and what your expertise is, and have a clear vision of what kind of practice fits you best.
Fourth, spread the word. Once you are ready, let the right people know that you are in the market. Talk to brokers, vendors, and other dentists and let them know what you are looking for. Once you throw it out there, you may be surprised at what materializes.
Fifth, take your time. I’m not saying you shouldn’t take the first opportunity that comes your way, but be wary since you have no other reference points to compare it to. There are no redos in this world, so take your time.
Sixth, if it doesn’t feel right, it probably isn’t. Deep dive into any opportunities with your team, cross all your t’s, and dot all the i’s. Don’t take anything at face value. And at the end of the day, trust your instincts. Sometimes the best deals are the ones you don’t make.
Seventh, when you are in, go all in. Commit yourself to the process. Remember that beyond the patients there is a team of dedicated professionals that are part of the new practice. You must be committed to them and always put people before profits.
Eighth, acquire with an earn-out when possible. The bank lending world has changed thanks to the pandemic, and it has become more and more difficult to secure financing. If structured properly, an earn-out model can create a true win-win situation.
For the buyer, it creates a situation where the acquisition is being done with revenue that is generated from the practice. For the seller, it creates a more tax friendly situation that can in many cases result in a higher payout.
Ninth, resist the urge to change. Inevitably, there are going to be things you want to change with the new practice and associated team members. While it’s important they understand your vision and practice culture, changes should be implemented slowly. Slow and steady will win the race as you morph the new organization into your own.
Finally, trust your process. I’ve had the experience of an acquisition not going as well as anticipated. I have learned not to panic but to focus my energy on the processes that I have successfully used. Be open and honest with the team and get all hands on deck. It may take longer than you wanted, but trust your process.
I hope these keys for success help you as much as they have helped me over the years. Dentistry has changed. But as practitioners, ultimately, we are the ones who will steer this profession. We have seen the good that has come from this change, but we have also seen the bad.
The future is bright. let’s move forward with optimism and professional collaboration so dentistry remains the incredible profession that it is.
Dr. Field is a respected leader and lecturer in the field of cosmetic and implant dentistry. His education, experience, and focus on patient care ensure client comfort and optimal clinical outcomes with a wide range of cosmetic dental services and procedures, including smile makeover, implant reconstruction, full mouth reconstruction, Invisalign, and whitening treatment. His dental education and experience are both vast and specialized, spanning two dedicated decades. He earned a BS in physiology from Brigham Young University and continued his studies at the University of Southern California School of Dentistry, where he is a faculty member. Upon graduation from USC, he returned home to Los Altos and is the owner of the Peninsula Center of Cosmetic Dentistry. He is dedicated to providing the highest quality care that focuses on the patient experience, meticulously and individually designed for each patient.