So, you've been thinking about retirement and reflecting on all you've done to build a fantastic practice. Is it time to bring in an associate? Perhaps sell the practice to a competitor or a corporate chain? Maybe even consider bringing your practice to a graceful end?
Many questions need to be considered as you determine which option suits you best.
1. Hiring an associate
Many doctors feel hopeless when they start interviewing a potential associate who may purchase the practice. It is challenging to emotionally disconnect from the business they have worked so hard to build and prepare it to become a sellable business. There is much concern about with whom and how to leave the patients and the dental team, as well as how to assess the actual value of the practice, including but not limited to the patient records, equipment, and building.
Many decisions need to be made in regard to an associate's salary. Do you hire the associate as an employee with a daily or hourly wage? Do you have a sweat-equity plan in place as the associate is compensated from a percentage of production or collections? Perhaps the associate buys in immediately, and you agree to stay for a certain amount of time before riding off into the sunset. The negotiations and possibilities are endless.
Unlike the nonencouragement old-school education approach most baby boomers received in dental school, millennials are told how wonderful and valuable they are to the dental community, sometimes skewing a realistic view of their financial worth prior to proving work ethic and commitment to a potential practice. Several dentists have expressed that this is one of the biggest barriers to obtaining the right associate fit.
2. Selling your practice
In the Midwest, a dentist is looking for a favorable exit plan, but he feels frustrated with what he thinks are the unreasonable upfront compensation requests from new dental graduates.
Dr. Howard practices near the Iowa/Minnesota boarder and stated, "In our area, new graduates are being told by their dental school-appointed financial advisors to ask for $150,000 to $200,000-plus as a starting annual salary (32-hour workweek) along with full insurance coverage, 401(k), vacation, and continuing education per diem."
"Twenty-nine years ago, my wife and I both worked 40-plus hours a week for several years to pay off my dental school student loans, while building a practice from scratch," he said. "It was our hard work that brought us to the point of considering bringing on an associate, so we can cut back on clinical days, but the gamble and price tag is too steep."
Dr. Howard is now looking toward getting his accounting and assets in order to sell to an existing practice of an experienced younger dentist a few miles down the road that desires more growth.
Dentists like the one interested in purchasing Dr. Howard's private practice are, in my experience, part of an evolving trend who either want to "fight the invasion of corporate dentistry" or create their own private practice chain for maximal financial potential and eventual sale. These forward-thinking dentists are focused on obtaining the optimal "dream team" style of dentistry and pride themselves in excelling with customer care and the latest patient treatment options.
For some existing practice owners, another option is the corporate or large group investor.
Corporate dentistry is not the big bad wolf for many sellers. With the average dentist practicing 35 years, some are simply tired and want the least amount of hassle as they end their careers. Corporate dental buyouts often offer consistent, proven transition plans and top-dollar price tags. Some dentists stay on with the new owners and enjoy employee status, while assisting with the transition.
3. Closing up shop
The last option for retirement is simply coasting to the finish line. It often begins by not accepting new patients and not proposing extensive treatment plans. Often, the dentist is doing "patch-work dentistry" and changing the practice hours to part time, while tentatively targeting a date to close up shop. ADA legal guidelines need to be adhered to if this is your plan. As always, consult your practice attorney and refer to the "Guide to Closing a Dental Practice" on the ADA website.
Whichever "break out" option you decide is the best fit for you, please seek out a reputable practice transitions consultant and legal counsel prior to any contract negotiations.
Corinne Jameson-Kuehl, RDH, has been involved in the dental field for more than 20 years as a private practice practitioner, business development manager, and dental staffing company founder and owner. She can be reached corinnejamesonkuehl.com.
The comments and observations expressed herein do not necessarily reflect the opinions of DrBicuspid.com, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.