In the first part of this series, dental attorney Joseph D. Jordan, JD, covered the first two legal considerations for stepping into practice ownership: practicing due diligence and business entity formation. In this concluding part, he covers contract negotiations, closing on the practice, and running with ownership.
Negotiating the deal and the contracts that support the deal can be a long and trying portion of buying a practice. Rely on your attorney for this portion.
Do: Engage an attorney or firm with knowledge in the dental field. You will save time and money.
Don't: Try to negotiate the terms of the deal and the contracts yourself. One of the biggest reasons deals fall apart is too much interaction between the buyer and the seller before purchasing the practice. Although this may seem counterintuitive, very little actual interaction should take place between the two parties. All negotiations, requests, and other deal points should be handled by the attorneys or the practice brokers. This will help maintain a good relationship between all parties involved.
Do: Request all your deal points upfront. Requesting multiple changes over a long period of time only delays the deal and serves to agitate the other party.
Don't: Sign anything until your advisors have given you the all clear. Once signed, you have very little recourse if something was omitted or incorrect.
Closing on the practice
Closing on a dental practice is similar to closing on a house. The day of closing will be busy, so expect some issues.
Do: Set up a call with your advisors before the closing date to make sure you understand all of the documents you will be signing. The closing table is not the best place to say you need to "glance over the documents."
Don't: Expect to sit down at the table with the seller and pass a mountain of paper back and forth. In today's world, a lot of closings are done via email, fax, and scanning. More often than not, you will be emailed the closing documents, which you will print, sign, and then fax or email back to your advisor to be sent to the other party. There is nothing wrong with all gathering around the table to sign -- it just doesn't happen that often.
Do: Feel free to call your attorney if you see anything out of the ordinary. Remember, once you sign, it is a different ball game.
Don't: Delay closing unless absolutely necessary. Remember, closing day is a big day for you but also for the seller. A lot has gone into setting up closing, so, unless you absolutely have to delay, try to stick with the agreed on closing date.
Running with ownership
Once you have closed on the practice, congratulations, you are the owner. The buck stops with you.
Do: Keep the existing staff on board. There may be times when you need to let someone go or simply not hire staff members when you take over, but for the most part keeping the existing staff in place is a great idea for you. There is a lot of patient goodwill tied up in the staff, and you need the staff to help introduce you to the patients and let the patients know they are in good hands.
Don't: Talk negatively about the retired seller to the patients. These patients have seen the same doctor for many years and are probably quite fond of the seller. Telling patients that the seller did subpar dentistry or suggesting they need a lot of redo work will generally backfire on you. If the patients legitimately need a high amount of redos or new treatment, invest in an intraoral camera so you can make the patient part of the discovery process, which creates trust.
Do: Make sure you are fully covered from an insurance standpoint. Although this seems self-explanatory, many doctors are underinsured. You will need malpractice, overhead, disability, and general liability insurance -- just to name a few. Rely on your insurance representative for this.
Don't: Bill out any work under the seller's National Provider Identifier (NPI) number, preferred provider organization (PPO) provider number, or Medicaid number. Submitting claims under the seller provider number to an insurance provider or Medicaid can be fraudulent. Make sure that you have applied for your own provider number with any insurance the practice takes. Keep in mind that credentialing can take 60 to 90 days.
Practice ownership is the ultimate goal for many dentists. It is a very achievable goal and rewards you every day. Being proactive in the process and gathering your team of knowledgeable advisors will save you time, heartache, and money in the long run.
Do: Buy a practice and enjoy the fruits of your labors!
Joseph D. Jordan, JD, has been a dental exclusive attorney for 11 years and is the owner and founder of Jordan Law Group. He offers services to the dental industry in the areas of dental practice acquisitions, associateship planning and placement, and lease review and negotiations.
Disclaimer: Nothing contained in this column is intended as legal advice. There are variations in laws among the states. This column scratches the surface on many legal issues that could call for a chapter unto themselves.
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.