When you’re ready to own your own practice, there’s two options you may be considering; building a new practice or buying an existing one. Let’s focus on things to review for the potential purchase of an existing practice.
One of the main lures to obtaining an existing practice isto also obtain the existing client base. Study this practice’s patient records carefully – over the last five years has the number of patients increased, decreased, or stayed relatively the same? What percentage of the patients has demonstrated practice loyalty by consistently returning to the practice? What is the age demographic of the patients?
Enlist a dental equipment service professional to perform an audit on the existing dental equipment. The service professional should be able to tell you how old the equipment is, whether or not any manufacturer warranties are still valid, whether or not regular preventative maintenance has been performed, and estimate how long the equipment is expected to last. With technology becoming a large component of dental treatment, a piece of equipment only five years old can be a dinosaur. Gathering this information will allow you to budget for expected replacement and maintenance costs, if necessary.
Floor Plan, Design& Workflow
Walk through the office multiple times, on multiple occasions. Is the floor plan conducive to you personal workflow? This can be the most important part of buying an existing process, as it is not inexpensive to drastically alter the practice workflow. Take note of the design and décor. Replacing artwork, light fixtures, furniture, paint and flooring can be a cost effective way to update the office. If you notice water stains, sloping floors, broken cabinetry or cracks in the walls, these can be indicative of costly repairs and updates. Take advantage of a building study performed by a reputable construction company.
Be wary of practices that are listed for low sale prices – it could be because it’s not generating enough revenue to stay in business, or just that the doctor is eager to retire. If the practice is doing well, you maybe asked to pay a premium price, for the convenience of having everything setup. Add to the purchase price any equipment that needs to replaced, and any updates that need to be made to the physical office. Compare this total cost to the cost of building a new practice, and ask yourself if the difference is worth purchasing the client base.
Don’t hesitate to contact industry professionals along the way – many evaluative services are often free of charge, and don’t require any commitment.