#4 – According to google searches, the median income of a Canadian dentist is $120K per year – Saskatchewan is among the top of the median income
Now the challenges of owning in Saskatchewan
#1 – Lack of forward planning has resulted in a labour shortage in Western Canada. The result is higher wages and lower production as there are not enough people to fill the jobs. The average Dental Assistant wage in Saskatoon is $25 an hour compared to the national average of $21 an hour
#2 – We continue to graduate large classes of dentists that are now staying in Saskatchewan while fewer owners are retiring resulting in a dilution of patient base. It is also increase the competition to buy clinics, and more specifically the goodwill value.
#3 – The fee guide, particularly for preventive is low compared to actual costs of performing the procedures. The net result is an average of 30% of gross revenue at a low profit margin which makes it more difficult to provide a high quality service. The result is business trying to find ways to reduce costs to provide the service. Reducing the costs of materials used to perform the procedures. Reduce times and availability. Increased aggressiveness to recall appoint to maintain overhead.
The fee guide is a suggested fee guide, and yet anyone who varies from the fee guide gets challenged in the public perception without having an opportunity to publicly promote the reasons why they charge more or less (see point #6 below, marketing)
-is it possible that more aggressive treatment is recommended to compensate for the higher overhead in preventive?
#4 – The mixed demographics. We have an underserved population that pays an even lower fee guide, yet has a higher demand for the services. Can you provide the same quality of care for all people with a reduced fee? Will you encourage progress and public health with different fee guides for the same services?
#5 – Business valuations. It’s easy to evaluate real estate. There is enough volume as well as buyers and sellers to balance a market. Business is different. An intimate understanding of the business, the opportunity and the earnings is vital to properly compare. There are few evaluators that actually serve the Saskatchewan market – the net result is like comparing real estate in Saskatoon to Toronto.
#6 – Marketing. It’s difficult to make investments in a business without being able to market those benefits to the public. If you take time to improve your education, perhaps spending 2 or 3X the amount required, you are not allowed to make it public. How is that a benefit to the public? Continual improvement and investments can only be marketed “internally”. If you provide a procedure or technique that uses technologically proven superior results, you may have challenges to benefit the public with marketing this procedure.
What will change the valuations of clinics?
The killer of most business and rising valuations….perception of opportunity.
-If we continue to limit the ability to improve our business, the opportunity becomes less attractive.
-Interest rates. If it costs too much to get capitalized, and there are safer investments offering the same or better returns.
-Monopolization. If the price of a business is dictated by a shrinking buyers base.
-Affordability. When its riskier to own than it is to be an employee.
-Generation values. Will a new generation value working as many hours to pay down the debt?
Considering that Saskatchewan Dental Clinics have access to a larger more capitalized demographic – the values we are seeing today will likely continue. We have finally started to address the shortage of dental assistants with a new program at the U of S recently. The fee guide is still a challenge – but the challenge to me is to find ways to become more efficient. Make more and better use of the large fixed costs (rent and equipment) by extending the time it is used rather than spending more on larger rent and more equipment….
TIMEfactor your investments and Saskatchewan Dental Clinics are among the most under rated clinics and business opportunities in Canada!