Practices come in all shapes and sizes. Some are collecting over $1 million per year with 50% overhead. Others are collecting $600,000 per year with 65% overhead. These both appear to be decent practices. Yet, there are other practices collecting $300,000 to $400,000 with 70% overhead. The first two practices are definitely practices to consider buying, but is the third practice one that you should disregard?
We attempt to coach sellers to sell their practices when they are at their peak productivity and profitability. However, there are a number of doctors, over half, who decide to hold onto their practices while they slow down. They start getting tired, they refer out more procedures, stop marketing and refer more work out to specialists. I have seen practices collecting $350,000 with 600 to 700 active patients and hygiene production at 40% of total production. Analyzing these types of practices to see if they are worthwhile acquisitions or merger prospects requires looking at their procedures report, their production by provider report and profit and loss statement. Turning these practices around and making them more productive may be as simple as stop referring out endo and other procedures that you may be able to do, start marketing and start diagnosing treatment. If the location is good and the numbers look like they can be turned around, you should not disregard these practices for an acquisition or a merger.