The Practice Buyer's Corner - Random Musings from the Buy-Side

The purpose of this blog is to share current, real world, experiences on the topics of practice valuation, practice transition, retirement planning, and building equity value - over time - in your dental practice.

Blog By:
seanepp

Optimizing the staffing model for any practice always seems to be a work-in-progress.  
Dentistry is certainly not getting any easier, and top line pressures only exacerbate the need to identify pockets of opportunity in practice overhead.

You can only wring out so many efficiencies in supply and lab costs.  Rent is usually an immovable object.  What’s left?  The team.  Not their absolute costs, but rather the available efficiencies.

It probably goes without saying, but our current healthcare ecosystem almost requires that licensed healthcare professionals are working at or near the top of their licenses to drive sustainable outcomes and results.

One of the ongoing themes from the COVID era was the rise and persistence of an increasingly fractional workforce across all roles - from the dentists to the front of the house.

While this often makes an abundance of sense to the individual staff members, it can present a host of challenges that don’t automatically come to front of mind:

- The baseline effects of turnover are exacerbated simply because of the high(er) total headcount and turnover;

 - The increased rates of turnover can promote and accelerate wage creep as replacement hires are rarely at the same or lower costs;

- If you offer benefits - major medical in particular - their impactfulness with your staff could be rendered moot and not promote the tenure and retention they were designed to address;

- “Clock arbitrage” risk - i.e. clocking in/out too early or too late - expands by default

- Beyond all else, one of the largest risks is the increased likelihood that quality control and patient satisfaction could be adversely impacted, resulting in a potential compromise of the practice’s long-term value
Extremely lean practices are generally good for exactly one party - the current owner.  These same practices typically introduce risks - not opportunities - for the next owners which merit careful consideration.

Dental practices that prioritize full-time staff - where supported by patient load - tend to have the most stable and sustainable results.  This usually translates to maximizing practice value upon sale or transition.