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One and Done by Dr. Adrienne M. Hedrick

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Categories: Practice Transitions;
One and Done 

As this dentist discovered, sometimes owning multiple practices is not the best answer

by Dr. Adrienne M. Hedrick

Are you considering buying a second dental practice? Maybe you’ve heard stories about successful dentists launching an additional one, or you may be familiar with some of the “good reasons” to do so, including:
  • Dental education companies speaking highly of dentists who’ve successfully purchased multiple practices.
  • The belief that running multiple practices is as easy as running one and could be just as successful.
  • The expectation that additional practices would be “cash cows” that generate profits from the start.
I wanted to be one of those dentists I’d heard about, and 10 years after purchasing my first dental practice in 2008, I bought two additional ones, believing that three must be better than one. But my experience wasn’t quite what I’d imagined it would be: Both offices had major issues I wasn’t aware of until after I bought them, and they began to lose more than $10,000 per month. I closed one practice after just six months and the other after 2½ years.

Serious issues to keep in mind

If you have the same aspirations I had and are thinking about launching a second practice, you may want to consider the following key issues first. They’re what I experienced and are the primary reasons behind my eventual decision to close my two practices.


The difficulties of hiring an associate dentist. When you hire an associate dentist for your second practice, you put both your reputation and profits at risk.

It’s challenging to find an associate dentist who’s the right fit. They may be weak at diagnosing issues, inadequate at securing acceptance for treatment plans, perform sloppy work, communicate poorly, not get along with colleagues, and more. You can only surmise so much during the interview process, and by the time you find out your associate dentist was a poor choice, it may be too difficult and too costly to make a change.

As for profits, remember that you first must pay an associate dentist 30% commission plus the cost of hourly employee wages, rent and supplies.


The challenges of insurance credentialing. If you terminate an associate dentist or they resign, a replacement will be costly because you need to recredential the new hire with insurance. Associate dentists often won’t be credentialed with all your insurance companies, and it’s a lengthy and expensive process to qualify them. It can take up to six months and will put you out of network during that time. You won’t be listed on insurance company websites, which means fewer new patients, the inability to negotiate fees and lost revenue. The upend will also cause current patients to leave, resulting in additional lost revenue.

The process will also confuse patients, because you’ll be unable to provide them with accurate quotes because you won’t know how much their insurance will cover. And if you get your dentist credentialed and they quit or are terminated? You’ll have to begin at square one, which means more time wasted and more lost revenue.


Labor shortages. Hiring is already difficult with the current labor shortage, and in the dental industry, finding available dental hygienists is particularly challenging. I’m based in Denver, and just a few years back, you could post an ad here for a hygienist and attract 10 qualified candidates in just the first few weeks. Nowadays, you’re lucky to find one applicant in the first month of advertising, and you could be without a hygienist for months. And when you do fi nd an applicant, it’s now not uncommon for them to request rates as high as $55 per hour, putting an even greater dent into any hopes of achieving a profit.


Distraction from your primary office. The second office can’t run itself, and it’s difficult to positively affect its culture and atmosphere without being there full time. The result is often losing good employees and constantly needing to find and hire their replacements.

You also may discover that your associate dentist isn’t as strong a leader as you are and may lack motivation. To compensate, you’ll have to put a lot of effort into this additional practice and reduce the amount you put into your current one. Either way, a weak office culture will likely cause a revolving door of employees bidding farewell.

And it’s not just a weak office culture that could cause employees to leave. Many current employees will either quit or be terminated upon your purchase of a second practice, which means you’ll need to replace at least most of them in the first year. These mass exoduses could be because certain employees may be unsuitable under new management or that employees follow suit when others leave, especially if those who leave are good workers. It’s a common and unfortunate consequence that could overshadow the many other drawbacks of a second practice.1


High risk, low reward in additional dental practices. Unless a dentist is selling their practice because they’re retiring, the justification usually isn’t a satisfactory one and makes the mere act of buying a second practice more risk than reward. There are also the significant requirements of borrowing a large sum of money and usually signing a long-term lease. If your business doesn’t perform well and you have trouble selling it, you may still have to fulfill the remaining lease. Also, your practice’s physical location may make it harder to sell if it’s not in a prime area.

The potential difficulties in selling an additional practice shouldn’t be underestimated. Although it used to be feasible to sell one valued at less than $800K, that’s no longer the case. Dental service organizations want to purchase only established practices with high revenue; they’re typically not looking to purchase practices valued at less than $800K anymore. To make matters worse, individual dentists are finding it hard to obtain bank loans for practices making less than $800,000 per year. The bottom line: If your second practice fails, you may not even be able to sell it.

 Closing considerations

If I ever tried to go down the same path again, I would ensure that the associate dentist had an ownership stake in the practice so they’d be more motivated to perform well and less likely to leave. I would also consider location more carefully. Moving is costly, so my practice would have to be in a neighborhood with a high demand for my services. Lastly, I would need to have the time to put into an additional practice, to be able to fill in when needed and make sure it’s running smoothly.

The potential benefits of a second dental practice hold a considerable amount of appeal! They certainly did for me, and it’s natural to think we can apply our knowledge and skills to one and make it just as successful as the first. But my own experience taught me that 100% of my focus should have been on growing and nurturing my existing practice, not spreading myself thin maintaining multiple ones.

It’s wise to regard anyone who tells you that these other practices can “run themselves” with skepticism. Although my advice is based solely on my own experiences, I know many dentists who have invested in a second practice only to find their time and finances also drained. And just like me, many of them either sold or closed them.

Your outcome may turn out differently than mine did, but since refocusing entirely on my original practice, I’ve grown it more successfully and profitably, and I could not be more thankful.

Reference
1. Ro, C. ‘Turnover contagion’: The domino effect of one resignation. BBC. September 16, 2021.

Author Bio
Adrienne_Hedrick Dr. Adrienne M. Hedrick is an owner-dentist at Longmont Dental Loft in Colorado. Hedrick completed her undergraduate studies at Purdue University and her dental degree at Indiana University School of Dentistry. Professional memberships include the American Dental Association, the Colorado Dental Association, Boulder-Broomfield County Dental Society, and the Spear Education Faculty Club. She lives in Colorado with her husband and their children.
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