A dental practice transition occurs when an existing practice takes on a new professional who brings their patients onboard, or when a dental practice owner decides to sell their practice.
Having a smooth dental practice transition is crucial for everyone involved. Nonetheless, no matter how much planning you put into it, a dental practice transition can be challenging.
Read on to discover more about these transitions and how to facilitate a successful dental practice transition.
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Types of Dental Practice Transitions
You can categorize dental practice transitions in a number of ways, depending on which methods the parties use and what the long-term goals are. Here’s what you should know about six different types of dental practice transitions.
Buy-ins occur when an outside practitioner buys into an existing practice by paying a defined percentage of ownership. In some cases, the contract may have a clause allowing them to purchase the rest of the practice once the initial owner steps back or retires.
Buy-Outs or Full Purchase
Buy-outs are similar to buy-ins. Instead of an outside practitioner purchasing a percentage of ownership, they purchase the entire practice outright for a negotiated price. In some cases, an existing partner will buy-out their current partner. After a buy-out, the seller may stay for a short period (e.g., a few months) to help ease the transition.
A merger is when two or more dental practices become one practice with equal or varied ownership among all partners. The ownership interest is usually based on the value of the individual practices being merged. Once the partners agree on responsibilities and salaries, there may be a longer transition that includes a buy-out option if one partner wants to leave the merger.
When a practice associate makes several payments over a period to culminate in the transfer of ownership, that’s an associate buy-in. This gives the associate time to assess the compatibility of ownership and is a useful long-term strategy for a smooth transition.
An affiliate transition is what happens when a party transitions their practice to a larger entity or group. The purpose of an affiliate transition is to slowly transition over the practice and give clinical control to the buyer over a longer period before the seller completely exits the practice.
Roll-up transitions involve multiple dental practice acquisitions over time. The goal is to combine these practices eventually into one larger entity. After the larger practice acquires each small practice, it needs a new transition period.
[Related: The Importance of Healthcare Accounting]
Dental Practice Transition Checklists
If you’re in the market to purchase an existing dental practice, here are some steps you should focus on during the process:
- Work with an expert to find a location and a list of the most viable practices to purchase.
- Review a potential practice’s treatment philosophies, case acceptances and values to ensure they align with yours.
- See if you mesh well with its office management and patient flow policies.
- Review its billing and collection procedures.
- Check out a practice’s billing procedures, scheduling systems and dental practice management software. Make note of anything outdated or in conflict with your idea of running a practice.
- Tour the office and all associated facilities. Make sure to look at the equipment and note what will come with the sale or transition.
- Review all existing staffs’ compensation and salaries.
- Look over an existing office’s lease and terms.
If you’re looking to sell your practice or potentially a portion of your practice, consider doing the following:
- Focus on spreading the word that you want to sell to existing practices and potential buyers. Do so in person, via email and on social media.
- Consider throwing an open house. Invite colleagues, local businesses and influencers.
- Work with an expert to evaluate all incoming offers for your practice. Make sure you’re valuing your practice fairly.
- Notify your existing patients and staff of the potential transition.
Whether you’re buying or selling, make sure you include every detail and all specifics involving the transition in writing before you begin the transition process.
One of the first and most important parts of practice transitions is to inform your patients. Both buyers and sellers must work together to ensure a smooth transition and must be open to patients’ feedback.
Tell any patient who comes in for an appointment about the transition, and use active email lists to send a notification of the transition. Include details about the transition and who will come in to take your place. If you have a physical mailing list, consider mailing postcards to each patient in your database to relay the same information.
On occasion a seller will hold an event to say goodbye to patients and introduce the new dentist. It can be a touching and personal way to show patients you care, especially those who have been with your practice for a long time.
Work with Martin, Bircher, Thompson, PC
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