Gary A. Sherman, CPA
July 12, 2016
I recently visited the Rutgers School of Dentistry website. I was impressed by the course offerings in endodontics, orthodontics, oral and maxillofacial surgery, and pediatric surgery, among other specialties. Yet, try as I might, I could not find any course work that showed dentists how to set up and run their practices.
The upshot is that many dentists struggle with management basics, such as how to grow their practices. In fact, it’s a lot simpler than what most practice management firms let on. Either you grow organically or through acquisition. I recommend going the organic route first. It’s less expensive and you will not have to give up any control of your practice or take on new debt.
One way to think about growing organically is to consider your fixed costs or overhead. You’re paying for your office space, lights, heat. a/c, equipment, insurance, etc., on a 24/365 basis. But are they being used that way? Expanding your service offerings, increasing hours (for example, by adding Saturday, early morning, or evening appointments), or adding new services adds limited variable cost while increasing revenue potential.
Look Yourself Up On Google
Do you turn to Google when you are considering whether to buy a new service or comparing service providers? So do patients. Does your dental practice show up quickly and easily in search results? If not, you may be missing out on winning new patients. And what about existing patients? What are they saying about you? Is this new word of mouth helping or hurting your growth prospects?
Get Web Savvy
If you are not web-savvy, it’s time to get up to speed. You can start today by hiring professionals to build a website for you. You need one that is well designed, has good content, and puts you in the best possible light. Ideally your site should encourage visitors to schedule an appointment with you. Consider adding or obtaining patient recommendations once the site goes live.
Use Social Media
Social media can provide you with an opportunity to distinguish yourself from competitors. Facebook and Twitter can help you to connect with patients and build a fan base. Plus, the more valuable content you publish on the web, the more likely you are to show up on the first page of search results.
Growth Through Acquisitions
Once you’ve exhausted organic growth options, it may be time to add associates or acquire other practices. In most cases, dentists go this route when they want to add locations. Initially dentists will open a second or third office and try to split their time between them. That route usually leads to burnout. It also raises a difficult question: do you continue seeing patients or go full time into managing a chain of dental offices.
Dental practice expansion options tend to follow one or more of these routes:
- Associate with the option to buy. Incentivizing a quality associate with an offer to buy into the practice.
- Buy into existing practice. You buy part of another practice with a right to purchase the rest upon retirement of the seller.
- Total buyout. You purchase 100% of the practice from the seller. Seller exit immediately or stay for a period of time to transition the practice.
Of course, there tends to be quite a difference between what sellers and buyers believe a practice is worth. That’s the time to think less about dentistry and more about due diligence. A CPA with dental experience can give you reliable fair market estimate, a cost analysis on hiring and equipment, and valuable tax strategy advice.
Once you have someone like that in your corner, you want to make him a lifelong adviser and planner for both your professional and personal financial goals. Feel free to call me and we can examine your growth plan, or create one if you haven’t yet.