21 Questions To Ask When Buying Dental Practice

One of the largest career milestones a dentist will reach is deciding to buy a dental practice. There are many factors to take into account, so making a selection is not simple. Then there are the issues surrounding the purchase of a dental business. The choices you make when purchasing a dental business have the potential to either build a prosperous practice or have disastrous financial effects. To ensure that you follow through with the proper procedures and have a smooth dental practice transfer, it is essential to speak with a dental practice consultant.

One of a dentist’s largest financial decisions is to purchase a dental business, and obtaining reliable information can help you decide if you got a fair deal or not. This calls on you to do a thorough investigation of any practice in which you have an interest with the same care and focus that you would devote to a patient.

Also check – dental school interview questions / questions to ask an orthodontist consultation

Questions To Ask When Buying Dental Practice

1. Ask the seller why are the selling their practice?

The proper responses would be: They have amassed sufficient savings to retire or they have some health difficulties but are prepared to settle down and enjoy life.
A problem can be indicated by a response that deviates too much from one of these three. Some sellers list their practice on the market just to escape a difficult circumstance. Unless there is a unique circumstance, business owners often do not sell their company overnight.
If the tale doesn’t make sense, try to find as many questions as you can about it.

2. What percentage of patients are active in the practice?

Many times, a practice buyer learns that what they purchased isn’t what was advertised.
Make sure the practice’s count of active patients is accurate; if the data was entered appropriately, it should be simple to validate it using the practice management software. Although there is no clear-cut definition of what constitutes an active patient, I advise counting any recall patients who date back 12 to 18 months.

• There are a few ways to count the patients if the practice’s software turns out to be inaccurate:
• You can spend time looking through the charts to find out when the patient was last seen, depending on how many there are.
• Examine a sample of ten percent of the charts, then multiply the result by ten. This average should give you a figure that is quite close to the number of active patients.

3. What area is the practice in?

Location matters because visibility affects it, hence if you’re not also purchasing the actual estate, it’s definitely worth the time and effort to properly analyze the lease. This entails being aware of the terms of the lease and the possibilities for extending it. Naturally, you also want to make sure the region attracts the patient population you’re after and you want to be aware of any prospective rivals for your dental office that may already be present.

4. Are there any patients who have already undergoed extensive dentistry?

If so, hygiene services will be mostly the main source of cash you receive from the active patients. When there will be less of a return on investment if more comprehensive dentistry is performed. Patients could require more extensive care if there hasn’t been much progress in comprehensive dentistry. The drawback of this is that some patients may depart if they think you’re trying to sell them something they don’t need. However, as you continue to meet patients, you will develop a connection with them and their trust, which will make them more open to your therapy suggestions.

5. How about redoing dentistry work?

The contract should provide that any revisions to the dental work, the dentist’s services, including lab expenses, must be rendered and paid for by the seller. Typically, there is a standard of approximately six months from the day the new dentist takes over. You can demand that the seller create an escrow account for a certain period of time that you can draw from in order to be compensated for performing any warranty service or re-dos.

6. Where did the practice prime come from?

It is ideal if the vendor has obtained a verified value. If so, make careful to confirm the legitimacy and certification of the individual who performed the appraisal. Evaluations must Involve a study of accounts receivables, any leases or employment contracts, expected future cash flow, and an analysis of recent tax filings. Examine the insurance contracts with the seller as well. Never believe anything you are taught to be true.

7. Are the employees technology aware?

Many personnel who have been with the dentist for 25 years or longer, still often use an outdated method of dentistry. Training such workers in new methods and procedures usually isn’t worth the trouble and aggravation because they won’t want to change. Consider if you should incorporate the staff into your choice to buy the practice if you find yourself in this circumstance because there is a fair possibility that one or more of them—if not all—will quit the practice within the next year.

8. When does your lease expire?

Real dental lease traps exist: You may spend hundreds of dollars on them. When their lease is due to end, many sellers list their practises for sale. You can easily renew it, so if you’re thinking that’s no big issue, think again.

To renegotiate the conditions that are in your advantage while renewing, it takes time, effort, and money. Additionally, moving is expensive and comes with a chance of losing clients. If you really must relocate, be sure your practise is financially able to cover those expenses.

I strongly advise all of my customers to obtain a lease that coincides with their bank loan. in other words, the same term length as the bank. By doing this, you’ll make sure your lease doesn’t end before your loan is repaid. A ten-year lease will provide you plenty of time to scale up and the ability to pay for a potential relocation in the future.

9. Do you use your practice to pay for any personal expenses?

The key costs for any office are rent, dental supplies, salaries, wages, lab fees, and advertising. You, the buyer, must be well-versed in these figures.
However, it is also crucial to inquire about any unstated personal costs, such as those for your car, phone, insurance, and pension. Consider the physician who pays his wife a salary for doing the “bookkeeping.” Alternatively, the individual Amazon accounts could be connected to the “office cost.” In order to assess the practice’s genuine profitability, these costs must be acknowledged up front.
Do not be afraid to raise this question because the majority of practice owners have these costs.

10. Do any key team members intend to accompany you?

This query aims to uncover one of the riskiest aspects of any dental transaction. Most vendors and purchasers think that the dentist has the patients’ goodwill. Although this is frequently the case, in my opinion, the TEAM as a whole bears the majority of the favorable attitudes towards the activity. Any transition would be hampered if the practice’s 10-year veteran hygienist had to be replaced.

This point has to be made very clear. No one employee could have an adverse effect on a practice that would cause it to fail. It would be challenging to recover fast if the practice lost both the doctor and a crucial employee at the same time.

11. How would you characterize the practice’s culture?

It’s an open-ended inquiry. It’s fated to happen. Recline and discover the office’s guiding principles and culture. How have they handled challenging circumstances with patients and other team members? How is communication between members of the team handled? to find solutions? Welcome to the team, newcomers. new concepts for quality assurance?

You may learn about the practice’s culture and communication style by inquiring about it and acting with curiosity. This is also a chance to learn more about the interpersonal dynamics among the team members and the benefits the owner presently provides.
To ensure that the entire team and the patients are at ease and not taken aback by the shift, it is important to adopt the seller’s manner in this situation. Can you actually imitate what they’re doing now? It’s up to you to decide!

12. How many hygiene weeks are fully scheduled, exactly?

It goes without saying that the hygiene division is the lifeblood of any dental office. You’ll have the chance to introduce dentistry if you start off with a strong patient base to examine. For every dollar spent on cleanliness in this area, the typical dentist may anticipate to get $3 in restorative treatment. A buyer will struggle to fill their timetable right now without patients in the hygiene columns.

In light of the response to this inquiry, I would also advise assessing the Recare program’s general state of health. When hygiene visits are scheduled out four to six months in advance, the practice’s recare programme is doing well. Simply paying attention to the data and creating “the story” may reveal a lot about how an office runs. You can have problems with the practice’s general culture if the clinic is not scheduling hygiene appointments or avoiding cancellations. Everything is there; you simply need to seek for it.

13. How would you sum up for the clinical philosophy of the office?

It is crucial that the new dentist, at least initially, mimic the practice style of the prior owner for a transfer to be effective.
I’ve experienced it both ways. The buyer is overly forceful right away, demanding clinical adjustments that frighten both the staff and the patients. Or the purchaser is overly cautious and destroys the business rapidly.

This straightforward yet insightful inquiry may reveal so much about the way the office treats its clients. Know how truly conservative or aggressive the office is before leaving your due diligence meeting. Be brutally honest with yourself; that is more essential. Can you duplicate the seller’s methods? You shouldn’t have to question your capacity to continue handling the cases the practice is handling right now.
Simply expressed, it’s critical for the buyer to imagine themselves as the supplier.

14. What marketing Strategies have been successful in the past?

It’s likely that the seller has experimented with a wide range of ideas during the course of their tenure as a practicing owner. One of the things that needs trial and error is marketing. You might be able to save a ton of time and money by asking this question!

Given that they do not invest in advertising, you could assume that this question has no bearing on the office you are considering. Be not deceived. A lot of dentists have such a passion for dentistry that they maintain their practice for far too long and treat it more like a hobby than a business. What you will undoubtedly discover is that the seller’s lack of ambition has caused them to cease investing in marketing. What you need to know is what was successful and unsuccessful while they were expanding.

15. Which assets physical or otherwise – Are valuable for the practice?

The goodwill, which is calculated as a proportion of the practise income, and the fair market value of the tangible assets are often two factors that influence the acquisition price. The more goodwill a company has compared to its actual assets, the better its practises are. Generally speaking, it denotes that their cash flow is stronger. Nevertheless, because this would incur additional costs, you still need to assess the state of the dental equipment to determine whether it is in need of repair or whether a replacement is imminent.

16. What kind of dental procedures are carried out at the clinic?

Similar to this, there is a significant possibility for a new dentist in practices where the dentist mostly does low-end dental treatment to improve income from the existing patient base by finding possibilities where more revenue-generating dental work may be undertaken. Of course, your dental knowledge and experience will influence these options.
Before making your final choice, pose the following questions to yourself.

17. Does the dentist office’s location support your professional objectives and desire for work-life balance?

Not only in real estate, but in all aspects of life. You should always ensure that patients can find your office easily. However, it’s also convenient to have a short daily commute. Being close to your office makes it easier for people to choose you as their emergency dentist.

18. Are the clinic’s hours convenient for me?

Especially if you have small children and need to set aside time for child-rearing, carefully consider how many hours you’ll need to work to run the clinic and whether that schedule matches your lifestyle.

19. Can the dentist who is selling his practice help introduce you to his current patients?

Ask the seller whether they would introduce you to current patients before you sign any contracts so that you can get to know them and reassure them that the standard of service will not alter. Having the selling professional’s support during the changeover may be really beneficial.

20. The dental office does it assist your professional goals?

Will this dental office help you to reach your career objectives? Would this dental office be able to satisfy your desire to expand your dentistry to include wellness services?

21. Will you be able to provide the same specialized services that the practice being sold provided?

Would treating children be comfortable for you if you were buying a clinic that specialized in cosmetic surgery for kids and your main clients are adults? You will need to decide whether or not treating children is within your scope of expertise or whether you will send kid patients to a pediatric specialist.

Conclusion:

In conclusion, asking the right questions, paying attention, and showing an interest in learning from the vendor will be more helpful to you than crunching numbers. The grey region will make or break your transition because numbers are only ever presented in black and white.

One of the most crucial steps in the due diligence process is by far the interview with the seller. But maybe these deliberate inquiries will help you avoid significant hazards and take advantage of a huge opportunity.
Purchasing a dental office is undoubtedly difficult. There are many factors to think about, many dangers, and a lot of money at stake. On the other hand, taking control of your career is valuable.