The typical dental partnership is generationally based where an older doctor sells a 50% interest to a younger doctor. Not establishing the value of the second half of the transition and the timing of when that transition will occur is potentially a prescription for disaster. In my opinion, the value of the second half should be determined by the same formula that was used to set the value for the initial buy-in. It is also my opinion that there should be a requirement – not a choice – not the right of first refusal – for the younger doctor to purchase the second half.

This requirement is important from the perspective of both the buyer and the seller. If there is no requirement for the younger partner to purchase the second half, the senior partner might have difficulty finding a buyer. Perhaps someone would want to buy, but they don’t want to be partners with the younger doc. They might be interested in purchasing the entire practice. So the senior doctor in that situation would be at a disadvantage. Conversely, the younger doctor would be at a disadvantage if the senior doctor decides to sell to Osama Bin Laden’s brother because he can’t find any other buyer. Now the younger doctor might have to be partners with someone he doesn’t like or respect. So when I am involved in forming the initial partnership, I insist that the younger doctor be REQUIRED to buy the second half.

The younger doctor will then be in total control of his/her destiny. Probably bring in an associate – not a partner – and usually make a lot more money. Future partnership can then become an option if the dynamics are positive.

There is no need. Nowadays there are many banks and lending institutions that have programs specifically tailored for dental practice acquisitions. I am constantly amazed at how easy it is for a young dentist–even with significant education debt–to borrow 100% of the money needed strictly on a signature. No collateral. Even at the depth of the financial mortgage crisis in 2008 in 2009, dentists were still able to get their financing. This was in stark contrast to many successful small business owners in the same community who were not able to secure loans.

Practice values have increased so buyers often need more time to amortize the purchase price in order to make the purchase affordable. I would not want the selling doctor to hold paper for that long. That is what banks are for.

The biggest negative to the seller is the risk involved by acting as the bank. It is much easier for a disgruntled junior partner to walk away from this kind of owner financing. Sure–you have a legal agreement and you could sue for damages–but often times it just is not worth the aggravation. If in fact after a few years the junior leaves, he or she loses whatever money they paid in, and the selling doctor regains 100% ownership of the practice. But now the seller is essentially back to square one. The security of selling the practice has vanished and now you have to get back to the hard work of finding another buyer. I have witnessed this unfortunate situation on a number of occasions.

If instead the purchase had been bank financed, it is much more difficult for the buyer to walk away from the obligation. Remember that the bank has already paid the seller the entire purchase price. This buyer would now certainly risk personal bankruptcy and certainly severe damage to their credit score.

Owner financing is also a negative for the buyer who would not be able to fully share in the revenue stream of hygienists and other dental providers such as itinerant specialists or other associate dentists. As I have mentioned, when the selling doctor provides financing, he does not receive the full purchase price–just one year at a time. So the buyer only becomes “vested” in the other profit centers of the practice based on ownership. As an example, with a 10 year owner financed situation, the buyer pays 10% in the first year but only receives 10% of the profit centers. After year two, 20% and so on.  The increased sharing from profit centers only occurs as the acquisition cost is paid off.

Make the buy in a win/win situation for both parties. Don’t even consider owner financing.

Illustration: A practice was collecting $900,000 when the associate first joined the practice. Two years later, the practice is collecting $1,600,000 of which $500,000 is from the associate’s production. Subtract $250,000 from the $1,600,000 and the Collection number on which you base your valuation is $1,350,000.

What is a fair valuation? Appraising the value of a dental practice is based on a professionally prepared analysis that takes a large number of factors into consideration. Included would be- but not limited to: net profit (what is left over after you pay all the bills); are collections decreasing, flat, or increasing; number of new patients; insurance participation (dependency); age of equipment; level of technology; esthetic appearance of the office; practice location – good neighborhood or changing population dynamics; number of dentists in the area. The list is long. And then you need to factor in the current supply/demand ratio.

Based on my observations and experience, we definitely are in a seller’s market with more dentists looking to buy than doctors willing to sell. A diminished supply of quality practices for sale is driving higher practice valuations – often in the range of 70-75% of a weighted average of the last three years collections.

The poor performance of the stock market in the first eleven years of the twenty-first century has dashed the retirement hopes and expectations of so many dentists. They simply have not been able to accumulate the necessary funds to retire from practice and maintain their life style. As long as they keep working, they are financially OK. But they simply can’t afford to retire.

Recommendation.  Hire a professional to perform a practice appraisal as soon as an associate joins your practice. This will avoid arguments down the road.

The most difficult and complex practice transition is an equity partnership. In the typical situation, an associate who has been working as an employee for a number of years in a dental practice is offered the opportunity to buy a percentage of the business and become an owner. The sale is designed as an exit strategy for the senior doctor who will be retiring from clinical practice – probably in five to seven years.

The complexity of a dental partnership can perhaps be measured by the length of the legal agreement, often 90 to 100 pages. Contrast that to an outright sale of a practice where the legal documentation of the purchase is usually 10 to 15 pages.  There are significant risks to both parties when entering into a partnership. From the perspective of the seller, some  questions might be:

1. How am I going to handle losing total control (power) over decision making?
2. What will happen to my income stream?
3. Am I giving away the store?

The buyer will also have questions:

1. Will I be able to afford all this debt?
2. Am I paying too much?
3. I know that I am an equal partner, but will I ever be able to truly exert my influence?

You are going to the altar on this! It is a marriage without the romantic benefits, and in my experience I have observed that a dental partnership has about the same chance of success as a marriage. That being said, most marriages that don’t last certainly don’t fail in the first few years. So with hard work on everyone’s part, there is a reasonable chance to have the partnership survive until the senior doctor retires.

Contrary to my normal optimistic approach to life – and since I have seen so many unfortunate situations – and since partnerships don’t always turn out to be long term success stories – I have to force myself to use restraint when advising clients in this arena. The challenge is to design what essentially is a pre-nup agreement that tries to anticipate every possible contingency in the event that things don’t go smoothly and blissfully or as planned.

By definition, a dental partnership between a senior doctor and a younger “associate to become partner” is full of built – in inherent conflicts of interests. Recognizing this dynamic makes it all the more important that the prospective partners at least share basic core values like personality, consideration for others, and an ability to communicate well. Without that to start, all of the thoughtful contingency planning in the world will not insure success.

In my opinion, success in life is always about having reasonable expectations. I would suggest that you will be disappointed if you think your dental partner is going to be your best friend and golfing buddy. But if at the end of the day, you and your partner respect each other and can co-exist in a peaceful professional relationship, then that would meet my definition of success. Anything more than that would be icing on the cake.

Over the next few months, I plan to document and discuss in detail a number of positive suggestions and strategies to implement when designing a dental partnership.

But new evidence shows that there are almost as many searches for a dentist on Facebook as there are on Google. So with the advent of Facebook’s Timeline, now may be the time to upgrade your Facebook presence. Here are three good reasons why.

1. Additional real estate– with the wider profile of Timeline, you have more of an opportunity to tell your story graphically with a bigger logo and bigger and more dramatic photos. It gives you the feel of a website on your Facebook page.
2. Pinned posts–in the old Facebook format, any post you made about an offer–like a free exam or a discount on Zoom whitening–would quickly fall off of your live feed page. Now you can “pin” or attach that offer to the top of your Facebook page so the offer stays visible at the top of the page for seven days or until you unpin it.
3. Icons–in the old format, any icons were very small and appeared as a list below your small photo or logo on the left side of the page. Now with the open layout and wider format, the icons can be much bigger–similar to the buttons on your website. In my case, with my new layout, Get my Blog and Videos are now prominently displayed. Click here to see the before and after of my new Facebook page. I think you will agree the differences are pretty dramatic.

I want to thank Tim Healy and his talented team at TNT Dental for all of their extraordinary efforts in creating my new website,  my new mobile website, and my new Facebook page. I am especially grateful to them for the screenshots they were able to create on this post and the two previous ones that make it easy for people to see what I’m describing. I also want to thank my good friends Rich and Dave Madow who teach a fabulous course on Social Media. I took their course three years ago, and it provided me the inspiration and the technical knowledge to begin a journey that continues uninterrupted to this day.

On March 30^th, whether you like it or not, Facebook is going to force the timeline change, so any custom work you have done under the old format will look funky and possibly distorted. And if you are not prepared in some fashion, you are not going to look good under the new format either. So don’t delay. Speak with your technical people and take the appropriate action. And please remember to Like us on Facebook!

This mobile site will fit into a cell phone screen without having to scroll horizontally. The mission is to redesign a simplified Home Page that looks graphically similar to your main website. As the viewer scrolls down, a navigation menu appears. A correctly formatted mobile website enables users to access the website information easily and helps with conversion as it is designed to enable users to take the next step and call into the practice or e-mail with an inquiry. The mobile version will not be an exact replica of the main website, as smart phone users will not be spending the same amount of time on the site as someone browsing it from their laptop or PC. Consequently, they won’t typically want to view as much information. Instead, the mobile site  will contain key pages such as the welcome page, contact us, meet the doctor, and key service pages.

Click here from your computer to see what my new mobile site looks like. If you access my website from your mobile device, then you can get the total interactive experience.

A very important feature is to have your webmaster set up your full-size website so that it recognizes a mobile user and automatically redirects the search to the mobile website.  It would also be important to replace any meaningful Flash animation on your website with HTML5 or jQuery so it is viewable to the mobile browser.

This is not a costly project. What are you waiting for?

In my last blog post, I spoke about the necessity and the benefits of a reception area makeover. That same strategy definitely applies to older websites that may have been current three to four years ago, but now appear dated, and most definitely need an upgrade.

I am so excited about my new website. It had been over three years since my old site was built. During that time, I kept adding new features that could be referenced from the Home Page of my site.  These included an RSS feed for my two most recent blog posts, video testimonials, a horizontal drop down navigation bar, the Google review button, and another feed to sign up to get my blog. But as I added features, the site became more congested.

Now my site appears wider, brighter, the font is bigger, it is more easily readable, the content is much more navigable, and the features that I want to emphasize are more center stage. You can click this link to see the before and after of my website and I think the picture will be worth 1000 words.

What I did is called a reskin or a site redesign.  It repositions certain elements on the page bringing the site more in line with the best design practices for optimal SEO including updated tagging and page descriptions. The good news is that this process is very easy for the doctor. You undoubtedly remember how many hours you spent on writing the content for your website. “ I never want to do this again” was a common complaint that I would hear from clients. In this redesign process, all of the work is done by the webmaster. It is very labor-intensive to essentially re-organize every page on the website. While the doctor certainly has the option to change or add new content if desired, the whole point is to take what has already been written and give it a new updated look.

I hope I have given you the inspiration and motivation to take your current website to the next level.

Nothing major–nothing structural–but new carpet, new moldings, fresh paint on the walls, and some new wallpaper as an accent. He had also found some new wall art, and had updated the furniture. When I complemented him on the beautiful changes, he told me that the whole job was under ten thousand dollars. He had budgeted the cost by using his business line of credit, and had paid it back over four months. With bank borrowing rates so unbelievably low, it is practically an interest free loan.

Don’t get me wrong. It is not like the place was a dump before–just dated. Now it is flat-out gorgeous! No question, you walk through the door and you just know that you are in the right place. Existing patients are flattered that you have made the investment in their comfort, and new patients cannot  help but be impressed.

So if it has been more than five or six years since you have redecorated, you should definitely consider a makeover. It is a big bang for the buck. And I strongly recommend  using the services of an interior designer to help you.  Here are some additional thoughts on this topic.

First– “why would someone spend their money with you–so what is unique about you?” There certainly is no lack of dentists out there, so how do you separate yourself from the competition? It is all about building relationships that are based on trust. The patients must feel and perceive that the doctor truly cares about their well-being and is not motivated by dollars. This doctor–in the most low key way–must be able to explain the need for dental treatment–what are the benefits and what are the consequences of not moving forward. The doctor needs to be skilled at presenting choices because while people like to buy, they do not like to be sold. The patient needs to feel comfortable that the doctor possesses excellent clinical skills.

Second– “why would someone work for you?” I have always felt that it is the responsibility of the doctor to create an environment where staff can flourish. This wonderful workplace allows people the independence to make important decisions, yet ultimately holds them responsible for their actions. This workplace will reward and recognize excellence with bonuses and incentives. This workplace will promote the concept of teamwork. I revisited an article that I wrote in 1997 about staffing in the dental office, and I was pleased to realize that my thoughts haven’t changed all that much. The bottom line is that happy staff are great emissaries for your practice, and when patients interact with happy staff, they instantly realize they are in the right place.

As the new year begins, it would be time well spent to analyze the essence of what you and your practice are all about – what is unique – and what is remarkable – and how can you better convey that image to your patients.

The most important management system in a dental practice is scheduling, because the only thing we have to sell is our time. Yet over the years, I have observed that many practices are terribly inefficient in the way the doctor is scheduled to deliver treatment, wasting upwards of two hours every day. I didn’t say they weren’t busy–I said they weren’t efficient. There is a huge difference between being busy and being profitable.

I believe that when an effective scheduling system is introduced into a practice:

• the stress level of every one can be significantly reduced.

• the appointment backlog can be cut in half.

• the need for an associate is often eliminated.

• production is increased dramatically without raising fees or altering the mix of the practice.

.• every hour in the practice becomes a productive hour no matter what procedures are being performed.

In the two and a half years since I began writing blog posts, I do not believe that I have ever touted my own services. But this whole topic of how to increase revenue got me thinking. Teaching other busy dentists productive scheduling techniques was how I began my consulting career 22 years ago.  So if you are feeling maxed out -  perhaps scheduled out two  to three weeks or more-  feeling overworked and can’t seem to find the way to get to the next level of profitability other than working more hours -  you might want to consider speaking with me. But first read this to see if you qualify.

As Yogi Berra said, “It’s tough to make predictions, especially about the future”. But after seeing the significantly increased annual revenues in practices that have learned and implemented the Jodena advanced scheduling rules, this might be worth your consideration.