With an ageing population and declining interest rates, the current economy is prime real estate for dentistry. Of course, this growth has not gone unnoticed by entrepreneurs and investors.
A particularly noteworthy shift is occurring among dental service organizations (DSOs) that are buying practices to bring business and marketing expertise into what has traditionally remained a cottage industry of isolated establishments. This is enabling the expansion of consistent systems across networks of offices in an economy of newfound scale.
For dentists looking to retire or work elsewhere, the rise of DSOs presents an ideal opportunity to sell their practice. However, many good dental practices are yet to be purchased. If you’re interested in putting yours on the market, you need to know what DSO buyers consider an attractive offer.
This begins as soon as possible. A dental service organization typically favors owners who are willing to commit and continue working in their practice for a few years after the transition, so it’s wise to prepare in advance and handle the matter well ahead of your planned retirement. From here, the next step is to increase your yearly production.
The majority of dental offices fall into one or more of the following categories:
- Open four days per week
- Closed on evenings or weekends
- Several offices that aren’t fully staffed
Annual production is the leading factor for determining the market value of your practice. You don’t necessarily have to extend your own working hours to raise this figure. It’s also possible to hire part-time staff to fill in during the hours when doors are usually closed. Then, you can attract new patients easily and affordably through social media.
Keep in mind that DSOs value consistency and sustainability. An extensive track record showing year-on-year growth is far more compelling than a brief spike in production.
Enhance Your Office
One of the most common mistakes made by retiring dentists is pulling back too early. The offices have clearly seen better days, motivation dwindles and enthusiasm wanes among staff. This obviously doesn’t make the best impression. Be sure to maintain the appearance of your premises and communicate your goals with the team.
Your office and employees should look sharp until the final day. At the same time, be careful not to overspend on facility equipment or upgrades just before a sale, as you probably won’t see a full return on the investment. The primary value driver is your projected revenue and profit, not the quality of your assets.
Also, remember that an attractive office is run by a motivated team whose dynamics are free of miscommunications and toxicity. In most cases, the DSO buyer will retain existing staff and provide additional training.
Focus on Efficiency
An efficient practice is more desirable and valuable. When it comes to improving production rates, the foremost solution lies in the size of your cases. It’s no use chasing an endless list of clients for relatively small cases, especially if it indicates an unhealthy acceptance rate.
Aim to offer more services and spend more time discussing treatment options instead. Show prospective DSO buyers that when you acquire a patient, you follow up on the lead, deliver the required information and successfully bring them in for treatment. You want your practice figures to illustrate consistency in this process.
Retain Your Patients
In a similar vein, the profitability and subsequent value of a practice increases when its patients keep coming back to the same office. This is owed to several reasons, which are outlined below.
First, the DSO is assured that marketing costs will be lower as less money needs to be spent on client acquisition. If loyal patients experience issues in the future, even if it’s years later, they ought to seek treatment at a familiar dentist. Second, impressive retention rates speak for the effectiveness of your hygiene program if you employ hygienists.
The final reason is that faithful clients are an unrivaled source of word-of-mouth marketing. Your buyer can enjoy peace of mind knowing that the stability this brings is augmented by lower operating expenses. Plus, great retention is simply not something you can maintain unless your practice is doing something right.
The bottom line is that your financials need to be strong and reliable, just as your curb appeal should be enviable. When a dental practice shows consistent growth and looks attractive, it’s only a matter of time before the owner is left to decide which DSO is presenting the best offer.