The solution to this problem is the same solution to another bigger issue in dentistry : “ How to build a lucrative practice in this market ?”
The answer to both lies in practice mergers . The continued growth of a solo practice is becoming more difficult every year . With increased competition , stable or declining population growth , the influx of capitation programs , insurance clinics , advertising retail centers and an unpredictable economy , a general practitioner must be prepared to consider ways of expanding their patient base . Many practitioners make the mistake of joining various low fee programs , spending heavily on marketing , or reducing fees and giving away services to add more patients to their practice . They soon discover that these fee conscious patients will leave the practice as soon as someone else offers them a lower fee or a better deal .
There are numerous reasons for mergers , both financial and non-financial . A practice merger allows you the opportunity to invest in a business that you already know about ( as opposed to some limited partnership or other investment scheme that you know absolutely nothing about ).
A practice merger immediately increases your market share by instantly providing more fee-for-service patients , more referral sources , more growth and more profits . A practice merger eliminates competitors .
Acquiring the practice obviously removes the seller as a competitor , but acquiring the practice also prevents a more aggressive competitor from acquiring the practice . The transaction is generally fully leveraged ( meaning that the purchase price and closing costs are typically financed ). You invest ZERO personal capital to reap significant financial benefit .
In many merger transactions , the seller will remain as your associate . They provide passive income , coverage for vacations , CE and sickness . But if the seller does not stay , an associate can be added . If structured properly , your associate could be the “ heir apparent ” to acquire your practice when you are ready to sell , or an equity partner as you build a more competitive multi-doctor practice model . There is only one reason not to do a merger … you have to pay more taxes !
In years past , our biggest competitor was each other , and that is why our delivery model is so fragmented . Today the challenge is competing with “ big box ” dentistry , which is consolidating dental delivery . We need to learn by example and use practice mergers as the tool to maintain autonomy and keep our practices competitive .
About Dr . Moffa Upon graduation from the University of Pittsburgh School of Dental Medicine in 1980 , I cold started Willowbrook Dental Associates in my hometown of Greensburg , Pa . I transitioned my practice in 2002 , and continued practicing there as an associate three days a week . Over the past 15 years , we have done 5 mergers in our practice alone .
Through my association in 1995 with PARAGON Dental Practice Transitions , I have worked with a myriad of doctors in transition planning , mergers , stock sales , progressive ownership and estate sales . I bring a very unique and practical approach to the issues that face both buyers and sellers “ having been there , done that .”
I am a lifelong member of the American Dental Association , Pennsylvania Dental Association and the Dental Society of Western Pennsylvania , and am also a member of the Academy of General Dentistry .
JANUARY / FEBRUARY 2018 | PENNSYLVANIA DENTAL JOURNAL 25