A recent article from Forbes Magazine/Forbes.com reviewed the ten highest paying jobs. Not surprisingly, topping the list was surgeons (averaging $225,390 per year). Of the top ten, seven spots went to medical professionals and two to dentistry, specifically Oral-Maxillofacial Surgeons (#3 at $214,120) and Orthodontists (#5 at $200,290).
The article mentioned the specialized nature of the top paid medical/dental professions as well as the considerable educational expense required to enter the fields, but what does this article mean for you? While you may have even more requests to negotiate your fees as families are still mired in the difficult economy, more wide ranging is the realism of the financial needs within the profession and how you can best position your practice to make your transition a success. The reality is, while the “average earnings” of a general dentist was reported to be almost $159,000, for most purchasers the average simply isn’t and won’t be enough.
In life, serendipity is often sweet. However, serendipity rarely works as a strategy for a practice transition. Thoughtful planning and preparation will yield far better results. So what can you do in the time remaining to make your transition a success?
Bring in a transition expert now. A detailed examination of your practice will probably reveal areas for improvement, but general cookie-cutter advice will not suffice.
Review your fees and raise them wherever possible to be within the 80th percentile of local fees (contact your local ADS representative about a localized report). Look at staff salaries to make sure they are reasonable and reflect the individual’s qualifications. Determine whether your team members will be supportive of a transition and are not expecting to retire with you. Look for untapped opportunities to bolster your patient base or procedures, but avoid adding specialty procedures, especially those that need special training or qualification that may not be easily transitioned. Avoid major equipment purchases or extensive remodeling projects, but look at minor aesthetic upgrades (paint, flooring, etc.). You may consider ‘going digital’ or paperless, but realistically assess the cost and learning curve for your practice. Bringing in a transition specialist to do a “Coffee Stain Tour” or conducting your own will yield valuable opportunities for improvement.
Consider everything in the 2-5 year plan. Look to reduce specialty procedures and become as mainstream within your practice area as you can be by the time you hit year five. Ensure your practice systems and processes are running smoothly and efficiently. If they are not (or you do not know), bring in a practice management specialist to help. If you’ve considered digitizing or going paperless, you definitely have time and it will prove an important asset in your transition.
Consider everything from the 2-5 and 5-10 year plans. The significant difference is that you now have time for larger expenditures to pay off. Look at replacing major equipment or updating the office appearance. Digitizing and going paperless is pretty much a must. Carefully consider technologies such as Cerec or CAD/CAM as they still may not have the payoff in transition. However, they may prove valuable to you while practicing and should be considered primarily in that respect.
While the statistics of the past predict a glut of dentists reaching transition age, recent news of new dental schools opening will change the projections of a vast disparity between retirees and graduates. What isn’t changing is that future purchasers will need to earn more from their practice than those of the past, and the best prepared practices will not only transition faster, but for a higher value. Cash is and will be king, so increasing your practice’s net income is important, but how a practice operates and looks is not any less important.
Remember, serendipity is not a plan. Prepare now.
– Originally Published in Dental Economics