A hot topic for professional writers and presenters is the transition process and the advantages of adding a partner. While bringing in a partner is beneficial for some dentists, others find it is not for them. As you consider adding a partner, ask yourself the following questions:
- Is it a good idea financially and does it support your long-term financial plan?
Adding a partner will bring about significant financial changes for you and your practice. It may require a short-term decrease in personal income and, in a worst-case scenario, a permanent income reduction. It’s a good idea to meet with your financial advisors to discuss the impact of adding a partner before taking action.
- Why are you doing it?
It is important to ask yourself why you really want to do this. Answers like “My friend brought in a partner and it worked great for him” or “The seminar presenter told me I would be sorry if I didn’t act now because I might not find a buyer later” are not good reasons. Some people should not have partners. This is not a character flaw, but rather a fact of life. Take time to really contemplate whether a partner is for you.
- Can you share patients, decision-making, and income?
Most doctors who consider bringing in a partner have practiced solo for many years and are not accustomed to sharing patients or management decisions. Some doctors who add a partner have had an associate for a number of years and have made a profit from the associate’s production. Once the associate becomes a partner, the profit for the entire practice, including that derived from the hygiene department, is shared.
- Do you have an active practice?
One telling sign is the number of active patients. The definition of an active patient is one who has been seen within the last 14 months, has not died or moved away, and can be expected to return to the practice. One reason partnerships fail is because there aren’t enough patients to support two doctors. We have found a practice needs at least 2,000 active patients and should grow a minimum of 15 percent per year to support a second doctor.
- Will your facility support another doctor?
The answer to this question depends on how you and your future partner plan to schedule your time. If you plan to work the same hours, you will need more operatories than if you use a staggered schedule. Generally, the minimum number of operatories, even with a staggered schedule, is five.
- Does your practice have good operating statistics?
If your practice is not growing and collecting what it produces, adding another doctor will only make matters worse. If you are having problems filling one doctor’s schedule, it will be impossible to fill two. This is like the couple with marital problems that decides having a baby will make things better.
- What is your practice philosophy?
It’s amazing how many dentists have not taken the time to write a practice philosophy. If you decide you truly want a partner, it will be essential to articulate your practice philosophy with potential partners. Skipping this may lead to problems later.
- What is your financial philosophy?
It is not unusual to have one financially conservative doctor and one financially liberal doctor practicing together. You can guess what these partners argue about. Having a common financial philosophy can help partners work well together and avoid a lot of frustration.
- What are your expectations for a partner?
When I work with clients who are contemplating adding a partner, I spend a lot of time helping them determine their expectations for this person. Although it may be a process, this forces the doctor to think about what is important. Committing those thoughts in writing is essential. When it is time to negotiate the buy-in and operating agreements, each partner should share their expectations and — as much as possible — those expectations should be included in the written agreements.
- Am I willing to go through the process of finding the right partner several times if necessary?
Adding a partner takes courage. You must be able to start again the moment you realize your prospect won’t work out. While starting over can be expensive and frustrating, I guarantee that getting out of a bad partnership will be far worse.
Theodore C. Schumann, CPA, CFP®, is president of The DBS Companies and past president of American Dental Sales. The DBS Companies service the financial needs of the dental community, in addition to representing American Dental Sales in Michigan. Contact Schumann by phone at (800) 327-2377.