Many retiring dentists don’t want to spend time or money on upgrading their practice at the end of their careers, but they know this could result in selling at less than top dollar. This solution marries the best-proven, cost-saving approaches, so you can book your first-class ticket to freedom.
In football, the competing teams play the first three quarters to position themselves for the final drive that wins the game.
Manning, Elway, Montana and Brady are quarterbacks known for driving their teams to fourthquarter wins when the final play is on the line and it matters most. Just one missed read can be the difference between winning and losing the big game. In sports, players get paid big money, whether they win or lose.
But for dentists, it is their life’s work that’s at stake; and the big payoff for all the hard work, dedication, and sacrifice at the end of the game is a one-shot deal – the sale and proper transition of the practice.
Not taking the actions necessary to optimize the sale-price of your practice has consequences and failing to take the necessary actions will heavily impact your patients, team, family and the lifestyle you will be able to enjoy during retirement.
It has been said that 4 percent of dentists retire financially free when they hang up the loupes for the last time. Today, more dentists than ever are extending their work lives to make up for the financial collapse of 2008, when their 401k plans became 201k plans. Not only are doctors working overtime, so, too, are their spouses who are living in worry, fear and scarcity.
I meet many dentists feeling shameful and remorseful about where they are financially. They say they like our compassion and understanding and usually have a deep feeling of hope when they begin to understand wherever they are starting from is perfect. They understand that for the first three quarters of their career they did great dentistry and ran their business and financial life the best of their ability.
You can score big in the retirement red zone if you show up, suit up and get in the game. With the clock ticking down, you have to get out of defensive mode and go all out on offense.
Right now, most practices for sale are radically underpriced, because the selling dentist calculates value as a percentage of collections over a period of time, typically 70-100 percent of collections over a couple of years, so the selling dentist solely gets paid on how much they close and collect in treatment.
The real value is the proven production opportunity within your existing patient base. Practice brokers/ evaluators do not put as much weight on this because buyers have trained them to look solely at the money coming into the practice.
Most practices are operating at 50 percent of their natural capacity.
Let me show you how we calculate this. There are three ways to grow a practice from the inside out, on things that are already within your control and we call it our CARE system: 1. Case Acceptance, 2. Retention, and 3. Experience for the new patient.
We have metadata on millions of patients and know that the average patient coming back twice in hygiene is 20% of your entire patient base and case acceptance hovers between 15-34% depending on new or existing patients and case size.
❝Focusing internally on what you can control… will catapult you toward realizing your practice’s full potential.❞
Focusing internally on what you can control – your case acceptance and patient retention systems, plus investing in educating, training and taking special care of your internal customer – your team, will catapult you toward realizing your practice’s full potential. Your focus, as a dentist, is to do two things: diagnose and treat.
Please take out a pen and paper and follow along with me – we are going to do simple math and calculate your upside that you can realize in a short period of time…
Annual Hygiene Revenue: $300
Add up the average fees for a prophy, exam and radiographs; let’s say the number is $150. Multiply this number by 2; when you focus on creating known value in the patients’ minds, they will return knowing that it is not just for a cleaning. Therefore, the total revenue in hygiene for an adult is $300 annually.
Annual Restorative: $1,000
The value of one crown and a buildup – this doesn’t mean every single person walks out with a crown – it is the average case acceptance dollar amount when you are properly presenting cases.
Let’s add the hygiene revenue of $300, plus the restorative $1,000 = $1,300
Now take the average number of adult patients who came to your practice for any reason during the last 12 months – let’s say 2,000 patients.
Take the average annual value of a patient at $1,300, times number of patients at 2,000, for a grand total of $2,600,000.
The average annual revenue of this type of practice is under $1,000,000. And the selling doctor will get anywhere between $700,000 to $1,000,000 as a sale price. So, as a fourth quarter dentist, knowing what you now know, you can now have the possibility to cash in more than double what you thought you could.
What should excite you is knowing that you already have this growth potential under your roof, with patients who trust you, but whom you may not have been able to convert to twice-a-year hygiene patients, allowing for increased hygiene revenue and allowing your hygienist to educate them and to close more cases. To ally your concern that you will be called out on supervised neglect or over treating, the patient actually has an experience of appreciation and gratitude and your team feels like the shackles are ripped off and they can make a difference.
❝What should excite you is knowing that you already have this potential under your roof.❞
Focus internally on case acceptance and patient retention by building a high-performing hygiene department, one that is patient-focused on overall health and not just oral health, and you will have a priceless value proposition in which everyone wins. The patient gets healthier, your practice gets healthier and your team is fired up every day, knowing that on a good day they save a smile, and on a great day they save lives.
Just like Brady, Elway and Montana when the game is on the line, champions advance the ball. This is your chance to break free and score the touchdown of your life, with plenty of time to spare.
