Effective Strategies for Selling Your Dental Practice

For dentists, transitioning out of a practice is one of the biggest financial and emotional decisions of their careers. On our latest episode of Beyond Bitewings, we sat down with Steve Hipson, a seasoned dental practice broker. As the owner of the North Texas franchise of DDSmatch.com, Steve specializes in helping dentists successfully plan and execute practice transitions, and here is a synopsis of that conversation.

Start Preparing 3-5 Years in Advance

One of Steve’s key pieces of advice is to start planning 3 to 5 years before you plan to sell. While it may seem early, this timeline allows for strategic preparation that can significantly impact the value of your practice. Many dentists wait until they’ve started slowing down production, often due to burnout, injury, or lifestyle changes. But if production starts to decline, so does the value of the practice.

To avoid this, dentists need to get ahead of the curve and be proactive about maintaining production levels. This approach not only supports a higher valuation but also allows sellers to be more intentional about when and how they transition out of their practice.

Understand How Your Practice is Valued

When it comes to valuing a dental practice, dentists want to get fair market value assessments to get a clear, objective valuation based on revenue, production, and other key financial metrics. This removes the guesswork and sets clear expectations for both sellers and buyers.

Many dentists are also curious about EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), especially when dealing with DSOs (Dental Service Organizations). While EBITDA plays a major role in offers from DSOs, doctor-to-doctor sales prioritize different factors, like compatibility between the buyer and seller, the buyer’s clinical skills, and the location of the practice.

Selling to a Private Buyer vs. a DSO

One of the most critical decisions a dentist makes when selling a practice is whether to sell to another dentist or to a DSO. Both have pros and cons, and Steve’s advice is to remain open to both options.

Here’s a quick breakdown of the differences:

Private Buyer (Doctor-to-Doctor)DSO (Dental Service Organization)
Focus on compatibility and clinical fitFocus on EBITDA and financial metrics
Buyer often plans to run the practice themselvesDSO manages the practice while hiring providers
Less emphasis on cost-cuttingDSOs may streamline operations and increase efficiencies
Simpler, relationship-driven processCan result in higher offers but often involves stricter requirements

DSOs are a great option for dentists who want to remain part of the practice after the sale. Many dentists like this approach because it allows them to continue practicing while offloading management responsibilities like HR, compliance, and vendor negotiations. On the flip side, doctor-to-doctor sales are often simpler and more personal, with a focus on matching buyer and seller personalities, skills, and values.

Confidentiality is Key

One of the top concerns for dentists planning to sell their practice is maintaining confidentiality. Dentists fear that if their staff or patients find out they’re planning to sell, it could cause panic, employee turnover, or disruptions in patient care. Look for partners that prioritize maintaining confidentiality in every transition. All communications and negotiations should be handled discreetly, and announcements should only made when the sale is complete and both parties are ready.

The Importance of Hiring the Right Team

Transitioning a dental practice isn’t a solo endeavor; it requires a team of experienced professionals, including:

  • Brokers to manage the sale process and negotiations
  • CPAs to ensure the financials are in order
  • Attorneys to handle the legal side of the transaction
  • Lenders to assist buyers with financing

DDS Match refers to their approach as a â€śtrusted transition process”, where his team works with the seller, buyer, and support professionals from start to finish. They focuses on creating smooth transitions where both the buyer and seller walk away satisfied.

How to Get Started

If you’re thinking about selling your practice or just want to explore your options, start early. If you’d like to connect with Steve Hipson for more information, you can reach him at s.hipson@ddsmatch.com or visit ddsmatch.com to learn more about his process for buying and selling dental practices.

Understanding the Business Side of Dentistry with Dental Student Sarina Arzani

In the latest episode of Beyond Bitewings, Sarina Arzani, a third-year dental student from A&M College of Dentistry, joined the discussion to provide valuable insights for fellow dental students and young dentists. The focus of the episode was on the challenges new graduates face when transitioning from school to the business world of dentistry and how to effectively prepare for that transition.

The Gap Between Dentistry and Business Knowledge

Sarina highlighted a common concern among dental students: while they are equipped with extensive knowledge and skills related to dentistry, they often feel lost when it comes to the business side of running a practice. Many students, especially those nearing graduation, realize they lack the tools to navigate the financial, operational, and management aspects required for success after dental school. Sarina shared how her peers are searching for jobs but don’t know what to prioritize or where to start when evaluating potential employers or thinking about opening their own practices.

The Importance of Building a Strong Team

A key takeaway from the discussion was the importance of building a strong support team early on. Sarina emphasized that starting this process during the D3 or D4 year is crucial for feeling confident and prepared when entering the real world of dentistry. Whether it’s financial advisors, practice management experts, or networking with fellow dentists and vendors, surrounding yourself with a knowledgeable team can make all the difference. Sarina noted that dentists who are successful in both clinical practice and business consistently credit their support teams for much of their success.

Dealing With Information Overload 

Sarina also touched on the overwhelming amount of information available to dental students as they approach graduation. From job offers to setting up a practice, knowing what advice to follow can be challenging. One strategy discussed was how building relationships with experienced professionals can help filter the most relevant and valuable advice. Having a network of trusted experts can simplify the decision-making process and reduce the confusion that often comes with entering the business side of dentistry.

Making Connections Early

Networking emerged as a key theme in the conversation. Sarina encouraged students to start making connections early, whether through conventions like the Southwest Dental Show where the podcast was recorded or via social media, where many dentists and professionals share valuable insights. By building these relationships and learning from others’ experiences, dental students can better understand the type of practice they want to create and the best way to achieve their goals.

Leveraging Social Media in Dentistry

Interestingly, Sarina, who is considered a social media influencer, spoke about the power of social media in dentistry. She described how platforms like Instagram and YouTube offer an excellent opportunity for networking, learning, and even marketing future dental practices. For those looking to stand out in today’s competitive environment, leveraging social media is becoming increasingly important, especially for reaching younger patients and staying connected with peers in the industry.

Support from Edwards & Associates PC

As a final note, Ash reminded listeners that they offer free contract reviews for new dental graduates entering their first associateships. With decades of experience in dental-specific accounting and financial services, the firm provides invaluable support for dentists at all stages of their careers. Whether it’s reviewing employment agreements, offering business advice, or helping with long-term financial planning, they are dedicated to supporting the dental community.

Key Real Estate Mistakes to Avoid When Expanding Your Dental Practice

When facing real estate transitions, whether purchasing, selling, or relocating a dental office, it’s essential to work with a professional who understands the specific needs of healthcare practices. In a recent episode of Beyond Bitewings, Jennifer Page from Carr Real Estate discussed the importance of engaging a healthcare-specific real estate agent early in the process to avoid common pitfalls.

First, avoid working with agents who represent landlords or sellers. Jennifer highlighted that many dental professionals mistakenly reach out to the agent whose name is on the property listing, unaware that this agent has a fiduciary responsibility to the landlord. This is akin to having the opposing party’s lawyer represent you in court—not exactly a recipe for success!

To ensure fairness and avoid conflicts of interest, Jennifer emphasizes the need for tenant or buyer-exclusive agents, particularly those who understand the intricacies of healthcare practice spaces. This includes knowing how to negotiate better lease terms, finding spaces that fit the unique needs of a dental office, and properly timing the process. Waiting until the last minute or rushing real estate decisions can lead to poor leases or missed opportunities, so starting the process at least a year or more in advance is key.

Another invaluable tip from the episode is to always negotiate multiple properties at once to keep your options open. Dental practitioners can leverage competition between landlords to secure the best possible deal.

Working with a healthcare real estate firm, such as Carr Real Estate, can give you access to an extensive network of healthcare-specialized agents who can provide no-cost guidance to the buyer or tenant. By securing this type of expertise, dental practices can secure optimal locations with the best terms, allowing business owners to focus on patient care instead of real estate headaches.

To listen to the Beyond Bitewings episode, click here. For more tips and to connect with healthcare-focused agents, contact us for expert advice.

Ideas for Independent Dental Practices Competing Against DSOs

In this, the second of three podcast synopses discussing some of the biggest issues facing dental practices today, we focus on ways that smaller practices can differentiate themselves from corporate providers. (Go here to read the first post in this series, and here to listen to the podcast episode on which this article is based.)

In a dental market increasingly dominated by Dental Service Organizations (DSOs), small practices need strategic advantages to remain competitive. DSOs leverage economies of scale, enabling them to access lower costs and broader resources, making them formidable competitors, particularly in terms of pricing and operational efficiencies. However, independent dental practices can distinguish themselves by focusing on quality, personalized service, and building a positive workplace culture.

One way they can do this is by offering exceptional customer care, something that might be diluted in larger corporate settings. This involves training staff not just in dental skills but in customer service excellence. For example, staff can make a notable difference by remembering personal details about patients – like upcoming vacations, recent marriages or births, or promotions at work – which can be noted in their profiles and mentioned during visits to create a more welcoming and personalized experience. 

Moreover, fostering a strong workplace culture is vital. Independent practices often offer a more intimate setting where employees can feel genuinely appreciated and part of a team, unlike in some larger organizations where they might feel like just another number. This can be enhanced by providing opportunities for professional development, recognizing employee contributions, and ensuring that work-life balance is respected. Practices that invest in their teams not only improve morale but can also see increased patient satisfaction, as happy employees are more likely to provide better service.

Independent practices can also differentiate themselves by focusing on the qualitative aspects of their services. This includes the way they manage patient relationships, the atmosphere of the office, and how they handle patient communications and follow-ups. Practices might consider adopting advanced customer relationship management (CRM) systems to manage these aspects more effectively, ensuring that every patient interaction is as personalized and engaging as possible.

Incentivizing staff through performance bonuses linked to patient satisfaction and online reviews is another strategy. This not only motivates staff but also helps in building a positive online presence, which is crucial to attracting new patients. Offering unique services that DSOs may not provide, such as boutique cosmetic procedures or advanced patient education sessions, can also create patient “stickiness” and encourage them to refer you to their friends and colleagues.

Finally, embracing technology is crucial. This doesn’t mean only investing in new dental technologies but also improving the digital experience for patients. Ensuring that online booking is seamless, enhancing the practice’s website, and utilizing social media effectively can significantly enhance a practice’s visibility and appeal.

By focusing on these qualitative differentiators, independent dental practices can carve out a niche in an industry increasingly inclined towards consolidation. This approach not only helps in competing with DSOs but also in building a loyal patient base that values quality and personal touch over cost alone.

At Edwards and Associates, we take pride in the fact that we know the dental industry so well. And while we focus on your practice’s financial health, we know others that provide myriad other services and are happy to make referrals that will enhance your service delivery. Reach out to us if we can help in any way!

Strategies for Smaller Dental Practices to Navigate the Current Challenging Landscape

The closure of Walmart Health’s dental centers is a stark reminder of the evolving landscape in dentistry. Smaller dental practices face significant challenges, from insurance reimbursement pressures to growing competition. Here are key strategies to help smaller practices cope and compete effectively.

  • Addressing Insurance Reimbursement Strangleholds Rising costs and capped revenues due to insurance policies can severely impact profits. One effective strategy is to decrease the amount of insurance plans you take or transitioning to a fee-for-service model. Although daunting, when managed skillfully, this transition typically results in very little patient loss which is quickly offset by the increased revenue.
  • Competing with Corporate Dental Organizations Private equity investors continue to expand into dentistry, intensifying competition. Smaller practices can leverage social media, maintain user-friendly websites, and take advantage of patient communication tools like automated reminders and feedback systems. Engaging patients through informative content and showcasing expertise can enhance patient retention and attract new ones.
  • Combating Mental Health and Burnout The pressures of the profession can lead to mental health issues and burnout. Promoting a healthy work-life balance, offering mental health resources, and encouraging regular breaks and vacations are crucial. Peer support groups and professional counseling services also provide necessary support for dental professionals.
  • Ensuring Data Security and Privacy The digitization of dental records increases the risk of data breaches. Implementing robust cybersecurity measures, such as encryption, secure access protocols, and regular software updates, is essential. Additionally, educating staff on best practices for data security – and even working with an IT provider to train and test employees with fake phishing attacks – can help protect patient information and maintain trust.

By addressing these challenges with strategic approaches, smaller dental practices can not only survive but thrive in a competitive environment. Embracing changes, investing in technology, and prioritizing well-being will pave the way for a successful future for your dental practice. If you would like input or assistance navigating financial or tax issues, reach out to us to schedule a conversation.