Serving Better Smiles: Should You Buy a Dental Practice?

Dental Practice

Buying a dental practice could be an excellent choice if you’ve recently graduated from university or want to be more professionally independent. This endeavor lets you gain financial freedom and build a loyal patient base. It can also help you avoid the startup costs of building a new practice from scratch, like purchasing equipment and securing a location. 

While this option may seem more convenient than constructing one, you must not decide on this endeavor impulsively, like other significant investments. It means sitting with your staff, considering everyone’s requirements, and discussing the benefits and drawbacks of acquiring a dental clinic. Nobody should purchase a property and eventually regret it.

If you’re ready to level up your professional growth, this article will discuss the pros and cons of buying a dental practice. We’ll also teach you how to get one properly. 

What Are the Benefits of Purchasing a Dental Practice?

Buying an existing dental practice has benefits like inheriting an established brand, patients, and staff and not starting from scratch. It also allows you to use existing equipment or systems without advertising as hard. 

What Are the Drawbacks of Buying a Dental Practice?

While getting an existing dental clinic can help you reduce building and advertising costs, remember that it has drawbacks, like other things. Transitioning to a new dental practice involves patient turnover, employee departures, and unexpected expenses. It also means handling existing employee and patient issues and potentially inheriting a lousy reputation.  

How to Ensure a Successful Dental Practice Acquisition

After differentiating the pros and cons of buying a dental practice, this section will enumerate six helpful tips for a successful practice purchase. 

1. Consult Industry Experts for Advice

Before buying an existing dental practice, consult with industry experts, including a practice transition consultant or broker, to understand the market price and ensure a smooth transition, and a dental-specific certified public accountant (CPA) for advice on tax strategy, best practices, cost analysis, and expense averages. 

You should also ask a dental-specific lender and attorney. A lender offers more flexibility and understands your needs better, while dental-specific lawyers can provide valuable advice on legal matters related to the transaction.

2. Consider Your Loan Term and Structure

Dentists should opt for a longer loan term with flexible payment options and prioritize increasing cash flow to make additional principal payments. Financial experts recommend locking in a fixed interest rate instead of going for an adjustable rate.

3. Remember Your Values, Beliefs, and Philosophy

When acquiring a dental practice, determine if it aligns with your professional vision, quality care beliefs, and professional values. Also, consider the practice’s capitation, specialty care, referrals, the existing patients’ lifetime value, and marketing strategy. Remember that having more details can help you make better choices.

4. Consider Your Practice Acquisition Options

Different acquisition methods include 100% buyout, buy-in, room to expand, and associate with the option to buy.

5. Determine Your Prospective Practice’s True Value

You must determine a practice’s market value when buying it because the seller’s perceived value may differ from the actual value. Generally, clinics sell 70% to 90% of their previous year’s revenue, but specialty practices may sell for less due to referral unpredictability. Some sellers may attach sentimental value to their property, which you should also consider.

6. Never Rush the Transition Period

Take a slow approach to change during the transition period after buying a dental practice. Understand the existing system and processes, maintain familiar faces and traditions, and assure existing patients that they’re now under your care but will receive quality services. Also, be open to questions and feedback to prevent confusion and patient loss.

Buying to Start a New Professional Chapter

Buying a dental practice can be exciting but involves carefully considering your needs. You can make an educated choice by weighing the pros and cons and consulting the right professionals. 

If you’re struggling to buy a dental practice in Framingham, MA, call Ash Dental CPA! We provide high-quality but affordable accounting services for dental and healthcare professionals. Schedule a complimentary consultation now!