Author: omniadmin

When buying a practice one of the most critical numbers to look at is the number of active patients.  Active patients are typically defined as the number of patients seen in the past 12 to 24 months.  Most brokers use 24 months, but I like to use 18 months in my definition.  When I ask a selling doctor how many active patients they have, I typically get either an “I don’t know”, or a number that is astronomically high.  I’ve had dentists producing $300,000 per year tell me they have 5,000 active patients.

So, how do you get the real number of active patients?There are a couple of ways to get close to the number of active patients.
1.      You can take a day and go through each chart or the patient files on the computer to see when they were in last.  If they have been in the last 18 months, that counts as an active patient.  This would take you a long time.
2.       You can also do an estimation. For a medium-size practice ($400,000 to $500,000 in annual production), you can pull a hundred charts.  You can go through the charts to see which have been in the past 18 months.  You can then divide that number by the percentage of charts you pulled.  If you pulled 10% of the charts, divide by 10%.
3.       A third method and much quicker is to look at the number of recall appointments for the year.   Divide that number by two and that will give you the number of active patients.
4.       The fourth method is to take take the average number of hygiene patients seen per day.  Multiply that by the number of hygiene days per month and then multiply that by six months.

The number of active patients makes or breaks your practice.  Be sure and have confidence in that number.  If you think you are buying a practice with 2,000 active charts when there are only 500, you will have overpaid for your practice.  Spend the time to figure out the active patient number in your due diligence.

Often times I hear of dentists holding off on practice transitions.  They’re in their late 60’s, early 70’s, and even in their 80’s.  They either think they don’t have enough money to retire, or they simply enjoy dentistry.

In many cases, those who have sold and worked back for the buyer found an associate position or volunteered at a clinic and found a more rewarding and less stressful life.  They have no management or financial responsibility and can usually work when they want to.

So, if you’re holding on to your practice “for the fun of it”, look around you.  There’s more fun to be had when you have less responsibility and risk.  Call me and I’ll help you develop a practice transition plan.

 

• Minimum of 3 years Tax Returns and Financial Statements
• Minimum of most recent 3 years annual productions, collections, and adjustments
• Most recent production by procedure code report
• Fee Schedule
• Patient demographic information
• Accounts receivable and insurance receivable aging
• Employee census information
• Copy of the lease
• List of included equipment and furniture
• Outstanding treatment plan report

Now that you have these reports, it’s essential you understand what they mean.  If you don’t know how to read financial statements or tax returns, be sure you have a knowledgeable OMNI accountant on your team.  If you need help with the practice management reports, hire a consultant or third-party practice broker, like myself and my OMNI colleagues.  We can help you evaluate the practice.

In the long run, hiring OMNI experts to evaluate the reports will more than pay off.

We just listed another dental practice for sale.  This one is in Olympia, WA.

This Olympia practice has 3 operatories with a couple of pulse oximeters, x-rays and more; everything a practice needs.  Chairs are older but in good shape. There are “thousands of patients”, but the doctor estimates the active count to be around 2,000.  No financials on the practice will be provided by the doctor, and she would like to get $50,000 based on the equipment and the charts.  It’s a unique situation.

If interested in this dental practice, give me a call at 206-979-2660 or email me at rod@omni-pg.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Remember that you receive new practice listings as well as practice tips and advice once you LIKE US Facebook.com/OmniPracticeGroup.

A couple of years ago, in 2010, banks that financed buyers in a practice transition, tightened their credit requirements.  They began requiring dentists to be out of school for at least 2 years, they would only finance up to 80% of the last 12 months’ production or they would require the seller to take a note back for part of the loan.  In addition, they would absolutely not finance a new dental school graduate and many wouldn’t even do a dental practice startup.  Rates were up around 7% or higher.

It was a rough year for sellers looking to do a practice transition or sale and also tough on practice sales for practice transition brokers.  Practice sales were completely in the tank.

Fast forward to 2012, bank rates are as low as 5.25% and most around 5.75% to 6%.  They will finance up to 85% of the dental practices’ last 12 months of production and typically no longer require the seller to take a note back.  In addition, they’ll even finance dental real estate purchases if the real estate is available at a great rate.  If you’re in the market, or on finance to buy a practice, or think you can’t sell your practice because banks are not financing practice sales, think again.

Banks are back on the field of play and ready to loan you money so get in the game!