Buyer Articles

As we all close out on 2017 we reflect on the year’s accomplishments and successes.  For Omni, we had a record year helping doctors buy existing practices finding new locations for their startup practices.  This enabled us to give to various dental related charities and also towards our annual Thanksgiving Basket Brigade.  We helped feed over 1,000 people at Thanksgiving time.
How about you?  How did you do compared to your goals?  Was one of your goals that you missed to own or startup a practice?
We can help you with accomplishing that goal in 2018.  Here are some steps that will help you check this one off the list by the end of 2018:

1. Decide if you want to do a startup practice or look for an existing practice.   My advice is to first look to see if there is a practice available in the location you desire.  If there is not and you have exhausted your research, consider a startup.  Do demographic research to make sure there is room for another location.  Contact us and we can help with your research.
2. If you want to buy an existing practice, get the word out.   Contact all of the brokers to make sure you are on their mailing list and let them know you are actively looking and want to buy a practice in 2018.
3. Contact a bank that specializes in financing practices.  If you need a list of a few, let us know and we can hook you up with a bank that will do a good job for you.
4. Don’t be a tire kicker.  The likelihood of finding a perfect practice located on the busiest corner property in a stand-alone building with a huge sign, hygiene at 30% of production or higher, annual collections over $1 million, staff that is paid below market wages, brand new equipment, fully digital with a cone beam and a CEREC, and a patient base that needs a ton of work with a price of 60% collections is zero.  So, don’t waste your banker’s, spouse’s, consultant’s, broker’s or your own time by continually looking for the unicorn of a practice – it doesn’t exist.  Instead, look for a practice that fits most of what you desire, but if it doesn’t have everything, you can put some work into it and make it a good practice.
5. When you find a practice you like, don’t low-ball the offer.  If you have looked at a few practices, you know what the price should be.  Brokers should be pricing the practices they list at the market price.  Yes, you can offer a little lower if you feel you need to negotiate the price.   But, if a practice price is at $500,000 and it’s a good practice, don’t go offering $200,000 because you’re trying to get the best deal possible.  The seller will be offended and tell the broker to not entertain anymore offers from you as a buyer.
6. Buy the real estate if it’s available for sale.  With interest rates where they are right now, it makes sense to lock in at a low rate versus paying rent with a 3% increase every year.   Even if you pay slightly above market for the property, it can still make sense, as you own the building and you’re not throwing money down the toilet by paying rent.
7. Once you have made the offer, continue to push towards the closing and do your work.  Complete your due diligence in the practice.  Hire a consultant to help you if needed.  Continue to work with your bank to get them everything they need.
8. Upon closing, keep the practice the way it’s been running if it’s being run well, and don’t make too many changes in the beginning.  Let the patients see you a few times before you make drastic changes.  If it’s a dog of a practice, yes, make changes; but if it’s doing well, why change what’s not broken?
9. Work hard and be present.  As soon as you can, quit your associate job and be in the office as much as you can.  Chip in and help the staff if it’s slow.   Call patients yourself to get them in the door.  Do what you need to do in order to be successful.

All too often, we see doctors who want to be practice owners, but they just can’t seem to pull the trigger.  They can find something wrong and a reason not to buy any practice that is shown to them.   We want you to be immensely successful in your practice and are here to help you in any way we can.
We wish you a Happy New Year and cheers to much success in 2018!

I remember when I bought my first house.  I wasn’t sure if the timing was right, whether the house the real estate agent recommended I buy was the right house or if I could afford the house payments.  At the ripe age of 26, I took the plunge and bought the house.  It turned out that years later, those trepidations I had were irrelevant.  This wasn’t the perfect house, but I remodeled it and made it near perfect to me at that time.  The value grew and I built equity.  I made adjustments to afford the payments and the timing really didn’t matter. 

The same goes for buying a practice.  The practice you buy does not have to be perfect and the last practice you buy.   You buy a practice that fits your needs at your current time in your life.  You put sweat equity and hard work into the practice to make it profitable.  You do a bit of remodeling to make it fit your personality and style.  You work in the practice building equity and you hone your skills as a practice owner and a business manager.  In the end, timing is not as important as you think.  I know many doctors who bought their first practice when interest rates were 15%.  Also, keep in mind that practice owners earn 20% more than associates who are employees.  (Read Rich Dad, Poor Dad if you want to understand why you should own and not be an employee).

The moral of the story is if you feel you might be ready but are not quite sure, you’re ready.  Interest rates continue to be low.  The economy is doing well.  There are great resources that can help you own and run a practice.  If you would like to discuss whether or not you are ready to own, feel free to reach out to any of us at Omni to discuss your individual situation. Send us an email or give us a call at 877-866-6053 today!

In the September 2017 subscription of JADA, there is an article titled “Practice Ownership is Declining” by Marko Vujicic, Ph.D.  As the title reveals, the article is about the decline in practice ownership by dentists.  If you have not read the article, I highly recommend it.  The statistics in the article support what we are seeing in the market for dental practice and some of the articles I’ve written recently.  If you do not subscribe to JADA, here are a few of the highlights.

There is a steady decline of practice ownership, especially amongst male dentists.  Approximately 80% of dentists currently own practices.  Rising student debt, the emergence of corporate dentistry, shifting work-life balance preferences were just a few examples of why there is a decline in ownership.  One of the big questions brought up is whether the trend is a big deal.  It was pointed out that practice ownership is highly coveted and one of the reasons that dentists got into dentistry in the first place.  All else being equal, owner dentists earn more than non-owner dentists.  The question is, is practice ownership no longer as coveted as it used to be by younger, early career doctors?

The decline in practice ownership will continue for years to come.  A comparison to the decline in ownership by physicians, which is now below 50%, was used as a comparison.  Hospitals and groups have taken over the ownership of physician practices.  The study states that physicians’ net hourly income is significantly higher than for dentists; Although, I would say that the annual income is higher for dentists, all things being equal.   The author also claims that physicians are happier as a result of not being an owner of a practice.  With reimbursements continuing to decline, dentists will be asked to do more with less.  An emerging emphasis on quality and value will spur changes in dentistry. 

If you have not read the article, I recommend you take a look.  Email me at rod@omni-pg.com and I will send you a copy. You can also go to jada.ada.org and search for “Practice Ownership Is Declining.”

Over the past several months, the economy has been going quite well.  The Dow Jones average is up over 21,000 and setting all-time highs.  Employment levels are up while unemployment levels are down.  Current unemployment levels in King, Snohomish and Pierce counties are at 3.3%.  Amazing numbers for a strong economy.
The strong numbers have played a part in the increase in practice sales.  Practice owners who are over 55, are seeing the strong numbers and returns in their portfolios and deciding now is the time to retire.  Buyers are also watching the economy and realizing it’s a good time to buy a practice.  Interest rates are still good at between 5.25% and 5.5%.  Consumer’s discretionary income is up freeing funds for consumers to do elective and cosmetic dentistry.   (I know you shouldn’t base your dentistry on discretionary income, but many do).
The result of all of this is that practice listings and sales are up.  We typically carry an inventory of 10 to 15 practices and we’re now up to approximately 25 practices.  We have spoken to other brokers and most are experiencing a similar increase in business.  The interesting thing is that valuations are still staying true to normal formulas and historical numbers.
What this means to you is you can either be a participant in this booming market, or you can be a bystander and watch opportunity pass you by.   If you would like to get any information on any of our practices, let us know.  Consultations and phone calls are always free!