This article appeared in the September-October 2015 issue of Apex360. Prefer to read it in the digital edition? Click here.
Our American economy is increasingly becoming a centralized system controlled by large corporations. The local coffee shop has been supplanted by a national chain, local banks have been gobbled up by multinational banking institutions, and family farms have fallen prey to "corporate farming." One of the remaining bastions of small free enterprise in America is private practice dentistry. The beauty of private practice dentistry is its decentralization, which rewards efficiency and cost savings. Today, more than ever, private practice dentistry is alive and well! If centralized corporate dentistry takes hold, dentistry will surely end up in centralized medicine's quagmire economy.
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The bedrock of the dental industry is deeply rooted in the free enterprise notion of the "owner-operator." Regrettably, dentistry's successful model is being threatened by corporate dentistry. Many doctors have been enticed into selling out to corporate dentistry by a tagline of "sell and continue to work." These organizations prey upon doctors' desire to relinquish themselves of their dreaded administrative duties in order to solely practice clinical dentistry.
When corporate dentistry's premise is examined more closely, one discovers its inherent fallacies:
1. You receive less for the practice—When a doctor sells out to corporate dentistry, the selling doctor usually does not receive the full value for his or her practice. Corporate dentistry valuation models have remained whetted to rigid, outdated valuations. Thus, the doctor may sell out at an undervalued price. Furthermore, many of the corporate dental organizations require that the price include a risky seller "carry back." Such a scheme is unnecessary in a traditional sale since the selling doctor typically receives 100% of the sale price at closing.
2. You are paid less for your work—In corporate dentistry transactions, selling doctors are usually required to work after the sale. Most disturbing, they are required to work for far less than they would receive in a typical associateship and for even lesser amounts than if they were to continue to own their own practices.
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3. You are still responsible—Although the corporate dental organization purports that it will manage the practice for the selling doctor, the selling doctor essentially continues to manage the practice. This management responsibility does not go away when the practice is sold since the former owner is still managing the staff and is legally responsible for patients' care.
4. You lose control of the practice—Something else that frequently happens after a practice sells to a corporate dental outfit is the introduction of government assistance programs and deep-discount PPOs, expanded schedules, and new administrative and clinical protocols. In other words, the selling doctor gives up all control over the direction of the practice and must adhere to rigid corporate dental bureaucratic policies. Sometimes staff members are terminated when the corporation takes charge since loyal staff suddenly become "expendable" to the corporate executives.
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Obviously, selling a practice and working afterward appeals to some doctors, and it may be the right fit under certain circumstances. Nevertheless, from many viewpoints, if a doctor sells out to corporate dentistry, he or she usually takes less for the practice; makes less when working for corporate dentistry; continues management, legal, and professional liability; and loses control over the direction of the practice. If you are enticed by a tempting tagline, make sure you do a thorough investigation and are properly represented before you sell out to corporate dentistry. You've worked a lifetime to build your practice, legacy, and reputation. Don't sell yourself short, and make a stand for American free enterprise.
