This article originally appeared in the Principles of Practice Management e-newsletter. Subscribe to this informative twice monthly practice management ENL here.
Buying a dental practice is exciting but it can be overwhelming as well. I recently counseled several young dentists who purchased practices from retiring doctors.
Unfortunately, I didn’t have the opportunity to counsel these doctors until after their new practices hit the one-year mark, because all three of the practices' performances declined within 12 months after purchase. The first practice declined by 27%, the second by 19%, and the third by over 45%. Why did these offices suffer declines when they could have performed much better?
Dentists can suffer many pitfalls when buying a practice, but here are three key mistakes all of these young dentists made that had significant effects.
Three key mistakes
Mistake 1: No endorsement of the new doctors from the retiring doctors
With no endorsement from the outgoing dentists, patients were caught off guard to learn that the longtime doctors they loved and trusted had left and new dentists had taken over. While it’s always best if a selling doctor remains with the practice for at least six months during the transition, a strong endorsement can help to offset the loss of patients.
Mistake 2: Raising fees
Believing that the selling doctors had set their fees below current rates, all of the buying dentists increased fees by 5% to 15%. While increased fees for services such as endodontics or crowns weren’t noticed right away, fees for hygiene services were immediately felt. This resulted in numerous patient complaints and contributed to the loss of patients.
Mistake 3:Making hasty administrative changes
One practice changed from a billing cycle to immediate collection of payment without any advance notice. Another practice applied a $50 missed appointment fee. Both changes resulted in patient losses and complaints. These changes may have been necessary, but the timing and rollout were hastily implemented and poorly handled.
Take it slow
Immediate change usually results in patient losses, even when those changes are necessary. The current patient bases had a strong sense of respect and loyalty for the original doctors, and it will take them time to build positive relationships with the new doctors. The key is to build relationships with patients during the first year and then implement changes slowly after that. Your best asset in this process is the current front desk person. This person knows all of the patients and likely has excellent relationships with them.
In conclusion, when it comes to buying an existing practice, you must put patient concerns first. Avoid the three mistakes discussed here by (1) letting patients know you have the outgoing dentist’s approval and endorsement, (2) keeping patient concerns in mind with any new changes, and (3) proceeding slowly with all decisions.