Andy Acton discusses some of the common concerns dentists have when buying or selling a practice.
Whilst the value of practices has changed enormously in the 21 years I’ve been helping dentists buy and sell, one thing that hasn’t are the concerns that that many going through the process experience. They say a problem aired is a problem shared, so here are some of the most common fears encountered and, more importantly, some reassurance that might mitigate those worries.
“I fear a patient will make a complaint”
The fear of a patient complaint for many principals is real. There are many horror stories of spurious complaints designed to illicit a discount or refund. Thankfully they are very rare but do happen and cannot take away from the ongoing concern among dental practice that it ‘could be them’.
In life we often carry around worries of things that, on balance, are less likely to happen – but that doesn’t mean that we can banish those thoughts completely.
Whilst it is unlikely that selling your dental practice will be driven by the risk of a patient complaint, it is commonly cited as being one of the reasons.
“I will never be able to afford a dental practice”
It is no secret that the value of dental practices is at an all-time high. For many this can feel like being able to afford a dental practice is beyond their reach. However, with a bit of planning it is possible, but just might take a little longer to realise this dream.
You typically need a contribution when buying a dental practice of 20 per cent, so a £400k practice would require a deposit of £80k.
Many buyers decide quite early on in their dental career that they want to own a practice and this is the time to start making provision for your deposit. These savings are an investment in your future and, with the average profit in a dental practice between 22 per cent and 25 per cent, could be the best investment you ever make.
Depending on the deposit you have available you could work towards the practice of your dreams and target a slightly smaller practice as your first purchase.
“What if the NHS contract changes and affects my dental practice?”
No business is without risk, but dentistry is notoriously a low-risk profession. This is partly why the banking sector is so keen to support dentists.
That said, there is always a concern that a change to the NHS funding structure could negatively impact the viability of a dental practice. If a change were to take place this would be introduced over a period of time and whilst the funding system has changed, the patients still require dental care and will be looking to practices for alternative solutions.
If the NHS funding structure was no longer deemed viable there will be the opportunity to provide a fee scale, which is comparable with the NHS funding structure that is currently in place. This would then become a communication exercise to educate patients about the care they will be receiving and how this would benefit them.
“I am not sure there would be a demand for my dental practice”
At present there is a disconnect between the number of buyers looking for a dental practice compared to those available for sale. For example, Frank Taylor & Associates currently has 2,104 dentists registered looking for a mixed income, leasehold practice in Hertfordshire; this is from a total buyers’ universe of 5,426.
Of course, there will be differences across the country with demand higher in some areas than others. With an appropriate valuation, there should be demand for all dental practices across the UK.
“What if patients leave the practice after I buy it?”
It is an understandable fear that patients either leave and find another dentist once you take over or they follow the departing principal to where they might still be working.
To deal with the second point first, this should be covered off in your sale and purchase agreement giving you recourse to the seller if they continue to treat patients after they sold to you. After all, the goodwill relates to the patient base and ongoing delivery of treatment to these patients.
With regard to patients leaving to find another dentist, this tends to only happen where patients have already moved away, and the change sparks them to look for a more local dentist or they have been unhappy with the practice prior to you taking over. Either way the numbers are small. Most patients will give you the benefit of their custom and it is for you to prove them right for putting their trust in you and your practice.
Ensuring patients have a good first experience under your ownership tends to result in the overwhelming majority continuing to be patients.
If a few do decide to leave, you may not have been a good fit and developed a good dentist-patient relationship so it may be a blessing in disguise