Should Dentist Buy-In as a Partner or Purchase Solo Dental Practice?

Let me start off by saying the decision can only be yours and if the numbers are similar from a cash flow perspective it’ll come down to whether you believe working alone is better than working with a partner. If it’s all about the numbers here are my comments:

Practice #1- Rural setting- father/son practice. Father has been practicing 30 yrs. last 10 yrs have been working 2.5 days a week with 3 months off. The son has been there 12 yrs and works 4 days (7hr days) a week with 7 weeks off.

I would be buying the father’s percentage of production. Purchase buy-in would be around 225000.

Does that make you a 50% owner? If so and that means the practice was valued at $450k, does that fall within a reasonable range of value? Based on the revenue it seems to be.

They refer all ortho, implants, and most 3rd molar surgery.

What does that mean? Are these the procedures you do? Any other procedures you do that they don’t?

Roughly 3000 to 3500 patients.

Maybe in charts. If their average hygiene time is 45 minutes or more you’re likely looking at approximately 1,500 “active” patients. What’s the breakdown of the $900k in revenue between hygiene and dentistry? New patients per month?

They do no marketing, no website, and really pretty comfortable with the situation.

So how many new patients do they get and where do they come from? Do they participate with PPOs? If so, what percentage of the practice? Why don’t they market? Only game in town?

The son is open to expanding but doesn’t want to work anymore than he already is.

What’s the reason to expand? Are you talking space or both space and hours?

Compensation is paid out at 40% collections and then split any profits left after expenses paid.

How are profits split? Ownership? Collections? Hybrid method? Is hygiene separated out and split differently?

6 ops and runs around 50-55% overhead. Office produces around 900000 a year.

The overhead looks good and about right for a multi-doctor practice.

Practice #2- rural setting as well. Solo practice- 11 years- 4 days a week with 4-5 weeks off a year.

Why are they selling?

Office does most aspects of dentistry ie cerec, soft tissue laser, hard tissue laser, some ortho, most endo, most OS, and runs a very efficient practice with 5% marketing budget. I am able to do implants, some ortho, and most 3rd molar ext.

Do you do the same? What kind of marketing for $37,500 per year?

Booked 1-2 weeks out. 1500 active patients. 4 ops. produces around 750000 a year with about 65% overhead. Building is also for sale

I’d say no more than 1,000 “active” with only $750k in revenue. Again, of the $750k, what’s hygiene and what’s dentistry? New patients per month? PPOs or FFs? Why is OH 65%? What’s higher than average and why?

Practice would be sold for 500,000 and he would be willing to finance office purchase if I want.

Will they finance the practice AND building or just the building?

Which one is better?

From what perspective? Purely from a numbers perspective there’s not enough information.

I only hear negatives about partnerships but this particular opportunity seems better than most.

I hear negatives about marriage from divorced people also…and occasionally from married people

This first appeared on Dentaltown.

Send your questions to Tim Lott, CPA, CVA at tlott@dentalcpas.com

For more information or to sign up for our newsletter, please contact arose@dentalcpas.com
Follow us on TwitterFacebook and Pinterest