As dentists, you encourage your patients to come in every six months for a check-up. You know that proper hygiene and routine dental care can often prevent many long-term and more serious dental issues.
When is the last time your dental practice got a check-up?
Especially if you’re looking to transition out of your practice, spending more time in it might not sound appealing. However, you can realize a better practice value – and happier patients and staff after you leave – by evaluating your practice before you sell.
Consider this your six-month, in-house hygiene check-up. When you go back in six months (to sell), how do you want your practice to operate?
The Importance of a Practice Check-Up
If new patients have been harder to come by, profitability is slipping, productivity is dropping, or your practice is otherwise not operating at full capacity with a happy, engaged staff – you might need to make some changes. The extent of these changes is difficult to assess without looking carefully at the entire process. That’s where a check-up comes in.
Potential buyers will be scrutinizing your practice anyway. Make it harder for them to find inefficiencies or areas that can drag down the sale price. Your dental broker can work with you to identify and improve a few key areas in the months leading up to your exit.
What to Assess
Just as your hygienist asks patients about their daily dental habits – flossing, brushing, etc. – you also want to look at the daily habits of your practice. These numbers include:
- Average production for new and existing patients
- Daily schedule: capacity vs. actual
- Daily schedule: no-shows and last-minute cancellations
You also want to look at the patients and their level of care, overall.
- Number of new patients monthly (at least six months)
- Patient referrals
- Percentage of single-tooth treatments
- Need-based vs. elective procedures
- Case acceptance rates
- Accounts receivable (AR) aging report
Finally, look at the people (this includes you):
- Staff job descriptions
- Staff evaluations
- Dentist evaluation
- Staff benefits
Why These Areas?
Some measures, like the number of new patients, patient production levels, and AR aging are easy to understand. There are certain benchmarks you need to hit in these areas to ensure success. For example, if you find that 30 percent of your AR is more than 60 days old, you can begin to implement a more aggressive collections policy, including scripting for your staff, more frequent patient communications, and requiring payment at time of service.
Other areas are less clear. For instance, why would you evaluate your daily schedule? To check for inefficiencies. If you can fit in more patients, but you don’t, perhaps you need to reevaluate the scheduling policies, like requiring a new appointment if a patient is 15 minutes late.
Why would you analyze need-based versus elective procedures? Or single-tooth treatments? Performing more of these services usually equals more profitability, not to mention a patient with better oral health. If you’re having trouble moving from preventative care to elective procedures, perhaps additional training on selling these services, along with offering in-house financing, would move the needle.
If you’re looking to sell within six months, we recommend choosing no more than two or three areas to focus on. Avoid major investments in technology or software unless not doing so would drastically impact the practice’s value. Once you determine your current numbers, work with your dental broker to set realistic and achievable goals. Whether your goal is to reduce collections by 30 percent within four months, add 20 new patients a month, or implement new scheduling policies within three months – your goal should add immediate value to the practice.
If your transition timeline is longer than six months, you have some flexibility in how you select your focus areas. Either way, a practice check-up is a valuable and worthwhile exercise no matter when you plan to sell. Your goal is to leave your practice on a high note; a practice checkup can help you do that.
Contact our team of dental brokers with any questions – we are here to help make your transition process easier and more efficient.