The long-standing tradition in dentistry has been for a dentist to run his or her practice for 30 or 40 years, occasionally replacing some equipment as necessary, and then selling the facility and patient list to a young dentist or associate. That game has changed significantly, but many dentists haven’t realized that yet.
Now, when someone is assessing a practice for acquisition, they are looking at the age of two things: the facility and the patient base. Let’s talk about the first one.
New dental school graduates are learning to work with digital everything. And they are already fully digital in their personal lives. In fact, more and more schools now train on CAD/CAM. (Sirona just equipped Boston University with a full array of CEREC machines for the students to work with, for example.) This generation views digital radiography as standard. They also understand marketing much more than previous generations, and they have grown up surrounded by brilliant retail design, from iPhones to Nike stores.
So when they walk into a dental practice that is essentially devoid of new technology, with tired and dated design, what they see is a tear-down. They imagine that they will have to gut the facility and bring in new technology, as well as create an office design environment that is appealing to patients. From an expenditure standpoint, they are often better off starting with raw office space somewhere else.
So my question is, if you were selling your house after living in it for 30 years, would you not paint, landscape, replace furniture, throw out some magazines, upgrade a few appliances and generally spiff the place up? Because we all know the differences in price between a house in move-in condition, one that needs work, and a tear-down. And we all know which one sells the fastest. So why not do this with your practice?
The economics justify the upgrades, because you will recoup the money in the sale. But something else will happen, something that many dentists don’t expect. Suddenly, your existing patient base starts accepting more treatment, and coming in more often. Why? The place looks new again, and the technology is appealing, especially if you talk about the benefits to them when they come in, or if you use something like PatientActivator to tell your patients about new services and technology.
Which leads to the second part–the aging of your patients. In most practices, the median patient age mirrors the age of the primary dentist. In a transition, the buyer is going to look at the average age of the patients, and price accordingly.
The parallel to the real estate market is that young families with kids are going to look in neighborhoods where the residents have children of similar ages. So a young dentist is not going to be eager to try to treat an aging patient base (who considers him a child, too young to know anything about medicine or dentistry, right?) instead of a broad mix of patients of all ages.
So the second part of your practice renovation is to refresh your patient base. This is a lot easier when the facility is refreshed with design and new technology, by the way. If you’re marketing to new patients, if your practice doesn’t look new and modern, you won’t have good photos to put on your website, and certainly can’t do a video tour. But it also means investing in promotion to bring new patients in–new blood, so to speak, that brings that median age down.
This is a five-year plan, in my mind, or longer. This isn’t something that all comes together in 6 months, but you can certainly execute the first steps–remodel, start adding new tech, market for new patients–and then the results will start coming in. Your production will go up, and when you’re ready, you’ll have a practice in move-in condition, commanding top dollar. Make sense?