Cliff's Notes

The Business of Dentistry

When someone tells me ‘no’. It doesn’t mean I can’t do it.

et-the-extra-terrestrial  Ok, what does E.T. have to do with a dental practice? Well, E.T. is not the story, it’s the side story about how executives at Hershey Chocolate launched a new product when the first answer was NO!

In the movie there was a seen where E.T. follows and eats a trail of candy. Originally the movie producers approached Hershey Chocolate to make a deal to use M&M’s but the executives at Hershey didn’t like the story line and didn’t feel they wanted the M&M’s product associated with a space alien. However, a new product was just launched and it was struggling in the market. Common sense was to use the movie script to promote Reese’s Pieces and let it sink or fly. History shows the success of that decision. They found a positive in a business relationship that had a big NO on the surface.

Running a dental practice (business) will always have risks you have to take. The risk maybe prescribing a difficult treatment plan or the investments you make during your career. The biggest risk you will need to take is in your own confidence.

Just recently I sat just on the outside of two practices merging together. Practice mergers are difficult but very doable. Partnerships and group practices are the future of dentistry so a workable business relationship, if structured correctly, can be very favorable. Think about it, if the practice was open more hours and never had to shut down for vacation, what additional revenue can be generated?

Practice mergers usually start by chance. Someone brings up a subject and the conversation takes all different directions. The Disney Co. & MGM Studios’ deal started by a chance meeting on a NYC sidewalk and a cup of coffee. The conversation just needs to start., an idea should be expressed.

After there is a desire to explore options you will need to spend some money. You need to engage a “Dental Practice” Transition Specialist. Do not go to an attorney or accountant, they cannot create a customized contract and they may favor one side. A Transition Specialist is NOT a dental practice broker, although they do fill that role, they are mediators that understand personality, abilities, work load distribution and all other aspects of a planned long term business model.

Being part of a partnership or group also requires an exit plan with several doors. Let’s say that there is a group of 4 professionals and one seriously violates the code of ethics, how can the other 3 deal with it. Maybe there is a buy-out offer, how can it be approached or god forbid a partner dies, how do you deal with the estate. Now there are professionals that customize these legal arrangements but the Transition Specialist job is to bring all of these points to the table and organize the final contracts for your attorney and accountant review.

A top level Transition Specialist will cost about 5%-8% of the value of the merger. They can also provide direction in funding if necessary. This is money well spent, you should not be negotiating with your future partner/s the Transition Specialist will be the bad guy so that the good guys can work together for a very long time.

Please free to contact me at any time with any questions or concerns.

Henry Schein 2GKAS Give Kids A Smile – Friday, February 5, 2016

January 4, 2016 - Posted by | Uncategorized

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