Whether you are newly out of dental school or have been running your own practice for years, buying a dental practice is a huge commitment. It is absolutely essential to do your homework, ensuring that the practice you select will truly serve your needs. In addition, the paperwork requirements are significant, requiring a great deal of time and effort. With so much going on, it is easy to overlook some very important steps. Here is a checklist to keep you on track when buying a dental practice.
Research Phase
The first step is to research available practices in the area you would like to serve. Make appointments to go see each practice and speak with those in charge. Examine the existing equipment and make note of anything you would like to upgrade or change. Talk to the staff. Find out how many regular patients are currently on the books. Learn as much as you can about the practice’s current financials.
Build a Team
Once you have narrowed down your list to the ideal practice for you, it is time to build your team. At a minimum, you will need to retain a CPA and an attorney. You might also choose to add a business coach, a partner, and other professionals who can help make your transition as smooth as possible.
Apply for Financing
Although some dentists wait until their offer is accepted to find financing, it is far better to obtain pre-approval for a loan. Presenting a letter of pre-approval reassures the seller that you are serious and minimizes the risk of the deal falling through, which can help move yours ahead of offers from other dentists without pre-approval.
Make an Offer
Remember that you are not buying an inanimate object. You are purchasing another dentist’s life’s work. He or she has worked very hard to build the practice and form relationships with both the staff and the patients. Therefore, a lowball offer, like you might make for real estate, is inappropriate. While you certainly want to leave room to negotiate, and to get the best deal, consider the full package when preparing your offer. A fair offer shows respect and will be seriously considered, while a lowball offer may cause the dentist to move on to the next offer without negotiating.
Also include your letter of pre-approval, as well as your resume or CV and letters of reference. These documents show the dentist that if he or she accepts your offer, the practice will be in good hands.
Review the Sales Contract
With your lawyer, go through the sales contract with a fine-tooth comb. Ask for clarification on any clauses that you don’t understand. Make sure all blanks are filled in, and that all terms are as expected.
Manage All Other Documents
If you are assuming equipment leases, contact the lease companies for the proper assumption documents. Review the accounts receivable if they are part of the purchase. Assess the practice’s regulatory compliance status. Also speak with the property owner to set up either a lease assignment or a new lease on the physical location.
File Business Documentation
The exact documents that you need to file vary widely by location. Your attorney can help you determine what documentation you need. In general, expect to file paperwork with the state board, the IRS and state tax commission, any dental societies to which you belong or plan to join, and the unemployment office. You will also need the appropriate licenses and permits to operate a dental practice in your state and city. In addition, you will need to set up a business bank account if you do not already have one.
Get Insurance
Depending on your state and local laws, as well as the requirements of your bank, you may need several different types of insurance. Speak with an insurance agent in your area who is familiar with dental practices to ensure that you get everything you need.
Set Up Your Practice
Although you are buying an existing practice, it is important to adjust it to your needs and goals. Set your fee schedule. Decide which dental insurance carriers you will accept, and file the appropriate forms. Choose an employee benefits package. Set up your accounting system. Decide how payroll will be handled. Organize your billing and insurance filing systems either internally or through an outside company. Order business cards, prescription pads, stationery, and other branded products. Select a dental lab. Order new equipment if needed.
Immediately after signing the sales contract, determine how long you will need to get the office reopened. Review the appointment book and contact any patients whose appointments need to be changed. Send out a letter of introduction to all existing patients, and plan an open house. Meet with the employees to explain how the transfer will affect them. If desired, present a letter from the seller to the patients, employees, or both, to help them understand why the previous dentist left. Send a letter to your own existing patient list, if applicable, to let them know of your new location.
Buying a dental practice is complicated, but the rewards can be significant. Do your homework, assemble an experienced team, and take the time to help smooth the transition for both patients and staff. This will minimize disruptions and help your new practice start off on the right foot.
Ascent Dental Solutions is dedicated to helping dentists build their practices. If you are interested in learning how to take your dental practice to the next level, please contact us today at 413-224-2659.