When it comes to buying or selling a dental practice, demographics are key. PMA Practice Transitions consultants, Matt Sherer and Joe Gordon, lend their insight as to which demographics are important to buyers or sellers and why.
Transcript
| Matt Scherer: | Hello, thanks for joining us today. My name’s Matt Scherer. I’m with PMA Practice Transitions. And I primarily cover Ohio and Western PA. And I assist dental professionals who are looking to either sell or buy a practice. And my colleague is- |
| Joe Gordon: | I’m Joe Gordon and I do exactly what Matt does, but I do it in Indian and Northern Kentucky. |
| Matt Scherer: | And you do it well, Joe. |
| Joe Gordon: | Thank you Matt. I appreciate that. We’re here today to talk about somewhat an esoteric subject that a lot of people don’t spend a lot of time thinking of, but we’re going to talk about demographics of a dental practice. |
| Why do you think that’s important, Matt? | |
| Matt Scherer: | You know, I think one of the biggest things that I try to focus on with demographics is how many dentists per patients am I looking at in a specific area, right? |
| Joe Gordon: | Yeah. Very important. |
| Matt Scherer: | I don’t want to go into an area where there’s 900 patients per dentist versus maybe an area there’s 2500 patients per dentist, right? |
| Joe Gordon: | Yeah. Exactly. |
| Matt Scherer: | You would probably be a little bit more successful in the latter of the two. |
| Joe Gordon: | Exactly. |
| Matt Scherer: | But not only with demographics when it’s, when it talks about patients per dentist, but we’re also talking about demographics in a specific dental practice. |
| Joe Gordon: | Without a doubt. Without a doubt. |
| Matt Scherer: | So it’s age of patients, or age range of patients. Where the patient’s coming from. Zip codes and things like that. Especially if a dentist has more than one location. That’s hugely important, and they’re only selling one of their locations. |
| Joe Gordon: | Very important. Very important. |
| Matt Scherer: | Right. So I’m sure you seen it. |
| Joe Gordon: | When we talk about zip codes, the reason it becomes important from the buyer’s standpoint is, a large number of practices have been established for years and years and years in one location, and as populations have shifted, you’ll see that their patient population has moved away from that geographic area, but they continue to make the drive back to the practice, because they trust them, they know all the people there that they’re in love with them. |
| The problem that you have from a buyers standpoint, when you make that transition, it gives those patients the opportunity to rethink where they’re going to go for their dental care. | |
| Matt Scherer: | Absolutely. |
| Joe Gordon: | So you don’t want to pick up a practice where 50% of the population is outside say a 10 mile range, but they’re still making the drive out of loyalty, because now they have an excuse not to do that. |
| Matt Scherer: | I mean if you’re not looking at patient demographics, that has to be up on your due diligence list for sure, because that, I’m not going to drive 10 miles anymore if I love my dentist and he or she retires and I’m not sure about the new dentist. I can go closer to my home, I’m going to have to see a new dentist anyways, I’ll just go there. |
| Joe Gordon: | Age is another very important factor in that, as a professional ages, usually their client base ages along with them. And you don’t want to pick up a practice where everybody’s 60 plus that you’re going to see there, because eventually, that patient base is going to fall off. You want to see that they’ve still maintained good new patient flow. |
| Matt Scherer: | Yes. |
| Joe Gordon: | And that their age demographic matches the area that you want to practice in. |
| Matt Scherer: | Along with age, comes what type of dental work needs to be done, right? So obviously the older you are, maybe the less dental work needs to be done? And if you’ve got an aging population and most of them have dentures or whatnot, then there’s not going to be a whole lot of dentistry to be performed. |
| Joe Gordon: | And we also look at demographics in term of the population of whatever locale that you’re going to be in. While I’m a big fan of rural practices, and Matt is too. |
| Matt Scherer: | Absolutely. |
| Joe Gordon: | You just have to recognize that those are not growing areas for the most part. They’ll maintain the population, but there’s less competition in those areas. |
| Matt Scherer: | Yeah. And I think it ties back to what I said earlier, is how many patients per dentist? So do you want to go after 900 patients. Or do you want to go after 2500 to 5000 patients? |
| Joe Gordon: | Right. |
| We work with professional groups that can go out and get some of this market data for us. | |
| Matt Scherer: | Absolutely. |
| Joe Gordon: | And factor that into the value of the practice. |
| Matt Scherer: | Well, we appreciate your time today. Thank you for joining us. If you like us, give us the thumbs up and certainly share us with your colleagues and friends. Thanks. |