🎙️ Finding the “Perfect Dental Practice” | PMA Practice Perspectives Vodcast Ep. 1 🦷

Matt: Okay, good morning. My name is Matt Scherr with PMA practice transitions and on the call today we have John Duboss.

John: Hello, good morning.

Matt: Adam Goldsmith.

Adam: Hello, hello.

Matt: And Keith Nicholson.

Keith: Good morning from Philadelphia where it’s always sunny.

Matt: All right. Do want to let everybody know too, if you don’t already that, you know, John and Keith are both dentists. So their expertise is invaluable as we talk about some of these topics and today’s topic, we’re going to talk about finding the perfect practice. We get a lot of times, you know, buyers looking at practices and for one reason or another, you know, it’s not the right practice. And, you know, so we see some of these buyers just churn through looking at practice after practice after practice and just never pull the trigger because they can’t find, you know, what they’re looking for. And what they’re looking for is our various things, right? So that’s the topic today. Adam, you want to kick us off and talk about some of your experiences that you’ve had with some of your buyers in looking for that perfect practice?

Adam: Yeah, absolutely. There are a lot of attributes of any practice. And I think as long as the practice you’re analyzing hits a majority of those, that should be good enough, that everyone had practices differently. Every practice has a different style, different furnishings, different equipment. It’s gonna be really difficult to find the perfect practice. So I think as long as it checks most boxes, I mean, these people are, unfortunately, these buyers are missing out on really amazing practices that are really profitable and doing, have an awesome patient base and awesome staff just because one or two criteria points isn’t met. And I do think that know, they’re doing themselves and maybe even the patients disservice by not pursuing these practices.

John: I think that’s a great point. I don’t know that you can ever find a perfect practice. I don’t know that you can even build a perfect practice. I know from my own experience when I bought a practice from a practitioner, but later on moved to a new location and I thought everything was perfect. And then I got in there and I said, oh, I could have done this differently. I could have done that differently. But what I did realize is, the one thing that I think a lot of people overlook is they feel like they have to have the newest best everything all at once right now, and I think that’s that’s a big fallacy. Because the fact of the matter is, you know, going in and looking at a practice that’s called five or six operatories and you know your dream practices to have eight or 10. I understand that. But you know, with proper scheduling, proper diagnosing and in in training your staff and you know you can do the same dentistry in a 10 year old chair.

And five operatories as you can in a brand new Tosma Hall with eight or 10 operators and brand new equipment. So I think that’s a great point, that don’t always look at that on the surface, but look at what you can do to make it a better practice before making it a better practice by putting equipment and operatories in.

Matt: Yeah, John, you touched on, I think, the biggest point that I at least see when buyers are looking at practices, gosh, these chairs are old or whatever the case might be. My simple answer to them is I’ve been in the dental industry for over 20 years and you know, I go to the dentist on a regular basis and I can’t tell you what type of chair my dentist.

John: Exactly.

Matt: So the patient doesn’t care, the doctor cares, right?

John: Right.

Matt: Or the buyer cares. And they shouldn’t because the patients don’t, right? They need to be, I think sometimes too, buyers look at some of the things you guys talk about and they’re not looking at, you know, what is this practice doing from a clinical standpoint and what can I bring to the table? And there’s a lot of times there’s a lot of value that they can bring to it.

Keith: Yeah, feel the idea of a perfect practice, it’s a myth and there’s no exact rubric for identifying the best fit. But I think you all have brought up some excellent points. I think one concept that really illustrates just sort of the versatility and options that you have are, you may find a practice that is already operating very efficiently. It’s cutting edge, whether it be the technology or scope of treatments, it may be very compatible with how you envision practicing. And that can be a great opportunity because maybe it’s a more seamless transition. It’s just about sustaining kind some of the current systems and just practice operations. But to the contrary, I think one of the more exciting opportunities is a practice where there’s a lot of latent potential. And whether that be because the current treatment options or scope of treatment more limited or constrained than what you would like to do so you have this opportunity to kind of expand services that would uncover a whole new collection stream. Or if it’s just something about the equipment that you want to upgrade and modernize, that gives you an opportunity to really inject increased revenue or profitability in the future. And that can be a great opportunity as well. So I think that’s important for prospective buyers to kind of keep that those different vantage points as they’re reviewing a deal. And another item that comes up or certainly was relevant for me was just geographic location. And I think spending the time, putting in some considerable thought to where you want to live or the type of community is important in advance. And that will allow you to be a little more targeted as you’re reviewing potential options.

Matt: Yeah. And going along with the geographic piece, I think buyers are missing out on a swath of practices that are very profitable, low overhead, but they’re in a more rural area, right? Because everybody wants to live in the city. And you can do that and still own a practice that’s a bit more rural. You just may have to drive a little bit more to get to work, which I’m finding these days that people don’t want to drive. Um, they don’t want to drive very far. They want to drive 10 minutes to work. Um, and, that’s it, but man, there’s, there’s just diamonds, diamonds sitting out there. Um, you know, and the, the beauty about it is, you know, when you’re, you’re in a more rural area, you’re not fighting for the same, you know, number of patients that everybody else is. The patient per dentist ratio usually is much greater than in a bigger city area or urban area.

John: Well, that’s a great point, Matt. In the period of time I’ve been with PMA, I can’t believe how profitable some of these practices in these rural areas are. You always think, just like you said, you want to go into, I want to be in the biggest population area and I want to be, you know, I don’t know what the reasoning is, but you know, after seeing and, you know, and knowing people that practice in some of these smaller towns and how good of a practice they have, it’s just unbelievable. And, you know, to the one point I was, we were talking about what’s the perfect practice is. Keith, I don’t know about you, but, you know, as I practiced, I’d much rather work out of less operatories. And, you know, as opposed to having like that, what you think the perfect practice is with size and all that and number of operatories.

But one of the things that I really want to help people understand and mentor them on is, you always want to put into the practice and make the practice what you think is ideal. But I would say take a step back and if you really want to improve your practice, improve yourself. Invest in yourself and in how you do things. Just changing how you present treatment and taking a more comprehensive approach in providing treatment will make you more profitable than 20 operatories will. So, you know, that’s the one thing I learned over my 24 years of experience is that I’d much rather do it in a smaller setting with, you know, with less run around and just be more productive and more profitable. And it’s better for everybody.

Matt: Yeah. I’m going to let everybody in on a little secret too. This is like, I don’t know if people know this, but dental practices clinicians typically don’t fail. So, and let me put some context behind that. I used to work for the largest dental lender in the country and we used to lend 2.2 billion a year to dentists for various reasons. And the default rate was less than half a percent. So despite not having maybe a business acumen, they’re successful. I think that’s one thing that, because I’m sure there’s, as I put myself in a potential buyer’s chair, I have 400 grand in student loan debt. And now you’re telling me that I’ve got to borrow five, six, seven, $800,000 to purchase practice. I graduated dental school two years ago and now I’m getting into debt over a million dollars. You got to be kidding me. And I’ve never had one business. Well, maybe I had a business class because I think they most schools give at least a somewhat of a business class, right?

So that’s to me, I think that’s the biggest fear of dentists coming out of school and wanting to own their own practice because it’s, I can imagine it’s very daunting. But the beauty is and the secret is that they’re very successful.

John: Absolutely.

Matt: Despite all that.

Adam: One thing I’d like to add too is, you when we talk to buyers, um, their perfect practice usually resides in a very affluent suburb of a major city where the concentration of dentists is so saturated. Right. And, know, they’re going to have to fight tooth and nail for every single patient through marketing spend, keep their staff because you know, offices, they may know another party at a different office and maybe their, you know, pay rates, a couple bucks higher. You know, they’re going to have to compete in such different levels, their lease usually is a lot more expensive in those highly populated, more affluent areas. There’s so many benefits from an expense point of view and a competition point of view of practicing in maybe 20, 30 minutes outside of where you wanna live. But for whatever reason, their perfect practice always seems to land in the most affluent, saturated, most competitive markets. And so I would say, open up your eyes a little bit to the possibility of being very successful and lapping all the way to the bank by practicing outside of town just a little bit and where it’s not so saturated, not so competitive.

Keith: Yeah, Adam, I think that’s an excellent point. And I lived and breathed that as an orthodontist. We had four locations and that’s kind of been the evolution of the orthodontic private practice model where you may have a core practice or the original flagship office was in a, you know, I guess more urban or populated area. And then as more and more orthodontists move into those communities, know, a lot of times we would find different rural communities that were just satellite offices, you know, 30 minutes to an hour away. And those were great. I mean, they could have been great standalone practices. They were certainly an awesome supplement to what we were already doing. And so I think there’s a ton of, you know, awesome opportunities in various communities. And I think having some latitude with not only, you know, maybe where you live, but also just understanding if you’re amenable to a commute, you know, you can maybe find a way to placate both a desire to live closer to a city, but then also practice in a more rural setting. So yeah, I think there’s a ton of great opportunities with that.

Matt: And I think one of the pieces we’re missing a little bit on owning your own practice is the work-life balance piece.

I think and I don’t know the exact numbers. I know the ADA there was some numbers put out recently dentist salaries as an associate versus an owner of their own practice and certainly the the pace You know, the pay range is a lot higher when you own your own practice versus working for somebody That’s Yeah, so, you know you guys could probably talk to that a little bit better than, than I can, but certainly owning your own practice gives you that work-life balance and you’re not a slave to the man, so to speak.

Keith: Yeah, and that spills into just clinical autonomy as well. So I think there’s a lot of value in being an owner and from the business perspective, not only do you have an opportunity to implement some of your own business acumen or that just creates another more challenging, fulfilling side to being a practitioner. But yeah, I think it’s just a great tool to not only increase earnings, income, but also just your creativity and kind of having that as an outlet to, know, implement new ideas.

Adam: I’ll make one last point too. And when you’re looking at analyzing practices, you know, I may not have every single piece of equipment and maybe a little data here and there, but that gives you an opportunity to make your own equipment choices and really customize the office how you want, but you’re not paying, you know, a premium. You can maybe get a little discount on a practice that still does great numbers, just needs a little TLC. So I think that’s just another thing to consider is that, you know, you can make it your own practice, your perfect practice over time. It doesn’t have to be, you know, move in ready.

Matt: Great point, Adam. Yep. Well, that’s all the time we have for today. I would one last thing is get out there and buy a practice. Right. If you’ve been considering it, you know, hopefully you could take some points that we’ve made today and open up your eyes a little bit or your horizons a little bit and know that, you know, if you want a perfect practice, you have to make it the perfect practice.