Nowadays, the notion of a dental practice “going digital” seems about as archaic as the bow drill and dental key. Almost every practice has “gone digital,” so much so that we take for granted how far technology has come, and the root business challenges that caused dental practices to go digital in the first place. Every now and then, it’s important to step back and remember where you came from and where you hope to go, and to assess the tools that can help you get there. Here are five reasons I went digital 30 years ago, and how the dental practice management software I chose still guides much of my business today. Reason 1: Grow your patient base, not your floor space Faced with having to either expand my office square footage or pay for expensive storage space, I started to look for ways to end my paper charting. I eventually purchased my first computer, which allowed me to buy a practice management system, avoid hand writing, and eliminate the need to hire another employee – so it was a wise investment in my eyes. It was at that time that I truly began to go digital. We started slowly by scanning in all of our active patient charts, and we eventually scanned in our entire patient database. Now, I can’t even think about how much time and floor space we wasted with those paper charts. Reason 2: Simplify your daily tasks Now, practice management software makes everything easy. I can access my files from anywhere with an Internet connection, I never lose an X-ray, and the overall organization and simplification it brings to my practice ensures that my business operates efficiently and smoothly. Reason 3: Improve the patient experience Before I had this practice management software capability, explaining a dental issue and the proposed treatment to patients was challenging. When patients were not able to see exactly what I could see, it made it hard for them to comprehend exactly why a treatment was needed. When a patient can view X-rays, video, and images of his or her tooth, that visual perspective makes case acceptance much easier. Reason 4: Increased profitability The front office software also lowers my overhead expenses, and cuts back on time and staff needed for tasks such as billing and accounting. Since everything runs automatically in the background, I never have to worry about who has time to take care of these tasks, and I can keep down my staffing level because of it. It also helps that my practice management software seamlessly integrates with other software systems, such as credit card processing and patient education software. Reason 5: A built-in partner Any time I have a question, my support team is there to troubleshoot, answer questions, and walk me through a solution. That relationship and the people behind the product are just as important to me as the product itself. While many of us take going digital for granted, it never hurts to remember the role that new technology has played in helping us as dental professionals grow our businesses. While the innovations over the last 30 years seem vast, I can only imagine and look forward to what new technology and dental practice management systems can help us achieve in the next 30 years. Dr. Gerald Lande is a 1984 graduate of the Indiana University School of Dentistry. Upon graduation he opened Lande Cosmetic, Implant, and Family Dentistry in Carmel, Indiana, and has been in private practice for 30 years. Dr. Lande is a member of numerous professional organizations, including ADA, IDA, IDDS, CDS, ICOI, AAID, and the AACD, and he currently serves as the president of the local alumni chapter of Alpha Omega International Dental Fraternity.
Timing The transition out of dental practice generates its own series of decisions and events that are required to get from active dental practice to a happy retirement. It has been said that in business, indeed in life, timing is everything. A good idea at a bad time will fail. A mediocre idea at the right time can succeed. This adage about the importance of timing is also certainly true about investing. And it is especially true about the decision to sell a dental practice, and timing impacts the value of the dental practice in two ways. First, the decision to sell requires planning and preparation. Any dentist who has been in practice for 20 years or more should have at least initiated the process of planning for the transition out of dentistry. This process should include getting professional advice on financial planning for retirement as well as a professional practice appraisal to establish the present value of the practice. The practice appraisal that is done early can also give the vendor the time to identify and improve areas of lower value in the practice to realize a better selling price. The second element is the market conditions that exist at the time of sale. Much has been written about the demographics of the dental profession and its effects on dental practice purchase and sales over the next five years. Most consultants agree that in the present market environment, the key element is the cash flow that comes with an existing practice versus the time required to create cash flow in a start-up situation. Location, Location, Location A dental practice is a property and therefore location is a key determinant of value, especially when we recognize that the location interacts with the supply and demand for dentistry in a given area. In other words, an important element in a purchaser’s decision whether to buy an existing practice or set up a new one is how quickly the location of a new office will allow a ramp-up of new patients and the cash flow that results from that patient load. Thus the actual market value of the assets that are identified in the practice valuation will always be influenced by the supply and demand for dental practices in any given area. Practice Valuation A professional dental practice valuation is a document that should answer all the questions of the various stakeholders participating in a sale. This includes the vendor who wishes to know, in simplest terms, what the practice is worth and how it can be made more desirable (more valuable). It also includes the purchaser and the purchaser’s advisors, usually accountants and lawyers, who have a myriad of questions about the assets being bought. As well, there are lenders who provide the financing for the transition and their need to understand the security for their loans. In the evaluation, the principal elements that contribute to market value are the hard assets, such as dental equipment, leasehold improvements, office equipment and furniture, hand instruments and consumables, and computer hardware and software. The second element is goodwill, which can be defined as commercially-transferable cash flow. Let’s examine each of these value areas. Dental Equipment Obviously, this is an asset where both quantity and quality count. That is, how much equipment is there and how high-end is it. The third element that enters into the valuation of dental equipment is its present condition, which, in turn, is influenced by its age and past usage. Most evaluators give a higher value to equipment ‘in situ’ where it is functioning as part of an ongoing business than it would be worth if it were broken up and simply sold by the piece as used equipment. It is important to remember that dental equipment and its appearance are a key component of how a practice ‘presents’ to a prospective purchaser. Dentists are ‘techies’ at heart and they relate to tangibles so practices with older equipment or poorly maintained equipment are definitely harder to sell. Leasehold Improvements All dental offices need the basic structural elements of walls, radiation protective lining, five plumbing lines, substantial amounts of electric wiring, and cabinetry. While these assets do depreciate, they remain valuable to a purchaser as long as long-term secure tenure of the office premises can be assured. Therefore, the existence of a good lease at a reasonable rent with options to renew can positively influence the actual market value of the leasehold improvements. The decoration and overall appearance of the premises are also important. That doesn’t mean that the dcor of the office has to be very elaborate or luxurious. What it does mean is it has to be clean, well maintained and in keeping with the clientele of the practice. For example, a suburban or small-town family practice may have a very different level of decoration than a downtown big-city cosmetic practice, which, in turn, may look very different than how a working-class district ‘dental clinic’ presents. What is important in selling each of these practices is that the ‘look’ is appropriate to the location and clientele. Computer Hardware and Software It has become the norm for dental offices to be computerized, especially in larger or busier offices. Dental practice management software can increase efficiency and provide information that makes it easier to manage the business aspects of a dental office. The use of CDAnet’s EDI system also enhances management of accounts receivable in the practice. If the vendor isn’t computerized, the actual market value of the office may not be greatly affected, but the appeal or saleability factor is. Goodwill As stated earlier, the essence of goodwill for business valuation purposes can be summed up as commercially-transferable cash flow. But the actual calculation of goodwill in a dental practice involves the analysis of many other relevant but intangible factors. Some of these factors include: quantity and quality of patient records or charts; existing staff; past history of gross and net income; fixed and variable expenses; recall systems; collection methods and accounts receivable history; fees, services rendered and patient flow; quality and quantity of dental procedures; location of the practice/social and economic conditions; phone numbers; premises lease agreement and potential for the premises; non-competition covenant; competition in the area, and other factors, which may affect the marketability of the practice or restrict or enhance the future earning ability of the practice. The organizational components of goodwill may sometimes be intangible assets, but the results of all these factors are very tangible. That is why we come back to the cash flow and the history of the cash flow in a practice as the central measure of value from a business perspective. Another option that might be considered other than outright sale of a practice is bringing an associate into the practice. In a retirement scenario, this should only be done with prepositioned agreements to sell all or a portion of the practice. Also, don’t forget that one doesn’t have to own a dental practice in order to practise dentistry. Many dentists who have sold their practices and stayed on as an associate have discovered that this can be the most pleasant, rewarding phase of their careers. Finally, all the value factors in a given situation have to be weighed against lifestyle considerations such as age, physical health, mental health, attitude towards practice, other financial resources and family situations. When all these are factored in, sometimes the best decision may be to let the practice wind down. Whatever the transition path, the decisions that need to be taken in regard to retirement require a solid basis of knowledge if the transition is to be successful. Having an excellent understanding of the components of dental practice value can only enhance the chances of achieving that successful retirement. Dr. Bernard Dolansky is past president of both the O.D.A. and the C.D.A., and is a practising endodontist in Ottawa. He is currently pres |
What are two reasons why a computerized practice management system is important to a dental practice
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