Looking to grow your practice and make more money?  During these economically slow times some dentists have unsuccessfully attempted to cut overhead and increase fees to keep their net from dropping. 

• If you are a mid- career dentist now is a good time to consider merging a near-by practice into your office to increase your net substantially.
  
  
• Mergers usually involve dentists in their late career who have been looking into an exit strategy. 
  
  
• Many older dentists have patients that are in a “maintenance” phase.  The right education process with his/her patients by the purchasing dentist usually results in increased production by providing additional necessary treatment. 
  
  
• The cost to grow a practice patient base by attracting new patients and then cultivating the new patients to accept 6 month checkups can be substantial.  It often takes years to recoup the money spent in marketing to attract new patients.  Many of the patients that are attracted by external marketing have never been regular dental patients.  Some are not willing to pay for dental care.
   
• When you obtain a merged dental practice you purchase existing active patients who have been regular patients for sometimes 10 to 15 years.  Many place a high value on their dental care and are more than willing to pay for dental service.

If you are considering a merge,  CALL US!   678-482-7305  We can help you structure the deal and ensure patient transfer. EMAIL US!  info@southeasttransitions.com

If you are a dentist that has seen an increase in overhead with a decrease in gross and net income, the solution could be in your own back yard.  Merges always work.  I have never seen a failed merge, if there is a sale associated with the merge. 

Why are mergers the answer?       

What happens to the practice numbers in a merge? To illustrate the typical profitability of mergers let’s consider the following example:

Many times your operating expense -to-profit ratio is 60%-40%;

The reverse would be true in the merged practice.  Your expenses would only be 40% and profit 60%, including debt service.  

The adjusted rent % would be 6% to 8 %; insurance adjustment 2% and salaries would be 15% to 20%.  If the net income of the host (purchasing) dentist was 35% to 38 % before merge the new net from increased production would be 58% to 68%.  Even if you factor in debt service of 9% to 11% the profit margin is still 49% to 57% vs. pre-merge 35% to 38%.

 It is glaringly apparent that if the purchased practice gross yearly income was $400,000 and the host‘s practice was $500,000, 57% of $900,000 is much more than 38% of $500,000.  That boils down to an increase in net of $313,000 and 80% of that increase is passive income.