How to make your dental business as profitable as possible
If you’re thinking of selling your dental practice, maximising the value of your practice and goodwill can be an effective way of getting the best return on your investment. This can be especially important if you’re planning to use a practice sale to fund your retirement.
There are three questions you should consider to determine if you’ve maximised the value of your practice. A small change each day can add up to a bigger result on the bottom line over time.
1) Am I making the most of every income opportunity?
You’d be surprised how often a practice owner can easily increase their practice value by just exploring ways to increase turnover. Increased turnover can help improve your practices financial performance and future value. Here’s some examples:
Are you on track? Have you set a goal for the level of monthly income or hourly rate you want to achieve in your practice? By setting the goal and making it a regular focus you are more likely to achieve it. Think about how are you monitoring performance and are you keeping on track?
Optimise your space: Make sure you’re fully utilising all the space you have in your practice building. Finding uses for unproductive areas can generate additional revenue and give greater appeal to a potential buyer. For example creating a treatment consultation room to discuss treatment plans with patient including costs of treatment, payment methods, and when to schedule the appointment.
Optimise your diary: Consider staggering surgery hours to more efficiently use your surgeries. A free surgery could be used for a hygienist and again increase revenue and provide better patient care.
Revisit outstanding treatment proposals: Do any patients have outstanding treatment plans they’ve considered in the last 6-12 months but haven’t gone ahead? If so, have you contacted them to find out why they didn’t proceed and if they’re ready to start now? By building this into your regular routine you can minimise white space in the diary while helping your patients complete their desired treatment plan.
Optimise your patient mix: Increasing the number of patients on a payment plan at the practice represents a guaranteed income and increases the value of the practice. Talk to your existing patient base, both private fee-per-item and NHS patients, especially those that haven’t had an appointment in the last 6-12 months. You’ll receive a better return of investment as those patients tend to be easier to engage.
Optimise your treatment mix: Have you considered offering new treatments that are increasingly in demand from patients? For example tooth whitening, anti-snoring or facial aesthetic treatments. There may be members of your practice team that are interested in helping develop these in the practice as additional sources of income.
2) Is your business as cost-effective as it could be?
Reviewing your outgoing costs is an effective way to increase your bottom line. Consider the following:
Are you getting good value for money? Revisit the rates your current suppliers and utilities are charging to ensure that you’re getting the best value from your providers.
Optimise your private patient 'Pay as you go'/ PFPI fees: Review your private fee-per-item charges to make sure that your treatments are profitable. With your operating costs of the practice, the material costs of treatment, and the cost of your time you should be able to do some rough calculations against your treatment costs to ensure they’re giving a net profit.
Optimise your payment plan patient fees: Review your payment plan patient fees, just like your PFPI, to ensure they can realistically cover your costs and surgery time for each category of the patient to achieve your income goal.
Review your payment plan patients: Ensure your patients on a payment plan are in the correct fee category. It’s important to check and, if necessary, re-categorise your patients. The income is received from the patients should accurately reflect the costs incurred to maintain their oral health. E.G. If a patient on fee category B has experienced a large enough change to their oral health, they may need to be moved to the higher payment on fee category C to cover the treatment they now need.
3) Is your practice desirable?
It’s important to take an objective look at your practice through 'fresh' eyes, like your new buyers will. Even an exceptionally productive, and profitable practice could have its value affected by non-clinical factors. Take some time to look at the other details, such as:
Curb appeal: Spend some time and invest money in making the practice look fresh, modern and clutter-free. Make sure the external aspects of the building are appealing and inviting, with clear signage and suitable access.
Ready to go? Fix anything that has been broken (Even the little things that you have gotten used to working around) and action any recommendations from the regulator. If potential buyers would have to make an immediate outlay after purchasing your practice, it will likely reduce what the buyer is willing to pay, by at least that amount.
Are you up to date? Have you invested in key areas of the practice recently?. Things like outdated software systems can give a poor impression to both patients and buyers and may suggest to them that other areas of the practice have also not been invested in.
Don’t forget the lease: The length of the practice lease, and the conditions of renewal can impact the value of your practice. For example, banks will only lend funding for the term of the lease, so if the lease is too short it could limit the desirability of the practice. Lenders will typically look for at least a 10 or 15-year lease to lend against and this is something you need to resolve with the landlord before putting the practice up for sale.
Review your patient journey: Making sure the patient journey and the practice branding are as desirable as possible can help boost the value of your practice.
Denplan can help you with each of the topics above. You can come to us for expert advice, customised practice literature, and direct marketing services. Existing members can read our “Getting to grips with Selling guide ” right now for more advice on our members' dashboard.
For more advice and the chance to discuss your plans in more depth, speak to your Business Development Consultant or call your Practice Support Team on 0800 328 3223
