Practice Impact serves members of the dental profession with practice valuations, practice sales/transitions, associate buy-ins, and consulting.

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Practice Impact

Mergers Are a Win-Win Situation for Buyers

We often have dentists ask the best ways to grow their practice.  There are several options including marketing, increasing clinical hours, and adding new technology.  All of these are great ways to increase production and collections, if they work.  But, there is no guarantee that you will get the bump in your practice that you hoped for.  One proven way to jump start your practice is to add patients, and one good way to do this is to merge another practice into yours.  Does it cost money?  Yes, but the risk to reward ratio is definitely worth it.

The trick to a successful merger is finding the right practice.  You should look for a practice that is geographically close to your practice, no farther than 3 to 5 miles away, slightly farther if you are in a rural area.  If the practice being merged accepts PPO’s you need to be sure that you accept the same PPO plans or that you can become credentialed with these PPO’s as well.  You also want a practice whose patient base is not geriatric, is accepting to treatment, and who still have plenty of dentistry to be done.  A retiring doctor who has quit selling dentistry and has mainly been doing hygiene is a great candidate for a merger.  Often these practices do not have a large patient base but that’s ok.  A merger is hard to do and very expensive if the patient base is too large.  In most mergers the buying doctor pays for each patient record so you want a boost in your practice, but don’t necessarily want to double the size of your practice overnight either.

Often times, when a doctor decides to merge his practice into another, it means that all other options have been exhausted or that due to the age and condition of the equipment the practice cannot be sold at a premium price.  A reduced price makes this an excellent opportunity for a buying dentist – a low price with maximum potential.   The minimal cost for patient records makes this a low risk deal.  It is one that many doctors can afford to pay for themselves and a sure bet for those that decide to take out a bank loan.

Mergers are also low risk due to the costs outside the purchase price.  By merging another office into yours, you add additional patients and thereby revenue without adding many costs.  You will not encounter the extra rent, utility or equipment expenses that you would experience if you purchased or opened a satellite office.  Supply and lab costs will rise due to the increase in production, but those are expected to rise anytime your production increases.  You may also need to hire an additional staff person or extend clinical hours, increasing your staff expenses, but the extra revenue generated should cover these expenses and depending on how busy you were before the merger, you may not even need to do this.

One other added benefit for the buying doctor is that by merging a local practice into yours, you eliminate one competitor from your area.

Feedback from all of our buying doctors who have purchased patient records is positive.  In fact, almost all of them have told us they wish they have explored a merger earlier and that if any other merger opportunities become available near them that they will definitely take a look at the practice!