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Managing Your Practice’s Value

By Greg Auerbach, MBA

Have you looked at the internal processes of your of your office recently? If you haven’t, it may be a good time to do so. Not only do your systems affect your bottom line, but they can also affect the value of or even the ability to sell your practice.

Scheduling
Procedure blocking your schedule can be one of the best ways to mitigate stress in your daily routine while providing security to know that your practice will pay the bills (and you!). If you feel freshest in the morning, prepare crowns and do more intensive procedures then, saving fillings for the afternoon. Have your staff explain that this scheduling is done with the patient’s best interest in mind. Similarly, schedule your new patient exams just after lunch so that you’re never late for that appointment (what a great first impression for a new patient). Training your office to operate at this skill level and directive is invaluable in a transition.

Team
Speaking of your team, how well trained are they? How do they treat your patients and each other? How do YOU treat them? Even the best owners can get complacent and have internal team conflicts. Continual training and improvement is vital for your staff and practice, but it’s not just for fulfilling requirements – it can help your bottom line through higher quality, more efficient and cost effective service. Not only does that mean more income to you in the short term, but, generally speaking, what helps net income helps practice value. In addition, having an experienced, highly trained staff, aware of the practice intricacies of how a profitable and successful office should run, you have immediately offered a valuable and transferable practice asset.

Fees, Collections, and Insurance
Do you get paid for your work? That’s not just a collections question. If you’re producing dentistry but not collecting on it, you will find it difficult to pay your bills (again, and yourself). What about reduced-fee insurance, though, do you accept any plans? If you do and are pushing your full fee paying patients aside, you are essentially not being paid for your work and the losses can be substantial. For example, if you take an 80% of UCR PPO plan, your 20% discount may result in a 65% or more cut in your pre-tax compensation. Of course, this assumes that your fees are at the appropriate level, it can be much worse if they are not. As you’re continuously advised, update your fees regularly.

Why do these systems matter, though? Primarily, buyers will look at these and others in evaluating your office as a purchase opportunity. The systems noted are the most obvious and sophisticated buyers will look at many more, determining the quality of your practice and price they are willing to pay based on what they find. Even to the less sophisticated purchasers, poorly run offices stand out in the market. Statistical and financial reports directly reflect the internal office processes. These reports are also important in a formal valuation and the quality of the practice’s systems are usually scrutinized as a component in the tools utilized for evaluation.

Whether determining appraised or fair-market value (the actual price paid), the internal systems of your practice play a much more important role than you may initially think. If you do not feel that your practice is operating at its peak efficiency, the time to begin to fix those processes is now. Not only will you greatly enhance the value of your practice but you will reap the professional, lifestyle and financial benefits on a daily basis.

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