Dental Practice Buy-Out Question

Looking for advice on future practice transition….let me give you some background…

1. I worked as an associate for 3.5 years. Through the help of the owner (a great guy), he helped me grow my patient base to about 1,400 active patients by giving me most of the new patients. He brought me into the practice in order to take over when he retired so he wasn’t so concerned about seeing new patients as long as his schedule was booked. He had a very busy practice and did not plan to retire any time soon, he was just too busy to handle anymore patients.

2. After this time (about 6 years ago), I bought half of the practice – which was basically the patient base, equipment, and everything I had built in those 3.5 years. After this half of the debt was paid, I was obligated to buy the other half, which is his patient base, equipment, and such. At this time, we started splitting the new patients. We have a joint operating agreement, meaning he takes what he collects, and I take what I collect. We pay for our own staff members and overhead, except that which is considered joint operating expenses (rent, phones, etc.).

3. Currently, my half of the practice has about 2,100 active patients, and his half has about 2,400.

4. My half of the practice collects about $650,000/year and his half about $480,000/year – he works 3 days/week.Now….after all that…here is where I need advice. He is about to retire, but still wants to work maybe 2 days/week. I am about to start paying for the other half of the business, which means I, technically, own the practice (patients, equipment, etc). He will work as an associate. I will pay all overhead and he will make a percentage of his collections. In the transition, what patients will he see? I also want to bring in another associate to help out with patient load. His half of the practice could easily collect $650,000 with 4 days/week and some “want-to”.

Should he do hygiene exams on his former/regular patients on his two days, and book diagnosed treatment on his schedule?

Should I give the new associate all new patients in an effort to build his patient base, as I don’t need them with the current volume of patients? Eventually, it will be a buy in opportunity.

I guess I really need advice on how to make this a smooth transition, without making the retiring dentist feel like he doesn’t need to be there. I really look up to this man, as he was a true mentor and friend. I know he is having a tough time with retirement and “giving up” his practice that he has grown for 35 years. Any advice is welcome.


I also think that when you have a sit down with the retiring doctor, you need to make sure he understands that the priority is that there be enough work for you and your new associate as you’ll need that associate for your future. The retiring doctor needs to understand that and accept that he is third in line to see patients, in my opinion.

If you can work it out that he can work two days per week I agree that you’ll want the new patients to see you or the new associate. After they’ve become practice patients though does it really matter which existing patients he sees? Won’t it depend upon the patients wishes to a certain degree?

I need some clarity on some of your numbers though.

1. You say your half of the practice collects $650k, is that JUST you or you and your hygiene?
2. 2,100 “active” patients? The typical GD practice with 1,000 patients does about $750k. You say you have 2,400 yet only collect $650k? I must be missing something.
3. He has more patients and less production? Again, maybe the $650k and $480k are just doctor revenue and even still, that seems really low for nearly 5,000 “active” patients. Maybe the 2,400 and 2,100 is simply chart count?
4. How many chairs do you have?
5. How many hygiene hours do you have each week, average?

We are primarily a PPO practice, so yes, those numbers are lower than avg. Those are not production numbers, but collection numbers, after write-offs. They include hygiene.

Yes, he has more patients and lower numbers. He only works 3 days a week and isn’t really motivated to be busy. That’s an issue for me. There is a gold mine a treatment to be diagnosed from his patients, he is just really conservative in his treatment planning.

It is not just a chart count. Every January, we purge charts and inactivate anyone who hasn’t been in within the last two years. We may have lost quite a few patients due to the recession and just haven’t realized it yet, as their charts haven’t reached the two year mark.

We have 7 chairs, 2 for each of the doctors, 3 for hygiene.

32 hygiene hours per week.

32 hygiene hours equates to approximately 1,000 patients, $200k in hygiene so your gross moneys make a little more sense. The “active” patient count still doesn’t make sense though. I’m still wondering if you’ll have enough work to keep the retiring doctor there for 2 days.

Sorry….I should have clarified that we have 32 hours hygiene per week with each hygienist. I’m not sure if the retiring doctor keeps accurate count of his “active” patients. I know they purge charts every year, but I’m not certain they inactivate every patient that they should. Like I said, this is a joint operating agreement…I don’t have much say in how he runs his side of the practice. He is not a great businessman, but an incredible dentist. I just want to move this practice in the right direction when he retires.

Ok. Now the numbers are beginning to make a little more sense. Sounds like you have a practice that can support one and a half plus doctors, hygiene is doing approximately $300k-$400k?? Therefore dentistry should be approximately $900k-$1.2million for a gross production of between $1.2million and $1.6million. Depending on your PPO mix you should be collecting approximately 85-90% of that on average and I think you said you’re doing approximately $1.130million.

So with a retiring doctor that really doesn’t have the desire to be as productive as they can, keeping them around too long won’t be helping the situation if your real goal is to add another productive doctor who would become your partner some day unless you also implement a marketing plan to grow the practice with new patients, which would likely mean adding another hygienist.

It appears you do have a great patient base to work with, now it’s a matter of choosing the direction you want to take the practice in, choosing the right mix of team mates and if necessary, making the difficult decisions that business owners must make.

Good luck.

This post first appeared on Dentaltown.

Send your questions to Tim Lott, CPA, CVA at

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