Owning Dental Practices
In recent years, the prices of Dental Practices have surged significantly, with Dental Corporates acquiring larger practices and dentists benefiting from accessible financing options. However, the scarcity of small yet viable dental practices entering the market exacerbates the problem. These coveted practices are typically sold through personal referrals, leaving the Dental Press to handle the remaining selection, often comprising overpriced and less desirable options.
Setting Up From Scratch
Squatting offers a cost-effective approach to setting up a dental practice, with the possibility of starting a single surgery practice for as little as £100,000. This budget covers essential elements such as used equipment, units, marketing, and working capital. For those seeking a higher-quality setup to attract independent patients, investing around £150,000 can provide a state-of-the-art squat. The advantage lies in the tax deductibility of the squat’s cost, unlike purchasing a freehold or dental goodwill. Additionally, a supportive principal may allow you to transition from your current associate job and split your time between their practice and your own, easing your cash flow. While a squat may take approximately 9 months to break even, our experience as Dental Accountants shows that squats rarely fail, unlike existing purchased practices. They also offer the potential for significant capital profit when eventually sold. A squat grants you the opportunity to establish your practice exactly as you envision, with the freedom to select and train your own staff, delivering personalized patient care to a loyal following. However, squatting may not be suitable for every dentist, so consider the following alternatives.
Buying A Small Practice
This option appeals to certain dentists due to the immediate patient list available. The smaller scale allows for some autonomy, and typically these practices are reasonably priced. However, there are potential drawbacks, such as inheriting issues with existing patients, staff, equipment, or the reputation of the former principal. Additionally, there may be insufficient patient volume to meet your requirements. It’s important to consider that a practice that has only operated part-time is unlikely to sustain a full-time dentist in the short to medium term.
Buying A Multi Chair Practice
The appeal of this option lies in the potential for high profits within a stable environment with a substantial patient base. Additionally, such practices typically have more leverage in negotiations with PCTs compared to smaller practices with fewer NHS patients. However, the downside is the associated cost, as multi-chair practices can be quite expensive, particularly in terms of goodwill values. It’s crucial to consider whether you are prepared for the responsibilities involved, including managing existing staff and associates who may be older and more experienced than you. There is a risk that associates may develop a negative attitude towards you and decide to leave, which can present a challenging situation to handle. An alternative approach is to join as an “Associate with a view” to eventually purchasing the practice, which allows you to assess the practice, maintain patient continuity, and gain familiarity with its operations. Occasionally, it may be possible to negotiate a slight price reduction in this type of arrangement, although bargaining can be challenging within this closed environment.
Going Into Partnership
Acquiring a share in a partnership practice can be a challenging endeavour. Compatibility with existing partners becomes a critical factor, as implementing practice changes may prove difficult depending on the attitudes of the other dentists. Furthermore, if the new partner is younger than the others, they are often perceived as the junior partner, adding an additional layer of difficulty to implementing changes. It’s important to question whether the other partners value your contribution beyond financial investment. On the positive side, joining a partnership practice provides the benefit of an existing patient base and established practice systems and protocols, making it easier to navigate career breaks if needed. Additionally, these opportunities are often more affordable to acquire since there is limited interest from other potential buyers.
Looking for help and advice on owning a Dental Practice?
Simply phone us on 020 4577 1565 and one of our friendly Dental Accountants will be happy to help.
