Andy Acton explains more…..
When you’ve sold over £2bn worth of dental practices there is an expectation that you know the answers on future goodwill values. I don’t. There are too many unknowns to make a solid prediction.
I have hunches and insights and these change on a daily and weekly basis. What is known is that the market needs three key elements; buyers, sellers and money (primarily from banks).
Currently Frank Taylor & Associates has 5,000+ registered buyers, with 22 new ones registering in the last week. Let’s assume Pareto’s principle is right and only 20% of these would actually buy a practice that’s still 1,000+. So fair to say there is both an audience and appetite.
The banks are keen to lend money, it’s what they do, and lending to safe sectors such as dentistry makes sense from a commercial and risk point of view.
For many sellers it is timing that primarily drives the decision not optimising value, for example, selling due to retirement or poor health. However, with dental practices having been shut for several months I’m sure there will be a keen on what impact this has had on goodwill values.
Goodwill values are driven by supply and demand and as a practice owner this is outside of your control. What is within your control, however, is the operational and financial well-being of your practice.
Restoring your gross fees, in a profitable way, is the priority. This will ensure you will get the very best goodwill value for your practice.
So here are five key steps to enhance the goodwill value of your dental practice.
- Pace of work – in the new world treating as many patients as you did in a traditional day could be challenging (minimising cross contamination etc.)
If you saw 13 patients a day over a 35-hour working week pre-Covid, then maybe you’ll only see nine patients per day in the same time frame post-Covid. Therefore, to see the same number (say 65 in a week) then you’d need to be open for 50 hours. This could be managed by being open 8am-5pm Monday-Friday, with a rota to stay open through the lunch hour and for five hours (say 9am-2pm on a Saturday).
By flexing your opening hours, you can mitigate the pace of work issue. I appreciate this will mean longer hours, but recovery is not going to be a comfortable ride.
2. Engage your team – you are not going to recover and thrive alone. You will get so far and then burn out. You will need the help, support and commitment of your team.
Your new patient experience must quickly become part of the practice DNA and this requires your team to share your vision, goals and support these in all their actions. You will need to show leadership and empower your team with total support. Regular team meetings will play a big part.
3. Productivity – this is planning what you will do in each day.
Pre-Covid your appointment book may have been scheduled on a ‘fill it up’ basis. Going forward there are financial gains to be had by being much more structured in your approach to diary management.
Treatment scheduling, triaging patients prior to appointments to minimise downtime in the practice and accepting online payments will all positively impact on the total practice over course of a day.
4. Pricing – this is a delicate subject given the obvious increased costs around PPE and this being directly passed onto patients.
It is an economic reality, however, that increasing prices will boost profitability. It is important to consider when you last increased prices and identifying treatments that are not so price sensitive. For example, the prices of a routine examination or hygiene appointment will be more sensitive to change than less routine treatments such as a crown.
5. Boost your marketing – recruiting new patients will add revenue and (assuming you run a profitable practice) will add to the bottom-line profit.
It may be natural to regard marketing as a cost, but in the current environment it can be very much seen as an investment. You will want to invest in marketing (social media etc). It ensures you’re visible to new patients and reminds and reassures existing patients that you are back open for business.
By focusing on these five elements of your practice you can manage your environment and your practice performance effectively. This will ensure you have the highest goodwill value possible.
(Published 3 June 2020)