After a brief interruption to comment on Google patient reviews, I want to get back to dental practice transitions. My last blog post on this topic discussed a number of pitfalls to avoid when purchasing an existing dental practice from a retiring doctor. Let me share some specific details based on my experience.

The retiring doctor should leave on the day of the closing=when money changes hands. It is a common misconception that there is value to the buyer when the seller stays on for a short period of time to make introductions to patients. Not true! It is OK for the doctor to leave the practice and have the practice continue on successfully. But you may be playing with fire if you don’t retain the existing staff. The “introduction” and endorsement of the new doctor is made by the retiring doctor in a warm and sincere letter to the patient base. This letter must include a number of vital points.

1.The search – “after a long and careful search I have found a wonderful, talented, compassionate doctor who I know will continue to provide the same care and attention you have come to expect”. List the professional accomplishments – education, training, and experience.

2. The communication – “I have spent countless hours discussing the treatment plans for every patient in the practice.”

3. The continuity – “I am pleased that all of the staff that you have come to love and depend on over these years will be staying on.”  All scheduled appointments will be honored.

4. The thank-you and the pass off– “Thank-you so much for your friendship and continued confidence over these many years.  I am leaving you in good hands, and I know that you will be impressed when you meet Dr. ______. I hope that you will give him/her the same level of support that you gave to me.”

The staff then need to be able to reinforce and expand on these sentiments when discussing the new doctor. The endorsement of the staff is incredibly essential., both on the telephone and in the office. “You are going to love her- she is terrific – and everyone has been so impressed.”

Now all the pieces are in place. The letter was mailed, the staff  enthusiastically supports the new doctor, and the patient shows up for the appointment. But now the buyer has to step up to the plate and hit a home run. A similar analogy is getting a job interview. Someone of influence can set the table and make the introduction and get you in the door. But now you are on your own. It is up to you to sell yourself and close the deal. That is why you need to slow down your operative schedule and make adequate time to do a comprehensive hygiene exam. Every patient you see will be a new patient for you. You are being very carefully scrutinized and judged. Be interested and engaging. You want these patients coming back – that is what you paid for. If these rules are followed, retention rates should be in the 90% range.

Next time – how to prepare to sell your practice for maximum value.

“We interrupt this broadcast for the following breaking news.” That is how I feel about interrupting my series of posts on dental practice transitions in order to comment on Google’s recent policy change regarding patient reviews. In my opinion, this was done because Google wants to grow their review base, while at the same time guaranteeing consistency and compliance with how their search engine optimization programs work with rankings.

In a format change to the local Google Business Map display, patient reviews from companies like Demand Force and others have been moved to a much less prominent position below the name of the office. They have been replaced – to the right of the practice name – by the word “reviews” and “Place page.” When you click those words, a screen opens where you are prompted to write a Google review. As you add Google reviews, all other reviews from Demand Force or Bing or Yahoo are pushed lower and lower down on the page.

I am still a big advocate of the Demand Force review protocol. Their reviews should still continue to be collected because they remain extremely important. And even with this new arrangement, Demand Force’s special relationship with Google means that Demand Force is a relevant and an important player. But accumulating Google reviews now becomes  an absolute priority.

I am suggesting that someone at your practice – while the patient is still at the office – helps the satisfied patient to write a review from the office computer. Asking a patient to do this from home is an exercise in futility. It is too complicated except for the most computer literate.

I have developed a flow chart for how to do this easily. I suggest that you immediately make the process of obtaining reviews in the fashion I describe a number one action item in order for your dental practice to maintain high visibility and positioning on the local Google business map. As always, I welcome your comments and feedback.

The easiest practice transition is an outright sale. The legal documentation is way simpler than a partnership. It is basically a purchase and sale and a covenant not to compete. The success is predicated on the ability of the seller to transfer the goodwill to the buyer. Here are ten common pitfalls to avoid.

1.Arguing about the price – it is not really that difficult to calculate a fair price. As long as the price is reasonable, I never advise my clients to try to beat up the seller on price. I want the seller to be happy so that he/she can enthusiastically transfer the goodwill.

2.Not understanding the allocation of goodwill for tax purposes- this has to be agreed on before the pricing. Typically 75-80% of the sale price is attributed to goodwill. This is favorable to the seller who pays a capital gains tax which is currently 15%. The balance of the sale price is taxed as ordinary income.

3. Failure to retain key staff members. It is OK to change doctors – it is not OK to change staff.

4. Failure to review obligations and commitments. The practice has to be transferred debt free.

5. Misjudging the size of the practice – it is critical to know how many patients are in this practice. My definition of an active patient is someone with an appointment. Unfortunately, many times I get called in as a consultant after the fact – when the buyer is very unhappy – because the patient base they thought they were purchasing is nowhere to be seen.

6. Failure to educate on telephone technique – failure to review scripting for the front desk regarding the new doctor.

7. Aggressive dental treatment – I recommend that the buyer does not suggest treatment unless something is broken or decayed. Once that patient has come back a few times, they really become your patient and then it is fine to recommend more elective treatment.

8. Not slowing down – every patient that you see in this practice is a new patient for you. Take the time to slow down your schedule so that you have the opportunity to interact with these patients and start to build a relationship. Remember that you never get a second chance to make a great first impression.

9. Inadequate letter – a great letter – written by the buyer – which comes from the seller – is the principal way that goodwill is transferred.

10. Retaining the selling doctor for patient introductions. My feeling is that we do not want the seller there at all after the sale is consummated. There is no need for the seller to stay on for 4 to 6 months to introduce patients. It is virtually impossible to get patients to go see the new doctor if the old doctor is still there.

Next time – I will go into more detail on some of these common pitfalls.