You wouldn’t allow an elderly parent to be targeted by predatory financial products. However, a similar type of greed is spreading like a virus through the dental industry. Dentists are being sought to sell their life’s work practice to hedge funds with many strings attached. Corporate hedge funds are targeting mature dental practices with buyouts that are “too good to be true.” These hedge funds have deep pockets, and they promise a lot.
Of course, part of the buyout requires that the doctor to stay on to assure their earn-out potential. They often promise the doctor, too, they won’t lose control of the practice or their treatment decisions. The hedge funds often promise that staff will stay in place and nothing will change.
But we’ve heard a very different reality.
Too late after the fact, we get calls from doctors who took these deals who say, “I should’ve called you first. I’m not practicing the way I want to, and I no longer have my chair-side assistant who’s been with me for 20+ years who was awesome. There’s a cultural shift that I don’t enjoy anymore. I wish I’d never exited this way.”
Transitioning from your practice is not just about the money!
Every time a private equity buyer has an offer accepted, Phase Two misses out on a chance to help a doctor choose their successor more carefully. And our dental profession becomes a little less patient-focused and more “doc in a box.”
If transitioning is only about money, then it’s like anything else: Look hard enough and you’ll always find someone who’s willing to pay more and deliver less–just like a new patient: There are always those who shop for dentistry by price tag only. Is the procedure the same quality they would receive by coming to your office? Will their outcome and in-chair experience be the same as it would be in your practice?
These principles hold when a practicing dentist is ready to sell. While in practice, it is important to do things a certain way: Work with certain laboratories, buy certain quality supplies, hire a certain level of talented staff members.
How is it that when it’s time to sell, the only consideration is the Almighty dollar? An important part of the sales package should include concern for that doctor’s legacy that may have taken decades to build? The patients–we hope–will still come to the practice.
For doctors who have been in a practice for a while, they feel the effects of the changes to our industry. They know things are different, but they can’t quite put their finger on what it is. Corporate buyouts are part of that negative trend.