Simon Palmer, March 2005 - Specialist practice management is usually paid little more than lip service in the world of practice management, often being painted with the same brush as GP dentists by seminar and consulting companies alike. In Part 1 of this article we looked at how the relationship building that a specialist has to do differs from that of GPs. In Part 2 we explore how specialist dentist practice transitions differ from general dentist transitions.

Specialist practice transitions
Transitions is the term used in the practice management world to describe dental practices which:

1. Take on an employee dentist, then
2. Initiate a whole or staged sale of practice equity.

Undertaken correctly, it can create a source of passive income for the senior dentist as well as a cheaper, smoother and less risk laden buy-in for the junior dentist. Overall, it should be a win-win for both parties, resulting in a good long-term relationship between senior and junior dentist.

Specialist dentists wanting to undergo a transition in their practice have much murkier waters to navigate through than dentists in general practice. The smaller market of specialists and nature of their work make finding a candidate to employ, finding someone to sell to and the transference of goodwill more complicated.

Finding a candidate to employ
For a dentist with more patients than they can handle or some excess space in their practice, employing another dentist can have many benefits. It not only allows them to maximise the use of their practice and create some passive income for themselves, but it also introduces their practice to a potential buyer and/or partner further down the track.

A large hurdle, though, is in finding a suitable candidate. You need to look for someone who is:

• Not tied to another practice.
• Not within 10 years of retirement.
• Wanting to work in private practice.
• Wanting to work in the area.
• Compatible with you on a personal level (right attitude, trustworthy).
• Compatible with you in practice philosophy.
• Clinically up to scratch.
• Wanting to one day buy in.

There are around 9000 GP dentists in Australia and 1600 in NZ. To find a candidate to transition, a GP has to look within these 10,600 for someone who meets all of the above criteria. A candidate for a specialist practice has to meet all of the same criteria but they have a much, much smaller pool in which to look. To find a candidate periodontist to transition for example you would have only roughly 100 registered Periodontists in Australia and 25 in New Zealand to look within.

Market for a specialist practice
There is a huge potential market for a profitable business that can be bought and run by just about anyone (like a fruit shop or laundrette business). While it is true that dental practices can legally now be (and are sometimes being) bought by non-dentists at this stage, this makes up an extremely small percentage of practice sales. The vast majority of Dental Practices are bought and run by another dentist who (eventually) replaces the seller servicing the practices’ patients.

This gives a specialist practice the same small potential market to look within for a buyer that he had to look into for an employee (roughly 125 periodontists in Australia and NZ) and this small market has negative implications for specialist practice sales. Most obvious of these implications is that a small market for any product means less demand often resulting in a lower price. Specialist Dental practices are no different.

The main reason a dentist would buy into a practice rather than start up their own from scratch is for the patients and goodwill that would hopefully come along with an established practice purchase. The undersupply of specialist dentists in Australia means that there is often an abundance of work for them making it easier for a specialist dentist to set up shop and become very busy, very quickly without having to buy an established practice’s goodwill.

Transferring a Dental practice’s relationships (with patients or referring dentists) to a new clinician takes some expertise to execute effectively. Simply buying a dental practice (GP or specialist) is no guarantee that the goodwill and custom will come along with that practice. With goodwill transfer not being ensured for dentists and less necessary for Specialists due to their general undersupply, an exiting or selling Specialist dentist needs to go to even greater lengths to make the practice purchase attractive.

All is not lost - solid practice management can make it easier

A specialist dentist looking for employment can afford to be discerning but will still be attracted to an ideal work environment. If you are in the market for an employee specialist, make your practice stand out. If you create an atmosphere of excellence - clinically, managerially, professionally and financially, good employee Specialists will come. In the meantime, the benefits of a well run and managed practice will lead to decreased stress, better equipment, happier and more productive staff, and more money.

Setting up a practice from scratch in a new town is still an expensive gamble for any dentist. A Specialist dentist wanting to own their own practice and minimise their risk will be very attracted to the purchase of this ideal ‘well oiled’ practice with protocols and systems in place.

To minimise the risk even further for the purchaser, we often work with practice sellers to put together a structured multi pronged strategy to minimise attrition of GP referrers. This should include things like:

• The selling dentist planning a phase-out of involvement (if possible) rather than a fast getaway so that there is a perception of practice continuity to referrers.
• Planning phased handovers (if the sale is phased) of referrers so that the purchasing specialist has a chance to earn a reputation that can be leveraged, to win over the tougher GP referrers.
• Marketing sent out communicating to all stakeholders the sellers’ confidence in the buyer clinically and personally.
• Personal introductions to referrers wherever possible.
• Structured clinical, professional, financial and managerial mentoring (especially for a new graduate/rookie specialist). For an inexperienced rookie/graduate this opportunity to learn from an experienced specialist who has set up and runs an ideal practice can be very attractive.

Conclusion
Specialist practice management is obviously quite a distinct animal from GP practice management. The smaller size of the market and the unique nature of the relationship- building that their industry relies upon makes a very pronounced difference on almost all facets of their business. With this in mind a specialist Dentist cannot afford to approach their practice within the confines GP dentist practice management protocols alone.

[Published Australasian Dental Practice, March/April 2005]