36
|
Volume3 Issue5
S
upporting
Y
our
P
ractice
indicator of future revenue. Basedon the last 100valuationsofOntariopracticeswe’vedone
at Tier ThreeBrokerage, the
average revenueperpatient, per year, is$620
(excluding lab) for
ageneral dental practice. But thereareoutliers. Onepracticeaveraged$1300per patient, per
year, and someaveragebarelyover $100. So thequestion for potential buyersof thosedental
practices is, how reliableareestimatesof current revenue inpredicting future revenue?
Componentsof revenue
Tounderstand revenuecontributions inageneral dentist practice, youhave toconsider the
three typical componentsof revenue:
hygiene, dentistry, and lab
. Lab is aflow-through
cost becauseCanadiandentistsdonotmarkup lab fees. Sowehave to lookat revenue from
hygieneanddentistry tounderstand their potential futurecontributions to thepractice.
Buyers can countonhygiene revenue
Revenue fromhygiene is a transferrableasset of thepractice—thismeans thatwhenyoubuya
dental practice, patientswill predictably keepcoming to see that hygienist so
average revenue
fromhygieneperpatient is reproducible
. For example, if apractice isdoingover $550per
patient, per year, inhygiene services, even though theaverage for general dental practices is
$220, someportionof that higher-than-average revenuecanprobablybemaintained. On the
other hand, if apractice isdoing$65per patient, per year, inhygiene, thenunfortunately that
relatively low revenuewill alsobemaintainedunless thebuyer is able tobring revenueup. And
that underperformance inhygienecan represent apossibleupside inpredicting futurecash
flowand thus thevalueof that practice.
Dentistry revenue is lesspredictable
On theother hand, r
evenue fromdental services tends tobe specific to thedentist
selling
thepractice. So if adentist producesover $1300per patient, per year, in revenue fromdental
services, chances areanewdentist isnot going tobeable to reproduce that. Ingeneral, ifwe
seeapracticeproducingwayaboveaverage in termsof dentistry revenue,wedecreaseour
projectionsof futurecashflowbecauseanewbuyerwill probablynot beable to reproduce
thosenumbers. Thiswould then represent apossibledownside inpredicting futurecashflow
and thus thevalueof that practice.
More than abusiness
Increasing revenue is consistentwithgoodoral hygieneandpatient satisfaction—toapoint.
Tobeblunt, thepoint atwhich it stopsbeingconsistent isovertreatment. Overtreatment isnot
going toadd to thevalueof apractice. Thebestway to increaseyour patient satisfaction—and
thusnewpatient flowand retention—is to
keepyourpatientshappy
. And thebestway I
knowof doing that isbydeliveringexcellent oral healthcare.
a
Towatch the full
interviewwith
Dr. Dolansky, visit:
The bestway to increase your patient satisfaction—and
thus new patient flowand retention—is to keep your
patients happy.
