Multiple Dental Practices, Are You Ready?

By Karen Marshall, Vero3 Consulting

Owning multiple practices and locations is a current trend in the dental industry.  It’s a great concept that can be exciting, rewarding, profitable, and an avenue to provide long term security and regenerating income well into retirement.  Unfortunately, not all who take this leap are successful.   Many look at a second facility as double income, only to experience double stress, increased overhead and less profit than with a single location. Without proper planning and a redesigned business structure, many will fail or sell off second or third facilities at a loss.

Let’s take a step back and look at the true dental practice reality.  The 2013 ADA Survey of Dental Practices says dental practice overheads for both general and specialty practice range between 74-78{c91082aefe0e580fe546c40af534787b48cfd474f8c9ab8dac50bf49a7a1c43a}.  If the practice grosses $1million per year, the owner can anticipate taking home around $250K.  However, adding a second $1million location doesn’t double the take home pay.  Why?  When additional locations are added into the mix, overheads increase and tip the scale to over 80{c91082aefe0e580fe546c40af534787b48cfd474f8c9ab8dac50bf49a7a1c43a} or more, reducing the doctor’s bottom line revenue.  If the doctor works in the same design as in a single facility, as many do, he is putting himself and his future at risk.

These are my top 6 areas to address before you leap:

1. Business Structure- LLC vs. C-Corp.  Perhaps it’s time to change your business structure to secure personal and professional assets.

2. Location- Lease or purchase.  Owning real estate can be advantageous- but not always.  In today’s economy, towns, neighborhoods, and demographics can change in a snap.  Leasing may be a better option and provide flexibility to adjust with the economic climate.

3. Tax burden- You can’t keep it all!  Additional businesses change your tax structure, liability, and tax burden.  Guidance and proactive planning are key.

4. HR and Employment Law Compliance- Now you’re in the big league!  State and federal compliance laws take a big shift with 20 employees.  Looking to work employees in multiple locations to keep the number of employees down?  New changes to overtime exemptions may force you to hire more employees to maintain multiple offices and business hours, along with mandated healthcare insurance and paid time off. 

5. Risk and Prevention- Personal and Professional.  Business structure, insurance coverages, and training are necessary to ensure your businesses and personal assets are protected.

6. Liability and Compliance- internal and external systems must be consistent to ensure compliance, reduce risk and ensure employees are not a liability to you or the practice.  Insurance, Medicaid fraud, records, personal and PHI security compliance, and consistent patient care must be well designed and implemented to ensure consistency.

How can multiple locations work for you?  They can, if you understand you shouldn’t go it alone.  Most likely, neither you nor your staff has the expertise to address the next level of corporate structure.  You must shift from a solopreneur to a corporate mindset.  The stakes are higher and risks are too great for mistakes. That’s where a strong team of outside advisors including an; Attorney, CPA, Practice Management Consultant, Financial Advisor, and Banker come in.  They are experts, and will develop a consistent structure, ensure compliance, efficiency, and provide sound guidance to support you and your businesses from the inside out.

vero3 consulting

About the Author: With over 35 years of experience in the dental industry, Vero3 Consulting founder, Karen Marshall, gives dental practices the customized, tangible solutions they need to realize their full potential.

Telephone: (606) 356-4522