At some point in your career of owning a dental practice, you may need to hire appraisers to determine a fair market value for the practice, such as when you bring in or cash out a partner in the practice, sell the practice to another organization upon your retirement, or obtain financing for daily operations or strategic growth. Until you do, you may not realize the critical role that your practice’s staff plays in determining a valuation. A highly experienced, efficient team can maximize practice value by optimizing profits and patient satisfaction/retention.
The Role of Staff in Dental Practices
A dental practice may have staff members beyond the owner or partners. These may include other non-partner dentists or orthodontists, dental hygienists, office managers, bookkeepers, and receptionists. Each member of a dental practice’s staff plays a critical role in the practice’s operations, including providing quality care to patients and ensuring smooth administrative functioning. Having top-quality staff members can boost a dental practice’s valuation, as quality staff can improve the practice’s reputation, ensure accurate and thorough billing and reimbursement, and increase patient retention.
How Staff Size Affects Practice Valuations
The number of individuals on a dental practice’s staff can also affect the practice’s value. Larger, experienced teams can maximize operational efficiency and increase revenue by serving more patients with a higher quality level of service. Conversely, overstaffing for a smaller dental practice can drag on the practice’s profits due to inefficiencies. Striking the right balance between staffing numbers and practice size can optimize a dental practice’s operational efficiency and increase its value to buyers, potential partners, or lenders.
Staff Experience and Specialization
Having highly skilled professionals on staff who cover a wide range of specializations can increase a dental practice’s value. Experienced staff more frequently provide higher quality care and service to patients, making patients more likely to return to the practice for treatment and follow recommended treatment schedules. Patients who enjoy the care they receive at a dental practice may become more likely to refer friends and family members to the practice.
Practices with providers offering specialized dental care, such as orthodontics, cosmetic procedures, or dental surgery, may have a higher value than others offering basic dental care, as these practices offer patients a one-stop-shopping level of service for their oral health needs.
Staff Turnover
Dental practices suffering from high staff turnover may receive lower valuations. High turnover may signal mismanagement or instability in a dental practice, a potential red flag for a buyer, prospective partner, or lender. Furthermore, turnover harms a practice’s finances, as the practice will incur additional expenses to train new staff and manage disruptions to patient care due to delayed or rescheduled appointments. Finally, staff turnover adversely affects the patient experience as patients lose the opportunity to build trust with specific providers.
Efficiency and Productivity
A dental practice staff’s efficiency and productivity can also boost the practice’s valuation, as those factors can increase the number of patients the practice serves and the quality of care those patients receive. Furthermore, staff efficiency and productivity can play a role in employee morale, especially if staff members do not feel overworked or feel like valued team members with a stake in the practice’s success.
How Management Plays a Role
The leadership and management provided by a dental practice’s owners/partners and office managers can also affect valuation. Effective leadership/management will ensure that a dental practice’s staff works efficiently while providing high-quality patient care and service. A well-managed dental practice can maximize revenues/profits and patient satisfaction and retention.
Contact a Dental Practice Lawyer Today
When you need a valuation for your dental practice, contact Mahan Law for an initial consultation with a dental practice attorney to learn more about practice valuations. We look forward to meeting with you and discussing your practice together.