How Generational Disparity is Making Buying & Selling a Challenge
By: Amisha Singh, DDS
Meet Dr. Smith. Dr. Smith dedicated his entire life to dentistry to care for patients as if they were family. He has come to work every day for the past 41 years taking a grand total of four days off – each for the birth of his four children. He has loved every moment of it. Dentistry is at the very core of who he is. He is so proud of the many smiles he has restored. Dr. Smith has many patients who are the third generation to call him their dentist; the grandparents and grandchildren alike have benefited from his care. Sure, he hasn’t really taken a vacation in over 40 years and he has seen some tough times when the economy dipped. But he took his role in the lives of his patients and his staff seriously. His last hygienist even went on to dental school and he contributed to her tuition. Dentistry is the method he chose to give back to the world that has given him so much. He loves his work, but his wife has told him for years that it is time to retire. She wants to travel and now is the time. He worries, “If I don’t practice, am I no longer a dentist? What if the new dentist who comes in doesn’t take good care of my patients? I have known most of them for decades.” Silently, he deals with this stress and calls his broker. He doesn’t feel 100% ready but is looking forward to spending more time with his wife and seeing the world. That vacation is long overdue. It is time for him to pass on his legacy and he looks forward to seeing who will inherit it.
Enter Dr. Jones. She is still getting used to the title “Doctor” in front of her name. Earning that title took a lot of time, a lot of work and a lot of money. She graduated three years ago and has been employed as an associate ever since. It was a good place to start, but she noticed the practice did several things she didn’t necessarily agree with. Dr. Jones believes in building a good culture. She wants her staff to love coming to work as much as she does. She realizes it is time for her to stop building someone else’s dream and start building her own. Unfortunately, Dr. Jones’ current employers did not teach her much about the business side of dentistry. She doesn’t know where to begin. She calls a few colleagues for advice on how they went about purchasing their practices and gets three different answers from three different people. She is confused but figures out which brokers she needs to call. She makes a To-Do list, touches up her CV and begins to get excited. This is it! This is what she worked so hard for. Yes, there will be a learning curve, but it’s going to be worth it. She is going to do some good for this world. It is time.
Dr. Smith and Dr. Jones are on two sides of the same equation: buyer and seller. They cannot achieve their goals without each other. But, just like any other relationship, communication is imperative; and communicating across experiences and generations is challenging. They come from two eras, their experiences in dental school and in the workforce have most likely been very different.
For starters, Dr. Smith and Dr. Jones’ tuition for their dental education likely varied by tens of thousands of dollars. According to the American Dental Education Association (ADEA), the average amount of debt incurred in dental school in 2016 was $261,149. Over 80% of graduating seniors had over $100,000 in debt and more than 30% had over $300,000. This number incites outrage among many programs because it is an average; many graduating students accrue debt double or even triple these amounts! This financial burden places huge amounts of pressure on new dentists to succeed financially. Monthly payments for student loans this large are often one of the highest expenses a dentist faces post-graduation and, in many cases, they are higher than the cost of food or housing. According to the National Association of Student Financial Aid Administrators (NAFSAA), the prices of higher education have increased at an average rate of 7% per year since 1988. This is double the rate of inflation and this challenge makes “debt” a bad four-letter word for many young buyers. More debt carries stigma and fear. For new dentists, education is one of the greatest investments they have made thus far. The practice(s) they aspire to purchase will potentially be an even larger investment. Students graduating in recent years have a very real need to make money and make it fast due to crushing debt. This changes how they view potential practices and their expectations for earning.
Another factor is Dr. Smith and Dr. Jones have very different life experiences. Age is a factor in many of life’s decisions. Dr. Jones is starting out in her career and this market which has vastly changed compared to 40 years ago. Competition and saturation are at an all-time high, insurance has a more competitive influence, society as a whole is more litigious and the costs of practicing and living continues to increase. These factors influence Dr. Jones’ decisions for practicing. Dr. Smith grew up in a different time and likely experienced more scarcity. As a result, their priorities will not be the same.
Both doctors have worked hard for their current achievements and both have their patients’ best interests at heart. The downfall comes in communicating these needs and expectations to one another. How is this challenge best faced?
Outlining Expectations. Many times, both the seller and buyer are experiencing their first dental transition and do not know what to expect or understand the rules of the game. To make matters more complicated, these expectations and rules can change with personality, location, lack or presence of a broker, the broker’s experience and countless other variables. Establishing common ground is key. In any buyer-seller relationship, once serious intent to purchase has been established, there should be a mutual meeting between the buyer and seller. Here they can discuss practice philosophies, time frame of transition, additional expectations as well as lay out their action plan and timeline for closing.
Gratitude Goes a Long Way. If there is one thing I have seen be the kiss of death for practice transitions, it is entitlement. The seller has worked extremely hard to build this practice and deserves a fair price for their efforts. The buyer has also worked hard for their credentials and is ready to put hard work into the practice. Both buyers and sellers tend to focus on what they “deserve.” But, just like in a marriage, empathy can change the course of the relationship. A buyer can voice their dedication to the seller’s patients and staff with something as simple as an email, card or letter stating their appreciation of this opportunity. They can outline their visions for growing the seller’s legacy. A seller can use this information to be more welcoming and empathetic to the buyer’s concerns. This business was built in connection with the seller’s work. It is to the benefit of both parties to establish mentorship and communication, no matter the time frame, to maintain continuity of care and decrease attrition.
Fair is Fair. It is important to note that dental transitions are, at the very core, a business transaction. It is hard to separate emotions from something that has been and will continue to be a large part of the dentist’s identity and life, but business is business. There has to be a fair and equal exchange. As much as the buyer wants to get a good deal, and as much as the seller wants a copious sum to supplement retirement, they must meet somewhere in the middle. If both parties start off with this expectation, the road becomes much easier to travel.
Buying a practice in this market may seem like an insurmountable challenge, and it does come with its fair share of trials and tribulations. Communication gaps may arise but learning how to traverse them will serve both the young and more experienced alike.
Dr. Amisha Singh is a Denver native and loves living in beautiful Colorado. She a member of ADA, CDA and MDDS. She serves on the CDA New Dentist Committee and Membership Council as well as on the MDDS Member Services Committee and as co-editor of the Articulator magazine. She was named as one of ADA’s Top 10 Under 10 dentists in 2018. Dr. Singh recently opened up her private practice in Parker, CO, Smile Always Dental.
The Metro Denver Dental Society is a not-for-profit component society of the American Dental Association and the Colorado Dental Association.