A View to a Practice

For Dr. Kent Caserta, life has revolved around a family dental practice for the past 32 years. But in recent years, he started thinking about slowing down and introducing a new partner to the practice.

He already had a retirement plan in place, but since the practice is a large part of his wealth, he needed to know marketplace value of his practice. That way, if he wants to discuss his practice with a potential partner, he won’t be giving a price off the top of his head – but he didn’t want to spend a lot of money on a full valuation.

The Process

A Know & Grow Valuation – a cost-effective way to determine the value of a company – was the answer for Dr. Caserta’s practice. The procedure involved a one-hour interview with staff members, where I collected financial information including receipts and collections.

“I think half the battle is having good records available – it was easy for our staff to pull the information together,” said Dr. Caserta. “If you didn’t keep good records of your costs over the past five years, it could be an issue.”

“We normally tracked statistics each year such as number of new patients, patient ZIP codes and number and types of procedures,” he said. “We hadn’t done an evaluation like this for some time. We did compare our productivity and collections versus some benchmarks that were published in some of the dental publications, but that was it. But each practice is different. A specialist has fewer costs because he or she hires less staff members to do fewer services, and as a general practice we have higher overhead. So we didn’t have a very good figure to use as a benchmark.”

The Result

My team took the information collected from Dr. Caserta’s staff and compiled a series of reports. We drafted a copy of the report and worked together to streamline it to include the information Dr. Caserta needed most.

Dr. Caserta said that he wasn’t surprised by the value of his practice when the final number came in.

“It’s very important to know the value of your business,” he said. “I think it should be something a practice like ours does at least every five years. It can help you no matter what state of growth your business is in, from a less experienced practice to a more mature one, and can also help you pinpoint the services you are offering, such as hygienists, as well as the products you might sell.”

The business valuation helped Dr. Caserta in other ways as well. “Having the current value of our practice makes it much easier for my wife and my family if something should happen to me,” he said. “Not only can I approach a potential partner with this knowledge, but my family can better make decisions in my absence as well.”

Dr. Caserta also feels the Know & Grow Valuation can be a good starting point for a new practice. “It gave me a starting point from which to benchmark my business in the future,” he said.

Computerization is Key

For most dental and medical practices, Dr. Caserta says, a business valuation should be a relatively easy process. “The problem comes if an office isn’t computerized and it’s hard to access the necessary financial information,” he said. “There are many computer programs that could be used such as Texas, Eaglesoft and others, and your office manager will have the ability to categorize things to meet your needs.”

He said that dentists know more about their bottom line today than they did 10 or 15 years ago. “In many ways, we are bombarded with information now,” he says. “I probably get 10 dental magazines each month that give me business information and benchmarks. I also think dental schools do a better job of teaching the business aspects of running a practice, but still, I don’t go to business courses because I don’t receive continuing education credit for it. My business is very different from many other businesses, so I look for practice management courses that can provide information specific to dental practices.”

Moving Forward

Dr. Caserta said that he isn’t making any changes as a result of the Know & Grow Valuation. “We are looking a little bit at our production, at our procedures versus collections and at our overhead to see how we can increase net profit, but there were no surprises,” he said.

“When I began my practice, my goal was to establish a good clientele to rely on and for referrals, to be good to the people and treat them with respect,” said Dr. Caserta. “We spent 31 of those years in the same location in Willoughby,” he said. “We probably see 10,000 patients a year, some of them twice a year, and have a staff of five.”

For now, he’ll continue to look for that partner who shares his philosophy and hopefully transition to a lighter workload that allows him to spend time with his family. But he can move forward knowing the value of his practice and can discuss it confidently if he meets the right person.

Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.