Depending on the buyer, an office’s technology, or the lack thereof, can be a major draw or stumbling block in selling a practice. It is not an across the board rule that newer technology will make a practice more marketable. Generally practices with the newest technology run higher overhead, which reduces profitability and can make a practice less appealing to a buyer. On the other hand, the efficient purchase and incorporation of technology into the practice can increase profitability. The perfect example of this is the incorporation of a velscope (or similar oral cancer screening light) into the practice. After the purchase the doctor should make oral cancer screenings a mandatory portion of every visit (or every exam). The charge for the screening can be modest, say $15 per screening, and the equipment will pay for itself in short order. With one purchase, the practice has (1) increased its overall profitability, (2) protected itself from malpractice lawsuits which might come as a result of not spotting oral cancer, (3) increased the overall technology of the office, and (4) given itself a depreciation deduction. There are many other items of technology which can similarly be incorporated into a practice to boost the bottom line. Buyer beware, however, as purchase of every brand-new gizmo for your practice will more likely than not hurt rather than help your practice.
As alluded to above, when it comes to technology, the buyer matters. For the younger less experienced buyer newer technology is a key attraction. Generally these younger doctors want the technology they came out of dental school using. For a practice which has continuously updated its technology throughout the course of its life, technology is usually not an issue. For older buyers newer technology is rarely a sticking point. Dentists with existing practices who are seeking a satellite office or new location generally just want functional equipment and strong bottom line; having the newest technology is usually not a concern. These buyers, unfortunately, are less plentiful in the marketplace, and if one is seriously looking to prepare their practice for sale updating technology throughout the life of the practice important.
One important point not to be overlooked is that updating technology is something that should be done over the lifetime of the practice and not in the years immediately preceding a potential sale. Adding new technology should be done with the goal of improving patient care, efficiency, and profitability. Dumping money into new gadgets just for the hope of attracting a buyer accomplishes none of these goals, and will create a bloated expense report. For a practice that has not invested in technology throughout the course of its life the time to make such an investment would about 7 years prior to any potential sale. The hope here is that updated technology will increase profitability in the years which any potential buyer would consider relevant while also gaining the greatest possible depreciation deductions on business property. This will in a sense help the new technology pay for itself. Updating technology in the years immediately preceding a potential sale will have negative effects towards profitability due to the expense of purchasing the property without the time the realize the benefits of the new equipment. This later option also offers the purchaser inadequate time to recapture the depreciation on the new technology.
One final point on technology. Not everything needs to be updated for a practice to be marketable to the younger buyer. In my opinion digital x-rays are a type of benchmark. If a practice has digital x-rays they are going to have a computer, and probably multiple computers, in the office. This raises the likely possibility that the practice is running some practice management software which probably can produce financial and demographic reports about the practice. Also with computers there is a good chance that the practice may incorporate intra-oral cameras and a variety of other digital dental diagnostic tools. The point is that digital radiography a point from which other items of technology flow . It certainly goes without saying that this isn’t always true, but as I said, for me it’s a benchmark. The bottom line is that if you want to taken seriously as regards the technology, digital radiography is the starting point. It is certainly worth mentioning however, that practice management software in many regards is fundamentally more important than any other technological improvement within a dental office. Attempting to sell an office without practice management software is difficult, and there is no way around it. This software is another type of benchmark, and similar to digital radiography in that other technical improvements come after its incorporation.
No comments:
Post a Comment