David Chong Yen from DCY Professional Corporation Chartered Accountants, spoke with Dr. Suham Alexander about the different ownership options of dental practices.
The dental industry has changed significantly over the past decade. The low interest rate environment has significantly impacted the dental landscape because this has facilitated “easy money” to purchase practices. Many dentists are realizing that their best investment is in their own profession, namely the dental profession because they know this business better than any other. Overall, the dental industry is recession-resistant.
The primary ownership types are:
- Traditional “hands on” dentists. These are individuals or partners who own a single practice.
- Multi-practice dentists. These dentists either as individuals or as partners own two or more practices.
- Group/corporate dental entities. This consists of larger groups of dentists and non-dentists who acquire dental practices to be a part of their network. Those outside the dental industry view the dental business as an investment opportunity.
One ownership option is not more or less profitable than another. Dentists considering whether they should own multiple practices or join a corporate dentist group, must first assess what their end goals are and then, pursue opportunities that are aligned with these end goals in mind.
For dentists looking to sell, corporate dentistry is a new option which may suit their needs. It allows dentists to cash out some of the equity in their practice while continuing to practice dentistry in their practice. In most cases, the dentists may have to meet certain performance targets to fulfill their end of the agreement. The type of dentistry, amount of autonomy and responsibilities, as well as money, one wishes to make will guide the dentist’s decision-making.
Other vendors may not be looking to maximize their financial return. Instead, they may be looking for a purchaser who will actually treat the patients and not hire associates to run the practice.
Overall, with single and multi-practice owners, investment-focused dentists and corporate dentistry on the horizon, practice owners now have more options on how they can operate their practice and different exit strategies.
Watch the video interview