Women in Dentistry - Blog

By: Jackie Joachim, Chief Operating Officer with ROI Corporation

Practices have faced huge challenges and have undergone an incredible amount of change over the past few years. This will not slow down in 2023. The time has come now for practices to deal with the aftereffects of the global pandemic, increased interest rates along with the rise of inflation.

The market for dental sales is never dull. The average vendor is no longer the 65+ male looking to retire. Instead, it is not uncommon for the vendor to be between 45 to 55 and female. This person does not want to give up dentistry but rather the stress of ownership. In the case of female owners, it is motivated by simplification. Managing a career, staff, spouse, and children make things a little more complex for women than for their male colleagues. Often, when I meet with an owner, who ultimately wants to eliminate the stress of management, I am always amused by the way in which a male explains this versus a female. Men will say they want to leave management behind unapologetically. Women, on the other hand, for some reason feel they are taking a defeatist attitude. I applaud the choice simply because we have only one life to live, and we must choose to do so in the most meaningful way possible.

So, will practice values decrease in 2023? Yes. It is to be expected. In general, valuations for healthcare practices are driven by two overriding forces: the industry’s appeal and current macroeconomic conditions.

Industry Appeal Factors:

• Dentistry has proven it is recession and pandemic-resistant, showing quality performance relative to other businesses in challenging times;
• Aging population; and
• Solid historical growth rates of four to five percent, with a good outlook on future growth rates.

Macroeconomic Conditions Factors:

• Record low-interest rates during the past decade, making capital cheap for practice buyers;
• Stable economic conditions and slow, but steady, economic growth; and
• An abundance of investment capital, and many investors finding our resilient industry to place their funds.

The last 3 months have certainly had an impact on individual doctors looking to purchase. Many first-time buyers are very nervous with increasing interest rates combined with their excessive student debt, many may not qualify for financing. But this does not mean that a good office will not sell. It simply means your expectations must be realistic. Do not be surprised or offended if you are presented with an offer at, or even below, your asking.

We predict the value of practices will decrease. This is simply because if key expenses such as wages and supplies increase, then net income will decrease. Cashflow plays a huge factor in determining the value. With the HR crisis, it is not uncommon to see higher wages along with signing bonuses. This is certainly a tough pill to swallow.

As much as things may feel or look bleak, all is not lost. Good practices continue to appeal to the right buyer. Business cycles have a wonderful way of self-correcting. If you are not ready to sell for at least 5 years, now is the time to plan and be prepared to manage your finances with this in mind. Ask yourself the following questions:

• Do I know the value of my practice today?
• Are there any reasonable overhead reductions I can make?
• Can I invest in new technology to add additional revenue?
• Can I keep my gross income stable or, even better, increase it? As a note, practices in any state of decline worry buyers and usually attract a lower sale price.

The final thought as we move into 2023 is to “Keep Calm and Carry On”. The challenges that may come are ones that can be managed provided they are faced head-on. I would like to leave you with one of my favorite quotes from Barack Obama “The future rewards those who press on. I don’t have time to feel sorry for myself. I don’t have time to complain. I’m going to press on.”