Should Dentist Buy This Dental Practice?

Older dentist has had practice on the market:

Here's some info:

Free standing building in great location, wants to lease his office $1500 per month.

Currently works 3 1/2 days per week with 5 hygiene days.

4 operatories. Older equipment, no computers in office.

Referring all endo, pedo, complete dentures, implant restorations, most oral surgery.

Heard from other local dentists who have seen his patients, there is a lot of work out there- crown and bridge especially.

Been in location for 10 yrs. All FFS, no PPO's/medicaid

Recall schedule full- looks like half the production is hygiene

2006: Gross receipts $316K Net profit 121K
2007: Business done $352K Prof Receipts $357K Income before taxes $109K
2008: Business done $373K Prof Receipts $366K Income before taxes $91K

Asking price: $220K

How many hygiene hours per week? If 5 days at 8 hours, that’s 40 hours, however, sometimes a day does not equal 8 hours. Find out HOURS.

Even if between 32 – 40 hours of hygiene that should be approximately $175k-$200k in hygiene production alone, therefore doctor is only producing $150-$175k!!!

Under producing is an UNDERSTATEMENT. Verify of course.

If the hygiene production above is fairly accurate, dentistry should be at least $500k, making this a $650kplus grossing office and $220k is a great steal in my opinion. Again, do due diligence.

Checking the fee schedule is a great idea. Hopefully you know the fees for the area and can evaluate that potential as well.

This post first appeared on Dentaltown.

Send your questions to Tim Lott, CPA, CVA at tlott@dentalcpas.com

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