Magnifying glass: dental practice valuation

How to Value Patient Attrition

Here’s how to evaluate patient attrition during a dental practice valuation.

My wife and I moved to a new area recently so we needed to pick a new dentist. Our new house is in one of the most heavily dentist-saturated areas in the states – Utah. Google Maps says that within two miles of my house I have 23 general practitioners to choose from.

(23!? Sheesh.)

As far as I knew, we only needed cleanings done. Basically, I’m just trying to establish care. We have no big specialty projects needed so the cost wasn’t the main issue on who I’d pick as our dentist.

I only had two criteria for whom I’d make an appointment with. They had to:

Pick up the phone when I called and be reasonably personable
Have an in-office membership plan

At 10:00 am on a Tuesday, I called all 23 offices on my list of “local” dentists. When they picked up, I would explain I’m a new patient looking for an office for my family of six and I’d be paying cash.

Again…just to reiterate: 10:00am on a Tuesday paying cash for 6 people. Calling 23 offices.

How many of those 23 offices would you estimate even picked up the phone?

…?

Twelve. That’s right, 12.

And only six of the 12 I called could even answer my question about the in-house membership plan.

Yikes.

Once a doctor I’m working with has landed on a practice with a signed, negotiated LOI and starts getting closer to the closing date, I will inevitably hear this question:

“I’m nervous about patient attrition. How do I make sure that all the patients who were seeing the seller are going to continue to see me?”

And that is an entirely reasonable question coming from an entirely reasonable point of view. When you buy a dental practice, after all, what you’re buying in large part is the goodwill – or the habits of the existing patient base to come in to see you and spend money.

My consistent answer, honed by experiences like the one above trying to find a dentist for my family, is that odds are you have nothing to worry about because the average business bar in dentistry is SO LOW.

Your average competitor is probably pretty bad at the business basics. After you buy your practice, simply:

Say hello in a friendly way to every patient who visits your practice.
Train your front desk to answer the phones in a consistently helpful way.
Teach everyone in your office some basic phrases to use (and some not to use) when talking about basic dental care.
Have an electronic service set up to help patients who call after-hours.

Just do the basic, common-sense things that you’d expect from a dental office if you were a patient and you’ll automatically be in the top 10% of dental practices in your area.

Simply by doing the bare minimum of good business basics, you can stop being scared of patient attrition.