Beyond the DOW: Recent Economic Survey of Dentists:
I recently completed my fee, wage and economic surveys for the Upper Midwest. Over 300 practices responded.
33% of the Metro practices surveyed said they were up this year, 46% were down and 21% even. For Outstate offices (including the edges of North and South Dakota, Iowa and Wisconsin) the outlook was a little better. 41% of the practices said they were up, 28% down and 31% even.
17% of Metro Area practices felt the economy is not a factor at all but 73% felt the economy had a “moderately negative” effect. 27% of Outstate offices said the economy hasn’t affected them at all and 70% said “moderately negative”.
29% of Metro Area offices have given or plan to give raises this year and 41% said they won’t. In Outstate offices 54% have given or plan to give raises this year with 24% saying that they do not plan to give raises (the rest variable or not sure).
There is no question that the current economy is having an impact on practices. Just three years ago “5% growth” was more or less the rule.
I believe in management. Whenever we see Doctors take actual steps to improve, they do improve! Things just don’t come as easily as they might have in previous years.
Amidst Bad Economic News, Practice Values Are Rising:
Although most Doctors are seeing their stock portfolios declining and their production nearly flat, the value of their practices may be rising in bad economic times. For 24 years, Shea Practice Transitions has tracked practice values. In the past three years they have appraised over 100 practices and handled the sale of about 75 (more than anyone else in our area). Their records show that practice values from 2006–2009 are up 6%. More impressively, practice values have increased nearly 40% from just a decade ago. In addition, several practices have sold for over the asking price because of the competitive nature of buyers seeking to own.
Another favorable factor is a reduction in the length of time necessary to sell practices. According to Kevin Shea (President of Shea Practice Transitions), it typically takes from 12-24 months to market and sell a practice. However, the most recent experiences are that in many cases “Metro” practices get offers and acceptance twice as quickly as it took just a few years earlier. Many “Outstate” practices are receiving offers where ten years ago they were virtually unmarketable.
Furthermore, Kevin told me, “Make no mistake— it is still difficult (if not impossible) to sell practices in remote areas. Nevertheless, practices in the Metro area, as well as “Third and Fourth Tier” communities are showing moderate to strong sales potential. Contributing to this favorable environment are continuing low interest rates, available financing, low tax rates and the job security inherent in practice ownership.”
Naturally, there are a variety of other options to consider (e.g. buy-ins, buy-outs, associates). Thus, if you are interested in more information, contact Kevin Shea. This 30 minutes consultation will be informative, no pressure and absolutely confidential. You can contact Kevin at 952- 920-9411 or email at firstname.lastname@example.org.
The $1,000,000 Staff Is Coming November 20. Be There!
The $1,000,000 Staff seminar has been moved to November 20. Many of you have seen Joe Steven and Mark Troilo in previous seminars and know them to be the gurus of “bread and butter” dentistry. Joe and Mark have offered a 25% discount for Advanced Practice Management clients who would like to attend. I highly recommend that you take your entire staff to this teambuilding seminar.