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2009 Student Event: Purchasing a Private Practice

Dr. Randy Goldfarb answers questions about his experiences purchasing a private practice that had operated for more than 20 years.

Photo of Dr. Goldfarb Dr. Goldfarb is in practice in Boca Raton, Florida. He completed his periodontal residency at Nova Southeastern University in 2005.

What was your plan after graduation?

My plans were to begin working with 3-4 general dentists as their “in-office” periodontist and to work in a periodontal office as well to avoid becoming a “prescription surgery periodontist.”

What made you consider starting your own practice?

I was almost forced into my own practice. The periodontist I had been working with decided to sell his practice. I had invested 2 years working there bringing in new referrals and felt it would be a loss to allow someone else to gain from my work and growth of that practice.

What factors affected your plan and decisions about your career and future?

As they say, location, location, location. That is what encouraged me to have my own practice rather than being a nomad. I knew I was going to stay in the same area long-term, so it made sense to me to plant myself and let the roots grow. Also, at this time I have no children. To me, this is the ideal time to build a practice due to the enormous time requirement.

How did you begin the process of starting your own practice?

I purchased a practice that had been around for over 20 years. Early on, I made few staff changes and policy changes, however made numerous cosmetic changes (both out of need and taste) that sparked questions and comments from long-standing patients. They all recognized the changes and immediately associated the changes with me and saw them in a positive light.

What variables influenced your decision on location?

I am in an area where people value their health and well-being. Also, it is an affluent area as much of what we do is some form of luxury. It’s only necessity when it hurts. The actual practice location is a medical only complex near a hospital. I would only work in a “medical only” facility. When was the last time a physician closed their doors as compared to a clothing store or restaurant. All patients ask their other doctors for recommendations, so being near medical offices has translated to instant referrals.

Did you meet with an attorney, practice consultant or accountant before pursuing a loan? Why or why not? What did they do for you and why was it beneficial?

All of the above. An attorney reviewed all paperwork, an accountant looked at the books, and of course a practice broker valued the practice and negotiated the deal. Practice brokers seem like the most crooked people ever, worse than car salesmen however, a necessity. They help translate emotions to actual meanings. In any deal, someone always feels like they are the loser, however in my case the broker aided both sides with appropriate give and takes.

How did you determine the financial requirements for starting a practice?

I had absolutely no idea how much money was needed. It became a work in progress. The financial information that the previous practice ran under was irrelevant from day one. Equipment changes, staff changes, more bills and new bills appear. Insurances are needed for numerous things that I never heard of. After about 12 months I had a grip of what I needed to produce, collect, and save. Cash flow is critical!

How did you obtain financing?

My broker handled everything regarding financing. That alone made the broker valuable.

How did you structure the practice’s finances in the beginning to pay the bills, yourself, staff and to buy equipment, etc.?

Equipment was last on the list. As the broker said, “it worked for the previous dentist, it will work for you.” I waited until things were stable before big equipment expenses. I feel you are only as good as your staff. The moment the doctor leaves the room, the patient always asks the staff about us. I found it essential that the staff trust, respect, and think highly of us. The patients can sense that immediately. The few extra dollars to make them happy will go a long way.

Using real or fictitious numbers, how did the realities of your finances compare to the plan you originally outlined?

The previous practice collected $70-80K each month. I used that as my budget to make sure I did not lose. I began collecting over $100K each month early on. I made that my new goal and I consistently collect 30% more than that. For my 3rd year in practice I feel that is a monster number.

What resources (i.e., people, publications, groups) did you find the most helpful?

The previous doctor that sold me the practice has been the most valuable source. He has encouraged patients and referrals to work with me. The AAP has been very helpful in providing documents, patient education, and insurance information.

Looking back on the choices you made, is there anything that you would do differently?

There is very little I would change. I would have bought a second practice by now to merge with this practice. Also, I think I should have established better office policies early on regarding payments, treatment coordinating, and staff.

What is the most useful advice you can offer to someone who is considering starting a practice?

Don’t hesitate. Even with doubt and uncertainty, one will find a way to succeed. Look around at all the other dentists out there doing well and if you believe you are as good or better, you will succeed.

What do you like most about being a periodontist?

Everything! Although this sounds cliché, when you actually can improve someone’s quality of life makes all the sacrifice worth everything. A patient thanked me last week for “giving me back my life.” That says it all!