by Dr. David Silber If you’re thinking about joining a dental service organization, you’re probably weighing some pretty heavy financial questions — between office debt, rent, bank note, and other fixed expenses, the offers that a DSO rep makes are probably starting to sound pretty good. I want you to take a step back though, and take a deeper look at the DSO question, because this decision is one that can change the path of your career and your life overall. Dental Service Organizations can be great! First off, it’s important to understand that DSOs really can be a good fit for some dentists. I know many doctors who’ve benefited from the DSO relationship. They’ve been bought out, their loans got paid off, accounts payable is cleaned out, and they come out keeping around 25-30 percent of the practice’s profits. This outcome though, requires a lot of ideal situations. You’ll normally see dentists who are close to retirement getting the most out of working with a DSO because for that stage of a dental career, it makes sense. If you’re a younger doctor or have any financial issues that require special consideration, you should be asking some critical questions about your DSO decision. Questions You Should Consider With dentistry coming in as the number 1 job for debt (many of our colleagues are walking around with more than $400,000 in negative net worth) the DSO decision is one that you’re going to want to ask very good questions around. Here are the ones I recommend starting with. Do I Understand My Financials? Before you even consider a DSO it’s important to understand your financial situation. What do your taxes look like? What do you pay in rent? How much do you owe in student loans and on your bank note? What’s the state of your accounts payable? How much does your practice bring in annually on average? All of these are factors you’re going to want to grasp, because once a DSO buys you out, the best case scenario is that you’re left at $0. If you’re in the dark about any of those issues, you might still come out with debt.
Am I paying attention to the negotiation? Like I said before, there are some DSOs out there that really want to help…but there are two sides to every coin. This means that you need to understand what’s going on with the negotiation, ask questions, and read documents. That can be challenging because by the time many dentists are considering a DSO, they’re just ready to get out and find some relief. They’re not thinking. The last thing you want to happen is that you sign something you’re not comfortable with or don’t understand, leaving yourself in a deal you can’t sleep peacefully with. Remember that you know your practice. You know the income, A/R, accounts payable, and debt. Don’t let anyone make projections that don’t make sense or talk you into an arrangement that doesn’t feel right. Am I thinking too much about my staff? This might sound a little callous, but it’s necessary. The DSO decision is about you and your life. As much as you might love your staff or want to be considerate of them, it’s important to accept that the DSO is going to come in and make changes. That might mean reducing generous salaries, cutting personnel, or shifting duties. The whole point of working with a DSO is to take all these decisions out of your hands. The earlier this becomes a reality for you, the easier it will be. Do I understand my future income? On that note, the changes aren’t just happening for your staff, they’re also affecting you. You’re now essentially an employee of the DSO, meaning you’ll be getting a percentage of the practice income (and you’ve got a great excuse to turn down patient requests for discounts). Will that work for you and fit your lifestyle? You’ve got an employer now and should start thinking about your income the same way. Have I talked to colleagues? One of the best ways to learn about which DSO will be the right choice for you is to talk to colleagues. Look for other doctors you trust who’ve been through the transition and remember that every group is different. Some are really out there trying to help doctors out of financial nightmares and others…aren’t. If you’re feeling even a little shaky on any of these questions, I’m going to recommend considering another option. If you’re simply having financial issues in your practice, you might want to consider some additional capital. I have over 20 years' experience in private practice and am dedicated to helping dentists make the best decisions for their careers. Contact me today to get started on a better path for your dental business. |
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