We interviewed Timothy Brown, the CEO of ROI Corporation, one of the largest dental brokerages in Canada, and talked about what dentists should consider when looking to buy a dental practice, questions and answers below:

Why is it important to buy a practice where you want to live?

Timothy: So let’s go back to what dental schools teach about selecting a place to practice dentistry. They’ve always bandied about some slide rule formulas and quick calculations regarding the ratio of dentists to patients. The gist is that dentists should set up their practices where there are about 1500 people to 1 dentist because that means there are more people to treat, right?  While that’s still a good rule, any place today within 2 hours of any major city is oversaturated with dentists. So, while those ratios still matter, they don’t matter as much anymore because there are too many good dental offices everywhere. 

And by the way, here are other calculations we can make for equivalent full-time dentists. You could count the number of dentists in the book in a town like Brampton– but if some of them work one day a week, and others work two days a week, that’s not equivalent to full-time capacity. Our company does those calculations. 

But, as I’ve said to dentists over the years: “Sure, there’s high growth in Milton, Ontario, or Ottawa. There’s new housing and new populations. But when that happens, there are new plazas. All of those plazas contain a new dental office that does not have any patients at the starting date. Those empty practices are trying to absorb the new population as much as any other dental practice in town is. So, why don’t you practice where you want to practice? Why don’t you consider practicing where you want to live?” There are a couple of good reasons for that.

First of all: commuting. The less a dentist commutes to work, the more time they have for business and family. I know dentists who commute at least an hour a day each way. That’s 10 hours a week to go where the money and opportunity are. But they’re not happy. They don’t like spending 10 hours of their life driving. Sure, they can talk on the phone to make their drivetime more productive, but no one wants to do that.

So, practice and live in the community where you want to be first. Then, if you’re patient enough, the right opportunity will eventually become available. Also, if you can’t find a practice to buy, you can start one where you live and be happier. 

Secondly: If you dedicate your non-practice hours to living, working, shopping, and supporting a community, the patients will see that. They’ll know that you’re part of their area and will support you much more than the Monday to Friday dentist who drives into town in the morning, drives out at night, and is never seen on the weekends.

How does community involvement lead to dental success?

Timothy: Much of the conversation around search engine optimization concerns organic visits and organic views. Organic engagement refers to people who are seeking you, finding you, liking you, reviewing you, and commenting on you. If you want true organic engagement, you need to be involved in your community.

A successful dental practice in Canada needs somewhere between 1500 to 2000 reliable, high dental IQ patients. From those 1500 to 2000 patients, referrals will come. 80% of your new patients come from your existing patients. 20% of your new patients will come from other outreach methods, including marketing services.

So, the more time you spend investing in your existing patients and supporting your community, the more your practice will grow. 

Leaving town at 5:00 on a Thursday and not coming back until Monday morning– I don’t think that’s cool anymore. However you measure your community, your town, your city, or your block, you have competition. There will always be competition. So, living and working immediately in the area where you wish to practice dentistry, in my opinion, is the best investment you can make to drive referrals for new patients to your practice.

Why shouldn’t you automate your dental practice?

Timothy: Return every phone call and text the same day, within reason. I know sometimes they come late at night, but always strive to return phone calls and texts within 24 hours.

Even if you don’t want to respond to somebody, you should always respond. If you don’t have anything to report, let the patient know you don’t have anything meaningful to report, but that you’re working on it, and you will get back to them when you do have something to report. And that goes for any salesperson in any organization. 

I know there are times when you have to have some difficult conversations with people. My advice is to go ahead and have those conversations and get them over with. Apologize if you’ve made a mistake. Most importantly, be human. I think we’re forgetting to do that with all of this automation and technology. I miss meeting people in person. I don’t do anywhere near as much of that as I used to. I miss that dynamic.

How does reputation affect dental practice value?

Timothy: I don’t like to use the term “social media” anymore. I like to call it “reputation management” because you will be rated and reviewed whether you want to be or not. Reputation management means a great deal. We don’t appraise reputation; we appraise revenue and profitability. A dental practice with a stellar reputation, lots of five-star reviews, and great commentary on all social media will have more referrals, revenue, and profit.

But people have made some very bad comments about dental practices on social media. Comments like that may cause existing patients to lose confidence in a dental practice and not come back. That’s a drain on the practice and can dramatically cut off inbound referrals. Sooner or later, that will reveal itself.

It usually takes between six months to a year for a crisis to reveal itself financially. Sometimes, it takes longer and we call that a latent revenue loss. It could take up to a year before you realize that your practice is not doing well. And if that drop in revenue was due to a silly reputation challenge that you could have addressed head-on by dealing with it, you might have prevented that continual loss. In the end, great practices with great reputations sell for higher prices.