Previously, I wrote about the importance of improving the tangible assets of your practice in the years leading up to selling. But what about your intangible assets?
Most dentists I know are sitting on a gold mine of untapped possibilities. It's not because of incompetence; on the contrary, it's usually a case of being overwhelmed by success and having patients and potential opportunities fall through the cracks of an over-taxed system.
This is a problem in the best of times, but it becomes a particularly costly issue when you're putting your practice on the market. That's because you are not only missing out on that untapped revenue, you are also devaluing the most critical intangible asset you have: patient goodwill.
Just as the value of CEREC or a digital radiography unit can be measured, the value of patient goodwill can be measured too, by looking at the number of patient charts, the regularity of visits and making certain assumptions.
The more patients you have who are active, the more value the practice has – for you and for a prospective buyer. Healthy numbers indicate that the right patient behaviors are occurring around retention, case acceptance and invitations (they're staying, saying yes and sending others). This naturally has a profound effect on revenue and net income.
Of course, appraisers have a number of methods of calculating the value of goodwill, but keep in mind that your intangible assets like the strength of your patient base, and how that drives your ability to earn income is a big part of that calculation.
So if you want to ensure that you get the best value for your practice it's essential that your revenue accurately reflects the level of patient goodwill in the practice. If you think there are gaps between the possibilities and the present reality, now is the time to start tapping into that gold mine and driving your practice value up. Honestly, just about every practice I've seen can boost their productivity substantially within weeks of implementing a few simple strategies.
If you're looking for a quick but essential overview of how to really tap into all the possibilities in your practice and drive the value of these intangibles upward, I invite you review the first two e-books in my series, where you'll find a concise discussion of the framework of economics in the practice.