Too Late for Digital?

Does it make sense to add technology if you’ll soon sell?

By Dr. Bradley Dykstra

If you are considering selling your practice in a few years, you may well be asking yourself: Will the technology additions needed to stay current with today’s dentistry provide a return on my investment and increase the value of my practice, or is it just a waste of time and money?
These technology additions can include putting computers in the operatories, installing digital radiography and digital clinical charting systems, or making the larger investment in hard and soft tissue lasers and CAD/CAM milling systems.

Intangible assets
To answer this question, it is important to review the intangible things that add value to your practice above and beyond the value of the tangible assets.  This is what is often termed “goodwill.”  Goodwill is the excess of the price paid by the purchasing doctor over the fair value of the net tangible assets.  Goodwill is often comprised of things such as your patient database, the loyalty of your team and the reputation of your practice.  In short, it is the potential value of the ongoing operation.  Retaining the existing team and patient base enables the purchasing doctor to generate enough cash flow to make the payments on the purchase and, hopefully, achieve an adequate to excellent standard of living.

The first perspective on goodwill involves the value of your patients.  As the dentist approaches retirement age, the patients begin wondering if the dentist will be in practice much longer or even if the practice will remain open long term.  With If you’re considering selling and have made no visible proactive measures during the past couple of years to add technology, patients may well begin trickling out of the office to find a more progressive and younger practice.  Many patients have the perception that if you invest in improvements, your practice will be a more stable ongoing and growing business where they can feel confident in their care for the long term.  This increase in confidence in your office will enhance the goodwill of the practice.
 True or not, using the latest technology imprints in the patients’ minds that your techniques and treatment are state-of-the-art and the practice is a great place to continue patronizing.  The larger and more stable the patient base, the more value the goodwill of the practice has.  

Your team
How about the goodwill contributed by your team members?  Unless your team is completely incompetent and disloyal, their retention for the buying doctor is a true asset.  They aid in the stability of the practice and in the transition of introducing the new doctor to the patients.  Most often, the reality is that the patients trust the team members for the “true story,” which can initially make or break treatment acceptance.
 If anyone has an accurate feeling of what is going on in the practice, it is your team.  If they believe the doctor is not keeping up with technology, and see that the doctor’s interest in dentistry is waning, they will also wonder about the long-term prognosis for the practice and their individual careers.  Any good employees with an eye for continued growth and viability, even if they love their existing doctor, will inevitably move to practices where they feel they can grow and thrive.  
The buyer’s perspective
A third perspective to consider is from the viewpoint of the buying doctor.  In some parts of the country, students coming out of school will not even look at purchasing a practice that is not digital, at least in radiology and photography.  The practice is much more valuable to the purchasing doctor if the changes have already been made.  Acceptance of the new doctor by both the patients and the team members will be both quicker and easier.  Financially, it is also easier for the purchasing doctor to have one payment on the practice rather than one for the practice and multiple others for the upgrades in technology they think are necessary.
You have the ability to create goodwill in your practice.  Not only will you be increasing the value of the tangible assets in your office by implementing new technological equipment, but you will also be increasing the value of the intangible assets.  These intangible assets consist of a strong patient database, a loyal team, and a great reputation.  By not incorporating new technology into your practice, you actually may be decreasing the value and salability of your practice in the future.