2018 is here and with an updated calendar comes an updated tax code. If you haven’t already, we strongly suggest you connect with your financial advisors to review the impact of the new code, both on you as an individual, as well as on your practice. With so much conversation about “pass through” income, among other topics, it’s vital that you are up to date and strategizing properly for the year ahead.
In addition, consistent with previous advice, we see the beginning of the year as the time to implement the changes from your 2017 review that you determined will best benefit your practice (and you). Whether staffing, marketing, discounted fee plan participation, fee schedules or otherwise, the longer you delay implementation, the less you will receive in immediate and future returns (remember the immense power of compounding).
Looking forward, we are still seeing a strong transitions market, nationwide. Values have been steadily increasing with the strength of the economy and, in some parts of the country, we’re seeing practices selling for ten to fifteen year, if not all-time, highs. Demand by purchasers is strong and financing remains readily available, particularly in conjunction with a valid valuation or professionally developed practice work-up.
As we discussed in our last newsletter, corporate entities are most certainly in the market, and whether small or large, they are looking to buy – further impacting supply and demand. Even so, we continue to see that a vast majority of purchasers are individual dentists looking to own and operate their own practice which, in most cases, proves to be the best transition option available to most sellers. We believe this will continue to be the case in 2018.
All factors considered, practices yielding higher net incomes due to operations that can be maintained or duplicated will continue to yield higher prices and values. An easy way to stay on top of cash flow is to ensure your UCR and PPO fee schedules are kept up to date. Expenses rise every year. If you do not adjust your fees accordingly, you are simply paying more to earn less. Every day we see practices where fee schedules have not been adjusted for years which results in less take-home immediately, significantly less take-home long-term (due to compounding), and lower value when it comes time to sell. We encourage you to review your fee schedules and adjust accordingly – if you need assistance with this, don’t hesitate to contact us at (800) 988-5674.
Other important factors still include location, physical plant size, procedure mix, payment mix, and staffing. That said, these factors may not be important in the way you think and can be very practice specific. We are always happy and available to discuss these particulars.
In all, we are optimistic and looking forward to a great 2018. We are here and available to help, whether it is time to buy, sell, value a practice, locate an associate, or even just discuss planning. Cheers to you, your practice, and an outstanding year to come!