As a part of our seminar series on converting your dental office over to EMR we’ve been hearing from several older dentists that are saying they’re not going to make the investment in updating their practice because they’ll be retiring in a couple of years anyway. “I’ll just sell the practice and let the next guy deal with it.” That’s all well and good; however, when they sell most likely they’ll be leaving money on the closing table that they could have been putting in their pockets during those crucial last years before retirement.
One’s monthly draw from Social Security is based on the average last five years income before starting to draw and not on one’s lifetime contributions. The last five years leading up to retirement is the worst time to reduce one’s income. If a dental office is worn, tired, and out-of-date, chances are patients will start jumping ship to find a newer dentist that is staying current with technology and procedures. Also, they don’t want to be stuck finding a new dentist under pressure when they receive a notice in the mail one day saying the office has closed or been sold. Regardless of the reason fewer patients means less revenue and chances are a lower income right before retirement.
Additionally, if an investment is made in new technology and dental office design before a sale, five years gives the retiring dentist the opportunity to take advantage of depreciation rules for this investment, putting more money in their pocket for having made this investment, rather than handing this off to their purchaser. Plus, the overall valuation of the practice is going to be higher for one that has newer equipment, fixtures, and furnishings than one that these items are 10, 15, or more years in age.
Technology is here to stay and things are only going to continue to advance. We know change can be hard. Rather than looking at ways to avoid embracing EMR and other changes, we encourage every dentist to talk to their financial advisor and accountant and explore how they can make the investment in new technology and dental office design work for them.