The Good Will Factor: The Intangible Asset A Buyer Should Never Ignore

Purchasing a practice is a major capital investment, and a well-prepared buyer should carefully consider all assets and liabilities before making the commitment. While most buyers proceed with caution and discretion by following sound advice from attorneys and accountants in respect to tangible assets, the process should also include a common sense look at an important intangible asset – the good will factor of the practice under consideration. Like it or not, your predecessor’s management skills and image is what patients know. This will carry over into their perception of the practice even after you take over.

A buyer’s worst nightmare is the patient who wasn’t entirely happy with the seller’s practice philosophy, or team, or customer service. This is the patient who will use the transfer of ownership as an excuse to find greener pastures. An isolated case is one thing; if the source of dissatisfaction affected even 20% of the other patients, you begin your tenure as new owner with an unexpected and unacceptable deficit. The cost, in time and money, of recouping the potential losses can be quite high.

To preclude this scenario, every buyer should take the time to observe standard operating procedures in the practice, especially as they relate to satisfying patient needs. To do this properly, you will need all five of your senses and a willingness to perceive things from a patient’s perspective.

A proper evaluation of good will intangibles begins with knowing a few things about patients and concludes with observing whether the practice you want to buy recognizes these things and incorporates them into its current philosophy. As we all know, patients in a dental practice:

Need to be understood.

Need to feel welcome.

Need to feel important.

Need to be comfortable.

Satisfying these needs creates good will and helps ensure patient loyalty. So before you sign that contract, put yourself in the patient’s shoes and find out how much good will you can count on. Imagining you are a patient, drive to the practice from your home. Is getting there easy or is access difficult? Is there ample room to park? Does the building that houses the practice have a nice exterior? Is it well maintained? Are there flowers? Are snow and ice removed promptly and thoroughly? Is the plate glass door of the practice clean and smudge free? If you come in the evening, do all outside lights work? Are they positioned in a way that provides comfortable and safe lighting?

As you enter the reception area, does the front desk person “jump over the desk” to make you feel welcome? Pay particular attention to see whether this happens when a patient comes in. Is every patient greeted like a welcome guest?

Take off your coat. Is there a place to hang it? Is the temperature comfortable or are you freezing or sweltering within three minutes? Is the couch or chair you are sitting on comfortable? Is the place tidy? Check out the magazines? Are they relatively current or do you spot an issue of Popular Mechanics published in 1993? Is there enough variety for adult patients of different gender and different educational levels? Have geriatric patients been accommodated? Are there coloring books for small children? Has the area been attractively decorated with artwork that is soothing or amusing or interesting?

Check out the bathroom. Is it clean? Is it adequately stocked with toilet paper, paper towels and disposable cups? Does it have an attractive flower arrangement or wall paper? Is there an overhead fan that Kicks in as soon as the light is turned on? Does the room smell clean and fresh?

How long, on average, does a patient wait in the reception room? Are patients escorted to operatories and escorted back to the front desk after treatment? Are all hallways or corridors leading to operatories clean and uncluttered? Are all operatories clean and well-organized? Is there a hook where patients can hang pocketbooks or sweaters? Are dental visual aids on the wall fresh looking and updated? Are they properly spaced or do they run into one another like an indecipherable collage?

Eavesdrop on front desk telephone conversations. Does the team member speak clearly? Smile? Express interest and concern in the patient? Communicate in a way that a lay person can easily understand? Listen? Is politeness evident throughout the conversation? Observe what happens if the caller is placed on hold. How long of a time lapse occurs before the receiver is picked up by the receptionist or the doctor? Did you hear the patient’s name during the conversation? How many times? Did you hear at least one thank you?

Eavesdrop on any conversation between team members that can be heard by patients. Is everyone polite? Is there an audible sense of teamwork? Any tension? Any raised voices? Do people smile? Do they kid around? Is the kidding good-natured and appropriate in a professional setting or does anyone cross the line?

Eavesdrop on conversations between team members and patients. Can you sense gentleness and a positive attitude at all times. Do you see smiles on both sides? Are team members reassuring to patients who seem frightened or anxious or in pain? Do team members actively listen when patients speak? Are patients’ questions answered courteously and fully? Do you get the sense that at least one team member takes a personal interest in a patient’s family, work, or hobbies? If you have access to patient charts, are these personal interest items a standard feature of every chart.

Gauge overall practice TLC level as it applies to every aspect of patient contact with team members. TLC in the operatories is an absolute must. But TLC should also be evident in the range of hours and days available for appointments, in the willingness to assist patients with insurance paperwork, in the willingness to offer a comfortable range of payment options, and in the quality and appearance of warm fuzzies.

As you look and listen and feel out all of these good will components, imagine yourself as a patient. Will you be saying “I am understood here” or “They don’t have a clue”? Are you being treated like a welcome guest or like an interruption? Are you and your concerns taken seriously enough to make you feel important? Is every minute of your visit comfortable? Weigh your own answers critically and then ask yourself another question – would I refer my husband or my son or my cousin or my boss or my best friend or my mother-in-law to this practice? If you can comfortably visualize all of these people in this practice, it’s a pretty safe bet that the patients in the practice won’t be jumping ship when a new captain takes over the helm.