Southern Dental Corporation is looking for a few good dentists, preferably ones with offices to sell.
SDC of Ridgeland, a newly formed dental management company, is in the business of buying dentists` practices and turning a profit for both, said Jerry McBride, vice president and director of corporate development.
“We are looking for diamonds in the rough,” McBride said. “We want to be able to buy $200,000 to $400,000 practices with potential for growth where other similar managed care DPM (dental practice management) companies are looking for $1 million practices.”
SDC is initially buying dental practices in Mississippi, Louisiana, Arkansas and Tennessee and plans to expand into Alabama, Georgia, North Carolina, South Carolina, Virginia and Kentucky. “Because Florida is heavy in managed care, we won`t be going there,” McBride said.
Southern Dental Corporation is a spin-off of a 30-year concept, AFTCO, and has already acquired three practices in Jackson, Memphis and Baton Rouge. With the addition of two practices in Tennessee, SDC will have five by the end of the month. Dentists have accepted purchase proposals in nine additional practices, and more than 35 are in various stages of the acquisition process, he said.
“Our goal is to have 30 practices in place by year`s end and three-year projections call for 100 to 150 practices,” McBride said.
Two years ago, McBride hooked up with Ed Woods, an AFTCO licensee since 1988. As a consultant, not a broker, McBride arranged “marriages” of doctors and purchasers in the Louisiana area. “I saw managed care DPMs filtering into Louisiana, and saw that these companies were lacking an acquisition arm,” McBride said.
McBride teamed up with Arthur Clark and Jeff Gorman, partners in Private Equity Partners, LLC. They joined J.O.Hambro, LLC, and formed Southern Dental Corporation and subsequently signed an exclusive contract with Ed Woods and AFTCO Midsouth as their corporate acquisition arm.
AFTCO finds dental practices and SDC analyzes them. An SDC acquisition team determines whether to purchase the practice.
If the deal is made, SDC gives its selling dentist a 20% cash downpayment, and a promissory note payable monthly for the remaining 80% rather than stock like other DPMs that are publicly traded offer. The monthly installment gives the dentist the equity return out of his practice, McBride said.
“We don`t want to make sweeping changes because we`re buying something that`s already working,” McBride said. “We want the dentist to work at the pace he wants and promote very little change as far as the patients are concerned. We`re not putting our name all over the building. We want dentists to feel it`s still their practice. We`re just taking over the administrative duties.”
SDC sends its management consultants to make the practice more efficient without putting restrictions on the dentist or the staff. “We want a win-win situation. If the dentist and the staff are not happy, SDC will not be successful,” McBride said.
SDC is primarily targeting “fee for service” dental practices with room for growth. “Fee for service” practices have patient fees based on the market, not fees established by third parties, like managed care companies. Dentists looking to retire or cut back hours, or dentists tired of administrative duties are good candidates, too, he said.
“We`re also in the market for associates,” McBride said. “It`s an excellent opportunity for young dentists who do not want to start their own business or do not have the funds to start their own business to work for us. We have a very competitive pay scale.”
SDC will keep dental offices open five days a week, even if the selling dentist only works three days a week. “After we have several practices in an area, we can fill in with an associate two days at one clinic and three days at other clinics.”