What Metrics Should You Focus on During Your Initial Review of a Practice Opportunity?

What metrics should you focus on during your initial review of a practice opportunity?By: Anthony Copple, JD
Transition Specialist

Reviewing an opportunity to purchase a practice outright or to buy into a practice as a partner can be an overwhelming task. You may have been presented with a mountain of data about the subject practice: tax returns, profit and loss statements, and operational reports. What does it all mean? What should you focus on? What data is important in determining a fair value for the practice?

Well…the long answer is that all of the data and information surrounding a practice is important in determining its value. After all, an orthodontic practice is a unique asset and no two are exactly alike. However, there are a few things you can focus on that will provide a reasonable snapshot of any practice. Three of the most consequential are explained further below:

Practice Overhead Rate
The overhead rate of a practice is one of the most important factors in determining a practice’s value and the benefits that practice will provide to a buyer. After all, the overhead rate ultimately determines the amount of cash the owner can reap from the business. Generally, the lower the overhead rate, the more valuable the practice. So, a practice at 55% overhead will be more valuable than a practice at 65% overhead, all else being equal. The average practice overhead rate for an orthodontic practice is 58% of collections. If operating expenses are below this level, it can drive the price of a practice up while expenses above this threshold will generally have the opposite effect.

Practice Production
Production acts as a bellwether for practice collections; it tells us where we’re headed. If the practice produces $1,500,000 this year, we can expect that the practice will collect something close to $1,500,000 next year. Knowing this, we can use practice production, practice collections and their relationship to one another to identify trends within the practice. If practice collections have grown over the past two years and production in each particular year exceeds our collections in the same year, we can be fairly confident that the practice will see continued collections growth in the following year. This can be vital to practice value because a growing practice has more potential, and less risk, than a declining practice.

Practice Contracts Receivable
The contracts receivable balance is the total amount remaining to be billed to the active patients of a practice. This can be distinguished from accounts receivable because accounts receivable have already been billed to the patient and are currently due. The contracts receivable balance gives us an indication of the stability of the expected future cash flow of the practice and an idea of the number of active patients that are paid-in-full.  We know that we can expect cash flow from the contracts receivable balance as we treat current patients of the practice regardless of the number of new starts we have. On average, a practice’s contracts receivable balance is approximately 50% of prior year production. Below that level, and the practice likely has more paid-in-full patients than the average orthodontic practice. This would add risk for a buyer expected to continue to treat those paid-in-full patients after the closing without collecting patient fees. This additional risk tends to drive the practice price down. Of course, if the contracts receivable balance is above this threshold, it can add value to the practice.

As I said above, there are dozens of factors that go into determining the value of a practice. No one point of data will tell you everything you need to know about a practice. However, analysis of the three metrics above should give you a pretty solid idea of the type of practice you are looking at and whether it is worth pursuing further.

Orthodontic Job Opportunity: Dallas, Texas

Dallas_BlogA unique new orthodontic model and practice group is expanding nationwide. This fast-growing group is seeking a motivated, entrepreneurial associate to join their team and manage a practice in Dallas, Texas. This practice is passionate about making orthodontic care exceptional and believes in putting the orthodontist at the center of its growth strategy.

Located in North Texas, the city of Dallas is the core of the largest metropolitan area in the Southern United States as well as a commercial and cultural hub of the region. Fun fact: The nation’s largest arts district is located in Dallas which consists of 19 blocks of museums, venues, and galleries. Offering both big-city excitement and quiet suburban living, residents enjoy living in Dallas. New developments have drawn in both families looking for a community with easy access to the city and millennials looking to advance their careers.

If you are looking for a new career with a competitive income package this opportunity is ideal for you. To learn more about this practice opportunity, please forward your CV and letter of interest to shannon@bentsoncopple.com.

Orthodontic Job Opportunity: Scottsdale, Arizona

Scottsdale_BlogA unique new orthodontic model and practice group is expanding nationwide. This fast-growing group is seeking a motivated, entrepreneurial associate to join their team and manage a practice in Scottsdale, Arizona. This practice is passionate about making orthodontic care exceptional and believes in putting the orthodontist at the center of its growth strategy.

This desert city is located east of Phoenix and is known for its spa resorts and golf courses, but that is not all Scottsdale has to offer! There are endless opportunities for outdoor adventure including hiking McDowell Sonoran Preserve, horseback riding, kayaking Salt River, or capturing breathtaking sunsets from a hot air balloon. Head over to Old Town Scottsdale for the Southwest’s largest shopping destination, the city’s entertainment district, award-winning craft breweries, and it’s very own Wine Trail!

If you are looking for a new career with a competitive income package this opportunity is ideal for you. To learn more about this practice opportunity, please forward your CV and letter of interest to shannon@bentsoncopple.com.

Orthodontic Job Opportunity: Washington, D.C.

Washington DC_BlogA unique new orthodontic model and practice group is expanding nationwide. This fast-growing group is seeking a motivated, entrepreneurial associate to join their team and manage a practice in Washington, D.C. This practice is passionate about making orthodontic care exceptional and believes in putting the orthodontist at the center of its growth strategy.

Washington D.C. is a compact city located on the Potomac River, bordering Maryland and Virginia. The nation’s capital is a place unlike any other filled with monuments, memorials, national museums, and eclectic neighborhoods with each having its own atmosphere. Public parks and cultural sites give the D.C. metro area the perks of a large urban area while neighborhood block parties and coffee shops create the feel of a much smaller community.

If you are looking for a new career with a competitive income package this opportunity is ideal for you. To learn more about this practice opportunity, please forward your CV and letter of interest to shannon@bentsoncopple.com.

Orthodontic Practice For Sale: Central Louisiana

Cental LA_BlogA unique, multi-location private orthodontic practice located in Central Louisiana is for sale.

The area offers residents a true sense of community and is a wonderful place to call home.  The area has experienced unprecedented growth in recent years and received national recognition for one of “America’s Best Small Towns”.  Residents enjoy its one-of-a-kind community, modern conveniences with close proximity to larger cities. It is also a sportsman’s paradise with many outdoor activities like hiking, hunting, camping, and endless water-related fun. Residents enjoy a wonderful year-round climate, annual festivals, a low cost of living and state-of-the-art hospitals and health care facilities.

If you are looking for a wonderful practice opportunity, please email your CV and letter of interest to shannon@bentsoncopple.com.

Dr. Boomer & Dr. Millennial Participate in ‘The Git Up’ Challenge

Dr_Boomer_Dr_Millennial_Episode3

We are excited to release Episode 3 of Dr. Boomer & Dr. Millennial: Generational Diversity! This edition focuses on the struggle of creating social media content, specifically The Git Up viral dance challenge. Our team hopes you’ll relate to the differences between the two doctors and enjoy a good laugh as Chris Bentson and Shannon Patterson attempt the two-step then cowboy boogie.

Each episode of the video series, examines generational diversity in the orthodontic workplace, reviews some of the benefits and issues associated with it, and shares some of the best practices based on our company’s experience. The ultimate goal of the series is to remove the age barrier by illustrating the differing viewpoints and asking viewers to take a step back and relate to it from the other side’s perspective.

Click here to watch, or visit Bentson Copple & Associates’ YouTube Channel!

What Do Patients and Parents Look for When Choosing an Orthodontist?

 What do patients and parents look for when choosing an orthodontist?By: Mandy King
Client Support Associate

Every orthodontic practice is different so potential patients and their pa
rents will be looking for what looks like the “complete” package. Putting yourself in their shoes, let’s see what that looks like.

Parents want an office environment where their kids feel comfortable. Not only with their surroundings but with the doctor(s) and team members. The first impression of your office is usually a ‘make it or break it’ moment. As soon as parents walk in the door, they are looking around to see if the waiting room is clean and inviting. They will then make a mental note if their interaction with the front desk is a pleasant experience. Your team needs to be aware of how important that first touch truly is to a parent!

Every parent is paying attention to the treatment fees. Several parents might even get second or third opinions. However, that is not always the deciding factor. Parents also value the quality of orthodontic care their children will receive. If they have been referred to an orthodontist by their child’s dentist and other parents that rave about the quality of your practice, price can become a secondary consideration. Let’s face it, word of mouth referrals are a key to a thriving orthodontic practice.

Patients also like to feel like they are the only one in the room while they are being cared for so paying attention to them is of utmost importance. Your team members should carry on conversations with patients and make them feel important during their time in the clinic. Parents like to see that their kids are being treated with individual attention as well. Therefore, when it comes to the new patient appointment, it is crucial to exemplify these qualities so that the parent and patient will choose your practice for their orthodontic care.

Having a “patient-first” approach is certainly what every parent or patient likes to see!

Orthodontic Job Opportunity: Raleigh, North Carolina

Raleigh_BlogRaleigh, North Carolina is the place to be and we have a great opportunity for an orthodontic associate!

The streets in the heart of the city are lined with many oak trees making Raleigh known as “City of Oaks” which helps further the family-friendly atmosphere and welcoming community. This state capital is also known for its universities, including North Carolina State University and is part of the Research Triangle Park. This region is luring new residents every day with strong job growth and high quality of life. Many of the people who call this metro area home are young, friendly, diverse, and educated. U.S. News ranked Raleigh #10 in Best Places to Live and Money Magazine describes Raleigh as the ‘Best Big City in the Southeast’.

To learn more about this practice opportunity, please forward your CV and letter of interest to shannon@bentsoncopple.com.

Click here to view additional practice opportunities available from Bentson Copple & Associates.

What Should Be Accomplished During an On-Site Visit Interview?

What should you accomplish on a site visit interview?By: Shannon Patterson, CPR, CMSR
Partner, Kolbe Certified™ Consultant

When a potential employer and/or partner is interested in you, chances are you will be invited to visit the practice. Whether it is your first opportunity post-residency or you’re moving on from a previous opportunity you need to make the most out of the site visit. You should know a few basics and questions to ask about the practice and community to ensure you find the right opportunity in the right place.

When, What, and Who?
As you share with co-residents you will quickly realize that no two site visits are the same. It will be up to you to do some homework before the visit to ensure you get the most out of it. Understanding the three basic W’s – the when, what, and who will help you prepare for the visit.

When Does a Visit Take Place?
Typically you are invited to visit a practice after initial conversations with a potential employer and confirming you both are interested in moving forward. At this point, you should understand the position and have a genuine interest in the practice and the community in which it is located. I have had candidates visit practices as early as their first year of residency if the practice meets their goal parameters and is located in their geographical area of interest. Most potential employers, especially those offering a path to equity, are looking for a person who can adapt to their practice culture and they are definitely willing to wait on the right candidate.

What Does the Visit Include?
A site visit is designed to showcase a practice and the community and what it has to offer a candidate in a very short amount of time. We highly recommend an overnight stay to maximize the visit. Most of the time the visit is tailored to each candidate but has a standard format which usually includes additional interviewing with the doctor, meeting with the team, clinical shadowing, touring the community, dinner with spouses and possibly a social event in the community. We also recommend meeting with a local realtor if you feel strongly that you will accept the position.

Who Should Join You?
Although it is you the practice is interviewing if you are married your spouse will likely have a very important role during the visit. Orthodontic practices typically are very involved in the communities they serve and want to ensure that you and your family will feel comfortable and welcomed. Spouses are often the number one reason candidates reject a job offer especially if the spouse did not attend the site visit. One of the most important parts of the site visit is to envision yourself and your family living in the community where the practice is located. The second part of the “who” question I often hear is “who” pays for the site visit? A potential employer should pay for you to visit the practice. That usually includes airfare, hotel, and a rental car. It is customary that the potential employer reimburse you for travel expenses after the site visit is complete but some employers offer to make travel arrangements for you; either is fine just be sure to get a plan in writing so you understand what will be covered.

Remember your goal on a site visit is to gather as much information as possible about the clinical position, the practice culture, and its alignment with your own values, and the surrounding area and whether it will meet your social needs. At the end of a site visit, you should confirm that the opportunity has the right culture, the right team, and is located in the right place for you to start a successful orthodontic career.

Orthodontic Job Opportunity: Seattle, Washington

Seattle.BlogA unique new orthodontic model and practice group is expanding nationwide. This fast-growing group is seeking a motivated, entrepreneurial associate to join their team and manage a practice in downtown Seattle, Washington. This practice is passionate about making orthodontic care exceptional and believes in putting the orthodontist at the center of its growth strategy.

Seattle is Washington State’s largest city and is home to a large tech industry, with Microsoft and Amazon headquartered in its metropolitan area. The practice is located near the Seattle Center which has become a premier destination for arts, entertainment, and leisure activities. One of Seattle’s greatest assets is that it’s a large city that doesn’t require you to leave to find outdoor activity offering a wonderful lifestyle for both families and young professional adults!

If you are looking for a new career with a competitive income package this opportunity is ideal for you. To learn more about this practice opportunity, please forward your CV and letter of interest to shannon@bentsoncopple.com.

Click here to view additional practice opportunities available from Bentson Copple & Associates.