If you have not had an opportunity to watch our holiday video greeting, we would like to encourage you to do so. May the joy of the season, put a song in your heart (and a smile on your face)!
We spend a lot of time and effort working with today’s orthodontic residents. We visit their residency programs, attend events solely catered towards the resident community and participate in resident-only webinars and presentation opportunities. We spend numerous hours speaking with them as they search for an orthodontic practice to purchase and/or employment opportunities. We are focused on actively working with and providing as much information as possible to them to help them make educated decisions about their future. This group of young professionals will ultimately shape the future of the orthodontic industry.
As part of our commitment to providing relevant, accurate and useful data to the orthodontic community, each year Bentson Clark & Copple conducts a nationwide survey of all current orthodontic residents for the purpose of collecting, compiling and analyzing information regarding today’s orthodontic resident population.
As in our previous surveys, we ask a variety of questions regarding residents’ anticipated plans after completing their residency program. The survey also inquires about income expectations, geographic locations, total educational debt, and preference of whether they would seek an employment relationship or equity opportunity upon graduation.
We have published a brief sampling of the 2012 Annual Orthodontic Resident Survey’s results in the 4th Quarter edition of the Bentson Clark reSource. We have, in addition, compiled the full results of this year’s survey in booklet form featuring our commentary and a comparison of this year’s data to that of the previous two years. This publication will be available for purchased within the next few weeks. Please check our website and blog for additional information and purchase information.
The fourth quarter edition of the Bentson Clark reSource is now available. Each quarter, the Bentson Clark reSource orthodontic newsletter analyzes and examines the most current issues and concerns within the orthodontic industry. We feel that this quarter’s publication features a vast array of articles targeted towards all orthodontists, regardless of practice size or career stage. Here’s a brief overview of the articles that are included in the latest quarterly issue:
From The Mouths of Orthodontic Residents
By: Laura Overcash
Bentson Clark & Copple spends a lot of time and effort working with today’s orthodontic residents. We are focused on actively working with and providing as much information as possible to them to help them make educated decisions about their future. It is once again time to share this year’s annual resident survey results. The survey inquired about income expectations, geographic locations, total educational debt, and preference of whether they would seek an employment relationship or equity opportunity upon graduation.
Solving the Orthodontic Sudoku Puzzle – Part 2
By: Debbie Best
Just as a precise combination of numbers is required to solve a Sudoku puzzle, orthodontic practices must have detailed systems in place that are closely integrated throughout all areas of the office to meet and exceed patients’ expectations. There are several little things that add up to a patient’s perception of an orthodontic office, from the initial referral through the completion of the retention phase.
Speak to Moms About Value and They Will Listen
By: Maria Bailey
Value is a word that Mom understands well, particularly when it comes to managing the family finances, but value doesn’t always mean price in Mom’s mind. It means much more than a price tag, especially in a health care relationship like an orthodontist has with a patient, which also happens to be her child. Value is more closely aligned with quality in this setting.
OrthoSynetics: An Example of Corporate Practice Management
An Interview with David Marks, CEO of OrthoSynetics
The term “corporate dentistry” is thrown around quite a bit these days. It can take various shapes and forms; one of which is the concept of a Management Service Organization. OrthoSynetics is an example of this type of organization. If you are unfamiliar with the firm, it is a dental practice management company that manages all business aspects of orthodontic and dental practices. We recently interviewed OrthoSynetics’ CEO David Marks regarding the company’s future in the orthodontic industry within today’s economic environment.
Transition Traps: 3 Types of Transition That May Not Be What They Seem
By: Char Eash
Whether you are the buyer or the seller of an orthodontic practice, there are certain types of transitions to avoid. The author has learned firsthand about transitions not working out for either party, and has seen the destruction that a sale or potential sale can have on the patient base, the practice and the doctors involved when there is no plan in place. This article discusses three types of transitions buyers and sellers should avoid.
By: Daniel Sroka
For those of us who grew up in the era when the best part of a dentist’s waiting room was a Highlights magazine, the multi-media experience that greets children today is truly amazing. Although Nemo, Buzz Lightyear and Curious George have made both the wait to be called back to the operatory and time in the chair a calmer, quickly-passing experience for young patients, all of that entertainment comes at a price. The lurking issue is whether that price will be paid by the orthodontist voluntarily or whether it will be paid in a response to a lawsuit filed by the lawyers of the entertainment industry.
Click here to read a sample version of the 4th quarter 2012 reSource. Not a subscriber? Be sure to subscribe today by visiting our website.
At some point in the life of your orthodontic career, there will most likely come a time to have your practice valued. This process usually occurs only once for most practitioners, but more in some cases. The reasons for having an orthodontic practice valued vary, but by far the most likely reason is the contemplation of a change in ownership. If you plan to retire and sell your practice, a practice valuation is highly suggested as one of the first steps in the process. When the time arises, do you know who should perform your orthodontic practice appraisal?
The AAO provides its members with a list of companies or individuals that offer valuation/evaluation services to the orthodontic community. If the purpose of the valuation is for an ownership change, it is strongly suggested you select a firm that specializes in orthodontic valuation and transition services rather than using your local CPA or accounting firm. Bentson Clark & Copple, LLC, provides valuation services and appears on the AAO’s listing, as do several other well-respected companies.
Most Certified Public Accountants who have been involved in the sale of various businesses can likewise prepare some type of valuation report for your practice. For reliability purposes, the report should follow accepted valuation methodology. It should be completed and signed by someone who holds nationally recognized valuation credentials (such as CVA, AVA, ASA, etc.).
We are reminded during the Thanksgiving season to be thankful and cherish the family and friends that are such a significant part of our lives. While we at Bentson Clark & Copple enjoy the Thanksgiving food and traditions that go with the holidays, we are very thankful for our families, clients, and co-workers.We would like to take a few moments to reflect back on these three groups.
1. We are thankful for our families. As in most endeavors, we spend a great deal of time at work and away from our families. Whether we are in the office, away with clients or attending meetings, our families at home are always on our minds. Each of us is so thankful for those that we live with and care for. Their love and support allows us to focus on our work. We are grateful for their health and safety throughout this year.
2. We are thankful for the opportunity to work with such great doctors. We are blessed to become part of the lives of doctors during the pivotal points within their orthodontic careers. We are able to work with orthodontic residents as they begin their practice journey and once again when doctors are ready to transition into a new chapter of their practice life. Those plans can be retirement, reducing the number of work days or bringing in a partner/associate to help manage the practice’s workload. These doctors become more like family members than clients during the months (or even years) that we work with them. We enjoy the opportunity to help them reach their goals, make their career dreams a reality, and educate them with the valuation or transition information needed to make educated decisions regarding these big choices.
3. We are thankful for the Bentson Clark & Copple team. We would not be able to function without each team member. Each individual brings different expertise, talents, and gifts to the business. This allows us to operate as a team, to grow and to focus solely on our clients and their individual needs. Each team member is dedicated to providing the best service for each and every client. We work hard, but we do our best to make our work fun.
Have a great Thanksgiving!
Bentson Clark & Copple specializes in orthodontic valuations and transitions, but what does this really mean and involve? We are in the business of helping orthodontists during the pivotal points within their careers. We perform practice valuations, provide partner location services, offer practice sales and marketing services and help negotiate practice transactions.
Let’s focus on practice valuation. You are more than likely aware of the concept of business valuation, but may question how orthodontic practice valuations work. When an orthodontist is ready to find out what their practice is worth, they come to us. We then provide them with an information request document. This multiple page form requests the doctor’s personal information, and general information about the practice, including, the staff, hours of operation, leasing arrangements, number of locations and referral sources, among other items. After this information is collected, we then accumulate statistical and operational information. We inquire about the practice’s fees, the number of start cases and case completions, contracts receivable balance, number of active and recall patients and information on all active patients with paid in full balances.
Besides the on-site practice visit, perhaps the most important part of the valuation is collecting the practices’ financial information. We ask doctors to provide the past three years’ profit and loss statements and the most current interim profit and loss statement. We also obtain the most recent tax year-end and month-end balance sheets and a fixed assets listing. Lastly, doctors need to submit tax returns for the past three years including any other supporting statements. (Generally, we find that practices that employ practice consultants have a good grasp on key operational metrics and systems compared to practices that do not use practice consultants.)
We take all this information and determine a fair market value of a practice through a valuation report. The report briefly explains the various general valuation approaches and the valuation approach used by Bentson Clark & Copple. Through a variety of charts, graphs and statements, we explain how the value is calculated. The report includes a practitioner biography, the practice history, state and local demographics and an industry profile.
For more information regarding orthodontic practice valuations, please contact our office.
Chris Bentson has been speaking to the orthodontic residents a great deal recently regarding market positioning. Within any market there is a luxury brand, a middle market brand, and a value brand – yes, this is even true in orthodontics. In car manufacturing think Rolls Royce, Camry, and Yugo. In the world of mass-market clothing retailers consider Nordstrom, Gap, and Wal-Mart. If in the market to buy a watch, Rolex, Seiko, and Timex define these three market positions.
In orthodontics there are subsets of practices in the country that are “high-end” (or luxury practices). These practices are often characterized by high fees, exquisite facilities, the latest technology, and are heavy with a personal touch. On the other end of the spectrum there is a growing number of “value branded” orthodontic options. Ranging from “doc-in-the-box” corporate stores to “insurance- or Medicaid-” based practices that do not rely heavily on general practitioner referrals and offer no-money down, no frills. Orthodontic practices at both ends of the spectrum, luxury and value, seem to be performing well in today’s economy. Where does that leave the mid-market orthodontic practice? Perhaps, in a pinch.
The middle market orthodontic practice is characterized by mid-level fees (approximately $5,200), a modest-to-high integration of technology, contests and/or drawings for patients are common, patient flow is largely from general practitioner referrals, and a hot cup of coffee may be offered in the reception area. The mid-market practice is fighting hard to attract consumers. The question arises; why is there such a struggle for this market segment of orthodontic practices?
“Retailers and consumer-goods companies alike grappled with a disappearing middle class in 2011. After years of caution following the stock market’s financial-crisis swoon, the wealthy returned to luxury brands, benefitting retailers such as Saks, Inc., and Nordstrom, Inc.
At the lower end, dollar stores and discount chains profited as prolonged unemployment and economic uncertainty spurred the middle class to trade down.
That created a barbell effect, as companies that traditionally cater to middle-class consumers suffered. Gap Inc.’s profit declined 27% for the first nine months of the year. Department store chain J.C. Penny Co. recorded a $65 million loss.”
For practices feeling the pinch in the middle market, orthodontic owners should understand where their practice is positioned, manage overhead costs to meet consumer expectations for that particular market segment, and develop strategies to extend their position up or down in the market to attract more patients. Business as usual will likely put you in an uncomfortable position. An orthodontic consultant can be a great benefit to help you make the right moves. A thorough demographic analysis of your drawing area is also suggested (see “Is It Cold or Pneumonia: 5 Demographic Facts About Your Practice Area,” Bentson Clark reSource, 4th Quarter 2011). With time and effort, your practice can be successful regardless of its market segment in today’s economic environment.
Chris Bentson had the opportunity to spend some extended time with the first and second year residents attending two Mid-western programs a while back. Prior to the visit, he requested each resident complete a basic questionnaire regarding general information for U.S. orthodontic practices. Here is a list of the resident questions:
1. Approximately how many private orthodontic practices exist in the U.S.?
2. What is the average annual collections of a single doctor practice in the U.S.?
3. What is the average overhead of a private practice in the U.S.?
4. What percentage of practices in the U.S. are using Invisalign?
5. Name a ratio of revenue of collections per full time employee in the orthodontic industry.
6. Name some common rules of thumb used to express a practice value.
7. How much money will a lender loan to purchase or start-up a practice?
8. What are the expectations of income for a first year, full-time associate?
9. Would you consider using a practice management consultant in the first two years of practice ownership or start-up? Why or why not?
10. Name some considerations that need to be examined when considering a long term partnership.
It was fun to compare the residents’ responses before and after the presentation. Chris compiled answers to all the questions given prior to the lecture. Using the extreme answers, below is a radical, fictional description of the U.S Orthodontic market from the mouths of residents:
There are 1,000 practices in the U.S., having average annual collections of $300,000 and an overhead of 75%. One-hundred percent of the practices in the U.S. currently use Invisalign. The average revenue per employee is approximately $50,000, and I’m planning to employ six employees in my practice that grosses $300,000 per year. I will pay about 30% of annual collections to purchase an orthodontic practice. A lender will loan up to $2,000,000, and I expect to take home $250,000 within my first year of practice. I would consider hiring a consultant because they only cost about $100 per day and probably have some good ideas. If I go into a partnership arrangement, my biggest concern is tracking vacation time.
Obviously everyone in the orthodontic industry has a lot of work to do when it comes to residents’ knowledge of the industry.
The fall meeting schedule has been in full swing for the Bentson Clark & Copple team! We are once again packing our bags, putting together our marketing materials and reviewing our PowerPoint presentation for the upcoming OrthoSynetics’ 2012 Practice Meeting. We are honored to be invited to participate and can’t wait to finally get there!
We are extremely excited about the 1950’s themed Friday Night Sock Hop. We have heard through the grapevine that Chris Bentson will be rocking a leather jacket, white t-shirt and loafers at the event. Be sure to keep your eyes peeled (and snap a photo). The evening’s entertainment will include a performance from Shanana from the movie Grease! That should be a treat for all.
There will be a wide variety of speakers featured presenting on a diverse array of topics. We always enjoy speaking alongside industry leaders including Dr. Ben Burris, Dr. Mark Coreil, Dr. Jack Devereux (along with many others) and the wonderful OrthoSynetics team. Chris Bentson is scheduled to speak on Saturday, October 20 at 10am. Below are the details regarding his lecture.
Today’s Orthodontic Marketplace and How It Will Shape Tomorrow
Saturday, October 20 @ 10:00am
This presentation examines the economic state, current trends and existing benchmarks of the orthodontic marketplace and how these factors will affect today’s orthodontists and impact the future of the industry. The following areas will be discussed in detail:
• Current consumer and business owner behavior
• Operational and financial benchmarks
• Overhead standards
• Current trends: cause and effect
Bentson Clark & Copple is honored to participate in the AAO’s The Business of Orthodontics Webinar Series. This 10-part educational webinar series is directed toward today’s orthodontic resident community. The webinars began in September and will continue through April 2013. The series covers topics from starting/purchasing a practice to selling/retiring from practice, and everything in between. The webinars will be presented by a variety of industry insiders and consultants.
Chris Bentson will be presenting his first webinar (out of three that are scheduled) on October 9 at 8:15 PM EST/5:15 PM PST, and will last 75 minutes. There will be allocated time at the end for a question and answer session. The title of his lecture is Path to Ownership, Partnership, or Associateship.
For residents, understanding the options for employment, how to find them, and what to review when you do find them is extremely important. This webinar will be directed primarily with an orientation to the process of how buyers and sellers or employers for orthodontic opportunities happen. A review of the current market conditions and review of the timeline, expense, and materials needed to review an opportunity will be discussed. Current valuation methodology and a high-level overview of the operational and financial metrics that should be reviewed will be covered as well as associate pay, and cash flow pro-formas. Partnership methods of buying in will also be discussed.
This webinar series is free for all residents. It is funded by the AAO with the generous support of the AAO Insurance Company (AAOIC). For more information please contact the AAO.