Bentson Clark & Copple’s Resident Survey

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.

Who Should Perform Your Practice Appraisal?

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 Thankful

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!

What is An Orthodontic Practice Valuation?

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.

Residents’ Skewed View of the Orthodontic Industry

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.

On the Road Again…Traveling to Tucson

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

Upcoming AAO-Sponsored Orthodontic Resident Webinars

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.