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.

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.

Orthodontic Job Opportunity: Chicago, Illinois

Copy of Blog TemplateA 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 Chicago, Illinois. This practice is passionate about making orthodontic care exceptional and believes in putting the orthodontist at the center of its growth strategy.

Chicago is recognized all across the United States as a very passionate sports town but that is not all they have to offer. Chicago today embodies the values of America’s heartland – integrity, hard work, and community. As a multicultural city that thrives on the harmony and diversity of its 77 distinct neighborhoods, they have affordable housing in attractive and economically sound communities.

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.

Orthodontic Job Opportunity: Western South Dakota

South Dakota_BlogA private orthodontic practice in western South Dakota with multiple locations is looking for a motivated associate to join their team!

Located in a broad valley on the northern edge of the Black Hills, this community thrives as an outdoor recreational paradise along with a center for art and culture. Some of the best hiking trails are in the area, as well as majestic waterfalls and bubbling springs creating breathtaking scenery. Leisurely day trips to five National Parks and Monuments are within a two hour drive. The fast-growing, friendly community is home of one of the oldest educational institutions in the state making it an active college town with many young professionals residing there. This community was voted the #1 environment for entrepreneurs.

This opportunity offers a very competitive compensation package including a relocation bonus. If you are looking for an opportunity in a place that has a high quality of life, please forward your CV and letter of interest to shannon@bentsoncopple.com.

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

Orthodontic Job Opportunity: Bethlehem, Pennsylvania

Full-time.pa.BlogAn amazing private practice located in Bethlehem, PA is seeking a fun, dynamic, rock-star associate orthodontist to join their team. This practice likes to have fun while they work, and was recently voted one of the Best Places to Work in the region!

The practice is located in the Bethlehem community, which is part of the Lehigh Valley, the state’s third-largest metro region. So while it might seem like you live in a small community you are actually only 90 miles from New York City and 60 miles from Philadelphia. The valley is well known for its extensive award-winning parks and biking (including the Velodrome, an Olympic caliber biking track where you can see some of the world’s elite riders). The downtown historic district is rich with culture from early immigrants but is now home to art galleries, fun shops, and the famous “Restaurant Row”. The Southside district residents enjoy the first Friday of the month as the area comes alive with live music, entertainment, and food to promote the area merchants and a sense of community among its residents. As if this isn’t reason enough to consider this area, Bethlehem is also home to Marshmallow Peeps and Mike & Ike Candies!

This is an awesome opportunity for a new graduate to gain experience and knowledge working with an orthodontist who is an excellent clinician, has fun with his team and absolutely loves what he does! The ideal candidate is available by fall 2019 and eligible for Pennsylvania state licensure. To learn more about this 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.

Orthodontic Job Opportunity: San Fernando Valley, California

SanFernandoValley.BlogA growing practice in the San Fernando Valley of California is looking for a full-time orthodontic associate.

Located in the Los Angeles metropolitan area, this opportunity is in a prime location, with great options for work, school, and it has a thriving, diverse community. With 107 languages spoken in Los Angeles and limitless educational opportunities, there is a level of creativity and business that cannot be found in many places.  The Valley’s economic growth significantly outpaces metropolitan Los Angeles, California and the nation (Daily News February 27, 2019). For the adventurer, there are multi-use trails marked for hiking, mountain biking, and horseback riding. Beach access and parks are within a 45-minute drive as well. Transportation is made easy with rail services, trains, subways, and airports located within close proximity.

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.

Orthodontic Job Opportunity: Chicago Suburbs, Illinois

Illinois, Chicago Suburbs.BlogA practice located in the suburbs of Chicago, Illinois is seeking a full-time orthodontic associate.

This suburb is voted one of the best places to live in Illinois offering residents a lot of restaurants, shopping, and parks. Many young families reside here due to the highly-rated public school system. According to the Illinois School Report Card, two of the school districts in this county are among the top 20 districts in the state, one achieving exemplary status. Locals thrive on living a healthy lifestyle as the area offers a wealth of attractions to inspire both mind and body from a top-rated golf course to strolling through beautiful natural spaces. There is a downtown Metra station, making Chicago easily accessible, and it’s also a convenient location to major highways and airports.

This charming town offers exciting opportunities for a doctor looking to practice in Illinois. 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.

Equity-Minded Orthodontic Associate Opportunity: Hawaii

Hawaii_BlogAloha! A private orthodontic practice is seeking an equity-minded partner in the beautiful state of Hawaii.

This is an amazing opportunity for a candidate seeking an ideal work-life balance. When you get to live where most people vacation, your days off are extra special. The state is ranked as one in one of the healthiest lifestyles available for both body and mind as most islanders say living here is less stressful than living on the mainland. Islanders enjoy breathtaking beaches, unique cultures, history and an abundance of outdoor opportunities including; hiking, surfing, kayaking, kiting, fishing, and wildlife exploring.

If you are interested in learning more about this amazing 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.

As an Orthodontic Resident, When Should I Begin Searching for a Practice Opportunity?

As an orthodontic resident, when should I begin searching for a practice opportunity?By: Mandy King
Client Support Associate

As a liaison for residents seeking orthodontic opportunities, my job is to provide you with support during the recruitment process with our placement services. In doing so, I am able to share insight about crafting an “About Me” letter, preparing a curriculum vitae, and answer any questions you might have, including ‘when should I start looking for an opportunity?’

You should begin to determine in which state and city or town you wish to practice after the first six months of your residency. If you wait until your last year to start the process of identifying the area in which you wish to live, you are taking a gamble on finding an opportunity. Some of you are pretty open to different areas, which is great because this will give you more opportunities. A good rule of thumb is, beginning when you are one year out from graduation, you should dedicate two hours per week to your job search depending on your geographical preferences.

If you are considering buying-in or purchasing a practice, you need to start preparing early. Be on the lookout a year or two in advance for practices for sale in the areas where you hope to purchase. Speak with a lender to determine financial goals you may need to meet in order to be extended a loan.

Do not hesitate to inquire about opportunities that interest you or to ask questions you may have about current market trends. You never know when the “right” one will present itself.

Each month our team sends out the Bentson Copple InSight e-newsletter which includes a list of available practice opportunities. If you are not receiving the InSight and would like to stay up-to-date with current orthodontic career opportunities, please click here and sign up.