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.

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.

Bentson Clark & Copple Announces Upcoming Speaking Schedule

The Bentson Clark & Copple team have a busy upcoming fall schedule. We always enjoy the opportunity to speak at orthodontic society meetings, study clubs, orthodontic schools, and resident functions. This fall we have been provided numerous opportunities to do so! Chris Bentson will be crisscrossing the country presenting to the orthodontic community.

Some of Chris’ presentation will be solely directed towards the orthodontic resident community, while others are targeted toward the general orthodontic doctor population. He will be speaking on a number of topics including, but not limited to: locating a practice opportunity, today’s orthodontic marketplace, orthodontic trends, practice transition (from both buyers’ and sellers’ perspectives), practice valuation, and the future of the orthodontic industry.

Below is a list of Bentson Clark & Copple’s upcoming speaking and exhibiting schedule.

September 20-23, 2012
Middle Atlantic Society of Orthodontists (MASO) Annual Session
Baltimore Hilton
Baltimore, MD
Booth # 405
Doctor Lecture: Benchmarking the Orthodontic Practice
Resident Lecture: The Process of Locating a Practice to Build, Join, Partner or Purchase

September 27-29, 2012
Southern Association of Orthodontists (SAO) 2012 Annual Meeting
Grove Park Inn
Ashville, NC
Booth # 605
Doctor Lecture: Today’s Orthodontic Practice & Marketplace
Resident Lecture: How to Locate a Practice Opportunity

October 9, 2012
AAO Sponsored Resident Webinar
Resident Webinar: Path to Ownership, Partnership or Associateship

October 11-13, 2012
OrthoVoice 2012
Bally’s Hotel
Las Vegas, NV
Booth # 311
Practice Transition Panel Discussion

October 18-20, 2012
OrthoSynetics’ 2012 Practice Meeting
Loews Ventana Canyon
Tucson, AZ
Doctor Lecture: Today’s Orthodontic Marketplace and How It Will Shape Tomorrow

October 25, 2012
TP Orthodontics Resident Presentation
TP Orthodontics Headquarters
La Porte, IN
Resident Presentation: The Resident Pathway to Future Practice Ownership

Be sure to attend one of Chris Bentson’s lectures, visit our booth (if we are exhibiting at that particular meeting) and pick up of the most recent copy of the Bentson Clark reSource!

Dentistry Going Corporate

There was an interesting article featured in the April 9, 2012 issue of the ADA News.  The cover story, “ADA Explores Growth of Large Group Practices” caught my eye. The article sites a recent study conducted by the Health Policy Resources Center of the American Dental Association (ADA), which concludes that the rate of solo practitioners is falling. In 2010, 69% of dentists were solo practitioners compared to 76% in 2006.

Certain states and areas of the country are experiencing the expansion at a faster rate than others. For example, the Minnesota Dental Association reports more than 12% of dentists in the state are employed in large group practices.

The American Association of Orthodontists (AAO) surveyed new graduates in 2009 and 2011 and found that 16% of respondents are practicing in a non-traditional setting, defined as either an interdisciplinary practice or a practice where they are employees or independent contractors. Chris Vranas, AAO Executive Director says, “Overall our membership is still at 69% in solo practice, 16% in partnerships, 6% in associateships, 4% interdisciplinary practice and 5% in large corporate practice.

We ask the question – what is driving the trend? The ADA article references educational debt of young doctors and the growth of Dental Service Organizations who need employee doctors to grow.

This trend of dentistry going corporate is something Bentson Clark & Copple has been watching for several years and one that you may have noticed in your drawing area. It will take some time to have a major impact, but understanding this trend will help you as you think strategically about your brand and identity as you communicate with new patients and referrals.

To learn more about the trends of today’s orthodontic residents, check out Bentson Clark & Copple’s 2011 Annual Residents Survey Results.