Casey and Jarrod shift the focus to long-term considerations involved in selling your practice to a DSO. They explore the impact on patient relationships, staff dynamics, and the overall ethos of the practice post-acquisition. By weighing the pros and cons of such a decision, they equip listeners with the knowledge needed to make a well-informed choice.
Announcer:
Hello, everyone. Welcome to The Millionaire Dentist Podcast, brought to you by Four Quadrants Advisory. On this podcast, we break down the world of dentistry, finances, and business practices, to help you become the millionaire dentist you deserve to be. Please be advised, we do speak with an honest tongue and may not be safe for work.
Casey Hiers:
Hello, and welcome to The Millionaire Dentist Podcast. This is Casey Hiers in studio with Jarrod Bridgeman. How are you, sir?
Jarrod Bridgeman:
Hey, good. How are you?
Casey Hiers:
Fantastic.
Jarrod Bridgeman:
Hey, listen. March Madness stuff has been happening, right? We got a little pool going here. Aren't you in first place?
Casey Hiers:
Well, yeah.
Jarrod Bridgeman:
Oh, I'm like almost next to last.
Casey Hiers:
Well, I mean...
Jarrod Bridgeman:
I picked team names I thought were funny.
Casey Hiers:
What's your team name?
Jarrod Bridgeman:
My actual team, like the fantasy?
Casey Hiers:
Yeah.
Jarrod Bridgeman:
It's Death by Tacos.
Casey Hiers:
That's kind of funny.
Jarrod Bridgeman:
It's how I kind of wish I could go.
Casey Hiers:
I'm into tacos.
Jarrod Bridgeman:
Yeah. Not so much the death part.
Casey Hiers:
I did like a... Is it a double entendre, is that what it's called? Poison Ivy. I'm a Purdue guy, Jaden Ivey, some connection. I don't know.
Jarrod Bridgeman:
I get it.
Casey Hiers:
Number one, top of the list. Let's go.
Jarrod Bridgeman:
Well, good luck I guess, if you win, take me out to lunch or something.
Casey Hiers:
That didn't feel very heartfelt, the good luck part. The taking you to lunch, you felt real committed there.
Jarrod Bridgeman:
I did.
Casey Hiers:
So I had the opportunity to present some continuing education to a study club earlier this month.
Jarrod Bridgeman:
Nice. Where was this?
Casey Hiers:
I was at a nice country club in the Midwest. Nice venue, nice group, lot of good folks. An orthodontist, it was his study club and a really good group. And I was asked a question that led to robust conversation, and I thought we could talk about that today. You're familiar with corporate dentistry.
Jarrod Bridgeman:
Correct.
Casey Hiers:
DSOs.
Jarrod Bridgeman:
Correct. And they're the same thing, for our listeners. Right?
Casey Hiers:
Dental support organization, it's that acronym, right?
Jarrod Bridgeman:
Okay.
Casey Hiers:
But yeah, somebody had asked me, is it easier to sell your practice to a DSO or maybe to a younger associate? And that was in front of a decent crowd. I felt like it was a loaded question. So I took a step back and I asked the group, I said, "Does anybody here have any experience with either one of those?" And one gentleman raised his hand and shared his experience. But it's a robust question that I thought we could unpack.
Jarrod Bridgeman:
Yeah.
Casey Hiers:
What do you think?
Jarrod Bridgeman:
In my mind, like right off the bat, maybe the initial sale itself could be easier, because I'm assuming the DSOs have a team of people, realtor, lawyers, and all that kind of stuff to help kind of push that through, versus one-on-one working with an associate or another dentist.
Casey Hiers:
Yeah. Yeah. It really is loaded because you are right, selling to corporate dentistry, they make it pretty turnkey.
Jarrod Bridgeman:
Yeah. They have a process for that.
Casey Hiers:
And the upside is they dangle the carrot, the big number, which is exciting. But, with everything, the devil's in the details, right?
Jarrod Bridgeman:
Now, instead of a carrot, what would entice you? More of like a Snicker's bar?
Casey Hiers:
I do like my sugars. No doubt about it, but yeah. The question of "easier," I need to.
Jarrod Bridgeman:
Does easier mean better, right?
Casey Hiers:
Ooh. That's a...
Jarrod Bridgeman:
I mean, people talk about taking the easy way out or the easy road. It doesn't always mean it's the right one.
Casey Hiers:
So the conversation we had... I'll render my opinion later, but the conversation we had was basically someone had raised their hand and they said, "I sold to a corporate dentistry. And the process was very smooth." But his agreement was to stay on for five more years, and he said he didn't last 12 months under that model. Then the conversation turned to, well, the younger generation and younger dentists coming out of dental school or associates, it's a little different now. Some of them don't want to be owners, right.
Jarrod Bridgeman:
It's a mix of that, and being younger and coming into the world of our value of our money doesn't mean the same as it did 20, 30 years ago. It's a lot tougher to conceptualize those kind of things.
Casey Hiers:
No, I think you're onto something, and it's true. We're hearing more and more younger dentists are content being associates, not being business owners, because, as we've discussed in previous podcasts, there's a bonus job. Right. You think you're supposed to buy your practice and you buy it. Well, now you have overhead. Now you have payroll. Now you have all these other responsibilities. And so there is potentially less of an appetite, generally speaking, for young people to own.
Casey Hiers:
So the question I think was really good. Here's what I didn't know, the person asking it had just sold to a DSO. And so that was a tricky part, but getting somebody in the room to share their experience was important. And what I asked the person was, if your overhead 75%, and if your income off of your practice isn't great. If you take all the insurances that are available, that practice might be harder to sell to a younger associate.
Jarrod Bridgeman:
Because it doesn't look all nice and shiny.
Casey Hiers:
Yeah. And I said, let me ask you this if your overhead was 58%, and let's say it was a million-dollar practice, maybe you took three or four insurances, but your income was 400, and your profit and loss statement and your balance sheets and all your financials were really, really sharp. All of a sudden that kind of practice, that's not necessarily hard to sell either. And then she sort of looked and conceded well, that makes sense. And so it was a great question.
Jarrod Bridgeman:
Did she come and talk to you at all afterwards and say, maybe I wish I wouldn't have done this now? Or...
Casey Hiers:
The comment was, "Had I heard this content prior to, I would've had more to think about." Meaning taking the time to get... What's the word I want?
Jarrod Bridgeman:
To get your practice in order, to get your ducks in a row.
Casey Hiers:
The financial house in order of the practice. If you spend some time doing that, number one, you can still sell to corporate dentistry, but you're going to get more money. Or all of a sudden younger dentists want your practice because it is attractive because you can show them a path to having good financials.
Jarrod Bridgeman:
Giving it that curb appeal. So the guy that stood up and said, "Yes, I sold mine and I barely lasted 12 months." Did he give any details as to why he couldn't?
Casey Hiers:
Yeah. I'm glad you asked. And so most dentists don't get into practice ownership for their passion to run the day-to-day operations of a business, but they do like being their own boss. They like the benefits of that. Well, when you sell to corporate dentistry and they write you a large check, there might be a couple strings attached. And so what happens is all of a sudden there was some micromanagement from the corporate part of it.
Jarrod Bridgeman:
Like, "Do it our way, not the way you've been doing it for X amount of years."
Casey Hiers:
The answer to most questions is money. Do more procedures, have more case acceptance, right? So then less time visiting with the patients, right?
Jarrod Bridgeman:
End up being like a mill, just turning the patients out.
Casey Hiers:
That can be the business model for these, right? I mean, you're not getting written the big check just because people are nice. There's expectations involved. And so if you're going to sell out to corporate dentistry or a DSO, make sure you fully understand what you're getting into. There are strings on the back end. It's a great option for people. It's a great option for some folks, some personalities. Most I speak with, they would prefer to go out on their terms, not just for themselves, but for their staff or their team, and for their patients. Because the culture of your office will change, if it's corporate dentistry.
Jarrod Bridgeman:
Because not only does it affect your job, it affects your staff as well. Because now they're going to have to deal with these new systems and these new things in places.
Casey Hiers:
Again, it's all about more patients per day, more production per day, more case acceptance. It's not just up to the whim of how the dentist or the team is feeling. Now you have criteria and metrics that potentially need to be hit with some of these agreements. And so...
Jarrod Bridgeman:
And then, like this guy, stuck for five years.
Casey Hiers:
Well, yeah. So if you agree to stick around in the way some deals are structured, you're going to get more money. Well, when he couldn't fulfill that obligation, I imagine there was some changing to the terms. Most will say, ideally, you find a young associate, it's the right partnership, everybody's happy. But we also know that 80% of associates don't become partners. And so what happens is, if a practice owner has under-saved for retirement, and they've started their transition two years, or they've started finding somebody to buy their practice two years before they want to sell, the percentage of success is low.
Jarrod Bridgeman:
No. And you're stressed. You're getting up there in age. You kind of need the money because you're like, "Oh shoot. I still have 20, 30 years left in my life, but I know the way I spend now, I'm not going to be able to cover it with what I've got." So yeah, you're right. That big fat check from that big, bad DSO can look appealing.
Casey Hiers:
I mean, life's full of trade-offs, right? I mean, obviously, our firm preaches keeping your financial house in order with your practice and with your personal, starting in your mid to late 30s. Then when you're of 50 or 60, you can retire on your terms. You literally can call your shot.
Jarrod Bridgeman:
So you shouldn't do what I do, which is just buy by a bunch of Legos. Just invest in that.
Casey Hiers:
Did you use the word "invest" and "Legos?"
Jarrod Bridgeman:
Listen, my buddy has the Ghostbuster firehouse, and it's now worth double. Okay.
Casey Hiers:
Wow.
Jarrod Bridgeman:
There you go. Yes.
Casey Hiers:
So let's use words like, "How are you going to scale that?" People love saying that, right? How are you going to scale that? That sounds...
Jarrod Bridgeman:
I don't know.
Casey Hiers:
You know, what is it... Hobby and investment schemes?
Jarrod Bridgeman:
Yeah.
Casey Hiers:
Anyway.
Jarrod Bridgeman:
Yeah. Most of the stuff I buy, it's not worth a damn thing. So...
Casey Hiers:
I like to break the Lego set. So what happens if you break the Ghostbusters firehouse? Would your buddy be mad?
Jarrod Bridgeman:
Yeah.
Casey Hiers:
Like crash it down?
Jarrod Bridgeman:
Yeah.
Casey Hiers:
Okay.
Jarrod Bridgeman:
Yeah. I bought Thor's hammer as a Lego set. So I got it sitting up on a bookshelf right now.
Casey Hiers:
How long did that take to put together?
Jarrod Bridgeman:
Two days.
Casey Hiers:
Only 1,000 pieces?
Jarrod Bridgeman:
Yeah.
Casey Hiers:
Sounds like my nightmare. But see, it's personal preference.
Jarrod Bridgeman:
Yeah.
Casey Hiers:
I don't love putting together 1,000 pieces, you do. Some people want to sell to corporate dentistry, some don't. It's personal preference. We're not endorsing one way or the other.
Jarrod Bridgeman:
We just hope you get the best deal for what you've got.
Casey Hiers:
Well, yeah, if it's those two choices, what's easier? It's easier to sell to corporate dentistry, most likely.
Jarrod Bridgeman:
Again, doesn't mean that it's better.
Casey Hiers:
Correct. Now the best way is to utilize an external firm that can help you have low overhead, high income, all the things we mentioned, have multiple associates that really want your practice. Go out on your terms. To me, that's the winner, but it takes more work.
Jarrod Bridgeman:
Right. And you should start early.
Casey Hiers:
Yes.
Jarrod Bridgeman:
Earlier the better. All right, Casey, that was a good topic. I appreciate you thinking of one for once. That was nice.
Casey Hiers:
I want to see Thor's hammer.
Announcer:
That's all the time we have today. Thank you to our guests for their insight and for sharing some really great information. And thank you to you, the listener, for tuning in. The Millionaire Dentist Podcast is brought to you by Four Quadrants Advisory. To see if they might be a good fit for you and your practice, go on over to fourquadrantsadvisory.com, and see why year after year, they retain over 95% of their clients. Thank you again for joining us, and we'll see you next time.
