Continued on page 55
What I have seen, is that the dentists who have done this
out the practice is worth next to nothing.
I wouldn’t recommend this model if you have any intention of
selling your practice.
PROS: Quick exit – you just lock the doors anytime you want.
CONS: There is no wealth attained from the practice, there is
no future for your patients, and no future for your team.
Endgame Model #2: Buyout
The rest of the models that I’m going to talk about end up
back here at the buyout. But they end up here after you’ve
built an asset that’s much, much more valuable if you just go
steady state and then look for someone to buy your practice.
PROS: There is a sequenced exit (you know approximately
when you’re going to sell, and how long until you exit) and
the asset is transferred to cash. There is a future for your
patients and your team.
CONS: As a sequenced exit, it can take time to exit. There is
no continuing income.
Endgame Model #3: Retire in the Practice
This is for the guys that want to practice full time, bring in an
associate and then drop down to a day or two. The associate
ramps up, the senior doctor ramps down.
PROS: As your engagement in the practice declines, you can
reduce your workload to match your engagement and that’s
enticing. Your income is split between what you produce and
CONS: As the associate doctor ramps up he ends up being
the one that has the relationship with patients and the team.
I have seen many times when it comes time to buy the senior
doctor out, the junior doctor decides he doesn’t want to, and
goes to another practice nearby, taking the best of the team
and many patients with him. And so now, the senior doctor
is low in engagement, hasn’t been in the practice, and has to
start all over again.
That’s why, in my opinion, this is a risky model. One that I
have seen blow up on people multiple times.
Endgame Model #4: Buy-in, Buy-out
This model looks like this… an owner doctor enters into an
arrangement with an associate doctor. The associate doctor
buys a portion of the practice with an agreement that at a
set future date he will buy out the rest of the owner doctor’s
portion of the practice.
manage.
PROS: You get immediate cash as the associate doctor buys
in. There is a future for your patients and your team.
CONS: You now have a partnership to deal with (and partnerships
are tough.)
Endgame Model #5: Associate-driven growth
This seems like the right place to say, the bigger your practice
-
able it is, the more you’ll get for it.
In this model, the owner-doctor is going to take a period of
time and use associates to drive up the practice. This was my
model in my practice in Iowa – to have multiple associates.
We’re driving the practice to become bigger, and bigger, and
bigger, so there could be a time down the road when the
practice would be worth a lot more.
I worked this model for 20 years. This one takes some time
to mature, but you can get multiples out of your practice that
you can’t get in the other models.
PROS: The practice continues to grow, there is a future for
your patients and your team. It puts your practice in a good
position to convert to the legacy model.
CONS: Your growth is fueled by your own money in the
bank, limiting your growth to how much the banks will loan
you. There tends to be higher turnover with associates
(because they aren’t owner-doctors.) You need to be good at
managing doctors as well as teams.
Once you have your practice at the size and the level of
engagement that you want, then you’re going to go back to
Model 2: Buyout, and you’re going to have a sale event or
convert it into the legacy model.
The challenge with this model, and I’m seeing it more and
more, is that it requires you to have employee-dentists. I see
a lot of doctors who will expand, or they’ll buy a practice
and have associate dentists in that practice. They thought
it was going to be easy – but once they are in it, they realize
that they don’t have the knowledge, skills, or teams to make
it work. And it sucks all the money and energy from the
owner-doctor who is now making less money and has more
headaches. This model is not for the faint of heart – you
must be able to learn and develop your own skills as a leader
and manager.
Endgame Model #6: Legacy
The legacy model is similar to Model 5: Associate-driven
growth, in that you have associate doctors, but then you let
those associate doctors buy into the practice.
They don’t necessarily get to buy half, but they can continue
to buy into the practice. You can use the money that they
provide to invest further in more locations, or expanding the
current locations you have, or upgrading the facilities, or any
other activities that might make the practice more valuable.
SPRING 2019 | TPDMAG.COM 47
/TPDMAG.COM