Hi Team! We talked about several important topics in today’s episode of Transition Talk and while there is so much more to partnerships than we could cover in a short time, planning out successful transitions is something we help clients do daily and something that also takes considerable work beyond the closing table!
We have detailed out some of the topics we talked about on today’s episode, and remember, we are here as resource for all your transition needs!
Break-Even Calculation for an Associate (future partner):
An important question when bringing in an associate is what you need to bring in to cover their cost. We call that the break even and as we discussed in the episode there is more to that calculation than their salary. When bringing in an associate you need to consider their compensation, additional build-out, increase in supplies/lab, additional staff and any other expense you wouldn’t have incurred without their presence. For example, lets assume you bring on an associate with a base salary and benefits of $160K, you have to build out an additional operatory which costs $40K and you have to invest in an additional implant kit and other specific supplies of $25K. Your total investment is $225K. To find the monthly break-even then need to bring in to be profitable you would divide that investment by 12 months to arrive at a break-even of $18.75K.
Two Practices: Partnership Ready?
In our episode, Charles discussed two practices and what would make one ideal for partnership and one that may not look ideal but with some work and the right set of individuals could turn out to be a great opportunity.
Ideally, we would like to see a practice with collections of $1.2 – 1.3M, a busy schedule, good healthy new patient flow and enough space (at least 6 Ops) to accommodate both Drs. These practices are no brainers for bringing on an associate.
There are times though that we see practices in the $700-800K collection range and an owner who wants to bring on an associate now. Maybe they have found the perfect person or they may have had something personal happen that requires them to slow down (but they aren’t ready to sell). These practices can still be a good opportunity – especially if the owner’s new patient flow is low and they aren’t advertising, they are open a limited number of days or perhaps don’t take many insurance plans (all which means it can be increased to grow the practice) and both parties are willing to implement a plan to grow the practice and be flexible in the growth and transition plan. By growing these types of practices they can become the “ideal” practice for partnership.
Additional Resource from CWA:
Also remember to check out our affiliate, Cain Watters & Associates, podcast about Creating Successful Dental Partnerships – an excellent guide to the ins and out of partnership and their methodology. Click here to listen and get those resources!
Contact our transition team for any questions – we look forward to helping you!