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Endo Mastery

Day: July 15, 2021

MAXIMIZING PRACTICE OWNERSHIP VALUE

DR. ACE GOERIG

OWNER & CO-FOUNDER

There are two fundamental practice values that every practice owner has. The first is the “operational value” of the practice. That is its value as a “going concern”, as accountants say, to continue operating as a profitable enterprise. The second is the “exit value” of the practice. That is the value you can expect to realize when you sell your practice.

 

If you own your practice for 30 years before you sell it, then your total ownership value is 30 years of realized operational value followed by a single instance of realized exit value. It’s like a big cake with a cherry on top of it.

 

When doctors reach a certain age and begin to contemplate retirement timelines and options, the value of the cherry becomes more important to them. They want to maximize exit value … either because they need the financial infusion into their retirement accounts, or because they want to memorialize all the years of sweating and fretting over their practices.

 

Let’s put exit value into context. The average endodontic practice completing 3 to 4 cases per day is likely to sell for between 60% to 75% of gross revenues. Splitting those ranges down the middle means a practice doing 3.5 cases per day on average (5 days per week, 48 weeks per year, at $1250 per case) has gross revenues around $1 million per year. That practice might sell for around $675,000 or within a certain range of that amount.

 

Given the average profitability of practices at this level, the practice is going to sell for about 2 years of doctor income. This is just an illustration, not rules. Every practice is different and will have an individual valuation. But realistically, the difference between an exit value of $600,000 vs. $750,000 is a drop in bucket over the course of an entire career. That’s the key understanding. No matter how good an exit value you receive, it’s nothing compared to the 30+ years of operational value.

 

The best way to maximize your total ownership value is to maximize your operational value from year to year. Coincidentally, maximizing your operational value is also the best way to maximize your exit value when you’re ready to sell.

 

From the operational side, let’s consider again the average practice completing around 3.5 cases per day. Financial surveys of endodontists reveal the average doctor has an income of about $330,000 per year (which is less than what an associate would usually be paid for completing the same procedures). Assuming they maintain this level of productivity for 30 years of practice ownership, then the 30-year operational value for the owner doctor is effectively $10 million.

 

If the same doctor was able to add 1 case per day (from 3.5 to 4.5 on average), then their revenues would increase by $300,000 annually. Since all fixed costs are already paid, almost all of the incremental revenue flows to the bottom line as increased profit. That has a 30-year value of nearly $9 million (on top of the original $10 million). You could achieve the same result with 2 more cases per day for 15 years, or 3 more per day for 10 years.

 

10 years from possible retirement is a key point for many doctors. This is when they begin to obsess about maximizing practice value (for a difference of a couple of hundred thousand dollars at best). Instead, they should be thinking about maximizing their operational value at the height of their endodontic skill and expertise. That could make a difference of $5 million to $10 million over the same period of time. Which would you prefer?

 

I’m not saying you need to become an endo factory. There are 8 hours every day and I don’t know any experienced endodontist with today’s techniques and technology who is taking more than hour for head-down clinical treatment of the average root canal. If you’re completing 3 to 4 cases per day, what are you doing with the rest of your time? It’s likely you’re doing a lot of things that could be delegated to a properly trained team.

 

It’s entirely possible to do 6 or 7 cases per day in an easy relaxed way and still have enough time for consults and other doctor essentials. As a business owner, the incremental operational value to you of being efficient and productive each day is massive, and it’s worth way more of your energy than worrying about that comparatively small exit value cherry that is years away.

 

Next month, I’m going to continue the story of operational value and exit value, and I’ll tell you why retirement is the wrong time to sell your practice. Stay tuned.

UNTRAINING, RETRAINING AND CROSS-TRAINING

DEBRA MILLER | DIRECTOR OF COACHING

Keep the team running smoothly, performing at a high level, and helping the practice to grow requires a steady and focused approach to training. A team trained to the highest professional standards becomes your greatest asset and practice building. Teams that fall short of the mark can limit your success. Here’s some training tips that every practice can use:

  • Untraining: Essential for New Team Members

Usually when you hire new people, you look for someone with previous dental (or preferably, endo) experience. You count on them coming with a set of skills that lets them integrate quickly and productively with your office.

 

What you don’t count on, and often overlook, is that they also come with the habits, values and mindsets of their previous practice. It can be a big gamble whether those things are aligned to your office. Many times, a new team member is thrown into the mix and it can be a big surprise down the road when you realize they’re in conflict with your goals.

 

Every new team member needs one-on-one training, which is often the responsibility of your office manager (for the administrative team) or your clinical lead (for dental assistants). Part of that training needs to be focused on finding the things that need to be untrained. Your team leader, when training and showing job responsibilities to the new team member, should be asking, “How is this different from the way you did it in your previous practice?”

 

By asking that question and highlighting differences, you create awareness for the new team member of the aspects of their job that they should not be relying on their “default” knowledge nor assuming your practice is the same.

  • Retraining: Keep Your Team in Shape

Retraining isn’t about learning again how to do something; it’s about learning how to do something better. In that light, retraining is actually an ongoing process, because dental teams should always be striving to improve.

 

Every time something good happens, it challenges you to ask what can be done to keep the good times rolling. Every time something negative happens, it always challenges you to look for ways to improve so it doesn’t happen again.

 

But adapting to these challenging questions is a challenge in itself because often the answer isn’t definitive. Sometimes you are asking team members to be creative and try new things. That’s when you often experience resistance from your team … maybe not open disagreement, but the harder-to-detect “lack of genuine effort”. Team members get attached to doing things in a certain way, they become good at that, and they are often reluctant to step out on a limb when there is no clear benchmark for success.

 

In retraining, mindset matters more than anything. You have to create a culture that values learning and growth, accepts there are going to be bumps on the road to anything new, and rewards people who fully engage with the process. It’s groupthink, and progressive encouraging leadership that reinforces vision and goals is vital.

  • Cross-Training: Flexibility and Court Sense

Everyone on the practice team plays a vital role. As long as everyone is there, in their lane and performing at a great level, every day can run smoothly. But what happens when something is out of place or goes wrong? A team member is absent, or an emergency (or more) needs to be scheduled into an already full day, or you have an equipment failure that slows everything down.

 

When these situations happen, it’s important that everyone who is on deck is capable of pitching in as much as possible to handle the flow. That’s where cross-training is so important.

 

There are certain tasks normally done by dental assistants that administrators can learn how to do. For example, turning over an operatory between appointments, or instrument sterilization. Be mindful of state regulations that may require licensure and a formal training program in infection control. Likewise, assistants should know how to cover certain tasks of the administrative team. For example, answering the phone, scheduling a patient, or processing a payment.

 

When you have team members who can adapt and be where they are most needed (even if it’s outside their normal role), you create a lot of flexibility. That gives you “court sense” on the fly to direct the team optimally as the schedule flow warrants.

CHOOSING YOUR BUSINESS FAMILY

CYNTHIA GOERIG | CHIEF EXECUTIVE OFFICER

Family is the ultimate inner circle of our lives. Family gives us identity, purpose, and home. It is the foundation of where we receive and give love in the world. Family is where we turn for help or advice when we need it, and in turn we give help and advice when we can. Especially when it comes to children, we protect and nurture them to the best of our ability and help them evolve and grow their lives with possibilities, fulfillment, and success.

 

Businesses need an inner circle of family too. In endodontics, doctors often practice in isolation of their peers and colleagues. While the team is part of the doctor’s business family, they are also not on the same level of the doctor, both in terms of understanding the business of the practice, and (since they are employees and not business owners) being able to benefit to the same degree as the business grows.

 

Doctors need to surround themselves with trusted advisors who understand business and can be depended upon to support the doctor’s and practice’s growth and success. At Endo Mastery, this is the heart of what we do. In fact, “heart” is a big part of what we do.

 

The culture and mission of Endo Mastery is to help doctors achieve the best life possible, with an endodontic practice at the center of that life, but not taking over life. Our philosophy and approach come directly from Dr. Ace Goerig, who has achieved such profound abundance and freedom in his life that his personal mission is to help other doctors achieve the same level of success. It’s something we believe in so strongly and at every level of our business. Our goal is to help you define and achieve an incredible vision for your life and practice. In fact, Dr. Goerig often describes Endo Mastery as the 3rd year of endodontics residency that no one gets … the business year.

 

Clients of Endo Mastery count on us to provide coaching to their practices that is both practical and with the highest integrity. We strive to do that without fail, acting in our clients’ best interests, and working with teams with warmth, humor and compassionate focused leadership. We also have our Mastery Circle community of doctors where knowledge and ideas are shared openly between members under the leadership of Dr. Goerig.

 

As CEO of Endo Mastery, I truly believe our mindset of service, value and personalized attention sets us apart. If you’ve dabbled with other coaching providers in the market, you will find us to be much more low-pressure than those companies, with a higher focus on quality content, strategies, tools, and (most importantly) financial and non-financial results that matter to you.

 

We walk the walk, and that’s why we confidently offer a full financial guarantee that no other coaching firm does: you will earn back every penny of your coaching fees and more within one year. We do this to earn your trust and give you a risk-free path to a better life in endodontics. That’s how much we believe in your possibilities, and we invest in nurturing your success. And that’s what family should be.

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