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- #14: The Build-Up Weekly
#14: The Build-Up Weekly
Trevor Kimball
June 02, 2023
*Welcome to the 14th edition of The Build-Up, where we deliver weekly insights and inspiration for dentists on every stage of the private practice journey. If this email was forwarded to you, you can click here to subscribe.
Dear friends and colleagues,
Another Friday, another Build-Up Newsletter. Happy June! (what??)
It’s my anniversary this weekend, so I’m looking forward to getting out of town for a night, dinner at Bells, and some R&R.
But before that, we’ve got a newsletter! Here’s what I have lined up:
🕺 Summer Disco: Jams for Summer
🏢 % of Dentists in DSOs: Did you think it was more or less?
👍 Financial Stress Tests: Are Your Prepared?
Let’s get started!
🕺 Summer Disco
I usually put music at the end, but today I figured - why not mix it up for summertime? Here’s a little disco jam (with a light 2023 remix) for your listening pleasure.
🏢 How many dentists are affiliated with DSOs?
The ADA’s Health Policy Institute just released new data on the number of dentists affiliated with DSOs.
But first - what do you expect?
With the dental consolidation trend (very real) and its prominence in industry news, I’d be curious to know what you think the data will say.
…
Got numbers in your head? Ok, let’s get to the headlines.
Overall Number of Dentists Affiliated with DSOs is Going Up
No surprises here.
In 2022, 12.7% of dentists were affiliated with DSOs.
In 2019, that figure was 10.4%.
In 2017, it was 8.8%
The figure is growing steadily, and I’m certain that it will continue to do so.
But I’ll be honest: I thought the percentage would be higher.
Your Age Correlates with How You Practice
No surprises here, either.
Older doctors (25+ years out of dental school) are FAR more likely to work in solo practice compared to doctors less than 10 years out of school.
Younger doctors are FAR more likely to be affiliated with DSOs (orange dots - 23% nationwide) than older docs (grey dots - 7% nationwide):
Large Differences Between States
As seen in the above chart, there is a pretty huge disparity between Nevada at the top end and Alaska, which turns out to be the Final Frontier for DSOs.
Interestingly, California’s doctors who have been out of school for over 25 years are the most likely in America to work in solo practice.
I don’t have any particular insights on this data, but I thought it was interesting and worth sharing!
🤿 Stress Tests
The ‘stress test’ concept is widely used in medicine, engineering, and finance to locate potential issues, identify bottlenecks, and discover breaking points.
wait a minute….breaking point….not point break
I was thinking about stress testing this week as I read Tim McNeely’s “Dental Wealth Nation”, where he presents it as a critical tool for financial planning.
It's a proactive approach to managing your wealth, akin to a regular health check-up for your finances.
The stress test serves two primary purposes.
First, it helps to avoid potentially destructive situations by identifying vulnerabilities in your financial plans. This is similar to Morgan Housel's idea that "avoiding stupidity is easier than seeking brilliance".
Second, a stress test ensures you're benefiting from all possible opportunities.
Tim pulls from personal experience when discussing the benefits of stress testing:
Early on, my wife was facing a disability, and the disability policy she had was not correct. She took out this policy before we met—bought it as soon as she got out of dental school. The policy was about fourteen years old before we realized her well-meaning advisor just didn't have the technical expertise to help her. We caught that error and made the correction.
Disability is a real issue for dentists. One in three dentists become disabled long enough to collect benefits at some point during their career. The next time you attend a CE meeting, look to your left, then look to your right. Then look at yourself, one of you is going to be disabled at some point in your career.
Imagine how you would feel if you'd been paying on a disability policy for fourteen years, and you reach a point where you say, "Holy moly! I may require a disability policy because I can't hold forceps to do extractions anymore in my practice." You begin seeing specialists, then look at the documents and determine, "Well, I'm so glad I got a disability policy I've been paying on for fourteen years." Then you find out that half of those benefits are going to disappear because some well-meaning advisor tried to get you a tax deduction because he was so focused on technical wizardry instead of the human element and what's really important.
I didn't know about stress testing then. All of a sudden, she was facing a potential disability. I remember saying to her, "Oh, hey, we should probably look at your disability policy and check this thing out." It was set up in a way that the benefits were fully taxable to her. Why was this taxable when it didn’t have to be? Because her previous advisor had said, "Hey, why don't you pay for this disability policy through your dental practice, and you can get a tax deduction?" Well, that sounds like a great idea, except the problem is if you pay for the policy that way and ever need to go on disability, then that policy-–when those benefits come to you-–is 100 percent taxable as opposed to paying for the policy with after-tax dollars, in which you have tax-free income when you need it the most.
Stress testing is a proactive and strategic approach to managing your wealth. It helps you avoid potential pitfalls and capitalize on opportunities.
It’s also a great idea to ‘stress test’ your practice, especially when it comes to transitions.
I’ve just completely reworked our practice analysis and valuation product, and we’ll be raising the price from $1,500 up to $3,200 very soon.
The increase is justified, trust me.
But before we raise the price, I’d like to offer anyone who read this far down the newsletter the opportunity to get it at the old price before it goes up.
And with that, I hope you enjoyed the 14th edition of The Build-Up Weekly.
Please consider using the link below to share our newsletter. 🙂
With best wishes to you and your families,
Trevor Kimball, PhD
A Guide for Selling Your Dental Practice
You can download it for free here. It’s material that I’ve covered in this newsletter before, but - if you’re contemplating a practice sale - the advice in this guide is crucial.
And if you’re ready to have a conversation with a practice sales professional, get connected with your local Integrity Practice Sales broker here.
It’s worth having a conversation no matter your current transition plans. You never know what you’ll discover together.