Episode 61 – How to Maximize the Value of Your Dental Practice

“I was growing, but if I hadn’t realized that I wasn’t optimizing my EBIDA, then wouldn’t have gotten the value out of my practice that I did.” ~Dr. Nikki Green

Having an Investment Grade Practice gives you choices. This is something my guest today, Dr. Nikki Green, knows well. Dr. Green is a savvy business owner. She understands the journey of peak and plateau and getting to the next level. 

Building a valuable dental practice is about more than just productivity. It’s about understanding your numbers and getting your systems, team, and culture all aligned so you are able to give yourself choices about how and when you want to sell your practice to create a financially secure future. 

“I wanted to build a practice that would self-manage,” says Dr. Green, “or build an Investment Grade Practice that I could sell one day, but I knew that for either of those options I had to really optimize my practice.”

It can seem like a daunting task. But I have good news for you. There is a cookbook to knowing how to make your dental practice the profitable investment you want it to be.

So if you’re stuck or plateaued or feel like you’re just not reaching the full potential in your practice, join us today as Dr. Nikki and I discuss her experience building her Investment Grade PracticeTM including:

• The biggest obstacle that kept her on the plateau (and how she overcame it)
• What her marketing budget looks like for growing her practice
• The importance of timing in knowing when to sell your practice at best value

Interested in the business calculator Dr. Nikki Green and Dr. Peterson talked about? Click here to use the completely free Investment Grade PracticeTM calculator: What’s my IgP Freedom Number?

Want to have a conversation about your Investment Grade PracticeTM? Contact Brent at brent@productivedentist.com.
Never miss an episode! Subscribe to Investment Grade PracticesTM Podcast on iTunes & Spotify.

EPISODE TRANSCRIPT

Victoria Peterson
I am here with the fabulous Dr. Nikki Green and Nikki, you’ve been a PDA client, you’re an advocate for dentists across the country and I remember a few years ago at a PTA workshop, I said I’m going to have a ladies’ luncheon and my team went like, “Ladies’ luncheon? What do you mean?” I say, “Well, there are so many female dentists here. I just want to get up,” and I said, “What is it like to be a female dentist?”, and I remember the look on your face. You’re like, “What does that have to do with?” So you are your role model, male, female dentist, entrepreneur, clinician, you are a role model on so many levels and I’m super excited to have you here today.

Dr. Nikki Green
Well, that is very generous to me to say that but I do remember that ladies’ luncheon and I actually left that ladies’ luncheon with a new Shero in you were my new Shero. So I’m not kidding. Like I left there, when I learned so much about you that you own practices and you were you know, what all your affiliation with PDA, which I didn’t even know it at the time and how you and Bruce became partners, after I heard those stories. I remember going home and telling Bob that I had a new Shero. So you two are inspiring role models.

Victoria Peterson
So thank you, I’ve never been called a Shero. All right, well, let’s just let’s share with our audience how savvy female dentists can be in hell right now the owner you are. We have recently rolled out a new tool that helps doctors understand the value of optimizing the practice. I think had you had this five years ago, you would have just eaten it up and so I want to talk about that because you’ve been on this journey of peak and plateau and go to the next level. So talk to us a little bit about your journey.

Dr. Nikki Green
Yeah, well, that’s actually how I first got introduced to PDA, I was on a plateau that I was just having a hard time getting off of and I had tried everything, I’d thrown every noodle, the spaghetti against the wall, you know, I had tried to bring in associates, I’d tried to bring in partners, I had tried new systems, I had tried multiple things, and nothing seemed to be able to get me off that plateau. So I heard you and Patty actually one day on a podcast and I said, “Okay, I think PDA is the answer,” and so I sought out PDA took my team there for the first time. I wish I could remember years and dates, but I don’t remember, I think it was 2016 ish, probably, yeah, probably when it was and went down to San Antonio, and that you guys had that ladies’ luncheon and I have to say that immediately we began getting off that plateau and I thought that’s all I wanted, but by meeting you and meeting Bruce and meeting the others at PDA I kind of maybe at the time, you hadn’t coined the Investment Grade Practices yet, but we talked about it and that’s kind of what I set my sights on that I wanted to do. I wanted to build a practice that either would self-manage, so it would manage itself and I could remain the owner of for in perpetuity, you know and continue owning and operating and running this practice, or build an Investment Grade Practice that I could potentially sell one day and I really didn’t know which direction I wanted to go but I knew in order to be either of those things and be there those things at a high level, I had to have a truly optimal much practice and that’s not just from a productivity standpoint, that’s systems and team and culture. So huge, all of those things. So thank you to PDA, because guys put me on the track.

Victoria Peterson
Well, you’re welcome. Um, so that our listeners have an idea of what plateau means to you. Do you mind sharing what you were collecting at the time that you plateued?

Dr. Nikki Green
Yeah, I don’t mind at all. I really think I was somewhere around the two-and-a-half million mark. So um, I had you know, when I bought the practice I was pretty quickly a million-dollar practice, of course I bought it when it was doing seven or 800,000. So it’s not like I bought it you know when it was you know, doing really poorly and then immediately I was probably at the million-dollar mark, and then I slowly over probably the first five years of me owning my practice, just to give a little background there. I’ve now on my practice, I’m in my 14th year, I believe, maybe 15 and, and the first five years, I had just slowly grown to 2 million, you know, two and a half million, but I really wanted to be a three and $4 million practice with multiple providers. That’s not just me doing all the production, that’s multiple providers, multi-discipline in the sense that we could take care of 80 plus percent of our patient’s needs, we wouldn’t have to do a lot of referring out and that’s just the kind of practice that I wanted. So I was having a hard time coming off that two-and-a-half million mark didn’t matter, if I had two associates, if I had one associate, if I tried to bring in a partner. I tried so many different things, and I just could not get off that plateau and really, I give the credit all the time, it came down to how scheduling. I was scheduling in a way that I was never going to get off that plateau. It didn’t matter if I added more bigger procedures, it didn’t matter what I was going to do the way I was scheduling, I was never going to get off of it. So Bruce, very eloquently, taught me how to get off that plateau with how we scheduled so all about scheduling to have it look bad.

Victoria Peterson
Yeah. So then you grew how quickly grow? What happened after that?

Dr. Nikki Green
Yeah, so that’s a great question and there were some bumps and bruises along the way, let’s not pretend like it was all super-rapid growth and I immediately I think went over that 3 million mark, sat at around that 3 million mark for several years, and honestly, that’s about where I thought I kind of wanted to be, I really thought that that’s just kind of where I would sit until I went and learned more about productive scheduling and learned more about adding more productive procedures, did a better job of marketing. We brought better marketing on, so we were marketing for hiring procedures, cosmetic procedures, and all on four all on six type procedures, full mouth rehab procedures and then just immediately, we began even getting off of that plateau of around the three to three and a half million mark. I think in 2020, we did right at 4 million, and in 2021, we did 5 million.

Victoria Peterson
In the midst of a pandemic.

Dr. Nikki Green
Yeah, we made some huge jumps in there with a lot of the PDA principals.

Victoria Peterson
Wow, that’s amazing and you know, marketing. I’m glad you brought that up because I was looking at a recent survey, the average dentist markets you’ll love this point 0.5%. Yeah, it’s less than 1% and it’s like having a race car and putting a gallon of gas and you’re gonna go very fast for a very short period of time.

Dr. Nikki Green
Yeah, I mean, our marketing budget is easily 5%. So 5% of that 5 million last year. That’s a hefty number, you know, what does that term 50,000 Bruiser Bob are here, they could do that math, but not to say that men do better math just there once to pull that off the top of their heads.

Victoria Peterson
You know, 20 to 25,000 a month sounds crazy to some people. But when you look at PPO write-offs, if you were 5 million in PPO, you would have to produce 7 million

Dr. Nikki Green
500%. Right. So yeah, yeah, I think the way I see that is I’ll pay that to another small business marketing company all day every day, then to pay that to MetLife or Delta Dental, right? So all day,

Victoria Peterson
Well, first, create more jobs. Exactly. So I remember your productivity went up and I remember the phone call. I don’t know if it’s Brenda, or one of our coaches calling and saying that Nikki’s really upset, her productivity is up, but our profits are down. I was like, “Okay, then it’s time to work on the profits. How does it work on that part of the business?

Dr. Nikki Green
Yeah, 100%, because in the midst of growing productivity, we were growing team and we were growing, you know, technology and all those things that that we needed to grow, but I think at the end of one of those three, three and a half million dollar years, I looked at my profitability, and I was doing better at two. Yeah, I mean, you know, similar. I mean, that might be a little bit of an exaggeration, but I thought, “Wow, you know, I finally got off this plateau, and we’re doing so much more than my profitability is not reflecting how much growth that we had had.” So that’s when I kind of realized, you know, I wish that I had that calculator you showed me at the beginning of this call because maybe that calculator could have made that more clearer from the beginning and but I guess I was just one of those that was on the treadmill that thought if I would do more than the profitability would come and it was kind of eye-opening when I looked profitability and realized, “Okay, that wasn’t there.” So we started using your profitability instead of a point, you know, a measurement which is one that you know, that comes later in the coaching game and that was one that that I had really been taught, not the coach’s fault, I just wasn’t there and so they kind of taught us that part of the PDA tool and I realize, “Okay, I’ve got to pay attention to this. So I’ve got to make sure you know what percentage is going to my lab costs, what percent is going to my dental supply costs, what percent going into my team costs, all of that,” and we kind of started narrowing those percentages and getting those within the ballpark of what they were supposed to be and once we did that, then there was profitability leftover at the end. I do have to give a little credit. I know, we’ve talked about this before with PDA, but I did read the book “Profits First”, which is hugely helpful, hugely helpful. So before PDA had a calculator, there was the book “Profit First”, Mike Michalowicz, you know, probably helped

Victoria Peterson
Barbara Stackhouse has now worked with Mike to bring its “Profits First for Dentistry”. So get that book barbers, “Profit First” is fabulous philosophy

Dr. Nikki Green
and “Profits First” not which think it is, you know, I actually read, I was reluctant to read the book at first because I thought that it was going to be you know, egotistical or, you know, too materialistic or something, but it’s actually the opposite of that. I actually kind of say that it’s the Dave Ramsey for business.

Victoria Peterson
Yeah. I love it. So did you set up all your separate bank account?

Dr. Nikki Green
Oh, yes and all that nice through Bob on his ear, because Bob, my husband, you know, who may be some your listeners don’t know, but he’s my husband. He’s the one who taught me how to run a dental business had never done anything like that. So when I showed him all these different accounts that I was setting up, he thought I was crazy, but hey, it kept me from touching, I’m a spender and so it kept me from touching that money because I was really guilty about looking at the bank account and seeing how much money I had thinking that meant, you know, a new piece of technology that I really didn’t need. So it really, it helped me remain disciplined.

Victoria Peterson
I’m a big advocate and love that. Well, if you don’t mind, I would love it if we fast-forwarded all the listeners from 2016 to 2021, you’ve transitioned your practice and your mindset once again, where are you at today?

Dr. Nikki Green
Well, I actually made a big change in 2021 and one that I did not think that I would do, honestly. So I really thought I had it in my head that I was building this optimized practice that I would continue to own, you know, 10, 15 years down the road and now I did envision myself working less in it, I wanted to get the practice self-managing, I wanted to really work on building the team culture, but I really thought that I would continue to own it and we actually had a new building purchase, we were going to do a big remodel and move into a new building early in 2021, as many listeners on this call probably have had to happen to them. I was approached by a broker that was looking for practices to buy, he had several different, you know, DSO organizations lined up that wanted to buy practices and so I decided, you know, I think it came down to timing and I set one evening after getting one of those emails and talk to my husband and I said, “You know, now is either the time to do it, or we’re not going to do it for another 10 years,” because we were about to reinvest several million dollars into a new building and you know, all of that and it was not going to be a great time to sell once your several million dollars we invested. Early in 2021, I paid most of my debt down, I was in a very low debt situation with a high-value dental practice and one that really was managing itself. So I decided to look into selling and I actually did so in October of 2021. I actually sold to a silent DSO, I’ll use their name Independent Film Corporation is who they are. I’m very happy with that sale and they really do leave me alone when I say silent and I was very careful about who I chose. I, you know this about me, Victoria, but not only do I like doing dentistry, I really love running a dental practice and so I didn’t want to sell to a corporate that was going to come in and run my dental practice. I wanted one that recognized what we were doing and that it was a good thing and what they mean and so far, we’re four months into it, and they’re leaving me alone. Call me back in six months, we will see.

Victoria Peterson
I love it. You mentioned a couple of things. You said I, I had to think about the timing right and you’re right, we’ve got dentists that we’re coaching right now. They’re from 35 years old to 50 years old, and they’re being approached and really, you know, if you’ve got a 15 or 20-year window, that may be a different decision than if you’re like, you sound like you were right on the precipice.

Dr. Nikki Green
Yeah, it was, you know, my life situation. I would say most dentists are probably my age, this would not be perfect timing. I’m in my mid-40s. You know, most of us are just getting going in our careers and we want to continue owning and I think truthfully, part of me still does, but as you know, I’m married to a dentist who’s a little my elder, and we have spent the last 15 years of our lives living in two different cities and so the time was now for us to stop living and working in two different cities. He owns and operates his dental practice in Abilene, Texas, I own and operate mine here in Fort Worth and that meant the majority of our weeks were split apart. So one of the transitions we’re hoping to make with this and we are making barrage started making it is we’re going to spend more time together. So we’ll still go back and forth, I still own and operate or I still own 20%. Okay, I didn’t say that part about my deal, but I own 20% of my Fort Worth practice, we’ll still go back and forth. We’ll both work in both practices, but we’re going to do it together with a little less, maybe with a little less burden on our shoulders by not owning both practices in each location.

Victoria Peterson
I love it. I always picture Bob in the limo, you know, going back and forth between offices

Dr. Nikki Green
That’s true, don’t imagine him back there like working though, because I think that’s, you know, that’s what he’d like to tell the IRS.

Victoria Peterson
They’re working scar and, you know, waving a flag and you know, like revving it up on social

Dr. Nikki Green
Yes, that or taking a nap. He’s either smoking a cigar with a cocktail in his hand, if it’s the end of the day, or if it’s the beginning of the day, he might be taking a nap, but he’s doing work in that in that limo.

Victoria Peterson
So do you think that optimizing your practice first, did that financially make a difference or help with the timing of this decision?

Dr. Nikki Green
Yeah absolutely, because, you know, really the DSO market today? I mean, I know some of your listeners who listen to Investment Grade Practices you’re looking to how can you optimally sell your practice, maybe to a DSO, sometimes, when we get our practices to a certain level, it’s very difficult to think about selling that to an individual person. So maybe our only option or one of our only options might be a DSO and they’re looking for EBITDA, you know, they’re not looking at last year’s production and collection numbers, they’re looking for EBITDA, which EBITDA is your profitability at the end of the year. So yeah, in order to get, you know, the capitalized in the way you would like to, then you need to have a decent EBITA on those numbers. So, so absolutely had I not optimized, had I not realized that somewhere around 2018, probably that, oh, yeah, I was doing more dentistry, but I wasn’t optimizing my profitability, then my EBITA wouldn’t be where it was, and I wouldn’t have gotten the value of my practice.

Victoria Peterson
Yeah, I think that’s you’re such a great illustration of that, that. You know, I see doctors all the time. It’s like, Well, I grew, but they didn’t grow the bottom line and I’m in for you. I mean, that was millions of dollars in the difference of that. So I’m doing five million let’s sell I should get 3.5 million, but you don’t?

Dr. Nikki Green
Yeah, that’s not the way that works, right? It well, and in, you know, in today’s market, it’s actually that’s what’s so crazy about selling to DSOs in today’s market, is you’re actually getting more than last year’s collections. You know, you’re getting this multiple of your EBITDA, if your EBIT is high enough, you know, to get that multiple and end up being more than last year’s collections, but it all comes down to the math, you know, it’s not, it’s not, there’s nothing hidden in there. You know, it’s do you have the EBITDA , then you’re going to get that, you know, maybe five or six multiple of that EBITA, or you’re going to sell in the traditional way, which is going to be maybe 85% of last year’s collections?

Victoria Peterson
No, I love it. So if there’s anybody out there listening today that is stuck, or plateaued, or something like that, what kind of encouragement would you give them based on your journey?

Dr. Nikki Green
Well, first of all, if you’re not a PDA client, I mean, I don’t know how, how many times I can say that, I actually think I say it on every podcast, even when I’m not on your podcast, so become a PDA client, because I have not had exposure. There are great consultants out there and I’ve had some great Gary Tax was a wonderful consultant. I’ve had great consultants and but I haven’t had one like PDA that really shows me exactly how to do it, you know. There there is a cookbook for how you make this work. So if you’re just starting on the journey of trying to optimize your practice, I would say do that, for what I’m really hoping the listeners are, is maybe some PDA clients who were kind of in that phase two spot that I was in, where they have taken a lot of PDA principles, they’ve applied them in their practices, their scheduling, you know, more correctly, their productivity is going higher, but now they’re wondering, “Okay, what do I plan on doing with this thing I have created, you know,” it’s a beautiful thing that you’ve created, but what are we gonna do with it now, you know, and your calculator is awesome. I think if I had that maybe three years ago, I would have maybe been a little more intentional about my path. Maybe it wouldn’t have snuck up on me in 2021 like it did, which turned out to be a great decision, but maybe I would have been intentional about that, you know, over the last few years. So yeah, I would say get that calculator. Listen to your podcast, you know, tap into what the DSO market DSO, people are saying, you know, I know DSO is such a, I don’t like the word either I, I’d like to describe it a different way, but there are some good people out there in that world and there are some really smart people in that world and there are people in that world who really know the way businesses interact with each other and that’s just something in dentistry we’ve been outside for and maybe it’s been good. Maybe it was good, maybe the good old days were better when we were outside of that world and we didn’t have to deal in that private equity world and things but times have changed and so tap into what they’re saying, you know, listen, listen to some of those podcasts just to kind of have a feel for what’s out there.

Victoria Peterson
I think you bring up a great point that education is the great equalizer and so dig deep, and do your research. Nikki, you will be the first on my list. My new book, Investment Grade Practices, we’ll be previewing to a limited number of people this spring, probably in about three months and I would love it if you’d be a reviewer for me.

Dr. Nikki Green
Yeah, I would love it.

Victoria Peterson
Oh, perfect, perfect. Well, we’ll get you a copy of that and we talk about that is having an Investment Grade Practice gives you choices. So I know that you and I could have been on this podcast where you said, “Man, it was just the greatest choice, I brought an associate and this is the one and we went to the bank and she bought in,” and

Dr. Nikki Green
100%

Victoria Peterson
the plan, I could see you how confident you are like I had two or three options in front of me, right and had I had the freedom to sit down and make an educated choice

Dr. Nikki Green
Absolutely and I think that is the key in building an Investment Grade Practice because then you have a choice or if you know if the worst could happen which we all know stories of the worst happening right, a dentist can no longer do what the dentist has always done then your family has options. I mean that that was the goal was just to give myself more options. So I love it.

Victoria Peterson
Well, thank you so much for being with us here today. Thank you it was an absolute joy.

Dr. Nikki Green
Well, thank you Victoria. I always enjoy chatting with you.

Narrator
Thank you for tuning in to this episode of the Investment Grade Practices podcast. If you find value in this episode, help us spread the word by passing it along to a dental friend, subscribe, and give us a Like on iTunes or Spotify. Learn more about building your Investment Grade Practice at productivedentist.com Today