What Productive Dentists Gain When They Own an Investment Grade Practice (E.145)

“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 Practice 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 Practice? Contact Brent at brent@productivedentist.com.
Never miss an episode! Subscribe to Investment Grade Practices Podcast on iTunes & Spotify.

EPISODE TRANSCRIPT

[00:00:00] Announcer: The Productive Dentist Academy Podcast Network.

[00:00:03] Dr. Nikki Green: Had I not optimized, had I not realized in somewhere around 2018, probably that, oh yeah, I was doing more dentistry, but I wasn’t optimizing my profitability, then my EBITDA wouldn’t be where it was and I wouldn’t have gotten the value out of my parts.

[00:00:17] Announcer: Welcome to Investment Grade Practices Podcast, where we believe private practice dentists deserve to get the lifestyle today while building an asset for tomorrow. Join your host, Victoria Peterson, to design the practice of your dreams and secure your financial independence. Let’s get started.

[00:00:38] Regan Robertson: Doctor, did you know that PDA coaching doctors grew 219, 000 on average in just the last 10 months? If your revenue goals fall short this year, and you suspect that patient communication and inefficient systems are holding you back, Productive Dentist Academy can help, but you have to take action. Register today for the PDA conference, March 13th through the 15th in Frisco, Texas, go to productivedentist.com to snap up your seat. It is the nation’s leading course for dentists. For growing your practice and your team. Plus while you’re there, you can set up a free 60 minute session to identify your own unique opportunities for growth and if you act fast, you could score a one on one with PDA’s co founder, Dr. Bruce Baird. That’s right. We’re only offering 10 and then his calendar is full. Don’t wait. Go to productivedentist.com right now and have a great 2025. We’ll see you in Texas.

[00:01:28] Dr. 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 PDA workshop, I said, I’m going to have a ladies luncheon and my team went, “Oh, ladies luncheon. What do you mean?” I was like, “Well, there’s so many female dentists here,” 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 anything? You’re a 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.

[00:02:04] Dr. Nikki Green: Well, that is very generous of you to say that, but I do remember that ladies and I actually left that ladies luncheon with a new Shero and you were my new Shiro, so I’m not kidding. Like I left there when I learned so much about you that you own practices, 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 too are inspiring and a role model.

[00:02:33] Dr. Victoria Peterson: So, Thank you. I’ve never been called a shero. I want to talk about this journey of peak and plateau and go to the next level. So talk to us a little bit about your journey.

[00:02:45] 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 of spaghetti against the wall.cYou 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. My toes. I heard you 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, probably when it was and went down to San Antonio and met 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, you know, I 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 sight 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 in perpetuity, you know, and continue owning and operating and running this business, 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 either of those things at a high level, I had to have a truly optimized practice and that’s not just from a productivity standpoint, that’s a systems and team and culture, culture, so huge, all of those things. So thank you to PDA. Put me on the track.

[00:04:23] Dr. Victoria Peterson: Well, you’re welcome. Mind sharing what you were collecting at the time that you plateaued?

[00:04:27] 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 when I bought the practice, I was pretty quickly a million dollar practice. Of course, I bought it when it was doing seven or hundred thousand, so it’s not like I bought it, you know, when it was 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. 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 patients needs. We wouldn’t have to do a lot of referring out. That’s just the kind of practice that I wanted. I was having a hard time coming off that two and a half million mark. It 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 I was scheduling. I was scheduling in a way that I was never going to get off that plateau. It didn’t matter if I added 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 and how we schedule.

[00:02:42] Dr. Victoria Peterson: So all about scheduling to have a look back. So then, then you grew. How quickly did you grow? What happened after that?

[00:05:49] Dr. Nikki Green: Yeah. So that’s a great question. There were some bumps and bruises along the way. Let’s not pretend like it was all super rapid growth. I immediately, I think it went over that 3 million mark, sat at around that 3 million mark or 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 learn more about, um, productive scheduling and learn more about adding more productive procedures, did a better job of marketing. We brought better marketing on. So we were marketing for higher end procedures, cosmetic procedures, um, 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 five mill. So we made some huge jumps in there with a lot of the PDA principles. Wow. That’s amazing.

[00:06:48] Dr. Victoria Peterson: 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. 0.5 Percent. Yeah, it’s less than 1%. It’s like having a race car and putting a gallon of gas in it.

[00:07:02] Dr. Nikki Green: Yeah, totally. You’re gonna go very fast for a very short period of time.

[00:07:07] 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?

[00:07:13] Dr. 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. 7%, right? So,

[00:07:25] Dr. Nikki Green: Yeah, I, yeah, I, I think the way I see that is I’ll pay that to another small business marketing company all day, every day than to pay that to MetLife or Delta Dental, right. All day.

[00:07:37] Dr. Victoria Peterson: Well, let’s create more jobs.

[00:07:43] Dr. Nikki Green: Exactly.

[00:07:44] Dr. Victoria Peterson: I remember your productivity went up and I remember the phone call. I know one of our coaches called and said, Nikki’s really upset. Her productivity’s up, but her profits are down. I was like, “Okay, well then it’s time to work on the profits.” How did you work on that part of the business?

[00:07:51] Dr. Nikki Green: Yeah, a hundred percent because in the midst of growing productivity, we were growing team and we were growing technology and all those things that we needed to grow. But I think at the end of one of those, you know, 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, 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, but my profitability is not reflecting how much growth that we had had. So that’s when I kind of realized, 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 out of the eye opening when I looked profitability and realized, “Okay, that wasn’t there.” So we started using your profitability incentive point, you know, uh, measurement, which is one that, you know, that comes later in the coaching game and that was one that I hadn’t really been taught, not the coach’s fault. I just wasn’t there. So they kind of taught us that part of the PDA tool and I realized, 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 going to my dental supply costs, what percent going to my team costs, all of that and we kind of started narrowing those percentages and getting those within the ballparks of what they were supposed to be and once we did that, then there was profitability left over 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 Faucets First, which it’s hugely helpful, hugely helpful. So before PDA had a calculator, there was the book, Prophets by McAlewicz, you know. Um, and that helped.

[00:09:24] Dr. Victoria Peterson: Barbara Stackhouse has now worked with Mike to bring it, uh, Prophets First for Dentistry.

[00:09:28] Dr. Nikki Green: I’ve heard that. I’ve heard that.

[00:09:29] Dr. Victoria Peterson: You get that book, Barbara Stackhouse’s Prophets First. It’s fabulous philosophy

[00:09:33] Dr. Nikki Green: And prophets first is not what you think it is. You know, I actually re 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. You know, yeah.

[00:09:49] Dr. Victoria Peterson: I love it. So did you set up all your separate bank accounts?

[00:09:54] Dr. Nikki Green: Yes, and all that. Nice. I threw Bob on his ear because my husband, and 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 the, 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 and thinking that meant, you know, a new piece of technology that I really didn’t need. It’s. So it, it really, it helped me remain disciplined. I’m a big love that advocate.

[00:10:22] Dr. Victoria Peterson: I love that. Well, if you don’t mind, I would love if we fast forwarded from 2016 to 2021, you’ve transitioned your practice and your mindset once again.

[00:10:32] 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. I mean, I did envision myself working less in it. I wanted to get a practice self managing. I wanted to really work on building the team culture, but I really thought that I would continue to own it. Um, we actually had a new building purchased. We were going to do a big remodel and move into a new building and early in 2021, 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, it came down to timing. I sat one evening after getting one of those emails and talked 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 you’re several million dollars reinvested. Early in 2021, I’d 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 in October of 2021, I actually sold to a silent DSO, I’ll use their name, Independence Dental Corporation is who they are. I’m, I’m very happy with that sale. Um, they really do leave me alone when I say silent. I, and I was very careful about who I chose. 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 would leave me alone.

[00:12:14] Dr. Victoria Peterson: I love it. You mentioned a couple things. You said, I had to think about the timing 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 that like you sound like you were right on the precipice.

[00:12:34] Dr. Nikki Green: And, you know, my life situation, I would say most dentists, probably my age, this would not be perfect. I mean, I’m in my mid forties, you know, most of us are just getting going in our careers and wouldn’t want to continue owning and, and I think truthfully part of me still does, but as you know, I’m married to a dentist. Who’s a little, little, my elder, and we have seen. 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 spent apart. One of the transitions we’re hoping to make with this, and we are making, we’ve already started making it, is we’re going to spend more time together. So we’ll still go back and forth. I still own 20%. Okay. I didn’t say that part about my deal, but I own 20 percent of my Fort Worth Like this, we’ll still go back and forth. We’ll both work in both practices, but we’re going to do it together. Maybe with a little less burden on our shoulders by not owning both practices in each location.

[00:13:30] Dr. Victoria Peterson: I love it. I always picture Bob in the limo, you know, going back and forth between offices.

[00:13:36] Dr. Nikki Green: Don’t imagine him back there, like working though. Cause I think that’s, you know, that’s what he’d like.

[00:13:42] Dr. Victoria Peterson: No, I imagine that’s just smoking a cigar and, and, you know, waving a flag and, and, you know, like revving it up on social media.

[00:13:49] Dr. Nikki Green: Yes, 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 limo.

[00:14:00] Dr. Victoria Peterson: I love it. So do you think that by Um, optimizing your practice first did that financially make a difference or help with the timing of this decision?

[00:14:11] Dr. Nikki Green: Yeah, absolutely because you’re looking to how can you optimally sell your practice maybe to a DSO. Sometimes when we get our 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 number. They’re looking for EBITDA, which EBITDA is your profitability at the end of the year. So yeah, in order to capitalize in the way you would like to, then you need to have a decent EBITDA on those numbers. So absolutely. Had I not optimized, had I not realized in somewhere around 2018, probably that, “Oh yeah, I was doing more dentistry, but I wasn’t optimizing my profitability,” then my EBITDA wouldn’t be where it was and I wouldn’t have gotten the value of my price.

[00:14:54] Dr. Victoria Peterson: Yeah. I think you’re such a great illustration of that. You know, I see doctors all the time. It’s like, well, I grew, but they didn’t grow the bottom line And for you, I mean, that was millions of dollars in the difference of that. Let’s sell. I should get 3. 5 million, but you don’t.

[00:15:09] Dr. Nikki Green: Yeah. That’s not the way that works. Right. And well, in, 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 EBITDA is high enough to get that multiple and end up being collections, but it all comes down to the math. 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 EBITDA or you’re going to sell in the traditional way, which is going to be maybe 85 percent of last year’s collection.

[00:15:39] Dr. Victoria Peterson: 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?

[00:15:48] 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’s great consultants out there and I’ve had some great ones. Um, but I haven’t had one like PDA that really shows me exactly how to do it. 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. What I’m really hoping 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 the PDA principles, they’ve applied them in their practices, they’re 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 going to do with it now? And your calculator is awesome. I think if I’d have 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, um, you know, tap into what DSO people are saying. Um, you know, I know DSO is such a, I don’t like the word either. I’d like to describe it a different way, but there’s some good people out there in that world, and there’s some really smart people in that world, and there’s 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 of. 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. Listen to some of those podcasts just to kind of have a feel for what’s out there.

[00:17:50] Dr. Victoria Peterson: I think you bring up a great point that education is the great equalizer and so dig deep and do your research. Having an Investment Grade Practice gives you choices and 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 then we got a plan. I wish I could see you, how confident you are. Like I had two or three options in front of me, and I had the freedom to sit down and make an educated choice.

[00:18:15] Dr. Nikki Green: Absolutely. I think that is the key, Evan, building an Investment Grade Practice, because then you have a choice. You know, if the worst could happen, which we all know stories of the worst happening, right? A dentist no longer can 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.

[00:18:34] Dr. Victoria Peterson: I love it. Well, thank you so much for being with us here today, Vicki. It was an absolute joy.

[00:18:38] Dr. Nikki Green: Well, thank you, Victoria. I always enjoy chatting with you.

[00:18:44] Announcer: Thank you for tuning in to this episode of 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.