presented by: chris bentson partner, bentson copple & associates · computer expense 0.9%...

Orthodontic Marketplace Overview: Trends Affecting Owners and New and Younger Doctors

Presented by: Chris Bentson Partner, Bentson Copple & Associates

Who Am I?

Who Am I?

• 27 Years in Orthodontics • Partner at Bentson Copple & Associates • Committee Member of AAOFTT (American Association of

Orthodontists Future Think Tank) • Member of AAO Bulletin Advisory Board • Board Member - AAOF (American Association of

Orthodontists Foundation) • Advisory Board Member Ortho4D • Committee Member AAO Practice Modalities Task Force

Meet the Bentson Copple & Associates Team

Topics

• Pressures of Practice Growth

• Current Market Data

• Responses to the Market

• Expectations

What are the Pressures of Practice Growth?

More Orthodon+c Compe+tors

More Pediatric Den+st Compe+tors

More General Den+st Compe+tors

Doctor-‐Directed or DIY Orthodon+cs

Corporate Den+stry (DSOs)

Fewer Kids

Higher Spending to Obtain New Pa+ents

Result is practices are operating at less than 80% of capacity & revenue per FTE is averaging $180K

What are the Pressures of Practice Growth?

Orthodontics is a Great Profession…

Source: U.S. News & World Report, Best Jobs Rankings

1. Dentist 2. Nurse Practitioner 3. Physician Assistant 4. Orthodontist 5. Nurse Anesthetist

Practice Ownership Today

You Attorney

Insurance Advisor

CPAOrthodontic

Mentor / Online Forums

Transition Advisor

Who’s on My Team?

Spouse IT/ Social Media

Consultant

Practice Consultant/

Wealth Manager

Local Banker/Lender

Topics



What Market Are You In?Title Employment, 2015

Dentists 195,722

Dentists, General 154,719

Oral & Maxillofacial Surgeons 7,556

Endodontics 5,469

Orthodontists & Dentofacial Orthopedics 10,539

Pediatric Dentistry 7,163

Periodontics 5,524

Prosthodontists 3,531

Oral & Maxillofacial Pathology 351

Public Health Dentistry 753

Oral & Maxillofacial Radiology 117

Source: ADA Supply of Dentists in the U.S.: 2001-2015.

14.7:1

0.7:1

1st Year Enrollment: Ortho vs Pedo

Num

ber o

f Res

iden

ts

250

290

330

370

410

450

2004-05 2006-07 2008-09 2010-11 2012-13 2014-15

292306

316

340349

366

382

403 405

429436

448

330

349 353 352341

354 355366 364 369 363

375

Ortho PedoSource: 2015-16 Survey of Advanced Dental Education

= 73

Before 1993

Ortho School

= 5 Graduates

Start UpAssociate Purchase/Partner

Ortho School

Today

Associate Start Up Purchase/Partner

= 5 Graduates

20% MORE

GRADUATES

Today

Associate Start Up Purchase/Partner

Associate for General Dentist

Associate for Pedo Dentist

DSO/Corporate

Ortho School

= 5 Graduates

$$$

Growth Problem = Dilution

Source: AAO 2014 Economics of Orthodontics Analysis Report

Practice Breakdown

• Solo Ownership Declining

• Partnerships Increasing

• Associate/Employment Opportunities Increasing

5.0%4.0%

6.0%

16.0%

69.0%

Solo PracticePartnershipAssociateshipsInterdisciplinary PracticeLarge Corporate Practice

What Are Your Plans After Completing Your Orthodontic Program?

0%

12%

24%

36%

48%

60%

Purchase an existing practice Start-up Equity-Minded Associateship

4%3%1%

3%6%

50%

7%

26%

6%

2%2%

7%

47%

7%

29%

3%3%4%6%

28%

56%

4%2%

4%5%

27%

58%

2013 2014 2015 2016

OtherPurchase an Existing Practice

Work as an Employee in a

Corporate Practice

Work as an Employee in

Private Practice

Academics MilitaryStart-Up

Source: Bentson Clark & Copple, LLC Resident Survey, 2010-2016.

What happened?!

Equity-Minded Associateship

Explosion of Corporate Dentistry 2011

Heartland Dental

Aspen Dental

Pacific Dental

Smiles Brands

0 200 400 600 800

325

200

240

300

Source: The McGill Advisory, Volume 30, Issue 7, July 2015

Heartland Dental

Aspen Dental

Pacific Dental

Smiles Brands

107% Growth

Seekers vs Opportunities N

umbe

r of R

esid

ents

0

100

200

300

400

500

600

700

Oct 2010 Oct 2013 July 2015 Dec 2015 July 2016 Nov 2016 Feb 2017

530

457

403

473

544 552

658 656 645

596 603 619577

537562

626

532 526

577 559 575

135 153 155

204 210168 169

146 155 155 153175 182 171 187

211186 169 177 181 194

Opportunities Seekers

Source: American Association of Orthodontists, Practice Opportunity Database

Remember: 365 Orthodontic Residents Enrolled Each Year

Child Demographics

Source: CDC/National Center for Health Statistics, as of July 20, 2015

3,900,000

4,000,000

4,100,000

4,200,000

4,300,000

4,400,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20102011 2012 2013 2014 2015

4,316,233

3,978,497

= 337,736

Practice Activity Trends

1981 1989 1993 1997 2005 2009 2013* 2015*

Age 42 45 47 48 50 52 50 47

Years in Practice 12 15 16 17 19 22 18 17

Gross Income

(Rounded)$200K $350K $414K $518K $800K $960K $1,158K $1,200K

Overhead Rate 49% 56% 56% 55% 53% 56% 59% 59%

Case Starts 150 150 160 180 200 220 245 250

Adult Case Starts 15.4% 22.0% 20.2% 19.0% 22.2% 20.0% 23.0% 23.0%

Active Treatment

Cases300 350 366 400 460 495 500 520

Source: Journal of Clinical Orthodontics, 2015 Orthodontic Practice Study * surveymonkey.com

Practice Activity Trends

1981 1989 1993 1997 2005 2009 2013* 2015*

Child Fee $1,900 $2,800 $3,200 $3,600 $4,700 $5,150 $5,280 $5,500

Adult Fee $2,100 $3,000 $3,500 $3,900 $5,000 $5,500 $5,650 $5,963

Two Year Fee

Increase15.5% 10.0% 10.0% 8.0% 8.0% 6.0% 3.5% 5.0%

Payment Period

(months)24 24 24 24 22 21 22 21

Assignment of Benefits 38% 55% 68% 76% 74% 81% 88% 86%

Patients Per Day 38 40 40 45 50 50 50 50

Source: Journal of Clinical Orthodontics, 2015 Orthodontic Practice Study * surveymonkey.com

Where’s The Data?

= 80% of U.S. desktops

Operational Analytics - Gaidge

-10%

0%

10%

20%

30%

40%

Total Exams Full Starts Phase II Treatment Net Production Adult Exams

1.4%

14.1%

4.3%4%

24.7%

-5.8%

0.6%0.3%2.2%

4.6%

-0.9%

9.6%

1.2%2.1%

33.3%

7.3%

0%

-2.5%

0.06%1.6%

-0.4%

5.1%4.7%5.4%

16.7%

-2.4%

6.6%

2.3%4.3%

0.9%

2013 - 2014 2014 - 2015 2015-2016

Source: Gaidge, 2013-2016 data

Total Exams

Total Starts

Full Starts

Phase I Treatment

Phase II Treatment

Aligner Treatment

Net Production

Net Collections

Adult Exams

Child Exams

Jan - March 2017 vs 2016

-10%

-5%

0%

5%

10%

15%

20%

Total Exams Full Starts Phase II Treatment Net Production Adult Exams

0%

11.1%

3.5%

2%

16.7%

8.3%

4.5%

-1.2%

2.8%3.2%

5.6%

17.4%

2.8%

6.6%

20%

-7.7%

10%

5.1%

6.8%

8.8%

2015- 2016 2016-2017* (through March 31, 2017)

Source: Gaidge, 2013-2017 data

Total Exams

Total Starts

Full Starts

Phase I Treatment

Phase II Treatment

Aligner Treatment

Net Production

Net Collections

Adult Exams

Child Exams

Analog

Technology at a Glance

Digital CBCT Scanners Digital Printing

Does your Orthodontic Program take Initial Cone Beam Radiographs of your Patients?

0%

10%

20%

30%

40%

Yes, on all patients Yes, on some patients Yes, on very few patients No

12%

38%

29%

21%19%

37%

33%

11%

23%

39%

27%

11%

24%

40%

27%

9%

2013 2014 2015 2016

Source: Bentson Clark & Copple, LLC Resident Survey, 2010-2016

Topics




How To Be Heard

Communicating With Each Other

Bentson Copple & Associates

Modern Day Practice Communication

DrOrtho.com

Email Campaigns

PR

SEO

TV

WOM Programs

Blog

Print

Doctor / Staff Portal

Video Sites

Community Programs

Patient PortalAppts / Billing / Chat

Referral WebsitesDr / Bracket Comp

Practice Management Software

Pinterest

YouTube

Yelp

Twitter

Google+

LinkedInFacebook

InvisalignLocator

Online Chat

Annual Valuation Summary

Year Net Collections Practice Income Overhead Rate Value Before Debt

Value as % of Collections

2007 $1,366,000 $690,370 50.6% $1,056,440 75.3%

2008 $1,375,500 $646,342 55.0% $1,023,240 71.5%

2009 $1,383,680 $623,568 53.9% $1,049,280 75.1%

2010 $1,326,320 $580,038 55.4% $1,020,280 76.1%

2011 $1,569,480 $697,965 55.1% $1,206,200 75.8%

2012 $1,805,360 $794,756 54.9% $1,428,640 79.6%

2013 $1,549,520 $702,622 55.6% $1,260,960 79.0%

2014 $1,502,273 $674,561 55.8% $1,190,491 76.9%

2015 $1,686,724 $687,340 56.4% $1,374,291 77.9%

2016 $1,672,166 $740,724 57.0% $1,332,227 77.0%

Overhead Rate

50.6%

55.0%

53.9%

55.4%

55.1%

54.9%

55.6%

55.8%

56.4%

57.0%

Source: Bentson Clark reSource, Volume XI, Issue I, 1st Quarter 2017

Practice Income

$690,370

$646,342

$623,568

$580,038

$697,965

$794,756

$702,622

$674,561

$687,340

$740,724

for Orthodontic Practice OwnersSample Profit & Loss Statement

Bentson Copple & Associates, LLC | 397 S Swing Road | Greensboro, NC 27409 | 800-621-4664 | www.bentsoncopple.com

Dr. ___________________________________Income Statement and Adjustments

Year Ended December 31, 2017 Adjustments ADJUSTED %Practice Collections

Orthodontic collections $ $ $Refunds to patients

Practice Collections, net 100.0%Practice Expenses

Salaries and wages 20.5%Taxes - payroll 1.6%Uniforms 0.2%Continuing education, meetings 0.6%Employee Benefits 1.2%Pension, profit-sharing 0.8%Other staff expense 0.1%

Staff Expense 25.0%Orthodontic supplies 9.0%Lab expense 3.5%Invisalign 0.0%

Orthodontic Expense 12.5%Bank charges 1.1%Advertising & promotion 2.8%Automobile 0.0%General office supplies 1.9%Computer expense 0.9%Insurance - liability, general 0.9%Licenses & taxes 0.8%Outside services - accting & legal 0.8%Outside services - other 0.4%Postage & shipping 0.2%Travel & entertainment 0.3%Dues & subscriptions 0.4%

Business Management 10.5%Rent 7.0%Utilities 1.3%Janitorial 0.2%Repairs & maintenance 0.5%

Occupancy Expense 9.0%Total Practice Expenses 57.0%

PRACTICE INCOME $ $ $ 43.0%

2017

For Illustrative and Training Purposes Only

Changes in Spending Habits













2017


Net Revenue

# of Full-Time Equivalents

Bracket Practice = 14-16 appts/chair/assistant/day

Aligner Practice = 22-25 appts/chair/assistant/day

Revenue Per FTE =

* 56% Potential Increase in Chairside Efficiency













2017


To download this Sample Profit

& Loss Statement, visit: goo.gl/Sp78cN

Changes in Spending Habits

Team Costs = Focus on Revenue Per FTE

$180K per FTE < $230K per FTE $180K per FTE

Practice Expenses

• Average Practice Operating at 57.0% (as seen by Bentson Copple & Associates).

43.0%

9.0%10.5%

12.5%

25.0%

Staff ExpenseOrthodontic Supply & Lab ExpenseBusiness Management ExpenseOccupancy ExpensePractice Income

Topics




• Expectations

Market Expansion - More Cases to Treat

Million Starts in North America2.8

Million people who need to have their teeth straightened

70- 100

Market expansion will result in more patients for orthodontists

WIN-WIN

Source: The Progressive Orthodontist Magazine, 2nd Quarter 2017

Magazine Cover Here

$5,200/Case

$14,000/Case

$6,800

65%

60%

55%Expansion of Consumers

Mid-MarketOrthos

Value Orthos

70% - 6,440 Orthos

20% - 1,840 Orthos

High-End Orthos

10% - 920 Orthos

$4,200

$3,400/Case

Let’s Look at Our Market

High-End Orthos

Mid-MarketOrthos

Value Orthos

10% - 920 Orthos

70% - 6,440 Orthos

20% - 1,840 Orthos

Consumer Market Expansion

Did You Participate in Our Annual Resident Survey?

Approximately How Much Student Debt Will You Have Accrued at the End of Your Residency?

0%

10%

20%

30%

40%

Less than $100,000 $200,000 - $299,999 $400,000 or More

38%

17%16%

9%

19%

27%

18%

23%

10%

22% 23%

20%22%

13%

22% 22%

18%

24%

14%

22%

2013 2014 2015 2016

Less than $100,000

$100,000 - $199,999

$200,000 - $299,999

$400,000 or More

$300,000 - $399,999


What is Your Expectation of First Year Annual Income?

0%

12.5%

25%

37.5%

50%

Less than $100,000 $150,000 - $199,999 $250,000 or More

10%

29%

41%

15%

5%

11%

25%

37%

21%

6% 6%

21%

38%

31%

4%6%

15%

44%

34%

1%

2013 2014 2015 2016

Less than $100,000

$100,000 - $149,999

$150,000- $199,999

$250,000 or More

$200,000 - $249,999


Types of Transitions

Startup

Associateship

Associateship, leading to buy out

Associateship, leading to partnership

Solo Group Prac8ce

Employee of Corporate En8ty

Pediatric Den8st’s Orthodon8st

General Den8st’s Orthodon8st

Gypsy Orthodon8st /an Employee for several

Orthodontics is a Great Profession…

Source: U.S. News & World Report, Best Jobs Rankings

1. Dentist 2. Nurse Practitioner 3. Physician Assistant 4. Orthodontist 5. Nurse Anesthetist

Topics




• Expectations




397 South Swing Road, Greensboro, NC 27409 | 800.621.4664 | fax 336.333.0015 | www.bentsoncopple.com

Thank You!www.bentsoncopple.com

presented by: chris bentson partner, bentson copple & associates · computer expense 0.9%...

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