Andy Tapper, ex Lumino The Dentists CEO has engaged LANZ.Dental to help him identify practice owners looking for a secure and predictable succession plan within his new national dental group.
Dentistry is a relationship business. We build high trust relationships with our patients who allow us to perform invasive surgery - it is a unique profession. Clinicians don't want just anyone taking over their patient list when they move on or retire. Andy Tapper, via his involvement with Lumino and its sister company Maven Dental Group in Australia, has built similar high trust relationships with dentists, with over 150 of them selling their practices to him.
Andy understands the nuances of the dental profession better than any non dentist we know. He was the driving force behind Lumino's culture and initial success.
Grouping practices together to improve collegiality, efficiency and allow for economies of scale has been common in dentistry for decades. Typically sole practitioners would share reception and other staff with some growing larger to employ associates and multiple hygienists. Some also built up multiple sites and then corporates took it further.
Whilst Andy is very proud of what was achieved at Lumino, they didn't get everything right.
This group will be partly owned by dentists for the benefit of dentists. For a corporate style dental group to be truly successful, management needs to be accountable to a group of key and engaged ‘wet finger’ clinicians. Shared ownership is a critical part of achieving this. Aligning high clinical standards and best practice with accountability from highly experienced management will allow something special and unique in New Zealand to be achieved.
Continuity of care for their patients and ensuring ‘the team’ are looked after is most dentists key concerns when selling. However for a larger group like this the risks are more around clinician succession. Then for younger clinicians there is no clear pathway, especially around price setting, when buying into a practice. To manage these scenario Andy has developed a model where a portion (around 30%) of the practice can be owned by the principal or lead dentist(s). These shares can be on sold to other clinicians, such as an associate. Over time as a number of these transactions occur a more transparent value for these shares will develop.
This model allows principal clinicians to have a clear say in who succeeds them, younger clinicians to have a transparent and fair buy-in option. One of the more challenging situations we see at LANZ.Dental is when one member of a small group practices wishes to exit. Generally there is little or no process around this, often leading to deals falling over. In this situation there are clear processes.
Andy has developed solutions to cover most acquisition scenarios. From the older dentist looking to walk away almost immediately knowing their patients will be looked after through to the younger dentist looking for a partner to help realize the potential of their practice with capital investment.
A common brand will likely become more important in time but a co-branding approach will be favoured. Other large dental groups have struggled with brand perception and most of the benefits of size can be achieved without rebranding.
We are working with some of New Zealand's best marketers on brand development but it‘s envisaged taglines like, a ‘member of... ‘, or ‘part of...’ or 'by…'
There are aspects of dental practice management that are suited to being centralised. But many can be achieved better and easier at practice level, especially when utilising standardised systems.
15 Years running New Zealand's largest corporate dental group has taught Andy how best to manage, HR, marketing, financial functions, operation matters etc.
For those centralised services for example marketing, there will be a ‘tool box’ of best practice protocols and third party services. From online booking tips and tricks, to recall and reactivation protocols through to social media support and high value treatment click funnels. Many or all of these things may already be working well in some instances but in others could provide the impetus for desired growth.
HR is similar, most things work well already with oversight from vetted experts in the field such as LANZ.Dental.
Access to capital is critical to growing a dental practice. The model enables dentists to access capital to set up new or develop existing practices. Rather than having to fund expansion capital themselves and take on all the risk - the model enables dentist owners to share this risk with the group in proportion to the shareholding they retain in their individual or cluster of practices.
The years of experience of Andy, and other members of the group, with practice expansion will help guide these decisions and give dentists partners the confidence to take on expansion projects.
Having some transparency as to how Andy values practices is helpful when considering selling as an option.
High level the base valuation is done on an earnings multiple or profit multiple. Financial people will roll out the acronyms like EBITDA, NPAT, ROI etc. but the simple way to look at it is - how much profit would there be if the principal was paid 40% commission like an associate?
We would encourage you to move quickly to consider this option. There is likely to be a limited number of practices involved in the founding group. These owners may well benefit from entering into the group at an earlier stage.
You'll need to provide some detailed information about your practice, including financial data. Click here to see what documents are required to get the ball rolling.
LANZ.Dental can assist you in the preliminary stages, Tony is available on 021 866 985 or at firstname.lastname@example.org. Bruce, our practice sales expert, is on 021 777 499 or can be contacted at email@example.com or feel free to contact Andy directly here.
After nearly 15 years at the helm of Lumino, Andy has recently left following its change in ownership. I caught up with him last week to see what his plans were.
LANZ.Dental wishes you, your team and your family all a happy and healthy holiday. Our office is closed from Friday 18 December and will reopen on Wednesday 13 January 2021.