Post on 28-May-2020
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
• Pressures of Practice Growth
• Current Market Data
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
• Pressures of Practice Growth
• Responses to the Market
• Current Market Data
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
Doctor / Staff Portal
Video Sites
Community Programs
Patient PortalAppts / Billing / Chat
Referral WebsitesDr / Bracket Comp
Practice Management Software
YouTube
Yelp
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
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
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
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
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
• Pressures of Practice Growth
• Current Market Data
• Responses to the Market
• 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
Source: Bentson Clark & Copple, LLC Resident Survey, 2010-2016
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
Source: Bentson Clark & Copple, LLC Resident Survey, 2010-2016
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
• Pressures of Practice Growth
• Current Market Data
• Responses to the Market
• Expectations
• Pressures of Practice Growth
• Current Market Data
• Responses to the Market
397 South Swing Road, Greensboro, NC 27409 | 800.621.4664 | fax 336.333.0015 | www.bentsoncopple.com
Thank You!www.bentsoncopple.com