Denplan Partnerships Ltd

Label with an apple

The arrival of Denplan into the acquisitions market represents a significant change in the landscape for practice purchase and, on closer examination, raises some interesting questions.

Dentistry Magazine carried the story in their online version on Friday 27th March and I, for one, was caught unawares.

TO READ CLICK HERE

So why would a dental insurance company, owned by an even bigger health insurance company, invest over a year in researching the acquisitions market and then decide to jump in and focus their efforts as follows…

ideally suited to those looking to retire in the short to medium term from a one or two-handed practice.

I spent Saturday morning on a long training run and thought about the story.

Numbers

In my experience, the one or two-handed practice (with a hygienist) will be grossing around £500,000 and, if well run, will generate a pre-tax profit for the owner of up to 35% – perhaps on average 30% – so we can imagine EBITDA of £150,000.

The Principal will be grossing £275,000, the associate £180,000 and a part-time hygienist (maybe 2 days a week) might be grossing another £45,000. The numbers will be a little more confusing when one takes into account Denplan Care monthly premiums, as the income will be divided between all three – but the net result the same.

So it will be interesting to see what multiple of profits formula Denplan apply to that.

In the current corporate land grab for NHS and private practice I’m hearing of NHS practices selling for up to 185% of gross (totally bonkers), whilst mixed are selling at up to 120% of gross and the larger purely private at 100%.

Having said that, the same corporates are cautious around purely private and I’m seeing the lower grossing practices (as in my example above) selling at 85% of gross (inclusive of an earn out).

That would indicate a goodwill valuation of £425,000 and a multiple of not much more than 3 times EBITDA. In an earn out, the Principal would probably only see 70% of the valuation as cash up front – the rest speculating on future performance – so a guaranteed cheque at outset for perhaps £300,000 and a 5-year earn out for the balance on a 45% associate contract less 50-55% of lab fees.

Given that there will no “earn out” in the Denplan method, the attraction of 50% of 3 times EBITDA as cash up front – £225,000 – would be obvious.

Raise that to 50% of 4 times EBITDA – £300,000 – and still retaining half the ownership – and Denplan is a winning deal, especially if the current owner negotiates a good associate contract for themselves as well as profit share (surely they would have to do that?).

Sounds to me like a very attractive proposition when one considers that the larger corporates actually have little appetite for practices of this size and many such prospective sales attract speculative offers from independent predators looking for a distress purchase.

The independent valuers will, of course, disagree with my figures above, preferring to value the small practice at a much higher figure – but I respectfully suggest that the supply of gullible youngsters with family money willing to pay inflated prices for ailing practices hiding supervised neglect is drying up.

Succession

The possibility is raised that, when the existing owner finally does decide to go (“in the short to medium term”), then his or her shares will be sold to an associate who wants to step into the shoes of the 50% owner.

Valuation will have to be on the same basis but I wonder if the lack of a controlling interest will be reflected in discounted acquisition price?

Will the idea of buying into a practice owned 50% by Denplan attract those with the entrepreneurial spirit or will it seem like a safe bet for the more risk averse, who will then have put in the same hours, multi-task and make tough decisions like the rest of us?

Are there enough stakeholder associates around to create that market for disposal, or will Denplan find themselves having to stump up the remaining cash when the part-owner announces “I’ve had enough”?

Patients

Anything that promises continuity of care and standards has to be welcome. The prospect of Denplan as a part-owner in a practice can be a sure sign that rules will be followed and few corners cut.

I’ll be interested to discover where the buck stops as far as clinical governance is concerned, as the reputation of the brand will be in important factor in the regulatory process and the CPD of clinicians and DCP’s.

Decisions

How does that split vote work on a day-to-day basis? Do Denplan have a veto if they see the owner doing something that they don’t agree with? Do they have to agree to any innovation, investment or recruitment? Will there be regular Board meetings in what will, I assume, have to be an incorporated practice?

I imagine a complete free hand when it comes to clinical decisions on materials and lab but what about branding, marketing, the patient journey, treatment co-ordination, HR and the choice of external suppliers for training, consultancy and coaching?

Typically, when a practice of this size calls me in I often find myself pointing out that:

the brand looks tired
the website needs an overhaul
there is no digital marketing taking place
the numbers of new patients is too low
the marketing spend is too low
the fee-earners are too busy running the maintenance book to grow private treatment sales
the receptionist/practice manager/nurse/associate/hygienist is old-school and doesn’t like change
the interior needs a refurbishment
the equipment is out of date
the owner has no spare time

There are no funds available to facilitate change and they have insufficient time, money and people to “get things done”

So, Denplan, I hope you are ready with some answers to those problems.

Conclusion

I know that organisations do things to either build profits or keep the profits they already have, so I’m not so naive as to think that this is about a helping hand for the struggling owners of lifestyle businesses faced with increasing complexity and competition. Altruism in business has its limits.

I hope that Denplan put more effort into the idea than other healthcare providers who seem to have paid lip service without a great deal of visible action after the press releases.

Perhaps the most comfort comes from the fact that the idea isn’t born out of Private Equity managers looking for a 4-year turnaround or stock market investors chasing dividends.

If Denplan end up owning half of 50 practices that gross £500,000 then their sound will be lost in the noise.

If 200, then they will be a force in the market to be considered.

Either way, they will buy themselves a seat at the Association of Dental Groups.

Ultimately very good news for the smaller Denplan independent and I’ll be interested to see how they solve the problems facing the small practice in a rapidly evolving market.

Letters from a perfect imperfectionist: Sobering

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My return to marathon fitness on Sunday 15th March 2015 was the result of many hours, plodding the pavements and trails of (mainly) Cheshire with a real commitment to “get back” to the velocity I enjoyed as a younger man.

There is no alternative to just “getting the miles in your legs”.

My last few marathon outings have been disastrous, with finish times in excess of 5 hours 30 minutes and anyone who has run/walked for that long will confirm just what a miserable experience it can be.

The gremlins begin to see their chance:

maybe you are just “past it” and need to act your age?
maybe your body is starting to break?
maybe you should take up origami?
maybe you drink too much?
maybe all that Paleo is just bollocks?

….the whispers go on – usually in the most vulnerable moments.

Somehow, we resist all of that negative self-talk and resolve to give it one more go.

There is no doubt that buddying makes a huge difference.

Knowing that Michael Joseph and Marcus Spry would be running with me encouraged me to carry on when the body was tired and the spirit diminished.

So the training miles slowly pile up, morning after morning the alarm clock calls you to unearthly early winter runs in the orange glow of street lights, either blowing clouds of condensation into the frost-laden air with fingers freezing in gloves or soaked in a drizzle that permeates every item of clothing.

Most of the time, training is just the tedium of banging out the miles, no matter how you feel – and most of the time you don’t feel like doing it physically, even though the headspace is invaluable.

 Sobering1

Every now and then, there is a combination of physical, emotional and spiritual highs that produce a run to remember – often aided by an inspirational environment – a breathtaking dawn, beautiful countryside or a bold cityscape.

We take those moments and are present in them – they are few.

The reliable highlights of the week are that hot bath on Saturday lunchtime after your long morning training run and the permitted blow out on Saturday evening, knowing that Sunday will be a long sleep and a day without trainers.

I was frightened of Barcelona.

Frightened that my body would give out again and my pace would slow to a painful and depressing walk. That I would have to throw in the towel.

But it just didn’t happen – we kept on running and running, albeit slightly slower towards the finish but secure after 17 miles in the growing elation of knowing that we had those extra miles in us.

Michael was off from the start, as we agreed, hurtling towards an amazing first-timers 04:02 – Marcus and I stayed paired through the whole event and his courage fed my spirit and, I like to think, vice versa.

We crossed the line shoulder to shoulder, punching the air with delight and waving at Annie and Louise, whose whoops we heard even over the crowd on the final straight.

I cried – I always do.

The day was a triumphant experience and will encourage me to do more, to buddy again and, perhaps, to extend a challenge to any reader to join Marcus, Michael and myself in October for The Amsterdam Marathon.

Finally, the title of this post.

Sobering.

The sight of a gentleman in his late middle age, around the 15 mile mark, competing on two crutches with legs that clearly didn’t work, planting the two crutches on the road, swinging his legs forward in parallel, swinging his body forward using his arms, planting his feet and then repeating – 26.2 miles.

Count your blessings and celebrate the human spirit.

If he can do it, so can you.

“These “letters” are the personal observations of me, Chris Barrow and are not intended to reflect the views of 7connections and its team members, they just give me permission to publish here on the basis that they can keep an eye on me, a bit like a mad relative at a wedding reception. I’m likely to upset the sensitive and outrage the sensible – if you fall into either of those camps then read at your peril.”

Vorsprung Durch Technik and Apples in Dentistry

Vorsprung Durch Technik and Apples in Dentistry_1

The nearest translation to “vorsprung dutch technik” could be:

“advancement through technology”

and although it has been used by Audi since 1982 (and first coined by British “Don Draper” John Hegarty), the time is right for global dentistry to adopt this philosophy.

We are seeing the convergence of digital dentistry, digital smile design and digital marketing as a new playing field to be ignored at your peril.

A concern here is that we cannot obviously see where the incubators are for new ideas?

Those who recently visited IDS will, no doubt, confirm that the big manufacturers are rolling out new digital equipment.

The DSD movement collects new tribal (fanatical) members with a quickening pace.

Digital marketing has changed the direction of 7connections and is about to cross the gap between innovation and early adoption in the UK.

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But is there an Apple in global dentistry? A company for whom their very existence equals “the new”?

Here is what blogger Alain Breillatt says about Apple:

1      There are those who open their presents before Christmas morning.

2      There are those who wait. They set their presents under the tree and, like a child, agonise over the enormous anticipation of what will be in the box when they open it on Christmas morning.

Apple designs for #2. No other mass-consumer products company puts as much attention to detail into the fit and finish of the box—let alone the out-of-box experience. If you’re an Apple enthusiast, you can capture the Christmas morning experience more than once a year with every stop you make at the local Apple store.

Read more at: http://www.pragmaticmarketing.com/resources/you-cant-innovate-like-apple#sthash.ftkKwAvg.dpuf

I have two questions:

are there any manufacturers or suppliers who are delivering the Apple effect to the market?
are there any dentists who are delivering the Apple effect to their patients?

I can answer the second question – I am discovering practices globally who are delivering and delighting at every stage of the Lifecycle Marketing process.

I cannot answer the first question.

Perhaps there is an idea here for a new awards ceremony – for innovation in the science and art of dentistry.

In the meantime, as an independent practice owner, do you “put as much attention to detail into the fit and finish of the box – let alone the out-of-box experience?

Letters from a perfect imperfectionist: What do you see?

What do you see

What do you see?

The sky or the glass and steel roof?

Is the roof there to keep the sky out – or the observer in?

Back in March 1998 I was at Everest Base Camp chatting with Tom Whittaker, who was attempting to become the first disabled person to summit the peak.

He succeeded on May 27 of that year, on his third attempt.

On his return to Base Camp he emailed a message to his supporters which read:

I prefer to be defined by my abilities, rather than my disabilities.

“These “letters” are the personal observations of me, Chris Barrow and are not intended to reflect the views of 7connections and its team members, they just give me permission to publish here on the basis that they can keep an eye on me, a bit like a mad relative at a wedding reception. I’m likely to upset the sensitive and outrage the sensible – if you fall into either of those camps then read at your peril.”

Letters from a perfect imperfectionist: FOMO and FOMM

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FOMO = frightened of missing out.

A great habit for people in an organisation that wants to innovate.

Allow people to experiment.

Encourage risk.

Celebrate failure as a pathway to success.

Leadership is “follow me.”

FOMM = frightened of making a mistake.

A disastrous habit for people in an organisation that has grown too big to innovate (or the new owners don’t want to).

FOMO and FOMMExperimentation discouraged.

Risk avoided.

Failure castigated.

Leadership is “I’d rather you didn’t but, if you must, you crack on and if it works I will claim the credit but if it fails I’ll throw you under the bus.”

Recognise anyone?

“These “letters” are the personal observations of me, Chris Barrow and are not intended to reflect the views of 7connections and its team members, they just give me permission to publish here on the basis that they can keep an eye on me, a bit like a mad relative at a wedding reception. I’m likely to upset the sensitive and outrage the sensible – if you fall into either of those camps then read at your peril.”

Is clinical innovation in an Intensive Care Unit?

denture

I never thought I would hear an ambitious young dentist tell me that he was pulling away from implant dentistry because of his concerns about the General Dental Council’s perceived witch-hunt for those who “stick their heads over the parapet”.

Over the last 20 years I have encouraged all of those around me to take a positive view, often opening conference presentations with a tongue-in-cheek summary of all that is rotten, scary and broken – then moving on to talk opportunity and innovation.

After all, lists of the good, the bad and the ugly are available to all of us.

When a perfectly talented, ethical and committed individual simply decides that getting better at his vocation and helping more people just isn’t worth the hassle of complaint or litigation and the risk to himself and his family, we have reached a moment of truth in the evolution of the profession of dentistry

The PR and political people are clever. As we saw at last week’s Health Committee meeting, it is difficult to counter the endless denial and spin from the GDC, sheltering behind the claim that they are acting in the interests of the public, protecting them from the unscrupulous and the incompetent. Watching Moyes throw Gilvarry under the bus was worthy of an episode of House of Cards; one wonders whether a signed photograph of Frank Underwood adorns the wall of the Chairman’s office?

Much has been said by the eloquent and experienced about the inadequacies of the FtP system and the latest “party line” is that help is just over the hill as the devolution of the process to local NHS services miraculously solves the problem.

That remains to be seen.

When the current “leadership” in public sector dentistry have retired, picked up their lifetime achievement awards and/or moved on to their next non-executive, non-elected, non-accountable job, I hope someone will mount a blue plaque on the wall outside the GDC proclaiming “here, in the first decade of the 21st Century, an unsuccessful attempt was made to assassinate the hopes and dreams of a profession”.

Thankfully there are still practising dentists out there who are prepared to mentor their younger colleagues, often without compensation, to ensure that the spirit of the profession can live on in spite of the efforts of the dementors.

I’m arranging for the young dentist in question to spend some time with my top clients so that they can re-ignite the possibility virus inside him.

Letters from a perfect imperfectionist: Re-marketing

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I haven’t heard a single person tell me that they like re-marketing.

The term is used to describe what happens when you visit a website to research a product or service and the same product or service starts following you around the internet, on your other web searches and on your preferred social media sites.

So on a wet Sunday you take a look at sunny hotels for August.

The following Wednesday you are updating your Facebook status and there is the same hotel, in a little sponsored box down the side of your Facebook profile.

I’ll bet it has happened to you?

Now – before I go any further – guilty as charged.

We at 7connections have been re-marketing some of our events and products.

We have been following you – with the help of our digital marketing agency, ApexHub.

Along with paid advertising on Google and Facebook, we have been re-marketing.

The end result, a significant increase in people visiting our website and exchanging their email address for useful downloads.

It works.

Re-Marketing

The other day I was chatting to Annie about the fact that some strange adverts were appearing in both of our sponsored link areas on Facebook.

We realised that Facebook was promoting to my profile stuff that she had been searching and vice versa.

That sounds freaky to me (and I’d better think twice about what I’m looking at on the web).

I’m looking at my Facebook profile right now (another wet Sunday morning in Manchester) and I can see:

a link to a business book on Amazon that I’ve already read and own – but sent a link to a client the other day with a recommend that he reads it
a link to the National Lottery – because I bought a lucky dip yesterday (for the first time in years – an impulse purchase) and checked the numbers an hour ago
having refreshed the page I now see a link to flowers for Mothers Day – my mother passed away some years ago – and Amazon wanting to sell me health supplements (no idea why)

I see the problem with re-marketing as being a lack of focus that can lead to offence.

Like “bugger off – my Mum is dead, I’ve already read that book and I’m unlikely to buy lottery tickets again (not a single number) – so if you are so bloody clever, why didn’t you figure that out?”

Therefore, a word of caution to myself and to my clients.

I see the benefits of re-marketing – but only if the target audience is chosen very carefully in order to avoid a sense of unease at the intrusion.

Perhaps the digital marketing experts can comment.

My sense is that this is a bandwagon that corporates are jumping on with huge budgets and just playing a numbers game.

That will dilute respect for the genre and, in the same way as sponsored links on Google, just encourage us to “switch off” so that the genuine and sensitive marketers are ignored.

Letters from a perfect imperfectionist: Faith

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Your team will excel when they know that you have faith in them.

You will develop that faith when:

you know that they are committed to your vision
you know that they are dedicated to fulfilling their individual responsibilities
you know that they are loyal
you know that their allegiance to you and your cause is unconditional
you know that they are pursuing their unique ability

Faith (Teamwork)

Part of your leadership role is to continuously demonstrate that faith.

Your appreciation and respect.

Part of their role as team members is to continuously demonstrate that your faith in them is justified.

Their fidelity.

If there is a single person in your team in whom you have no faith, that will weaken the whole.

They must be changed – or changed.

When you do that, you show faith in yourself.

People follow leaders who continuously demonstrate faith in themselves.

What to do with bad press

Bad_Press

On the same day last week I curated articles on:

an associate attempting to place bridge work in a McDonald’s restaurant in Central London (after being banned from the practice);
an extensive Daily Mirror report on “rip off dentists” and price differentials across the country;

and chose not to curate the feature on a Lancashire based dentist who paraded around his surgery in a thong, touched up his women patients and engaged in a series of relationships with very young nurses.

The first and last of these three sorry tales I probably wouldn’t post on the practice Facebook page as they are personal stories about people who have fallen off the tracks of normal behaviour and, whatever the press might report, we will never know the full story.

Any patient referring to these exposures in your practice should simply be reminded that the “first without sin” has the right to pass judgement – the rest of us should keep our mouths shut.

The rant by The Mirror does, however, warrant comment in my opinion.

Following a similar outburst by The Mail a few weeks ago, I recommended that the offending article be featured on the practice social media pages and even in reception – with the accompanying comment that if any patient wanted to discuss “our” pricing strategy, they should simply ask.

The objective is to deflate that bloke in the flat cap and scarf who wants to impress the reception team with his biting wit – otherwise known as the plonker.

Get there before he does.

And remember that old cliché that “bad publicity is like bad breath – it is better than no breath”.

The patients and the public are savvy and know that 80% of what they read in the press is fact spun into fiction. The Mirror article was a grossly biased re-working of some genuine research released by WhatClinic.com.

The plonkers don’t want to change their minds, whatever you can prove.

So here is a guideline:

where the critique is personal – avoid and count your blessings
where the critique is general – publish and comment

Letters from a perfect imperfectionist: I wonder if there is going to be a new Third Place?

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The original Starbucks opened in 1971 and by 1986 had only expanded to 6 locations – but the founders were bought out by budding franchiser Howard Schultz in 1987.

The premise behind the franchise idea was that people needed a “third place” to drink coffee.

The first place was their home.

The second place (in the USA at the time) was a grainy filter coffee in a polystyrene cup at a garage.

The third place offered coffee, somewhere to sit, music, newspapers and a variety of tempting foodstuffs.

The rest (as they say) is history and here we all are enjoying beverages at over £3.00 a cup and similarly priced buns and panini.

A New Third Place

Over 21,000 Starbies locations globally and then add in Costa, Cafe Nero, Pret a Manger, Cafe Ritazza and a bazillion independently owned cappuccino bars.

The “west coast coffee culture” has become embedded in the developed world and we assume an inalienable right to access wifi and work in these locations, along with all the yummy mummies, grey wavers, school kids, desperate housewives, students and business travellers.

My speculation is “what next”?

Life goes on, things change, the coffee bars of the South Sea Bubble in London’s 1720’s gave rise to The London Stock Exchange.

What will the coffee bars of the early 21st Century give rise to?

Will there be a “Fourth Place”?