Coach Barrow

Nice new web site here for a brand new practice in central Liverpool.

They need some additions - mainly pictures and video of:

1. the full team
2. the premises and
3. the patients (testimonials)

I’ve enjoyed 2 glorious days working at or around my desk in Falmouth - a welcome change from constant travel.

As well as responding to the never-ending round of emails and phone calls, its been a chance to respond to the 41 (this morning) enquiries from principals interested in the IDH Private proposition - and wanting to know what we have to offer.

This sheer number of enquiries has been a pleasant surprise but I am now having to prioritise the enquiries and make sure that everyone has an acknowledgment and a time-scale.

A common question is around whether the funding is still in place, given the current global situation - the answer is a very definite “yes”.

I have also invested a lot of my time these last 2 days in getting my head around the valuation model that we are going to use - and the somewhat head-banging concept of EBITDA.

There are many principals out there who have been caught up in the conversation about corporates paying multiples of gross revenue - 100%,120% etc.

Its not quite that simple - and, post-Iceland, probably not going to be as generous going forward.

The financial team at IDH have been helping me to construct a valuation template for private practice that takes into account as many of the idiosyncrasies as we can before due diligence.

That should be enough to enable good conversations - and that will be tested today as I visit two practices to discuss the proposition, the numbers and take a look around the practice.

I’ll also be taking my colleague and Operations Director, Matt Jackson, to visit one of my favourite private practices - just so that he can see “how its done” (not to buy it by the way).

48 hours of travel to follow - back on the road again.

Idea 1 - The “Free Prize Draw”

Book a stand at a trade fair, wedding fayre (why do they spell it that way?) or any other public event.

Take along some basic information on cosmetic dentistry - tooth whitening, smile makeovers, invisible adult ortho.

Make friends with a local supplier of electronics.

Put a very large plasma TV on the stand.

Ask for contact details of the people who visit the stand - name, address, telephone, email.

Ask them to throw 6 dice - and the first one to throw 6 sixes takes the TV home.

Ask a Lloyds underwriter to cover the risk - and split the premium with the TV shop.

Share the information you collect with the TV shop.

Write to the database after the show with a KEDO (knock ‘em dead offer).

Idea 2 - Satellites and feeders (inspired by Sainsbury - and perhaps soon by Tesco?)

Open a minimally equipped dental surgery in a local retail outlet with massive throughput of people.

Offer cheap check-ups to get people in through the door.

Offer low-cost or free consults with treatment co-ordinators.

If they require any treatment - explain that you don’t have the equipment and refer them to the private clinic that you operate.

When they arrive at your “proper” clinic, you can work your magic on them.

Idea 3 - The One-Page Treatment Plan

No matter how complicated and verbose your treatment plans, offer a one-page,single sheet, A4 summary of:

• the problem - what brought them to the conversation in the first place - either a clinical problem or a lifestyle need
• the solution - what you agreed to do to help them
• the timescale - what commitment will be required to complete the treatment
• the investment - how much it will cost and
• the payment options - up front, pay as you go or finance.

The well-informed phone call on Friday afternoon, to tell me that ADP were no longer buying practices (because they were funded by Kaupthing Bank) has yet to be verified by the dental press, although I have had one email from a dentist this morning indicating the same news.

If accurate, I suspect the effect on the market for acquisition could be dramatic - in the sense that a group of “nearly sold” practices may appear, all currently owned by principals who were looking forward to a cheque and a reduction of stress levels.

I’ve worked with many clients who have sold their practices over the years - and observed that in the three months between a heads of agreement and final sale, the principal has often spent and invested the proceeds many times over in the mind - including, perhaps, a well earned holiday.

Imagine the disappointment and uncertainty that might have set in over the weekend?

Add together the arrival of a portfolio of the “nearly-sold”, the chagrin of any sales agents who were looking forward to a commission or principals who were looking to reduce their borrowings, the general lack of liquidity in the market-place and the “even-worse news” that’s supposed to break tomorrow (a number of economic commentators are predicting a Black Tuesday on 14th October) - we seem to have a recipe for what George W. would call “an adjustment” in market prices for dental practices.

Downwards.

I’ll be watching this very closely over the next few days as it will impact my current activity - in fact, today I have a desk day, feeding sets of accounts into a valuation model that we have developed for private practices to see what offers we will be making to the first potential acquisition candidates.

Our own funding is secure, barring anarchy - and so it will be business as usual.

As you may imagine, I’m in conversation with many practices at the moment - a vertical learning curve on practice valuations and on “what to look for”.

This morning I wanted to share some trends I’m noticing that might be of interest.

Trend 1 - size clusters:

• Cluster 1 - the “one-man band” - a dentist with two chairs, the other occupied by part-time associate and/or hygienist/therapist. Turnover of between £300,000 and £500,000 - profitability can be quite high - up to 45%
• Cluster 2 - the “three-chair practice” - a dentist with full-time associates and hygienists/therapists. Turnover between £800,000 and £1.3 million - profitability at 25-30%
• Cluster 3 - the dental poly-clinic - a principal with general and specialist associates and a full hygiene team - possibly part or all referral practice - profitability at 20-25%

Observation - 10% of practices I meet at at Cluster 1, 80% at Cluster 2 and 10% at Cluster 3.

I deliberately exclude expense-sharing partnerships - because they are simply Cluster 1 practices all occupying the same premises - but usually with all the co-ordination of Gary Rhodes on the dance floor.

Beyond cluster 3 - nothing.

Why?

That leads me to:

Trend 2 - organisational structure:

• Cluster 1 - the dentist is main income generator and overwhelmed Managing Director. The part-time practice manager (spouse?) handles book-keeping and keeps the girls happy. Financial modeling, marketing, customer service and sales just don’t get done;
• Cluster 2 - the dentist is still main income generator AND Managing Director AND Clinical Director. The full-time practice manager (spouse?) handles book-keeping and keeps the girls happy and does a little bit of marketing and customer service. Financial modeling is a finger in the air to test the wind, there is no sales training;
• Cluster 3 - the dentist is cutting down on income generation and focusing on clinical lead and strategic leadership. There is a full-time business manager who works alongside the practice manager. Business manager is responsible for financial modeling and monitoring PRODUCTIVITY of all income generators, also looks after the departmental managers. There is a full-time marketing manager, there is a comprehensive programme of customer service and sales development. The practice manager looks after operational controls and the team.

So far, so good - until we get to:

Trend 3 - single site versus multi-site.

Whatever “Cluster” you occupy or aspire to - the real fun starts when there is more than one practice location.

Because without the organisational structure of Cluster 3 - the principal is doomed.

I am currently in conversation with a dentist who is at Cluster 2 but from two sites - and is considering a third site and aspires to a Cluster 3 financial performance.

Even with the current two locations, he is running around with his hair on fire - and, when “Elvis” leaves one building, guess what happens? The team slow down.

Now - a third site has been located and his team are deeply concerned that he will burn himself out.

They are perceptive - he will.

So after much cajoling from myself, his wife and his current practice manager - he has appointed a Managing Director to project manage the evolution of the business - and her first task will be the recruitment of a full-time marketing manager.

Instead of worrying about where the £150,000 “capex” (capital expenditure) will come from to refit the new premises, we are calculating where the £50- 75,000 per annum will come from to recruit, train and inspire the new people in the team and to reward and encourage the existing staff.

You cannot move from one “Cluster” to another with the same habits and the same team - you MUST do things differently. You MUST invest in the human capital I mentioned a few posts ago.

And is there a “Cluster 4″?

I’m not sure yet - if I see one I’ll let you know what it looks like.

I’m impressed with what Dr. Alex Jones has done, an innovative service in West Yorkshire, offering implants under GA.

To take a look at the web site click here.

Smart thinking - identifying a niche in the market - and doing something about it!

Bet you this market is recession proof.

Down in London’s Docklands area this morning and shortly to have breakfast with Ashley Latter before we wander over to the Exel Centre and attend the show.

The hotel is functional and nice - but being next to the runway at City airport was an unusual alarm call this morning.

Exhibitors in the hotel bar last night told me that Thursday was well attended.

My day will be a whirlwind of meetings with friends, former clients, suppliers, the IDH team, the press and potential acquisition candidates (although just because you see me talking to a dentist, it doesn’t automatically mean that’s what we are talking about!).

I counted this morning - 32 enquiries on my task list - principals who have expressed an interest in what we are doing.

That’s before the press launch - just shows how “word of mouth” works in dentistry.

And only one of them is a client of Breathe Business - which demonstrates a much wider interest group than just people I was working with as a business coach.

Yes - there are some former clients of The Dental Business School in there - but a large group who I have never worked with as a coach but we know each other through the speaker circuit and through my writing in the magazines and newspapers over the years.

I’m going to be a busy boy over the weeks ahead.

What inspires me is that the more I describe our proposition to interested dentists, the more they remark that it’s a fantastic concept.

A chance to do a “bigger thing” with like minded people who (to coin a phrase from an earlier post) have the time, the money and the people to make it happen.

I genuinely think this may be the most exciting time of my career.

Off to see Ash.

I have no doubt that the forums, study clubs and newsletters will be gloating over the news that Virgin have decided to slow down their advance into the provision of NHS healthcare and, thus, private dentistry.

There I have been - for the last 6 months, standing up at meetings and using Virgin as an example of a giant retailer who sees the growth in UK dentistry and wants to take part.

Warning all who would listen that, if Virgin started offering “points” for “prizes” that they would more than likely hoover up the UK family market as well as all of your best staff.

Sunday night I received the first email from a dentist- sharing a link to the press release - and Monday morning I had a call from a reader of GDP-UK to quote the threads and some of the comments from members.

So I did the logical thing at 12.30 pm yesterday - and called Chris Potts to ask what the real story was.

Chris and I know each other well enough (our sons are best friends and have played football and DJ’d together for years).

There is no competition or ego between us - neither of us are precious about our respective successes and failures over the years.

So here’s the real story - ready?

Just as it says in the press release.

Economies are in turmoil, there is a credit crunch, the world banks are re-stabilising the capital markets, we have a US election and the “man on the Clapham omnibus” (anybody remember that phrase?) is being very careful financially.

Not a good time to be investing in  healthcare squats for the family market in my view - I agree with Sir Richard - smart guy.

Just like Tom Peters says - “fail fast” - and to further quote Seth Godin in his little book “The Dip” - “sometimes quitting is a winning policy”.

It takes balls to stop before you get too far in and to change when your guts tell you its not going to work, either because you have the wrong people, the wrong amount of money or the wrong timing.

So they have put the brakes on - they haven’t “pulled out” of anything but the Virgin team are going to focus their energies elsewhere until conditions improve - AND THEN THEY WILL BE BACK.

So you’ve had a reprieve - make sure you use it wisely if you are offering family dentistry.

As you can see from the photos I posted last night - I visited the practice in Sainsbury’s last night. 

Its exactly what I would have expected in terms of decor and branding - but the £16 check-up is clearly a considered attempt to “fill the book” and sort out any problems later.

I called in at about 6.45pm last night and the waiting area inside the double glass doors was full.

As I mentioned - it was interesting to observe people at the check outs prodding each other in the ribs and remarking on the existence of the service and the prices.

Its working - even though it might not be concierge class.

And it hasn’t required a gigantic capital expenditure to get it going - unlike the Virgin model.

In the meantime (and before the moaners tell you that Virgin’s “withdrawal”s spells the demise of retailers and corporates yet again) let me tell you that I’m busy as hell at IDH and haven’t started in earnest yet.

I have 21 enquiries for practice purchase before I start full-time - we haven’t even launched yet.

The funding is in place and secure. I toured the IDH head office yesterday and its booming and full of committed people.

Also, yesterday I was interviewing candidates for the first acquisitions manager to help deal with the enquiries.

Today I am looking forward to a meeting with my colleague and Operations Manager Matt Jackson and the 5 Executive Directors of IDH to agree the 3-year vision, 12-month plan and 90-day goals for the Private Sector Division.

To quote Michael Gerber, “we are moving fast and looking for runners”.

I haven’t been this excited for years.

The bottle is more than half full - so go and make some sales today and inspire your team with your vision and confidence.

If anybody wants to pour scorn on Virgin - tell them they are not thinking at the right level.

My previous post sets the scene.

My spies tell me that there was an interesting thread on GDP-UK yesterday which included some speculation as to whether Hurricane Lehman would affect the ability of IDH to continue its growth or succeed.

Had a great chat with David Hudaly on the phone early this morning.

He suggests that the general consensus from Merrill Lynch is that being bought out by a bank who have a balance sheet three times larger than your own is a pretty good strategy in the current market.

Bank of America/Merrill Lynch will be the largest bank in the world by asset value when the deal is completed - and the whole arrangement has the blessing of the Fed.

David was in the offices of Merrill Lynch yesterday as the news broke and Merrill’s CEO John Thain conducted a global video broadcast to say “business as usual”.

So the soothsayers and prophets can all move on to discuss something else - why all associates are hopeless, why you can’t get any decent staff, why the new contract isn’t working, why botox is a black art, why we are all doomed.

At IDH its just another day and the Private Sector Division will still be the most exciting opportunity in dentistry next year.

Here’s a great little resource for you if you are as interested in branding as I am.

Click here to download and entertaining and informative PDF on “10 rules for branding in a post-branded world”.

Jogging down Oxford Street yesterday morning at 6.00 am was an opportunity to see branding naked - no people cluttering up the pavements.

It is staggering just how many media messages we are bombarded with nowadays - and I understand the point made in the download that if we are not genuinely interested in a product or service we can just “tune out” and get on with our daily tasks.

So branding becomes ever more significant in positively differentiating yourself, not just from your perceived competition but also from the “noise” of the world.

And on the subject of 21st Century dental business - ever wondered what a 60,000 square metre dental practice in a 11-story office block would look like?

Visit the Malo Clinic to see the future.