How do I replace my own EBITDA?
A practice owner asked me a very good question on a recent Tuesday evening call.
He is gradually reducing his clinical commitment by one day each year. His personal production has remained stable so far because the practice has successfully introduced more therapist-led dentistry.
He is now ready to move from three clinical days a week to two.
The question was simple:
“How many associate days will it take to replace one of my days?”
You will often hear people suggest that replacing one principal day requires three associate days. That may occasionally be correct, but it is certainly not a universal rule.
The answer depends on far more than the number of days worked.
We need to consider the principal’s daily production, the proportion of that dentistry which can be transferred to therapists, how much production can be compressed into the remaining principal sessions, the associate’s expected daily production, clinician remuneration, laboratory and material costs, and the availability of surgery space.
Most importantly, we must distinguish between replacing turnover and replacing EBITDA.
An associate may replace the principal’s lost turnover relatively quickly. However, once the associate’s remuneration and the additional variable costs are included, considerably more associate time may be required to replace the principal’s contribution to profit.
There is then a further question.
Even if the numbers work on paper, where will the additional clinician work?
If every surgery is already occupied throughout the working week, replacing one principal day with three associate days creates a capacity problem. The practice may need to extend opening hours, improve diary utilisation, increase production per session or reconsider how work is divided between dentists, therapists and hygienists.
This is why I have created the “Replace my EBITDA” calculator.
The calculator allows you to change the assumptions to reflect your own practice. You can enter your current working days and production, your proposed reduction, the amount of production that can be compressed or transferred, expected associate performance, clinician costs and available surgery capacity.
It then calculates three separate answers:
The associate days required to replace turnover.
The associate days required to replace cash ebitda.
The available surgery capacity, including any surplus or shortfall.
It also distinguishes between reported EBITDA and maintainable EBITDA. That matters because a business can appear profitable while still depending heavily on unpaid or underpaid work performed by the owner.
The purpose of the calculator is not to provide a valuation or replace professional accounting advice. Its purpose is to help you test the assumptions before making a permanent change to your diary.
My recommendation would still be to run any proposed transition as a 13-week shadow exercise. Recruit or allocate the replacement capacity, monitor the actual production and contribution, and prove that the new model works before permanently surrendering the owner’s clinical day.
Reducing key person dependency is not simply about working fewer days.
It is about building a business that can maintain its turnover, protect its profitability and operate successfully without depending on the owner to produce the numbers personally.
You can explore your own scenario here:
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