Below is a FB messenger convo I’ve had over the course of the last week. As I’ve said before this kind of thing is much more common than orthodontists and residents believe and it’s time for the profession to wake up and smell reality. I’m always happy to help folks in need who reach out to me… the cost being that I’ve decided to start sharing these conversations in the hopes of helping others while raising awareness. As I’ve done in similar posts, the convo is verbatim except for the ALL CAPS EDITS that were used to protect our protagonist’s identity.
The best way to get out of trouble is to avoid it in the first place. The second best way is to recognize and admit to yourself that you have a problem – then reach out to friends, family or peers for help! I’ve feared going broke more than once in my short 13 year career. It’s nothing to be ashamed of. Stuff happens, we are all human and we all make mistakes… and sometimes circumstances beyond our control conspire to sink us. The causes are only important in as much as we educate ourselves to avoid making the same mistakes in the future. Don’t beat yourself up – make a plan to make yourself and your circumstances better. We can’t change the past but we darn sure can influence the future. We get ourselves into these situations and we can get ourselves out!
Orthodontics is still a great profession but things are changing rapidly. We need to discard what we think we know and think carefully with an open mind about what we say/do instead of repeating the “orthodontic collective wisdom” that has sufficed for decades.
I appreciate the help and guidance you have provided over the years to all orthodontists as well as even responding to my personal questions. I woke up to a Facebook alert that even the rock star Ben Burris liked our family photo!
What people don’t see in that photo is that behind those smiles is utter fear and hopelessness. A few days ago you wrote a post titled “It’s Not as Bad as You Think.” While reading it I felt as if you were basically writing about my situation. This is the first time I actually read about the other side of the coin, as it always seems like everyone on Facebook and at MKS are just rolling in dough.
I graduated residency SEVERAL YEARS AGO, and with limited employment prospects heading back to POPULAR PLACE USA, immediately joined a practice in an area with an incredible high cost of living, and purchased it A COUPLE YEARS LATER for just over 1 million dollars. It wasn’t until just after that, that I was introduced to the Facebook groups, ortho pundit, attended the MKS forums (both), and learned Dr. Burris would be shaking his head at what I did. Only months into my new practice the old doc skipped out, referrals stopped, and I was drowning with over 50% (hundreds) of the patients way over tx. Basically the wheels fell off.
Early on I tried to go on the offensive. Attempted to join the geo exclusive ortho groups, but LIVING IN POPULAR PLACE USA and wedged in between Dr. AWESOME, Dr. BADASS, and Dr. SUPERCOOL, there was no room for me. I engaged A COMPANY TO HELP ME A COUPLE YEARS AFO. BUT AFTER A FEW MONTHS was told that there was not enough money in the practice for THEM to be of help to grow the practice. THEY could never fully help me get my P&L in order and we had over a $100,000 loss last year (without any doctor salary). The numbers of the practice tell it all:
production (year before I purchased): $1,115,834
collections (year before I purchased): $1,159,778
YEAR AFTER PURCHASE production: $648,670
YEAR AFTER PURCHASE COLLECTIONS: $897,925
LAST YEAR production: $536,977
LAST YEAR collections: $637,609
With almost a 50% decline in production the very first year, the future looked like it was going to be a challenge, and it continued to be that way. To stay alive I stopped paying myself 6 months into my practice, and cut staff along the way. I started with 5 very veteran and overpaid staff, now have eliminated all of them and have a single employee. Like in your post, I have worked, and worked, to keep this thing afloat. At this point see 20-25 patients myself, then handle all assistant duties, all sterilization, and do all lab work myself after hours. All of this has adversely affected my time to market, network, and work on growth.
At this point we are only cashflow neutral without paying my bank loan. I am currently trying to work with the bank to rework the loan.
I’d love to sell this practice, as also recommended in your post, but there is not much value in a practice with $125,000 in receivables, but continued production/collections declines, and the doctor spending 12+ hours in the practice trying to wear all the hats. Even if I could sell for a couple hundred thousand, I would be personally responsible for the $700,000 – $800,000 difference left on the practice note.
Now that I have finally got the practice down to a manageable size by debonding hundreds of patients each year that were dead weight in the practice, I have attempted to seek out other part-time work. My family has drained our personal savings and can finally see the end of it. In that 6 month search, multiple private practices have expressed their concerns about me having my own practice, not being able to grow with them, and have TO move on. I finally got an offer from a large chain, but only for fulltime.
At what point is my practice a sunk cost, and time to move on because of minimal financial rewards in the future? Is cutting bait, and moving to a place with a reasonable cost of living be more pragmatic at this point? My family has no real assets and therefore a bankruptcy would free us from the practice note without losing much else. What no attorney can tell me is what happens to my patients and license if I close with so much uncompleted treatment. I want it to work out, but I may soon run out of both working capital and family savings, then have no choice.
Sorry my rant got so long. Any thoughts?
I’m talking to the Waller Law firm and they are getting me a contact person for your area. Waller is the preeminent law firm in the dental space and I used them for my pracrice sale among other things. I’m going to buy you two hours with their guy so he can talk to you about your options. As soon as I get the contact I’ll send it on to you. Hang in there man. You’ll get through this.
I truly appreciate your help! Numbers-wise, is this something you see as trying to get out of or is it still worth rehabilitating?
I don’t think I can answer that for you as it’s complicated. Thus the need to talk to Waller. They have handled this stuff many many times. I don’t have enough knowledge or experienjce to help you directly. Getting you a couple hours of consultation is the best thing I can think of to do for you. Actually it was my wife’s idea. She’s pretty darn smart! Once you know your options then we can talk further. If you choose to stay and fight I have some ideas for you but you need to have proper legal and accounting council before we do that. You have to do what is best for your family. Period. Pride, ego, what others think… none of that matters.