00:00:02Election's Impact on Dental Practices
00:10:16Maximizing Dental Practice Value With IDSOs
এই এপিসোড সম্বন্ধে
In our latest episode, Chip dives into how the results of last year's election will positively impact practice values in 2025 and beyond. We'll examine tax implications, the acceleration of consolidation, Medicaid reimbursement increases, and strategic growth opportunities for young dentists, offering insights for practice owners to capitalize the evolving environment effectively.
Tune in to discover how LPS's experience in facilitating Invisible DSO partnerships can help doctors looking to relieve administrative burden and enhance their practice's growth potential.
Large Practice Sales is the largest advisor to GPs and specialists of all kinds seeking to monetize all or part of their practice. If you're interested in learning the potential value of your practice in an IDSO partnership, visit our website or you can email us at podcast@largepracticesales.com
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WEBVTT
00:00:02.424 --> 00:00:11.731
Hello doctors, I'm your host, chip Fichtner, co-founder of Large Practice Sales, and you're listening to Practice Partnership monetizing your dental practice.
00:00:11.731 --> 00:00:17.009
Hello doctors, thank you for joining us for another episode.
00:00:17.009 --> 00:00:24.890
Today we're going to talk about the impact of the recent election on practice values in 25 and beyond.
00:00:24.890 --> 00:00:35.143
It's a pretty exciting time to be a dentist and I think the change in our administration is going to be a good thing for practice values and dental practices in general.
00:00:35.143 --> 00:00:46.415
You know it's interesting.
00:00:46.415 --> 00:00:53.962
It was a very dramatic outcome.
00:00:53.962 --> 00:00:58.232
Giving the Republicans a full trifecta and then watching Trump's initial cabinet picks is a little interesting.
00:00:58.232 --> 00:01:14.472
But you know, from a business perspective, I think that we will continue to see an acceleration in consolidation, I think thanks to losing the fear of a big tax increase under a Democratic administration.
00:01:14.472 --> 00:01:23.875
As you know, biden and Harris had both proposed a 44.6% tax rate on the sale of an interest in your practice.
00:01:23.875 --> 00:01:33.114
In other words, they were eliminating the long-term capital gains tax rates, which today would be 20% federal and they were proposing 44.6% federal.
00:01:33.114 --> 00:01:42.971
So I think there's a big sigh of relief across the country in businesses and that they're going to avoid that type of long-term capital gains tax impact.
00:01:42.971 --> 00:01:51.953
The other thing that's changed from a tax perspective is, the Democrats were very eager to close what they call the carried interest loophole.
00:01:51.953 --> 00:02:00.983
The carried interest loophole is what allows wealthy fund managers who manage private equity funds, venture capital funds, hedge funds, etc.
00:02:00.983 --> 00:02:11.151
To have a very low tax rate on the income that they receive, and this is something that the Democrats have been screaming about for years.
00:02:11.151 --> 00:02:20.104
Some of the Republicans have chimed in as well, but I would bet that under Trump, that little problem is gone, which means the money managers are much happier today.
00:02:20.104 --> 00:02:35.752
So, as far as what's going to happen with practice values, we just saw the largest recapitalization in the history of DSOs, or invisible DSOs, that was completed this week at a value of about $3.7 billion.
00:02:35.752 --> 00:02:41.120
That's a good sign for the future of practice values.
00:02:41.240 --> 00:02:59.975
I do not think we're going to get a dramatic increase in the value of practices and, in fact, the invisible DSOs that are partnering with our clients are becoming more and more selective because there are more doctors eager to do these partnerships, particularly young doctors.
00:02:59.975 --> 00:03:12.752
You know, in the last 24 months, we've completed over $1 billion of invisible DSO partnerships and of that, 150 million of them have been for doctors in their 30s, which is a huge change.
00:03:12.752 --> 00:03:20.653
And so if you're an invisible DSO seeking a partner, you would much rather have one in their 30s than one in their 60s or their 50s.
00:03:20.653 --> 00:03:31.632
So the invisible DSOs, because of the broadening of their options meaning they now have the option to partner with doctors in their 30s and 40s are becoming far more selective.
00:03:31.632 --> 00:03:41.222
I had a transaction or I could not get the right number of bidders for a very exceptional client in the mid-Atlantic this week.
00:03:41.222 --> 00:03:57.828
This was a single female GP producing over $4 million a year by herself, with no associates, and I could not find any invisible DSOs that were eager to take the risk of a single doctor practice that was producing $4 million.
00:03:57.828 --> 00:04:08.508
She was exceptionally profitable and a wonderful doctor, but basically the invisible DSOs said when she has an associate, call us back, but the single doctor risk is too high.
00:04:08.508 --> 00:04:14.450
So net-net, from an election standpoint, we're going to have a more stable tax policy.
00:04:14.450 --> 00:04:23.072
I believe we will see continued investment in the invisible DSOs by the investment community, which, is a reminder, is not just private equity.
00:04:23.072 --> 00:04:34.108
Keep in mind that we have sovereign wealth funds, we have family offices, we have traditional investors like BlackRock, who owns two invisible DSOs now.
00:04:34.108 --> 00:04:40.470
So I think we're going to see continued investment in 2025, and it's going to be a good year for practice values.
00:04:40.470 --> 00:04:50.232
You know it's interesting.
00:04:50.372 --> 00:04:59.040
In the last couple of years, we've seen some states that have had dramatic increases in their Medicaid reimbursement rates for dental patients.
00:04:59.040 --> 00:05:21.577
As an example, in Vermont, in July 1 of 2023, they increased the reimbursement rate for pediatric dentistry and children's orthodontics by over 50 percent, such that an orthodontic case in Vermont today is getting paid by Medicaid at over $5,500, which is a pretty interesting number.
00:05:21.577 --> 00:05:26.574
And we've seen Medicaid reimbursement rate increases across the country.
00:05:26.574 --> 00:05:27.617
We've seen them in Ohio.
00:05:27.617 --> 00:05:29.521
We've seen a big number in Missouri.
00:05:29.521 --> 00:05:38.745
So keeping an eye on what's going on with Medicaid and it's on a state-by-state basis is important to practice value.
00:05:38.745 --> 00:05:52.709
It'll be interesting to see what the incoming administration does with that, but as a general rule, the Medicaid reimbursement rates have been growing in most of the states that we deal with, and that can be an opportunity for doctors.
00:05:52.709 --> 00:06:08.403
There are some Medicaid reimbursement rates that are significantly higher than private pay reimbursement rates, and some doctors are against Medicaid and having a practice with a high concentration of Medicaid is not, in my world, a great way to generate value.
00:06:08.403 --> 00:06:16.255
But it's something that doctors should keep an eye on as we see how the new administration unfolds on Medicaid, there may be some opportunities.
00:06:26.314 --> 00:06:46.802
You know, one of the growing categories are young doctors that are eager to build, meaning they have built one or two larger practices that are very successful and in their mind they would like to continue that growth trajectory by either building de novo offices or acquiring competitors or complementary practices.
00:06:46.802 --> 00:07:05.797
And you get to a certain size when you're doing that that you sort of max out your administrative and leadership capabilities, and so there's lots of programs out there that are eager to train dentists on how to go to a multi-site office condition, let's call it.
00:07:05.797 --> 00:07:19.461
And my counsel to those dentists is you know, to do that you're going to have to build an infrastructure, you're going to have to finance it, which typically means you're going to go to the bank and borrow the money and sign personally.
00:07:19.461 --> 00:07:35.170
And if you're really eager to build an empire through acquisitions or through growth and you're relatively young, let's call it under 50, there are plenty of these invisible DSOs that are eager to become your partner to help you execute that strategy.
00:07:35.170 --> 00:07:43.884
And that gives you the opportunity to not have to build out the management infrastructure that you think you need to build out to have multiple offices.
00:07:43.884 --> 00:08:00.779
You can utilize your invisible DSOs CFO, cmo, cio, cdo you can use all of their chiefs to grow your practice without having to put them on your payroll, and they'll also provide the pack, the capital for growth.
00:08:00.779 --> 00:08:09.009
Whether you want to build one or buy one, or build 10 or buy 10, they become your bank and you don't have to sign on it personally.
00:08:09.009 --> 00:08:18.151
And in these, depending on how you structure them, you doctor can keep a 49% ownership interest with no risk, in whatever it is that you build.
00:08:18.151 --> 00:08:29.732
So if you're a young doctor eager to build and grow, the invisible DSO partnerships are really something that you should consider, because it'll be more profitable for you personally.
00:08:29.732 --> 00:08:45.341
Yes, you will have a partner, so your ego will not be as assuaged as being the sole king of your kingdom, but I think it's something you should consider from a financial perspective, if you can swallow a little ego and put more money in your pocket.
00:08:55.296 --> 00:09:10.011
One of the other interesting things that's going to come out of the election, I believe, is in May, the Justice Department and the Federal Trade Commission, led by Lena Kahn, launched what they called an inquiry into health care roll-ups.
00:09:10.011 --> 00:09:25.985
Well, believe it or not, that's what we are in the business of is health care roll-ups, which is small practices selling to bigger entities, which is small practices selling to bigger entities, and the Justice Department and the Federal Trade Commission, which has been overly active under the Democrat administration.
00:09:25.985 --> 00:09:46.678
They're basically trying to be able to approve all transactions that are deemed health care roll-ups, which means they would have wanted to have approval.
00:09:46.678 --> 00:09:49.388
If I were selling a practice valued at $5 million to an invisible DSO, the feds would have wanted to get approval.
00:09:49.388 --> 00:10:03.668
There was a proposal in California along those lines which, fortunately, gavin Newsom vetoed on September 30th of this year a small miracle, but the feds are trying to do the same thing and that slowed down the flow of new money into health care roll-ups, including invisible DSOs.
00:10:03.668 --> 00:10:14.591
So that change under the new administration is going to be a very welcome one and I think will enable the spigot of funds going into the invisible DSOs to increase.
00:10:16.576 --> 00:10:22.240
Thanks for listening to Practice Partnership Monetizing your Dental Practice, a podcast from Large Practice Sales.
00:10:22.240 --> 00:10:30.990
Large Practice Sales is the largest advisor to GPs and specialists of all kinds seeking to monetize all or part of their practice.
00:10:30.990 --> 00:10:40.994
The key for doctors to maximize your practice value is choosing the right advisor and the right IDSO partner is choosing the right advisor and the right IDSO partner.
00:10:40.994 --> 00:10:49.986
At LPS, we guide our clients towards partnerships with IDSOs that not only reduce administrative headaches but give you the resources to grow your practice bigger, better, faster and more profitably.
00:10:49.986 --> 00:10:55.027
And, best of all, with the right IDSO partner, you can create generational wealth.
00:10:55.027 --> 00:11:08.403
If you're interested in learning the potential value of your practice in an IDSO partnership, visit our website at largepracticesalescom or you can email us at podcast at largepracticesalescom.
00:11:08.403 --> 00:11:16.267
Follow this podcast for more tips you won't find anywhere else on how to monetize your dental practice at the maximum value.
00:00:02.424 --> 00:00:11.731
Hello doctors, I'm your host, chip Fichtner, co-founder of Large Practice Sales, and you're listening to Practice Partnership monetizing your dental practice.
00:00:11.731 --> 00:00:17.009
Hello doctors, thank you for joining us for another episode.
00:00:17.009 --> 00:00:24.890
Today we're going to talk about the impact of the recent election on practice values in 25 and beyond.
00:00:24.890 --> 00:00:35.143
It's a pretty exciting time to be a dentist and I think the change in our administration is going to be a good thing for practice values and dental practices in general.
00:00:35.143 --> 00:00:46.415
You know it's interesting.
00:00:46.415 --> 00:00:53.962
It was a very dramatic outcome.
00:00:53.962 --> 00:00:58.232
Giving the Republicans a full trifecta and then watching Trump's initial cabinet picks is a little interesting.
00:00:58.232 --> 00:01:14.472
But you know, from a business perspective, I think that we will continue to see an acceleration in consolidation, I think thanks to losing the fear of a big tax increase under a Democratic administration.
00:01:14.472 --> 00:01:23.875
As you know, biden and Harris had both proposed a 44.6% tax rate on the sale of an interest in your practice.
00:01:23.875 --> 00:01:33.114
In other words, they were eliminating the long-term capital gains tax rates, which today would be 20% federal and they were proposing 44.6% federal.
00:01:33.114 --> 00:01:42.971
So I think there's a big sigh of relief across the country in businesses and that they're going to avoid that type of long-term capital gains tax impact.
00:01:42.971 --> 00:01:51.953
The other thing that's changed from a tax perspective is, the Democrats were very eager to close what they call the carried interest loophole.
00:01:51.953 --> 00:02:00.983
The carried interest loophole is what allows wealthy fund managers who manage private equity funds, venture capital funds, hedge funds, etc.
00:02:00.983 --> 00:02:11.151
To have a very low tax rate on the income that they receive, and this is something that the Democrats have been screaming about for years.
00:02:11.151 --> 00:02:20.104
Some of the Republicans have chimed in as well, but I would bet that under Trump, that little problem is gone, which means the money managers are much happier today.
00:02:20.104 --> 00:02:35.752
So, as far as what's going to happen with practice values, we just saw the largest recapitalization in the history of DSOs, or invisible DSOs, that was completed this week at a value of about $3.7 billion.
00:02:35.752 --> 00:02:41.120
That's a good sign for the future of practice values.
00:02:41.240 --> 00:02:59.975
I do not think we're going to get a dramatic increase in the value of practices and, in fact, the invisible DSOs that are partnering with our clients are becoming more and more selective because there are more doctors eager to do these partnerships, particularly young doctors.
00:02:59.975 --> 00:03:12.752
You know, in the last 24 months, we've completed over $1 billion of invisible DSO partnerships and of that, 150 million of them have been for doctors in their 30s, which is a huge change.
00:03:12.752 --> 00:03:20.653
And so if you're an invisible DSO seeking a partner, you would much rather have one in their 30s than one in their 60s or their 50s.
00:03:20.653 --> 00:03:31.632
So the invisible DSOs, because of the broadening of their options meaning they now have the option to partner with doctors in their 30s and 40s are becoming far more selective.
00:03:31.632 --> 00:03:41.222
I had a transaction or I could not get the right number of bidders for a very exceptional client in the mid-Atlantic this week.
00:03:41.222 --> 00:03:57.828
This was a single female GP producing over $4 million a year by herself, with no associates, and I could not find any invisible DSOs that were eager to take the risk of a single doctor practice that was producing $4 million.
00:03:57.828 --> 00:04:08.508
She was exceptionally profitable and a wonderful doctor, but basically the invisible DSOs said when she has an associate, call us back, but the single doctor risk is too high.
00:04:08.508 --> 00:04:14.450
So net-net, from an election standpoint, we're going to have a more stable tax policy.
00:04:14.450 --> 00:04:23.072
I believe we will see continued investment in the invisible DSOs by the investment community, which, is a reminder, is not just private equity.
00:04:23.072 --> 00:04:34.108
Keep in mind that we have sovereign wealth funds, we have family offices, we have traditional investors like BlackRock, who owns two invisible DSOs now.
00:04:34.108 --> 00:04:40.470
So I think we're going to see continued investment in 2025, and it's going to be a good year for practice values.
00:04:40.470 --> 00:04:50.232
You know it's interesting.
00:04:50.372 --> 00:04:59.040
In the last couple of years, we've seen some states that have had dramatic increases in their Medicaid reimbursement rates for dental patients.
00:04:59.040 --> 00:05:21.577
As an example, in Vermont, in July 1 of 2023, they increased the reimbursement rate for pediatric dentistry and children's orthodontics by over 50 percent, such that an orthodontic case in Vermont today is getting paid by Medicaid at over $5,500, which is a pretty interesting number.
00:05:21.577 --> 00:05:26.574
And we've seen Medicaid reimbursement rate increases across the country.
00:05:26.574 --> 00:05:27.617
We've seen them in Ohio.
00:05:27.617 --> 00:05:29.521
We've seen a big number in Missouri.
00:05:29.521 --> 00:05:38.745
So keeping an eye on what's going on with Medicaid and it's on a state-by-state basis is important to practice value.
00:05:38.745 --> 00:05:52.709
It'll be interesting to see what the incoming administration does with that, but as a general rule, the Medicaid reimbursement rates have been growing in most of the states that we deal with, and that can be an opportunity for doctors.
00:05:52.709 --> 00:06:08.403
There are some Medicaid reimbursement rates that are significantly higher than private pay reimbursement rates, and some doctors are against Medicaid and having a practice with a high concentration of Medicaid is not, in my world, a great way to generate value.
00:06:08.403 --> 00:06:16.255
But it's something that doctors should keep an eye on as we see how the new administration unfolds on Medicaid, there may be some opportunities.
00:06:26.314 --> 00:06:46.802
You know, one of the growing categories are young doctors that are eager to build, meaning they have built one or two larger practices that are very successful and in their mind they would like to continue that growth trajectory by either building de novo offices or acquiring competitors or complementary practices.
00:06:46.802 --> 00:07:05.797
And you get to a certain size when you're doing that that you sort of max out your administrative and leadership capabilities, and so there's lots of programs out there that are eager to train dentists on how to go to a multi-site office condition, let's call it.
00:07:05.797 --> 00:07:19.461
And my counsel to those dentists is you know, to do that you're going to have to build an infrastructure, you're going to have to finance it, which typically means you're going to go to the bank and borrow the money and sign personally.
00:07:19.461 --> 00:07:35.170
And if you're really eager to build an empire through acquisitions or through growth and you're relatively young, let's call it under 50, there are plenty of these invisible DSOs that are eager to become your partner to help you execute that strategy.
00:07:35.170 --> 00:07:43.884
And that gives you the opportunity to not have to build out the management infrastructure that you think you need to build out to have multiple offices.
00:07:43.884 --> 00:08:00.779
You can utilize your invisible DSOs CFO, cmo, cio, cdo you can use all of their chiefs to grow your practice without having to put them on your payroll, and they'll also provide the pack, the capital for growth.
00:08:00.779 --> 00:08:09.009
Whether you want to build one or buy one, or build 10 or buy 10, they become your bank and you don't have to sign on it personally.
00:08:09.009 --> 00:08:18.151
And in these, depending on how you structure them, you doctor can keep a 49% ownership interest with no risk, in whatever it is that you build.
00:08:18.151 --> 00:08:29.732
So if you're a young doctor eager to build and grow, the invisible DSO partnerships are really something that you should consider, because it'll be more profitable for you personally.
00:08:29.732 --> 00:08:45.341
Yes, you will have a partner, so your ego will not be as assuaged as being the sole king of your kingdom, but I think it's something you should consider from a financial perspective, if you can swallow a little ego and put more money in your pocket.
00:08:55.296 --> 00:09:10.011
One of the other interesting things that's going to come out of the election, I believe, is in May, the Justice Department and the Federal Trade Commission, led by Lena Kahn, launched what they called an inquiry into health care roll-ups.
00:09:10.011 --> 00:09:25.985
Well, believe it or not, that's what we are in the business of is health care roll-ups, which is small practices selling to bigger entities, which is small practices selling to bigger entities, and the Justice Department and the Federal Trade Commission, which has been overly active under the Democrat administration.
00:09:25.985 --> 00:09:46.678
They're basically trying to be able to approve all transactions that are deemed health care roll-ups, which means they would have wanted to have approval.
00:09:46.678 --> 00:09:49.388
If I were selling a practice valued at $5 million to an invisible DSO, the feds would have wanted to get approval.
00:09:49.388 --> 00:10:03.668
There was a proposal in California along those lines which, fortunately, gavin Newsom vetoed on September 30th of this year a small miracle, but the feds are trying to do the same thing and that slowed down the flow of new money into health care roll-ups, including invisible DSOs.
00:10:03.668 --> 00:10:14.591
So that change under the new administration is going to be a very welcome one and I think will enable the spigot of funds going into the invisible DSOs to increase.
00:10:16.576 --> 00:10:22.240
Thanks for listening to Practice Partnership Monetizing your Dental Practice, a podcast from Large Practice Sales.
00:10:22.240 --> 00:10:30.990
Large Practice Sales is the largest advisor to GPs and specialists of all kinds seeking to monetize all or part of their practice.
00:10:30.990 --> 00:10:40.994
The key for doctors to maximize your practice value is choosing the right advisor and the right IDSO partner is choosing the right advisor and the right IDSO partner.
00:10:40.994 --> 00:10:49.986
At LPS, we guide our clients towards partnerships with IDSOs that not only reduce administrative headaches but give you the resources to grow your practice bigger, better, faster and more profitably.
00:10:49.986 --> 00:10:55.027
And, best of all, with the right IDSO partner, you can create generational wealth.
00:10:55.027 --> 00:11:08.403
If you're interested in learning the potential value of your practice in an IDSO partnership, visit our website at largepracticesalescom or you can email us at podcast at largepracticesalescom.
00:11:08.403 --> 00:11:16.267
Follow this podcast for more tips you won't find anywhere else on how to monetize your dental practice at the maximum value.
অতীতের এপিসোডগুলি অনুসন্ধান করুন
Practice Partnership: Monetizing Your Dental Practice এর অতীতের এপিসোডগুলি অনুসন্ধান করুন।
দাবি পরিত্যাগ: এই পৃষ্ঠায় এম্বেড করা পডকাস্ট এবং আর্টওয়ার্ক Large Practice Sales থেকে এসেছে, যা এর মালিকের সম্পত্তি এবং Listen Notes, Inc দ্বারা অনুমোদিত বা অনুমোদিত নয়৷
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