{"id":151,"date":"2012-05-22T07:14:28","date_gmt":"2012-05-22T07:14:28","guid":{"rendered":"http:\/\/advancedpracticemanagementblog.wordpress.com\/?p=151"},"modified":"2014-05-23T14:07:08","modified_gmt":"2014-05-23T14:07:08","slug":"the-economics-of-multi-location-group-practice","status":"publish","type":"post","link":"https:\/\/blog.advancedpracticemanagement.com\/blog\/the-economics-of-multi-location-group-practice\/","title":{"rendered":"The Economics of Multi-Location Group Practice"},"content":{"rendered":"

Monday, February 14, 2011<\/p>\n

Purchasing a Practice:<\/p>\n

Example:
\nPractice\/Collections\/Month $100,000
\nPractice Operating Net per month (at 36%) $ 36,000
\nDr. Production per month (2\/3 of $100,000)
\nNon-Owner Dr. Compensation $ 66,000
\n(30% after lab and write offs) $ 19,800
\nPractice Sale Price (36,000x12x1.75)
\nDebt Service\/Mo. on Practice $756,000
\n($756,000 x 8 years x 8%) $ 10,687<\/p>\n

The Pay Off:
\nPractice \u201cOperating Net\u201d per mo. $ 36,000
\nDoctor Compensation $-19,800
\nDebt Service $-10,687
\nOperating Profit\/mo. $ 5,513<\/p>\n

Annualized:
\nOperating Profit $ 432,000
\nDoctor Compensation $-237,600
\nDebt Service $-128,244
\nOperating Profit Per Year $ 66,156
\nThe Bottom Line:<\/p>\n

For an outlay of $128,000 a year in debt service, the owner(s) receives $194,000, a 50% Return on Investment. Where else can you get that kind of R.O.I?? So what seems to be on the surface a sort of slim net of about 5%-6% on collections per month when leveraged really adds up over the course of the year. Now add to that some solid management for practice profitability and growth and the numbers really pop.<\/p>\n

Posted by Bill Rossi at 11:24 AM
\nLabels: Advanced Practice Management, Bill Rossi, Dental Consultant, dental office overhead, dental office profitability<\/p>\n

Monday, February 14, 2011<\/h2>\n
\n
\n
<\/a><\/p>\n

The Economics of Multi-Location Group Practice<\/h3>\n
<\/div>\n
\n

Purchasing a Practice:<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Example:<\/strong><\/td>\n<\/td>\n<\/tr>\n
Practice\/Collections\/Month<\/td>\n$100,000<\/td>\n<\/tr>\n
Practice Operating Net per month (at 36%)<\/td>\n$ 36,000<\/td>\n<\/tr>\n
Dr. Production per month (2\/3 of $100,000)<\/td>\n<\/td>\n<\/tr>\n
Non-Owner Dr. Compensation<\/td>\n$ 66,000<\/td>\n<\/tr>\n
(30% after lab and write offs)<\/td>\n$ 19,800<\/td>\n<\/tr>\n
Practice Sale Price (36,000x12x1.75)<\/td>\n<\/td>\n<\/tr>\n
Debt Service\/Mo. on Practice<\/td>\n$756,000<\/td>\n<\/tr>\n
($756,000 x 8 years x 8%)<\/td>\n$ 10,687<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
The Pay Off:<\/strong><\/td>\n<\/td>\n<\/tr>\n
Practice \u201cOperating Net\u201d per mo.<\/td>\n$ 36,000<\/td>\n<\/tr>\n
Doctor Compensation<\/td>\n$-19,800<\/td>\n<\/tr>\n
Debt Service<\/td>\n$-10,687<\/td>\n<\/tr>\n
Operating Profit\/mo.<\/td>\n$ 5,513<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
Annualized:<\/strong><\/td>\n<\/td>\n<\/tr>\n
Operating Profit<\/td>\n$ 432,000<\/td>\n<\/tr>\n
Doctor Compensation<\/td>\n$-237,600<\/td>\n<\/tr>\n
Debt Service<\/td>\n$-128,244<\/td>\n<\/tr>\n
Operating Profit Per Year<\/td>\n$ 66,156<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The Bottom Line:<\/p>\n

For an outlay of $128,000 a year in debt service, the owner(s) receives $194,000, a 50% Return on Investment. Where else can you get that kind of R.O.I?? So what seems to be on the surface a sort of slim net of about 5%-6% on collections per month when leveraged really adds up over the course of the year. Now add to that some solid management for practice profitability and growth and the numbers really pop.<\/p>\n

<\/div>\n<\/div>\n
\n
Posted by\u00a0Bill Rossi\u00a0<\/a>at\u00a011:24 AM<\/abbr><\/a>\u00a0\"\"\u00a0<\/a><\/p>\n
<\/div>\n<\/div>\n
Labels:\u00a0Advanced Practice Management<\/a>,\u00a0Bill Rossi<\/a>,\u00a0Dental Consultant<\/a>,\u00a0dental office overhead<\/a>,\u00a0dental office profitability<\/a><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Monday, February 14, 2011 Purchasing a Practice: Example: Practice\/Collections\/Month $100,000 Practice Operating Net per month (at 36%) $ 36,000 Dr. Production per month (2\/3 of $100,000) Non-Owner Dr. Compensation $ 66,000 (30% after lab and write offs) $ 19,800 Practice Sale Price (36,000x12x1.75) Debt Service\/Mo. on Practice $756,000 ($756,000 x 8 years x 8%) $ […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"wds_primary_category":0,"footnotes":""},"categories":[4],"tags":[],"class_list":["post-151","post","type-post","status-publish","format-standard","hentry","category-dental-practice-management"],"_links":{"self":[{"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/posts\/151","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/comments?post=151"}],"version-history":[{"count":0,"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/posts\/151\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/media?parent=151"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/categories?post=151"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/tags?post=151"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}