How do you know if you're ready to add an associate? To help you answer that critical question, Kirk Behrendt brings back Paul Sletten, founder of the Sletten Group, to share his insights on achieving successful partnerships and transitions. It all starts with having a plan. You know how to plan your vacations — now, it’s time to plan your life! To learn about the best planning tips for adding an associate, listen to Episode 532 of The Best Practices Show!
More than half of partnerships and associateships fail. Don't be that statistic.
A successful partnership begins with having a transition plan and life plan.
Know the key questions to answer when looking for an associate.
Create a flexible plan, not a rigid plan.
Have a plan for your life.
“I would say over half [of partnerships and associateships] fail. They don't have a plan. Those transitions have been, in most cases, slapped together. ‘I think I need to add an associate. Oh, there's one! Let me have a conversation with you.’ Pretty soon, they're working together. And the owner, the host doctor, did not have a plan.” (7:03—7:32)
“Everything begins with the owner having a transition plan and an updated life plan.” (8:14—8:20)
“A practice transition plan always includes the Associate Feasibility Analysis because they need to know, can you support another doctor in your current setting? Can you do it in a physical plant? Can you do it with an ability to be able to feed and help them build a productive schedule, first year, not by handing them all of your production but by helping to grow the practice so that they can become productive? If that doesn't happen, the whole thing is going to blow up.” (9:33—10:15)
“What you're trying to do when you add an associate, if they're going to have the ability to take an equity position later to buy in or buy you out, they’ve got to be on a path where they're starting to generate enough income and they can begin to see the light that they would be able, at some point, to afford to buy in. Simply stated, that they would be able to make the payments on their portion of the practice overhead, that they would be able to retire their note and make their note payments on school loan debt, and that they would have a good living income remaining after those obligations are met.” (10:53—11:36)
“We let [prospective associates] know that we’re not looking for an associate. We’re looking for a young doctor who wants to be an owner but will be an employee in the initial phase of the relationship. We set it up that way so that they're thinking about themselves becoming an owner in the practice. And we don't want people to come in and “try it”. They're going to have a period while they're an employee where they will have the chance to stay or leave. But we talk to them, and we help create a clear pathway to ownership.” (13:48—14:30)
“[The prospective associate’s] ability to buy in is going to be dependent — it’s going to be conditional — on a highly successful initial employment phase. It’s not automatic, ‘Okay, the two years is up. I get to buy in now?’ That's not the way it should be set up. And a highly successful initial employment phase really needs to be defined.” (15:33—16:00)
“[Prospective associates] have to be able to get along with the team. The team has to like them, genuinely, and endorse them. You want the doctor’s endorsement, but the team endorsement is more powerful. And the patients have to really like them. They're going to be fed some active patients and some new patients from the practice when they first come on board. But they'd better start generating their own referrals along with that by creating wonderful experiences that the patients like and go home and tell their friends and family about. So, they have to be successful at a variety of levels. They have to be coachable.” (16:30—17:16)
“We see a lot of young doctors who are not coachable, at least not at first, because they haven't gone bump in the night yet. And so, coachable, to me, is simply having them be hungry to learn, and open, and coming with a mindset that, ‘I learned a lot in dental school, but I have so much more to learn. And I want to be in a position and in a practice culture where that's available and embraced.’ So, you want the candidate who is borderline going to drive you half nuts with all their questions instead of the one who sits back and never asks a question. That person worries me.” (17:24—18:14)
“The owner’s decision to add an associate really comes along with a commitment to be willing to make their life more challenging, in the early going, with all the mentoring you're going to have to do. So, you get the dividends and the rewards later. But you have to be willing to make that commitment. And that could mean Saturday morning meetings. It means meetings in the schedule, with topics in the schedule.” (19:03—19:36)
“If you have 1,300 or 1,500 active patients, if you're going to cut back on your own schedule, you could potentially add someone with that number of patients. But that's not big enough in a general practice. Same thing in a specialty practice. If you have a nice referral base that beautifully feeds your solo practice, you're not ready for an associate yet. So, you really would have to add someone who’s got some sparkle and substance so that they can help grow the practice and expand the referral base.” (21:01—21:48)
“There are so many people who have a really nice, sweet, solo practice and who have colleagues who have four practice sites, or six, and they say, ‘I think I need another one,’ so they set up a satellite. What happens next? Because if they're going to add an associate and then try to do that expansion, the associate is not ready to help with that. They don't really understand their role yet, and they don't really understand the practice culture. And you can only spread the owner so far.” (23:35—24:17)
“When they do it well, the owner has their own transition plan and life plan in place, and they’ve got their action steps and timetables. So, in the 10-year case that I mentioned, they're going to have a 10-year plan, and action steps and timetables need to take place during that 10 years to prepare them for their eventual exit. It may mean the addition of another doctor. It could be, over 10 years, the addition of two doctors. But that's highly dependent on the success pattern of the first placement of the first doctor. So, that's a really important thing.” (24:43—25:24)
“[Prospective associates] need to have a facility that's large enough to house the second doctor. You do not want to have a small facility, bring in the second doctor, and then split shift, because they're never there when you're there, and they’ll never really understand how the success was created because they're in the off-hours with a new team.” (25:24—25:51)
“If you're wondering what to do inside a transition plan, always go back to putting the patient at the center of the model. How will this impact our patients? So, if you have a split shift, your patients are going to have a very different experience if they come in on one shift or the other shift. It’s not going to be consistent. It’s not going to be comparable, and you're not going to grow the practice that way. So, that's why you would have to either move and build out another suite, or if you're fortunate enough to have adjacent space, not go overboard but appropriately expand your suite.” (27:05—27:47)
“In a general practice, we’re talking about the first year that the employee doctor is in the practice, the practice has to be strong enough to move 300 to 500 active patients, or new patients in combination, but that total, into the young doctor’s schedule in a thoughtful way. That's one indicator that you look at. If you can't do that without harming the host doctor’s productivity and personal income, then you're not quite ready. And there are lots of other things to look at as well.” (28:52—29:35)
“The owner in the solo practice bringing on the young doctor has to have a financial reserve fund sitting there to be able to absorb the additional expenses for much of that first year that the new doctor is in. Or if they're tight, financially, they’ll end up bringing somebody on board and after three, four months, regardless of the performance of the young doctor, they look at themselves in the mirror one morning and say, ‘Oh my God! What have I done? I put myself into a corner.’ So, that's a component as well that I wanted to mention.” (30:06—30:45)
“In the plan to add somebody to the practice, you need to calculate the ripple effect and the impact of what that's going to do to the practice. For example, are you staffed strongly enough that you can absorb another doctor without adding additional team members? Typically, they have to add an assistant, at a minimum. And then, there's a ripple effect. As the practice continues to grow, you're going to add more people. And that will fan the flames of the growth, but there is definitely a ripple effect. What kind of investment am I going to have to make in terms of updating some technology in the office to get ready to have that other doctor come on board? What are we going to have to be able and willing to spend on continuing education? What are our new staffing costs going to look like? There's a big checklist there.” (32:16—33:19)
“You could find a great person that fits your practice culture beautifully. And if you don't have your plan in place, it may not work.” (36:33—36:43)
“A successful transition is absolutely achievable. It’s available to you. You just have to be careful, cautious, make good selections, have a good plan together that is connected to your life plan, and you've got to be in a position where you personally are ready, financially and psychologically.” (36:50—37:20)
“You have to have a flexible plan. You don't have to have a rigid plan. And that builds some comfort into it because when we think about putting a rigid plan together, it really locks us in, and it feels like we’re in a straitjacket sometimes.” (39:38—39:59)
“The very act of planning includes flexibility.” (40:10—40:15)
“We can't try to begin a plan looking at what to do next week without some concept of why it’s important. That makes planning fun.” (41:28—41:42)
2:04 Paul’s background.
4:00 Why this is an important topic.
6:39 Why more than half of partnerships and associateships fail.
7:59 Everything begins with a transition plan and a life plan.
10:16 When associates should begin paying for themselves.
12:23 Be very clear upfront with prospective partners.
14:31 Define a highly successful initial employment phase.
17:17 Look for coachability.
18:25 What a mentorship looks like.
19:39 Key performance indicators to know.
21:52 Expectations to talk about early on.
22:58 Things to think about when expanding with an associate.
24:31 Have a large enough facility.
25:52 Problems with splitting shifts.
28:23 Be able to comfortably move patients.
29:36 Have a financial reserve fund.
30:46 Calculate the ripple effect of adding an associate.
33:21 Growth sucks out cash.
35:50 Other thoughts and cautionary tales.
37:44 You need a plan for your life.
38:57 How to get in touch with Paul.
39:33 Have a flexible plan.
40:15 What a flexible plan looks like.
Paul Sletten Bio:
Paul D. Sletten founded the Sletten Group, Inc. in 1975 in Denver, Colorado. They are in their 48th year of business and have developed an international clientele, having assisted and completed transitions in all 50 states, six provinces in Canada, and two states in Australia. They continue to exclusively work with fee-for-service dentists and their teams around the country.
It is exciting to see both people and practices grow, and to know they have had a hand in so many transitions brings them enormous joy. Their wide-ranging experiences allow them to bring what they have learned to each new client situation. This experience helps them know how to tailor their services to the unique needs of each client and to be able to offer multiple options to almost any client situation. Due to this ability to customize their services, the Sletten Group also works with all of the specialty practices in the dental industry.
Paul has spoken at more than 285 dental meetings around the country. This includes almost all of the major dental meetings and numerous study clubs. The topics focus on all aspects of Practice Transitions — including buying a dental practice, selling a dental practice, and much more — as well as personal growth and development for dentists and team members.
Pam Sletten, a partner in the group, assists and works in the business and is very involved in helping their clients.
In an effort to expand their range of services for young dentists and prospective buyers, the Sletten Group helps in evaluating practice opportunities and sets a proper course for professional lives. All at the Sletten Group continue to focus on their own personal growth. They come to the world with a sense of wonder and are constantly on a quest to learn more and apply that learning to the benefit of their clients.