Can you 3D Print a More Valuable Dental Practice?
YES! you can 3D print your way towards a more profitable and therefore more valuable practice!
How much? Depending on the size of your practice, you could increase annual earnings by $20,000 or more, increasing your practice value by $100,000 or more.
Perhaps that increase in practice value sounds a bit far fetched to you. The key thing to understand is that the value of your dental practice is not the sum of the value of all your depreciated equipment, leaseholds and some fictitious number randomly assigned to goodwill. Nor is the value of your practice based on what your annual revenue is.
While it may look that way in some valuations, that hasn’t been the case for many years. A buyer can’t repay their bank loan with the dental chair in Op 3. Nor can they fund their lifestyle with revenue. They can only repay their bank loan and fund their lifestyle with earnings – what is left over from revenue after all expenses are deducted. That is why the value of your practice is determined by earnings1, sometimes referred to as EBITDA2. Therefore, it follows that if you increase annual earnings, you increase your practice value.
The amount you can increase your practice value may surprise you. Depending upon where you are located, the size of your practice, plus a number of other factors that go beyond the scope of this article, most readers’ practices will be worth between 5 to 8 times annual earnings. So, for every $1,000 increase in annual earnings, your practice value will go up between $5,000 to $8,000. In other words, what may seem like relatively minor increases in annual earnings can quickly add up to a very significant increase in practice value. It is also important to note that, if you are properly structured, that increase in practice value may be entirely tax free when you sell!
So, how do you 3D print your way to higher earnings and eventually more money in retirement? 3D printing allows you to make nightguards, splints, surgical guides and clear aligners in house, rather than using an outside lab. The printers are fast enough that night guards and splints can be done in one appointment. With that added convenience, you may well find you get higher patient acceptance and revenue will grow.
But the real magic of 3D printing goes well beyond delivering better, more convenient service to your patients. The real key is how much it can reduce your costs. An average sized practice may do 10 night guards a month. If your lab costs on those guards is $170, that is over $20,000 in lab expense a year.
Purchasing a 3D printer could cost you between $8,000 to $45,000 depending upon which one you chose. But, but the material cost for a nightguard printed in house is as little as $5.00. So, at just 10 nightguards a month, that could increase practice earnings by over $19,000 a year, compared to using an external lab, paying for the printer in as little as 12 months. Plus, those incremental earnings, at 5 to 8 times earnings multiple, will increase the value of your practice by $95,000 to $150,000 – potentially entirely tax free when you go to sell.
And that isn’t all. If you are currently providing clear aligner orthodontic treatment in your practice, 3D printing can save you considerably more. It is not uncommon for the design and lab costs of aligners to run around $2,200 per case. With a 3D printer, you can still outsource the design, but make the aligners in house. That could cut your costs from $2,200 to $500 or less for each case. If you are doing one case a month, that would increase your earnings by $20,000 each year. With your practice valued at 5 to 8 times earnings, that could add another $100,000 to $160,000 to the value of your practice, when you go to sell.
3D printing can also be used to make whitening trays and surgical guides. If you are doing guided surgery, depending on what you are paying your lab for surgical guides, you could be saving an extra $100 to $150 for each guide. Add that up over a year, and you will know how much you’ll be increasing earnings by. Then multiply it by 5 to 8 to see how much it increases your practice value. So, that is how you can 3D print yourself a more profitable and more valuable dental practice. To learn more, talk to your Henry Schein CAD/CAM Specialist (contact details below) or your local Tier Three rep. They can help you see how 3D printing and other digital technologies can improve your practice earnings and put a lot more money into your retirement fund, when you eventually sell your practice.
For more information contact a Henry Schein CAD/CAM Specialist, or Bill Henderson, the former President and principal shareholder of Tier Three Brokerage, and one of Canada’s foremost experts in dental practice valuation and sales (see bio here).
1. The earnings used to determine practice value are determined by removing all expenses of a personal nature (any wages paid to dentist/family, car expenses, meals, travel, etc.) and adjusting to pay the owner 40% of their dental billings (ex lab), as if they were an associate in their own practice.
2. Earnings Before Interest, Taxes, Depreciation and Amortisation.
