Orthotown October 2017 - 19

be part of it. Overstaffed, so he doesn't have to ever place or tie a wire? Still contributing large
amounts to his retirement plan, maybe has a cash balance plan? You definitely need to figure out
what your overhead would be, which staff would be cut, etc.
This seems, from the small amount of information you have given us, to be a very good
opportunity. He is highly unlikely to violate a noncompete and at age 79 should be willing to
actually give up the reins.
Are you looking at leasing the space from him? Buying it? Moving the practice? n
9/12/2017

He has three assistants (15-30 years) all making $40K, plus one front desk (30 years) making
$40K, plus his wife $40K. So $200K in labor, or about 23 percent (including wife).
No insurance contracts, FFS, $5,900-$6,500 per case, Phase One $4,000
Rent: $2,900, so about 3.3 percent (he owns).
Lab: 5.4 percent (uses Hawleys, which I will discontinue).
Ortho supplies: 7.6 percent
Rent to himself is padded $84K, but this was included in the net income by me. There has
to be other places the money is going. Doesn't really market.
Methinks with only 400 patients, you could do that with two hard-working assistants. n

charlestonbraces
Member Since: 06/05/09
Post 6 of 19

9/12/2017

If you increase the number of workdays to five a week (or 20-22 days a month), you only
need to see 20 patients per day. And you only need one slow, inexperienced assistant (like a new
high school graduate) to help you to tie, untie, sterilize, take records, clean the chairs, etc. n

ucla98
Member Since: 09/28/07
Post 7 of 19

9/12/2017

I see patients every six to eight weeks, so I could see 400-450 patients at 70 patients per week.
I could see that in two days a week with two assistants. This would allow me to work three days
at my corporate gig until I can ramp up the office.
So, I was ruminating last night and came to the conclusion that contracts receivable needs
to be close to the gross income. If it is not, it is due to:
1. Down payments were too high, or
2. A significant number of patients are overdue in treatment (and paid in full).
Neither is good.
$538K in contracts receivable, divided by 435 active patients yields me $1,237 per patient.
Not great. If it was closer to gross income-say, $800K-then it would be $1,840.
Then again, if I can get it for less than the $580K he is asking for, it may work. The question
is, what price. n

charlestonbraces
Member Since: 06/05/09
Post 8 of 19

9/13/2017

Fenrisúlfr

How's the overhead? n
9/13/2017

So for 2016, gross was $864K, his W-2 was $240K and his bloated rent he paid to himself
netted him another $84K.
$324K net total income, divided by $864K gross, gives a net percentage of 37.5, so overhead
is 62.5 percent.
See my earlier post about rent, supplies and labor percentages: That doesn't add up to 62.5%. n

Member Since: 02/25/09
Post 9 of 19

charlestonbraces
Member Since: 06/05/09
Post 10 of 19

9/13/2017

orthotown.com \\ OCTOBER 2017

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