In this episode, Dr. Brady Frank finishes discussing chapter three and then talks with his friend Dr. K.J. Sturhahn about his experience using DDSO strategies.

 

 

Hey, welcome to episode seven!

In this episode, I’m going to be interviewing a good friend of mine, K.J. Sturhahn, who went through the DDSO blueprint process. Flew through it – opened a bunch of locations

Unfortunately, he had neck issues, just like I’ve gotten some neck issues. And I’ll tell you what, it allowed him to reach total dental freedom – the DDSO process – to reach total dental freedom and not be worried about his physical ailments in his neck. So, he’s loving life, he’s got a ton of purpose behind the group he’s building, he’s definitely in the top 1% financially, and so can’t wait for you to hear his story.

But before we do that, I wanted to go over a couple of the diagrams to finish out chapter three: “Converting Your Practice Or Group To A DDSO”

So, obviously there are a few case studies in there, but I really want to go over something really important about the trial partner compensation model if you’re following along in the book. Also, if you’re following along in Transition Time, the book, it is in section 5.2 in Transition Time.

There are a lot of real funny numbers out there with structuring partnerships, oftentimes. And there are management fees and, you know, this chunk of profit, that chunk of profit, a salary to the ownership doctor – an owner doctor – all of these different formulas.

The reality is the most simple formulas have proven the test of time and work the best

An example, Comfort Dental, they’ve kept their same, or similar, ownership compensation strategy for decades and decades. And so, I want to show you what we have found to be the very compensation strategy for a multiple doctor, multiple location, group – very simple.

Two buckets of income

So, at the end of each month, half of the revenue, excuse me, half the profit goes to the clinical bucket of profit. The other half of the profit goes to the business bucket. The clinical bucket and split pro-rata based on your individual productivity. The business bucket or ownership bucket is split based on the percentage ownership of that practice. This rewards the clinicians who are in the practice working hard, right? Some docs are part-time, some docs are semi-retired. That bucket does not reward doctors who are in that retirement mode.

The business-ownership bucket does reward doctors for equity. So, if you’re a dentist and you want to cut back, you want to build locations, rather than doing a management fee – which means you’re going to have to put in a lot of effort to prove that fee – you should be receiving your profits because of the equity, because of the blood, sweat, and tears you put into the business overtime just because you own a part of that business, not because of a management fee.

And so anyway, to get all the details on that, just to head to the infographic, which is trial partner compensation model. So that’s in chapter three of DDSO Strategies.

The other graph I want to go over with you real quickly for those of you following along in the book is the advantages of co-ownership versus partnership

Obviously, autonomy is created by each dentist owning a hundred percent of each S. Corp., minimizes joint liability, maximizes an equitable team approach to growth. And the equity is often a manager-managed LLC as the founder maintains manager status.

So you, yes, you, the founder, if you’re listening right now, maintain a hundred percent control of your practice even though you’re selling co-ownership shares. So, most dentists in the DDSO Alliance, they say, I want to do this, but I don’t want to give up any control – you don’t have to. And this goes over that in the DDSO strategy.

So, so anyway, let’s bust right into my interview