Inside OSO/DSO Partnerships: Growth, Timelines, and Valuations

Alison Werner (00:04)
Hello and welcome to the Orthodontic Products Podcast. I’m your host, Alison Werner. On today’s episode, we’re tackling a topic many doctors are curious about, but don’t often hear discussed plainly, partnering with an OSO or a DSO.

Joining me are two guests with complementary perspectives. Allison Hale is COO at Parks Orthodontics in Yorktown, Virginia, which joined an OSO a few years ago. She is also a practice consultant who helps teams streamline operations and scale. Ty Ramsey is a mergers and acquisitions advisor with Professional Transition Strategies where he guides doctors through competitive OSO DSO processes and valuations. We’ll unpack what these partnerships really look like today, how to distinguish aggregationists from activist

models, the KPIs and red flags to watch and the due diligence questions to ask long before you go to market. We’ll also get practical about timelines, valuations and what actually changes on day one. Think HR accounts payable while protecting culture and clinical autonomy. We’ll also talk about growth levers, de-risking and why planning early can preserve both legacy and upside. Here’s our conversation.

Alison Werner (01:11)
Well, Alison and Ty, thank you so much for joining me today. I’m really looking forward to this conversation with you.

Ty Ramsey (PTS) (01:18)
Good to be here.

Allison Hale (01:19)
Same.

Hi.

Alison Werner (01:22)
Okay, so Allison, let’s start with you. Talk to me about your practice’s relationship to orthodontic service organizations or OSOs as we’re going to call them.

Allison Hale (01:36)
Sure, happy to. So I am currently the practice director for Parks Orthodontics, which is owned by my sister, Dr. Meredith Parks. Several years ago, we started noticing that other top doctors in orthodontics were partnering with OSOs and we were like, what’s going on with that? We wanted to learn more about it. So we started talking about it, talking to other doctors and decided to explore it.

Ultimately, we did partner with an OSO about a year ago. We’ve been very happy. And now, not only am I still in my practice director position, but I also work with other doctors who are considering partnerships.

Ty Ramsey (PTS) (02:08)
Thank

Alison Werner (02:18)
okay, because I was going to ask you because I know you have kind of you’re taking on an advisory position. ⁓ So now you’re working with other practices that are coming into that OSO Or thinking about it, OK, OK, great. OK, and then Ty, you’re working with Professional Transition Strategies. Correct. OK, so talk to me about your experience and what you’re doing.

Allison Hale (02:28)
or thinking about it, getting them prepped, yes.

Ty Ramsey (PTS) (02:37)
That’s correct, yes.

Yes, we’re ⁓ &A merger and acquisition advisors. ⁓ What we do, our specialty is partnering large dental practices of all specialties, not just orthodontics. We happen to do a lot of orthodontics, but all dental specialties, large profitable practices. What we do is we work to create a very good outcome for the doctor. ⁓

Basically, we create a competitive situation in which many different DSOs, OSOs are, for lack of a better term, bidding on the doctor’s partnership. And through that, we’re able to leverage up all the offers and create a better outcome than the doctor could have ever created.

Alison Werner (03:35)
Okay, so I guess to get started, can you we talk about like, what does an OSO mean as a practice model in today’s orthodontic industry?

Ty Ramsey (PTS) (03:47)
Sure, Allison, you want me to take that? Okay, sure. Yeah, so ⁓ it stands for, ⁓ you hear DSO, OSO. ⁓ DSO is Dental Service Organization, OSO, Orthodontic Service Organization. ⁓ We work, my company, Professional Transition Strategies. Most people call us PTS for short.

Allison Hale (03:49)
You hit it Ty!

Alison Werner (03:49)
Yeah, go for it. Go for it.

Ty Ramsey (PTS) (04:14)
We work with over, there’s actually over 350 self-identifying DSOs and within that subset is, ⁓ OSOs are within that subset as well. ⁓ We work with, we have a reach like no other firm that I’ve seen. We’ve actually spent over a million dollars on AI to ⁓ an internal system to match doctors.

Alison Werner (04:24)
Yeah.

Ty Ramsey (PTS) (04:42)
⁓ with the proper ⁓ OSOs, DSOs and whatnot. But I’ll work back to the original question that an orthodontic service organization, OSO, it’s a, there’s all kinds of, it’s kind of a long answer, there’s all kinds of entities that exist nowadays. The original DSOs are, ⁓ there’s a big difference between,

DSO is a four-letter word to a lot of people and it earned that right. When people think, there’s a lot of preconceived notions about DSOs and OSOs. People think, ⁓ I’m selling out to corporate. And in some cases, I would say that’s true. There’s a number of different investment theses out there. There’s ⁓ a number of different kinds of groups.

Alison Werner (05:15)
you

Ty Ramsey (PTS) (05:40)
Good and bad DSOs, just like there’s good and bad practitioners. You partner a great practitioner with a bad DSO or OSO, it’s gonna be a nightmare. You partner a bad practitioner with a great DSO or OSO, it’s not gonna work out. First off, it’s probably not gonna.

Alison Werner (05:46)
Yeah.

Yeah.

Ty Ramsey (PTS) (06:06)
Oddly enough, you partner a bad practitioner with a bad DSO, sometimes it works out for a while. But, you know, there’s a statistic out there that, know, some of the traditional DSOs, those are the ones that we call, I call them more of the activist groups. We tend to work more with the aggregationist groups. The activist groups are, if you, and I would say,

Allison Hale (06:11)
You

Alison Werner (06:11)
Hahaha

Ty Ramsey (PTS) (06:34)
sell out to them and you’re just an employee on a spreadsheet. You’re going to follow their treatment protocol. You’re going to use their materials. They have a cookbook and a playbook for every practice that’s followed. On the other side of the spectrum are the clinically agnostic DSOs and OSOs. Those are the ones that we work with. Let’s say

Alison Werner (06:47)
Okay. Okay.

Ty Ramsey (PTS) (06:57)
When I’m talking to a doctor, you know, the way I explain is hey, know, you’ve got a successful practice You’ve grown to three practices here. You have a way that you like to practice. It’s been very successful and profitable Let’s go back ten years. Let’s say you’re in the same spot and all your buddies from orthodontic school You’re still talking to five or six of them and you and y’all all get together and you decide hey We want to scale our good work across the page

Alison Werner (07:10)
Mm-hmm.

Mm-hmm.

Ty Ramsey (PTS) (07:25)
We want to start a group of like-minded doctors all working towards the same goal, kind of the one plus one equals three concept. We can do more together than we can separately. Let’s start a group and grow. And that’s what, those are the kind of groups that we work with, the groups that were birthed in that regard.

Alison Werner (07:34)
Yeah.

Mm.

Alison Werner (07:48)
Ty, I wanted to know if you could kind of just talk about where OSOs stand in kind of the industry as a practice model, because, you know, we have the private practices and OSOs now. What are you seeing in terms of that choice as a business model for orthodontists?

Ty Ramsey (PTS) (08:03)
Sure, yeah, provides ⁓ an alternative, OSOs and DSOs for that matter, provide an alternative eventual exit plan or strategy for doctors. Not that it’s for just doctors looking for an exit strategy because the average age of our client last year was mid 40s, believe it or not. but yeah, it’s a, ⁓ to me, ⁓

DSO is a four-letter word to a lot of people and it earned that in some respects but like I said, we work with ⁓ groups that are clinically agnostic, not the more what many doctors who haven’t researched think is a traditional DSO. But OSOs and DSOs in my mind, they solved a market problem.

And the market problem was dental and orthodontic practices have been historically undervalued. Why? Because of bank ceilings. Banks will normally lend, you know, at the top end, it used to be 80%. Now some banks will ⁓ lend, you know, maybe 100 % of collections at most. It’s not often. But because of that bank ceiling,

These dental practices have been historically undervalued and private equity realized that and hence the private equity investor entry into the dental market because these practices that were, you know, that would in the old days, if you will, sell at 80, 90 % of collections, sometimes we’re getting results, 250, 300 % of collections. And that’s, that’s only

Alison Werner (09:47)
Mm-hmm.

Mm.

Ty Ramsey (PTS) (09:56)
by partnering with a private equity backed DSO or OSO.

Alison Werner (10:00)
Okay, yeah, because I was going to ask you where private equity fits into this whole conversation.

Ty Ramsey (PTS) (10:05)
Yeah, yeah.

So private equity ⁓ in the 90s, there were only a few hundred private equity firms. Now there’s over 9,000 private equity firms. Over 50 % of all transactions, mergers and acquisitions done involve private equity in some way. I’ll try to give a 50,000 foot view here. Private equity is just that. It’s private.

high net worth investors that come together and create a fund. So you might have a private equity fund manager in which ⁓ three or four billionaires have given $100 million. So now they have a $300 million fund to go make investments. The only, the difference is, it’s not like the stock market. You can’t pull your money out. Your money is illiquid for normally a period of three to five years.

And with rising interest rates, sometimes it’s been shifted to seven years. But that’s why on average, you’ll see these dental groups go through what’s called a recapitalization event in which a larger private equity firm comes in and partners, and then they go through the whole process again. There’s small cap, mid cap, and large cap. And they come in and…

you know, that’s just a continuation of that. They make these great investments in dental practices. Private equity has been consolidating industry since, for over 30 years. 30 years ago, was hospitals. 20 years ago, pharmacy, you you rarely see Joe’s Pharmacy anymore. It’s CVS, Walgreens, et cetera. Then about 10 to 15 years ago, for the most part, it was

Alison Werner (11:40)
Yeah.

Ty Ramsey (PTS) (11:52)
veterinary, dental, and dermatology. Well, there’s almost 200,000 individual NPI numbers in the nation, individual dentists. ⁓ There’s a fraction of that in regards to orthodontists, I mean not orthodontists, dermatologists and veterinarians. So that industry has been mostly consolidated. There’s still plenty of…

Alison Werner (11:55)
Okay.

Mm-hmm. Mm-hmm. Yeah.

Mm-hmm.

Ty Ramsey (PTS) (12:18)
for lack of a better term, inventory out there in dental. We estimate the dental industry is about 30 to 35 % consolidated. And imagine a bell curve for consolidation on every industry where what they pay in multiples of profit of the practice. That’s always a bell curve. And right now, where I know some people are listening, some people are watching, but I’m making a bell curve and we’re just

Alison Werner (12:38)
Yeah.

Yeah. ⁓

Ty Ramsey (PTS) (12:47)
just past the peak of the bell curve or right at the peak. mean, whereas we’re seeing our winning offers are still right where they were what some people call the peak. just might instead of 10 offers for practice now since interest rates went up, we might get seven offers. So that’s the only difference we’ve seen is some groups are in

Alison Werner (12:50)
Okay.

Okay.

Ty Ramsey (PTS) (13:16)
go on what we call pencils down in which they’re just focusing on organic growth. But there’s still plenty of acquisitive groups out there and we’re doing business with those groups every day. Long answer to a short question.

Alison Werner (13:32)
No, thanks for

Alison Werner (13:33)
So Allison, know, Ty talked there about there’s some perception and I’ve heard it, but you know, it’s changed that you’re selling out to corporate by joining an OSO. So talk to me about your practice’s, decision making process there and why you knew this was the right move for you. Cause I know there was a hiccup before you got to the right move.

Allison Hale (13:57)
Sure, sure. So this is a hot topic in orthodontics right now. You’re going to find that there’s two polar opposite sets of opinions on it. You’ve got orthodontists that are like, no, no, partnering with an OSO is bad for the industry. It’s going to kill the orthodontic industry. And then you’ve got the orthodontist on the other side of the spectrum who have partnered and done so successfully who are going to cheer it.

all the way home. So why do OSOs matter? Why do we even have this discussion? Well, so many orthodontists pour decades of their time and their money and their sweat equity into their practices. And the way we looked at it is a partnership is a way to protect that investment. And in our case, it was a protection of the family legacy. The practice belonged to our father before us.

So too many doctors, and I see this a lot even in our area, they hit retirement, they’ve let their practices shrink, and they end up with something that’s of little real value to sell or that’s appealing to someone else. And it’s really heartbreaking because orthodontists rather work so hard to leave their future up to chance. to me is not a great idea. So we think that with planning, and my sister and I determined that with planning,

Alison Werner (15:05)
Okay.

Okay.

Allison Hale (15:22)
We could preserve that legacy and set up our practice for long-term success that outlasts even our time in these walls.

Alison Werner (15:29)
Okay.

Ty Ramsey (PTS) (15:31)
And I’ll echo that for sure.

Alison Werner (15:31)
Okay. Yeah.

Ty Ramsey (PTS) (15:33)
On the surface, it might be the opposite of what you think. A doctor can actually preserve their legacy. I would argue preserve their legacy better with a DSO or OSO than they can by selling to some random doctor at some point in time. Because the aggregationist groups, the ones that

Alison Werner (15:51)
Mm.

Ty Ramsey (PTS) (15:57)
A bunch of like-minded doctors, clinically agnostic, doctor’s name stays on the door, staff stays in place. No one knows that they’ve partnered, but they have all these synergies behind the scenes. They’re investing in the product. Allison’s a great example, and she was an integral part of that. They were kind of a unique situation. It’s Parks Orthodontics, and Allison was the COO.

Alison Werner (16:10)
Yeah.

Ty Ramsey (PTS) (16:27)
Her name was on the door as well. So it was a great situation for both of them. And we got a fantastic outcome, but more than anything Allison will tell you that the group they partnered with didn’t invest in an orthodontic practice. They invested in the brand called Parks Orthodontics. So much so that ⁓ one of their mascots, ⁓ Coco, is it Coco?

Alison Werner (16:30)
Mm-hmm.

Yeah.

yeah. I’ve heard about mango.

Allison Hale (16:55)
a dango mango

Ty Ramsey (PTS) (16:56)
Mango, Mango.

Allison Hale (16:59)
You

Ty Ramsey (PTS) (17:00)
That’s

a parrot, correct? Yes, they have a parrot mascot named Mango who requires some pretty expensive care every year. He has a handler and everything else. And this just shows you how on board the right DSO or OSO can be with investing in the brand. That was included in part of the package is go forward. We’re spending this much on Mango every year.

Alison Werner (17:01)
Yes.

Allison Hale (17:02)
Yes.

Ty Ramsey (PTS) (17:26)
rather than you might consider they’re gonna eliminate that, they did not. That’s how much they care about the brand. And I think that’s something that gets overlooked a lot. It’s doctors don’t realize, hey, I can carry out my legacy. And right, a lot of doctors are just kind of in limbo wondering, well, I’ve got five or 10 years left, but I’m starting to worry about, you know, I need an exit strategy rather than just.

Alison Werner (17:30)
Right. Right.

Hmm.

Yeah.

Ty Ramsey (PTS) (17:55)
You know, I need to plan ahead and that’s what a lot of doctors have told me. They have a mental return on investment once they plan, once they cement a solid exit strategy, which is exactly what Allison and her sister did that this way it is just.

Alison Werner (18:08)
Mm-hmm.

Okay, so, go ahead.

Allison Hale (18:14)
Such a great point,

Ty. And Allison, I think it’s important to know that it’s never too early for doctors to start thinking about what comes next, whether it’s growth, whether it’s expanding your practice, or maybe it’s retirement. It’s so important for them to get clarity on to what type of partnership they would be looking for, because there’s a lot out there. We’ve heard the term DSO, OSO, there’s some groups that are ortho specific.

Alison Werner (18:24)
Mm.

Mm-hmm.

Mm-hmm.

Allison Hale (18:44)
There’s

some that are multi-specialty. So knowing which type of scenario you want and what do you want to get out of the partnership? Do you want money? Do you want support? Do you want that structured path to retirement that Ty was mentioning? And it all comes down to what the doctor’s vision is for their life after partnership. And it’s never too early to start thinking about it.

Alison Werner (18:50)
Yeah.

Mm-hmm.

Yeah.

Okay, so then as you’re starting to think about it, what are some of those key questions that you should be asking yourself? And then what are some of those key questions you should be asking the DSOs, OSOs that you are speaking with? Because you’re going to probably talk to more than a few to really find that right match. So where do you start with those questions or that bullet list?

Ty Ramsey (PTS) (19:24)
Thank

Allison Hale (19:33)
Ty, you want to grab this? I’ve got some thoughts as well.

Ty Ramsey (PTS) (19:36)
Sure, yeah, I would say the first thing for doctors considering this, ⁓ first there’s a minimum level of production that’s required for most groups to be interested. And I would say that starts in the 1.2 to 1.5 million annual collections range and goes from there. So if you’re a boutique practice, I would advise just stay the course.

keep doing what you’re doing. If you want to partner with a DSO and you’re a boutique practice, ⁓ probably job number one would be hiring a consultant like Allison to get those collections up where they need to be. But I would say the number one advice I would give for a doctor is to plan ahead and partner with an advisor, whether it’s our firm or another reputable firm.

Alison Werner (20:19)
Okay. ⁓

Ty Ramsey (PTS) (20:34)
The analogy I make to orthodontists, know, orthodontists are, you know, let’s face it, they’re used to, were, good chance they were valedictorian in high school, college, and even their dental class. You know, they’re used to, you know, they’re a confident bunch and rightly so. So, but they, sometimes they make the mistake of, I’ve excelled in everything I’ve ever done. I can excel in this too. I can do this on my own.

Alison Werner (20:34)
Mm-hmm.

Yeah.

Yeah.

Ty Ramsey (PTS) (21:04)
And the example

I give on that is, hey, this is what we do. My firm has transacted over a thousand offices nationwide in all four time zones in excess of $2 billion in deal flow for our clients. It’s what we do. An analogy would be, know, doctor, I could watch a YouTube video on a treating in class two, div two case.

And then I could go try to do it myself, but outcome is not gonna be good. Outcome is not gonna be what you could get. So an analogy here, we can simply get an outcome well in excess of what a doctor could expect to get on their own. And I think Allison saw that first.

Allison Hale (21:34)
Hehehehehe

Alison Werner (21:36)
Yeah. Yeah.

Allison Hale (21:50)
Absolutely. think one, a few things that may surprise doctors as they go into this process and kind of by way of preparation, the process is way more involved than you’re going, than you expect. ⁓ These OSOs and DSOs are going to want to see everything, all your numbers, your financials. Like if the curtain is going to be pulled back Ty I think gave us an analogy that by the end of it, will be the equivalent of a practice

Alison Werner (22:03)
Okay.

Okay.

Allison Hale (22:20)
colonoscopy, something along those lines. And he wasn’t he wasn’t wrong. I’d also say to piggyback on what Ty said about making sure your numbers are where they need to be. If you aren’t already tracking those KPIs, and your production and collections closely, this can be an overwhelming process. So have your data in order before you start. So when these questions start coming,

Alison Werner (22:20)
Okay. Okay.

Yeah.

Allison Hale (22:46)
You’re

like, yeah, I’m very familiar with what we produce, average production on a monthly basis. What is our case acceptance? That kind of stuff. Two, what are your goals? If this is strictly about money, then that’s gonna shape your experience. ⁓ If I could also just mention one more thing. Identify, Ty mentioned this when he talked about our bird, Mango. This was a first for the OSO we partnered with. They were like, okay, we have to,

Alison Werner (22:50)
Yeah. Yeah. Yeah.

Okay.

Yeah.

Allison Hale (23:17)
embrace this mascot, this is what makes this practice unique, how are we going to do it? So identify for doctors, identify what is special or unique about your practice and the way you run it. And then make sure your transition partner, your broker knows what those non-negotiables are, and make sure that that’s conveyed properly to these potential partners. For example, you know, we had our bird, that’s kind of an outlier, but if

Alison Werner (23:19)
Yeah.

Ty Ramsey (PTS) (23:26)
you

Alison Werner (23:30)
Mm-hmm.

Mm-hmm. Mm-hmm.

Yeah.

Allison Hale (23:46)
Gifting your team is really important and you want to give really nice gifts at Christmas, make sure they know that. If you have like a unique marketing strategy that works really well in your specific region with your demographic, make sure they know that. Highlight that as a non-negotiable. One I hear a lot is if you’re working with a coach that you really love, make sure

Alison Werner (24:05)
Yeah.

Allison Hale (24:12)
that your affiliations team knows that you want to continue that work after partnership because otherwise they’ll be looking to trim down some of those expenses.

Alison Werner (24:17)
Yeah.

Yeah.

Allison, I’m curious because, you know, I know in talking to you that Parks Orthodontics was looking at another OSO partnership before you ended up with the one you have. How did you know that wasn’t the right one?

Allison Hale (24:39)
Well, number one, they were not excited about us. And, you my sister and I have been doing this together for 10 years. Our dad passed away about 10 years ago. And since then, she and I have been doing all the things. We run a very tight operation. We are really, really proud of the work we’ve put into it. And this, think the advisory, I guess, is what I would call it, Ty said earlier.

Alison Werner (24:43)
Okay.

Mm-hmm.

Ty Ramsey (PTS) (24:53)
⁓ Bye.

Alison Werner (24:55)
Okay.

Mm-hmm.

Allison Hale (25:08)
this particular company just didn’t seem that excited about us and we could not figure out why. Well, it turns out that they had brokered some very, like one or two very large multi-location orthodontic practices, you know, five or six years ago. And I think they kind of thought that was going to be us and they didn’t have the perspective of orthodontics.

Alison Werner (25:14)
Okay.

Yeah.

Allison Hale (25:37)
that was necessary to do a good deal for us and to represent us well. ultimately we decided to take some time, catch our breath. And when we met with Ty for the first time and he had reviewed our financials, he’s like, they’re crazy. Y’all are awesome. Let’s go. So it was a match made in heaven for us.

Alison Werner (25:59)
Okay.

Okay. So for you, it was also just having that that right advisor. So it’s also finding that match. Okay. Okay.

Ty Ramsey (PTS) (26:03)
Thank you.

Allison Hale (26:07)
Yes, yes.

Ty Ramsey (PTS) (26:09)
Yeah, and

to be clear, they didn’t look into another OSO. They worked with another advisor shortly. Yes, and ⁓ that’s another thing. The value of not just an advisor, but an experienced advisor. There are a lot of advisors that have very little experience in the orthodontic realm, literally to the point they might not even know what a case start is.

Alison Werner (26:17)
Okay. Okay.

Allison Hale (26:18)
right?

Alison Werner (26:33)
Mm-hmm.

Ty Ramsey (PTS) (26:38)
They’re just looking at numbers. They’re calling the patients customers. you know, it’s, I mean, that’s a bit of an exaggeration maybe, but you want someone that is not only experienced in advising, but in M&A advising, but also experienced in, had success with orthodontic transactions, which our firm has had many. And I think that’s shown through and shined, shown.

Alison Werner (26:47)
Bye.

Yeah.

Ty Ramsey (PTS) (27:06)
that shine shone sparkled through in the process. ⁓

Allison Hale (27:07)
Sparkle through.

Ty Ramsey (PTS) (27:12)
think, you we met, we met some big challenges during the process. Allison’s office flooded right in the middle of our process and basically shut down for six weeks. So we had to navigate those waters. No pun intended.

Alison Werner (27:23)
Okay. Yeah.

Allison Hale (27:27)
But

doing so and that’s probably my top advice for doctors is get help. I cannot imagine Dr. Parks and I going through this process without Ty. He it’s complex as I said but it’s complex, time consuming and there’s a lot that we didn’t know. I mean if you don’t know what earn outs, hold backs,

equity shares, clawbacks, if you don’t know what any of that means, which we did not, we needed someone to hold our hand, make sure we understood the process and make sure we understood every single proposal that we got. So we were lucky. We had a lot of interest in our practice. And one of them was if it had been all about the money for us, it was a no brainer. The money was crazy.

Alison Werner (27:59)
Yeah. Yeah.

Mm-hmm.

Okay.

Okay.

Okay.

Allison Hale (28:25)
But we had to pull back and say, okay, partnering with that organization is gonna look like this for us. The money was great, but post transition, we were gonna be doing a lot of heavy lifting and that’s not what we were looking for. So getting really clear on what we wanted, Ty was helpful in navigating every one of the offers and figuring out which one was going to give us the best possible fit.

Alison Werner (28:38)
Yeah. Yeah.

Mm-hmm.

Yeah. So in terms of ⁓ that post transition, what are you, what’s your advice in terms of what doctors should be looking for for their practice?

Allison Hale (29:03)
I think for sure what we discussed about making sure your non-negotiables are set out ahead of time. One thing I think doctors need to be prepared for, the first thing that’s going to transition likely is HR. So, which is a load lifted for most practices, but it does kind of limit you in some ways while you’re still able to hire and fire as you see fit.

you are not able to, let’s say you wanted to bring someone on because you really liked them and you wanted to create a position for them, something special and unique within your practice, that might be a little bit of a harder sell once you’re in an affiliation situation. They’re gonna wanna keep the headcount steady that matched the original model that they planned for. So HR is one of the ones you’re really gonna have to tighten up your HR policies because you’re gonna be.

Alison Werner (29:50)
Okay.

Allison Hale (30:02)
you and your team are gonna be adhering to the corporate policy. That’s probably the biggest shift that practices will see. And then very quickly, you’ll go into administrative handoffs. So for us, the next thing was accounts payable. Was very happy to wash my hands of that. It was time consuming, but very well worth it. And our organization did a beautiful job in transitioning us out of paying the bills to them paying the bills.

Alison Werner (30:05)
Okay.

Allison Hale (30:31)
So those are the two top ones. I would be prepared to tighten up your HR and to get ready to off board your AP ASAP. Clinical stuff, you wouldn’t know the difference. Patients coming through our door have no idea that we are a OSO partner. Yes.

Alison Werner (30:43)
Okay.

Okay.

Ty Ramsey (PTS) (30:51)
And that’s the whole idea.

Alison Werner (30:51)
Okay. Right, because that’s

what you were talking about with those two models of OSOs out there. Okay. Yeah. Yeah.

Ty Ramsey (PTS) (30:55)
Exactly.

Allison Hale (30:58)
Yes.

So our sign is on the door. Our everything has remained the same walking in the door. It feels the same. It looks the same. We’ve saved a lot of money on overhead. In the meantime, they’ve been able to help us find better pricing, nip tuck in certain areas to get our overhead down. Buying power is big. Once you’re part of an OSO, they get better prices on Invisalign than we could have ever imagined. So ⁓

Alison Werner (31:09)
Mm-hmm. Mm-hmm.

Yeah.

Mm-hmm.

Yeah.

Yeah, yeah.

Allison Hale (31:29)
Things like that are really what you can be prepared for. Maybe one other thing that Ty and I actually discussed prior, making sure that as the doctor, you’re going in with a lot of enthusiasm and a lot of confidence because there’s a lot of misconceptions, at least from the team perspective, that can be associated with partnership. Your team, for example, might think,

Alison Werner (31:35)
Mm-hmm. Yeah.

Mm-hmm.

Allison Hale (31:58)
gosh, we’re going to partner and they’re going to fire us all. Well, that’s a very large misconception. That’s and wouldn’t happen because if they come in and fire everyone, then who’s going to work to continue leading the practice in the direction that it’s going, which they’re only going to partner with you if you’ve got a strong ward. So Ty, anything you can.

Alison Werner (32:02)
Mm-hmm.

Yeah,

Ty Ramsey (PTS) (32:08)
Yeah.

Alison Werner (32:19)
Yeah.

Okay. Okay.

Ty Ramsey (PTS) (32:24)
Yeah,

I mean it goes back to the activist versus the aggregationist groups. know, the activist groups with the playbook and the cookie cutter, you know, they have about an average doctor tenure of under two years. ⁓ You know, just because that’s their model. They know they’re going to cycle through new graduates, but that’s why they have this cookie cutter, because they know that’s how they have to make, that’s what they have to use to make it profitable.

Alison Werner (32:29)
Mm-hmm.

Ty Ramsey (PTS) (32:51)
And it does work and there are some successful cookie gutter groups out there. Those just aren’t the groups that we partner our doctors

Alison Werner (32:51)
Yeah.

So Ty, I want to go back a bit. ⁓ You know, we’ve been talking about OSOs a lot, but DSOs make up a significant part of this practice model that’s out there. So can you talk to me about orthodontist opportunities within the DSO market and why they don’t just have to look at OSOs?

Ty Ramsey (PTS) (33:18)
Yeah,

yeah, great question. So if you talk to just a normal, you know, orthodontist who hasn’t really taken a deep dive into this market, they just assume, oh, there’s five or six OSOs out there and those are my choices. Well, we work, like I said earlier, with over 350 DSOs. And I would say roughly a hundred of those are investing in orthodontics in their portfolio.

You’ve got orthodontics only, OSOs. You have multi-specialty, which invest in every specialty.

And then you have

what some people call the dental trifecta, or I

it birth to wisdom teeth, a birth to wisdom teeth thesis, which is they invest only in ⁓ pediatric dentists, orthodontics, and oral surgeons.

Alison Werner (34:03)
Mm-hmm.

Ty Ramsey (PTS) (34:13)
So you got all those different

Alison Werner (34:13)
Okay.

Ty Ramsey (PTS) (34:15)
of groups out there. And then you have specialist only, have pediatric only groups. have for the most part, perio only groups and implant only groups. There’s all kinds of groups out there and we work with all of them. we also, something that a doctor could just never know. Again, it goes to the doctor that’s treated thousands of patients.

Alison Werner (34:25)
Mm-hmm.

Ty Ramsey (PTS) (34:43)
He knows a lot more than he did on day one. Well, we’ve done thousands of transitions. We know a lot more than we did on day one and we use that knowledge. We mine that data. That data is very important. know what basically we know what groups we know all about all the groups and yeah, some some groups are blacklisted. Some groups I would never consider to partner ⁓ Allison with so.

Alison Werner (35:03)
Okay.

Right. Mm-hmm. Yeah.

Yeah.

Ty Ramsey (PTS) (35:12)
And so

there’s so much value in having an experienced advisory firm that knows all the groups very well.

Alison Werner (35:21)
Yeah.

can you give me an example of where it made more sense for an orthodontic practice to go with a DSO as opposed to an OSO?

Ty Ramsey (PTS) (35:32)
Yeah, it’s just ⁓ you know it’s what they it’s their preference some orthodontics some orthodontists, you know it Run a process with us like Allison did ⁓ Allison And her sister decided to get decided to go with an orthodontic an OSO. So but ⁓ We had offers on the table from just about every from every different they had so many different options to choose from

⁓ A doctor might, for instance, if we’re talking just orthodontist here, an orthodontist might, for instance, ⁓ go with a multi-specialty DSO over maybe an OSO if, for instance, it could be a regional thing. Say, for instance, a multi-specialty DSO has eight GP practices around…

the orthodontist where it could do kind of a hub and spoke approach. that orthodontist knows day one, hey, my revenues are gonna go way up if I partner with this group, because I’m gonna, and they don’t

Alison Werner (36:33)
Mm-hmm.

Ty Ramsey (PTS) (36:41)
tell them to refer, I’ll be clear on that, but it just makes sense that their referrals would probably go

Alison Werner (36:45)
Yeah.

Ty Ramsey (PTS) (36:49)
up. There are situations like that, there are.

You know, it just depends on how the group presents and what the doctor wants out of it. And I don’t put any of them in a box. I mean, I’ve partnered every kind of ⁓ aggregous

There are many different kinds. Just like I said, I’ve partnered every kind of those groups with various orthodontists.

Alison Werner (37:14)
Okay, in terms of, know, we talk about how the practice should be growing as it’s looking at joining an OSO or a DSO. But what about growth once they’re in the OSO or DSO? Okay. Yeah.

Ty Ramsey (PTS) (37:30)
Yeah, if I could hit on the first part real quick.

So yes, very important. A lot of doctors say, this is something that I run across all the time. A doctor says, you know what, I love what you had to say. I do want to do this, but I want to wait a year because I know I’m going to grow. Or I think I’m going to grow. Well, it seems, you know, I would say that happens.

less than 50 % of the time they end up growing. Because let’s face it, competition is increasing and the competition is getting smarter. The competition for these private doctors being practices just like them that have partnered with great DSOs or OSOs and are going to grow 25 % their first year like Allison did. So it’s getting harder and harder. So I would say it’s very, very important.

When you go into this, all the groups are gonna look at your trailing 12 months. So your last 12 months production and collections. If that’s on the upswing, you’re in good shape. I’m simplifying a bit. For the most part, you’re in good

Alison Werner (38:38)
Okay.

Yeah.

Ty Ramsey (PTS) (38:46)
They’re gonna wanna look at your last three years, including your trailing 12 months. So what you don’t want to make the mistake of doing is that you’re on this trend and then waiting and being on that trend.

Alison Werner (38:51)
Okay.

Ty Ramsey (PTS) (38:59)
This trend is going to make a drastic ⁓

Alison Werner (39:03)
Okay, I’m

gonna have you say that words for the people who are listening, not just watching.

Ty Ramsey (PTS) (39:07)
okay. yes.

Yes, I’m sorry. Yeah. So I did my hand in an upward position. It’s very

Alison Werner (39:13)
You

Ty Ramsey (PTS) (39:15)
to ⁓ go to market there. It’s very advantageous. It’s optimal to go to market rather if you’re trending up. If you’re trending down, we can still get we can still get you a great result. But it’s we’re not going to be able to get quite the result we could get if you were

trending up. it’s and so if you’re trending down, do you want to wait until you’re trending up and we’ll analyze that and look at it. We do a free evaluation for any doctor that wants to do that and in many cases it would still be time to have a look at things because odds are if you’re trending down, you’re just going to keep trending down. So we got to you know we can help you look at

We could also help you look at your numbers and identify some blind spots. Hey, you’re paying twice as much as you should be on credit card fees. You might want to move to ACH instead. And that could make $50,000, $100,000 difference in your EBITDA, or your earnings before interest, taxes, depreciation, amortization. It’s what every group values a practice on.

Allison Hale (40:15)
me.

Alison Werner (40:17)
Yeah.

Okay. Yeah.

Ty Ramsey (PTS) (40:30)
And we can make some really educated suggestions on that for the doctors that do want to wait and then assess the potential of them being able to be on an upswing. And then we decide whether to go to market or not. And we’re not the firm that is, we’re gonna do a transaction at all costs. Dr. B. Dan, Group B. Dan, we just wanna do a transaction. And I think Alan can-

Alison Werner (40:52)
Mm-hmm.

Yeah.

Ty Ramsey (PTS) (40:58)
or Allison can tell you they never felt any pressure from me to do a transaction. It was my job to be their good shepherd and deliver the information and let them make their own decision. I’ve talked to many doctors and we have run a process and I say, you I can’t recommend that you do any of these. Not many doctors. Most of the times if we run the process we get a great result. But there are some times that we run the process and the result

Alison Werner (41:06)
Mm-hmm.

Ty Ramsey (PTS) (41:27)
We just couldn’t get what the doctor wanted. I’m not gonna push the doctor to do that. He or she’s gonna be living this. So I’m very cognizant of that and my philosophy has always been just do good work. And sometimes good work means that we do a transaction. Sometimes it means that we just give you advice.

Alison Werner (41:29)
Yeah.

Yeah. Mm hmm.

Yeah. So, Allison, let’s go back to you for kind of the growth and maybe you can talk about growth after transition.

Allison Hale (41:57)
Post affiliation, it was amazing. The group we partnered with really knew of all these different levers to pull that could increase our production super easily without adding doctor days, without adding more doctor time. And it was really beautiful. Our practice grew 25 % plus within the first 11 months of affiliation.

And now that I know what those levers are, I’m in a better position to help other practices get to where they need to be in order to enter into one of these partnerships.

Alison Werner (42:30)
Okay.

let’s go back a sec. And what would your advice be to when someone should contact

Ty Ramsey (PTS) (42:40)
Yes, great question. would say number one thing is you need to plan ahead. ⁓ We like to say start with the end in mind. ⁓ So that means normally I would say five years or more ahead of your ⁓ exit time frame. But for doctors who are past that, we can help you too. We can very much give you…

Alison Werner (42:59)
Okay.

Okay.

Ty Ramsey (PTS) (43:07)
good advice and help, you definitely want to start with the end in mind. We have an internal company joke or a saying ⁓ called, we say they always come back. what that means is we have had, I mean, I’m working with a, ⁓ this is a general practitioner now who did start planning ahead and let us partially advise her. We didn’t even get to the point where we did the evaluation, but we talked about doing one.

And then she said, well, I’ve been talking to this one group directly and they’ve given me a really good offer. And then she told me the offer and it was like over 10 years, I’m gonna make this much. And I said, okay, well, I mean, I wish you good luck with that. She was really intent on going. And then, know, six months down the line, she called me back. She said, everything you warned me about came true. So I’ve been through this. see, you know, if you…

You just want to, ideally, let us work with you on the front end so that we can get the optimal result on the back end. whether that involves us or not remains to be seen. But we’re here just to help clients. And we know that we’re gonna make a living if we just do good work. And sometimes good work means not doing a transaction with our clients.

Alison Werner (44:34)
Yeah,

yeah.

Okay, so I’m going to ask a follow-up question there. What are some of the things that you warn people about?

Ty Ramsey (PTS) (44:41)
⁓ Yeah, another great question. ⁓ You can’t put a price on information. Working with an advisory firm that has all the information

about all the groups, knowing the groups well is invaluable. ⁓ I would warn a doctor, I mean,

Alison Werner (45:05)
Okay.

Allison Hale (45:07)
you

Ty Ramsey (PTS) (45:10)
I think very highly of most of the groups out there, but you know, I want a doctor, know, don’t let us at least chat with you before you go direct with a group. And I always, I have great relationships with many of these groups and I always joke with them. I say, you know, yeah, we’re working on this great deal together. And I know you would rather be doing it direct with the doctor, but you know, I joke that they, the groups both

Alison Werner (45:35)
Yeah.

Ty Ramsey (PTS) (45:39)
get excited and they roll their eyes at the same time whenever we bring them in practice. They get excited because they’ll tell you that they turn down 90 % of the doctors that come to them directly. But they’ll also tell you that they’re interested in about 90 % of the practices that we bring to them. they’re excited, but then they roll their eyes because they know they’re going to have to pay up on this.

Alison Werner (45:44)
Yeah.

Okay.

Okay.

Yeah.

Ty Ramsey (PTS) (46:07)
we’re going to create a competitive situation. And most groups will tell you that about 80 to 90 % of all their transactions are done without brokers. ⁓ And we actually depend on that for our business because, ⁓ you know, that allows the group to pay up on the few deals that we bring them because they haven’t done a lot of deals with.

Allison Hale (46:10)
Mm-hmm.

Alison Werner (46:19)
Mm-hmm.

Hmm.

Ty Ramsey (PTS) (46:37)
brokers.

Alison Werner (46:39)
Okay,

so the doctor doing it directly isn’t necessarily getting the best advocate and getting the money they… They don’t have enough. Yeah, okay.

Ty Ramsey (PTS) (46:46)
I wouldn’t say they don’t have an advocate is the problem.

To me the analogy is, let’s say, God forbid you got falsely accused of some bad crime, you wouldn’t walk into the courtroom, hey I’m just going to wing it and defend myself. You would get representation. Just as you should have representation in looking at ⁓ leveraging your largest asset, your practice.

Alison Werner (47:04)
Right. Yeah.

Ty Ramsey (PTS) (47:16)
as a financial vehicle and that’s all we’re doing here. We’re leveraging your practice as a financial vehicle. You need representation in that. You need to have a great CPA. You need to have a great financial advisor and you need to have a great merger and acquisition slash broker as well. And all three of those entities should be disparate entities for checks and balances.

Alison Werner (47:24)
Yeah.

Yeah. Yeah.

Allison Hale (47:40)
Mm-hmm. ⁓

Alison Werner (47:42)
You you talk, yeah.

Ty Ramsey (PTS) (47:42)
And Allison had a,

you know, I recommended ⁓ a, this was actually, you know, towards the end of their process, but then we got through it, but I recommend it. She wanted to clean up the books and I recommended a CPA, I think that they’re using still today.

Allison Hale (47:59)
Yep, that’s right.

Alison Werner (48:00)
You know, a lot of this has been talking about how going to an OSO, looking at it as your end strategy or having your end strategy in mind. What if you’re a practice that a doctor who’s not necessarily looking for an end per se, maybe you’re in the middle of that career and you still want to be practicing for several years to come. Is that? Yeah.

Ty Ramsey (PTS) (48:14)
Mm-hmm.

Yeah.

Allison Hale (48:25)
I’ll just say briefly, in my experience, these are the practices that the OSOs are most excited about. A younger doctor who’s got 10 or more years left to practice and to give and build towards the greater good, I see OSOs offering younger doctors fantastic deals because they know they’re going to be there to keep the practice intact and keep it growing.

Alison Werner (48:33)
Mm, okay.

Okay.

Allison Hale (48:54)
⁓ So in fact, that was one of the reasons why Dr. Parks and I started looking in the first place is some of these younger doctors that we do to be high flyers were partnering and we’re like, hmm, we thought that was something that only doctors towards the end of their careers

Alison Werner (49:01)
Mm-hmm.

Mm-hmm.

Mm.

Allison Hale (49:13)
doing. And I think it’s worth seeing doctors in all stages of their career choosing the partnership for various reasons.

Alison Werner (49:13)
Yeah.

Allison Hale (49:22)
whether they just want to give up the administrative headaches, whether they’re to decrease their overhead. And again, ensure that their legacy is preserved.

Alison Werner (49:25)
Mm-hmm. ⁓

Ty Ramsey (PTS) (49:35)
Yeah, for sure. think that’s another misnomer, is this is only

Alison Werner (49:35)
you

Ty Ramsey (PTS) (49:40)
people that are looking to retire. I mean, I can’t stress the value of looking ahead enough. Because you can partner with, mean, kind of an analogy would be, let’s say you invested in Apple stock right

they came out with the

iPod.

I mean, you’d be in great shape right now. You were with the company the whole time through its ups and downs, but for the most part, it’s gone.

Alison Werner (49:58)
Yeah.

Ty Ramsey (PTS) (50:03)
you know, right and up. same thing, you can grow with a DSO. In my opinion, if you have the right DSO or OSO, your financial outcome with them, even if joining in your 40s till the end of your career, can in many cases far exceed what you can do on your own. And it’s taking those chips off the table.

as well. There’s a big value to de-risking your life’s work. Think of it almost as a professional athlete signing a contract with a guaranteed amount of money. You know, they blow out their knee and they can never play again. Well, they have that guaranteed money. You have the same thing here. You get some guaranteed money up front and then in the meantime, you pull all these, they pull all these growth levers.

Allison Hale (50:45)
and

Alison Werner (50:55)
Okay.

Ty Ramsey (PTS) (51:00)
And I have many clients who have experienced, I call it income recovery. So they partner with a group and then a group, ⁓ they’ve grown so much with the group that their income with the group is now pretty close or sometimes even exceeding what their income was as an individual practitioner.

Alison Werner (51:05)
Mm-hmm.

No. ⁓

Well, I think you know, for my final question, I wanted to ask you both what well, Allison, let me put the question to you first. What’s the one piece advice you wish someone had told you before you started down this path?

Allison Hale (51:36)
think if I could go back to the very beginning to our when we were first toying with the idea, I think the biggest piece of advice would be to get help. ⁓ You don’t know what you don’t know about this process. If you’re not necessarily business savvy, then you’re going to need to get some advice. Ask as many questions as you can. Connect with your peers who have been through the process.

Ask them about the good, the bad, the ugly. You want to know what worked for them, what didn’t work for them. Number two, be so clear on what you want to get out of the partnership. Know what, again, like as Ty said, begin with the end in mind. What do you want it to look like? And then get your house in order.

clean up your financials, if you’re running a lot of expenses through your practice, tighten that up before entering discovery because that’s going to help make things a lot easier going into it. But definitely getting help, asking questions, doing the research, doing the work, clear up these misconceptions. There’s a lot out there.

Alison Werner (52:54)
And then Ty to you, my last question would be, what’s your advice for a practice who’s got an inkling that this is something they might want to do?

Ty Ramsey (PTS) (53:03)
Yeah, my advice would be just get with us and we’ll do a pro bono evaluation on your practice. It’s a legal document that can be used in a trust or a will. It’s underwritten by a dental CPA and they would probably pay five to ten thousand dollars to have this done on their own. We do this pro bono. So worst case, you’re coming out with exponentially more information on your practice.

Alison Werner (53:18)
Okay.

Yeah.

Mm-hmm.

Ty Ramsey (PTS) (53:31)
practice is viewed from an investor’s perspective and the value of your practice when selling to an individual. Now if you’ve grown your practice north of 1.5, it’s going to be real hard to sell to an individual, ⁓ the partnerships with DSOs. But yeah, that would be my advice. Get a free valuation done. Worst case scenario, you have this legal document you can use in a trust or a will and you’re going to know all the blind spots if there are any of your practice.

Allison Hale (53:45)
Mm-hmm.

Alison Werner (53:54)
Yeah.

Ty Ramsey (PTS) (54:00)
and you’re going to know whether you’re ready to go to market or not. And if you’re not, mean, only good outcomes can come from doing a practice valuation.

One,

you find your practice needs work. You hire people like Allison to help you where it needs to be. We could recommend a good CPA to help get the books in order, things like that. Or, hey, you’ve got a great practice and we think we could get a great outcome for you.

Alison Werner (54:20)
Yeah.

Ty Ramsey (PTS) (54:26)
let’s go down that path. And even when we do that, there’s no obligation. We can run a full process, get a number of different offers. I think we got six or seven offers to choose from from Allison’s practice. And we can go through that whole thing and still there are no fees unless we call it a success fee. The only time we take a fee is off the top if we successfully partner the doctor with a DSO or OSO.

Alison Werner (54:38)
Mm-hmm. Yeah.

You

Okay. I actually have one more question because that brought something up. What’s the timeframe on something like this? ⁓ Really? Okay.

Allison Hale (55:02)
⁓ it’s fast. So I will say,

Ty Ramsey (PTS) (55:03)
Yeah, yeah.

Allison Hale (55:07)
one thing that surprised me the most, think not aside from just how complex it was, but how quickly it happened. So and this was part of the benefit of partnering with Ty is he was able to explain how private equity works and why we were getting so many offers and they were so eager.

Alison Werner (55:31)
Mm.

Allison Hale (55:31)
⁓

because these groups have allocated monies for certain timeframes and they want a decision. So I was very surprised at how quickly it went. Even we even had to pump the rakes a little because of our flooding. ⁓ But with Ty, we were able to very successfully navigate that. And he put our mind at ease that, they’re not trying to rush you. This is why they want to move quickly because they have these funds.

Alison Werner (55:39)
Mm-hmm.

Okay.

Allison Hale (56:01)
set aside and if they don’t get used, they could go to another potential partnership. Ty, did I get that right?

Alison Werner (56:07)
Okay. Okay.

Ty Ramsey (PTS) (56:09)
Yeah, you sure did. I would say, yeah, from a normal timeframe, if you, ⁓ let’s say that we’ve already done a practice valuation, you know, that’s probably gonna take ⁓ a month to get all the info in back and forth. No, they send in their financials. It takes us a couple of weeks to put the valuation together. We then review it. Then we decide to go to…

Alison Werner (56:25)
Right.

Ty Ramsey (PTS) (56:35)
you know, if we want to go to market, normally we call it running process. Normally we run the process for anywhere from four to eight weeks, depending on, that’s just, you know, letting the market speak and getting all the interested parties in, turning those into offers, doing ⁓ side-by-side analysis with a five-year wealth creation module on each offer.

Alison Werner (56:48)
Yeah.

Ty Ramsey (PTS) (57:02)
Then deciding with the doctor on the final, normally two to three groups. Then we have on-site meetings. So the whole process of getting from evaluation to signed with a group, LOI, letter of intent, is normally 60 to 90 days. And then after…

Alison Werner (57:22)
Yeah.

Ty Ramsey (PTS) (57:31)
it’s signed another 60 to 90 days. So the whole thing. Yeah, I mean, it’s, mean, and yeah, certain certain groups move slower than others, certain advisors move slower than others. So, but I feel like we have the process down pretty well and can expedite it, not rush it, but.

Alison Werner (57:35)
That’s really quick. I would have thought longer. Okay.

Yeah. Yeah. Yeah.

Yeah,

yeah. Well, great. I really appreciate you both sharing your expertise and thanks again for joining me.

Ty Ramsey (PTS) (58:04)
Thank you.

Allison Hale (58:05)
Thank you!