Ultimately, if LPS is unable to find the ideal IDSO partner for our doctor clients at an exceptional value, doctors are never obligated to do anything at all. They can learn about all of their options, confirm our estimated value and fully understand if an IDSO partnership is right for them or not. It is rare that LPS does not complete a partnership by delivering an IDSO partner to our clients that is exciting for the doctor…but doctors are never obligated to enter into any transaction.
What is an IDSO Partnership?
In an IDSO partnership, doctors sell 51% to 90% of their practice for cash up front and continue to lead their practice as owners for years or decades. They retain their brand, team, and full autonomy while accessing the resources of a larger, silent partner. And in the LPS process, you will understand exactly what full autonomy means – for you specifically.
The decision to seek an IDSO partner is the first step in the process. Doctors usually have strong beliefs as to whether partnership is right for them. Many of the skeptics change their view once they understand the actual benefits of IDSO partnership. In the LPS bidding process, doctors are educated on what each unique IDSO partner can offer to their practice, their lifestyle and their financial future.
Despite inflation, bank crashes and higher rates, LPS has continued to achieve record values for growing practices including GP and all specialties from coast-to-coast in Q3, 2023. This is in part driven by the number of new IDSO bidders with access to capital. Whether today’s record practice values will continue is an unknown. We hope they do!
18 Reasons Why Doctors Choose an IDSO Partnership over Remaining Independent
A doctor’s reasoning for choosing an IDSO partnership are different in every case, but here are the most common drivers to IDSO partnership, not in any particular order:
- Reduction in administrative burdens results in more time for family, other pursuits, and fewer headaches.
- A known, longer-term exit at today’s record values is attractive vs. the uncertainties of the future.
- The recruiting resources of an IDSO partner are very valuable in today’s hiring climate.
- A larger practice will ultimately only achieve a market value for the doctor’s ownership in an IDSO partnership. Associates or other doctors are unable or unwilling to pay a market value.
- Inflation in practice operating costs coupled with static reimbursement rates and fee schedules are compressing margins, decreasing future practice values. Many IDSOs are getting paid at higher rates than independent doctors.
- Competition for new patients is increasing and IDSOs are better marketers than most doctors.
- An IDSO partnership enables a doctor to reward loyal associates and key team members with future ownership opportunities, reducing turnover.
- Long term capital gains tax rates in 2023 are relatively low at only 20% Federal. They may be higher in the future.
- Liquidity in troubled times can create valuable investment opportunities outside of dentistry. Cash is also earning 5%+ without risk at the moment.
- An IDSO partnership can mitigate risk. One 55-year-old LPS client passed away last quarter. His $5.0 million value practice is now worth zero.
- Collaboration with like minded doctors can open up new patient care opportunities.
- Competition is increasing and an independent dentist is at risk of strong IDSOs or DSOs entering their markets.
- Doctors who choose the right IDSO partner can achieve generational wealth over time through their retained ownership. Over 100 LPS clients profited from IDSO recapitalizations in the last four months of 2022 alone. Some doctors achieved as much as 500% returns in less than 35 months. The lowest gains were about a 25% IRR.
- Doctors now understand that there is a difference between an IDSO silent partner vs. the “old” DSO model of homogenization, micromanagement and 100% ownership.
- Doctors who enjoy the building or buying of practices can utilize their IDSO partner’s resources to grow bigger and faster with no personal financial investment or risk.
- Reduced team benefit costs are useful in recruiting and retention.
- Specialists are at risk of their referral sources being acquired by DSOs or IDSOs.
- Doctors eager for growth are excited to access the IDSO opportunity of providing ownership to future associates and key team members.
Your Practice, Our Expertise: Get the Highest Valuation with Large Practice Sales
The decision to enter into an IDSO partnership is a pivotal one for doctors in 2023. With a range of benefits, including financial security, reduced administrative burden, and opportunities for growth, it’s no wonder that more doctors are choosing this path over remaining independent. At IDSO, we are committed to providing doctors with the information and options they need to make the best decision for their practice and their future.
If you’re considering an IDSO partnership, reach out to us today to explore the possibilities. Your practice’s next chapter could be your most successful one yet.
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