Too Successful to Sell? The Exit Strategy No One Talks About

[00:00:06] Dr. Sammy Webb, thanks so much for coming on the GrowOrtho Podcast today. So excited to be here today. Thank you. Absolutely. My pleasure. So tell everybody watching, listening, just a little bit about yourself. How long have you been doing this? Where are you based? And maybe just a little bit about your transition into Epic 4 too and how that became a thing. You bet. Well, I'm a practicing orthodontist in Nebraska and Wyoming. So in Scottsworth,

[00:00:34] Nebraska is our main location. I've been in practice for about 20 years, started my practice as a one day a week practice located inside of a hospital and slowly grew my practice to full time and then to six locations. Wow. Yeah. So it's been a fast and furious journey. About two years ago, I became the CEO of Epic 4,

[00:01:02] which is a specialty partnership organization with about 18 founder doctors. And our headquarters are right here in Scottsbluff, Nebraska. Their office is literally on the other side of the wall from me here. And it's just been a really great journey. And how was Epic 4? How did that kind of come to be? So Epic 4 is a group of about 18 founder doctors that came out of the Shulman study group, which was,

[00:01:32] it still is in existence, but it's a study group of, I mean, there may have been 150 orthodontists in this study group. Some of the top practices in the country. And I think all of us were, you know, looking for that next step in our career. And, um, we kind of ventured away from Shulman and came together and founded Epic 4. Yeah, that's really cool. I know some of the people in Shulman, um, worked with some of them, like Dr. Ed Wentz. Not sure if you know him.

[00:02:02] Well, that's how we got to HIP, to be honest. Yeah. Okay. Yeah. I didn't know that. I didn't know that that connection was through, um, Ed Wentz. Um, he, he's one of my favorite people to be around. Super positive. Yep. Yeah. I remember somebody told me this like a couple months ago about him, how they, uh, cause he's from, uh, Alaska and they kept saying, Oh yeah, you know, dark and depressing

[00:02:30] and like, man, that must've been tough. All he talked about is how it's sunlight 24 hours a day in summer and amazing. It was like he could only stay positive about it. Glasses always have full. Well, that's really cool. And, um, as you guys started Epic 4, did you start with the core group that it is now or, or was it a smaller group and then that group has now kind of grown? What, what has that looked like?

[00:02:58] Um, it's the same core group of founders, but we have, um, acquired two other Shulman practices or doctors that were in Shulman group. So, and about, about to do another here in the next couple of weeks. That's exciting. And what year did you guys found Epic 4? So March 20th of 2023. So we just did a two year celebration toast the other day. Nice. Congrats.

[00:03:28] Thank you. What are you guys seeing in the current marketplace of, maybe we can start broad, just orthodontics as a whole. It's been pretty crazy, um, since COVID and, you know, COVID affected a lot of markets. Um, but what are you guys kind of seeing just overall within or orthodontics in the, you know, I know you have practices in Nebraska or like all over. So you guys get to kind of see, um, what's happening from a national standpoint, but, but what does that look like?

[00:03:57] Um, I mean, I think the country noticed, uh, an increase in production right after COVID. And, you know, then I think there's been kind of a steady, you know, decline. Um, I would say that within our group, you know, that last year was down a little bit, but I mean, if you look at my practice within Nebraska, we were up. So I think it's going to vary across the country and, um,

[00:04:25] every practice is a little bit different, but I think that everyone is expecting 2025 to be a better year. Yeah, I certainly hope so. I mean, um, every cycle, you know, they say is like 36 months. So we're definitely in that timeframe and, and definitely hopeful that things are on the up and up. So fingers crossed, right?

[00:04:47] Obviously the DSO and OSO market. I mean, I didn't really know about this largely, um, until 2019 or so, but it definitely has heated up, you know, in that timeframe, there's good things and bad things depending on, you know, who you're, you're talking to or what your goals are, what your vision is. Um, what, what does that look like? Maybe, you know, a lot of our listener base is private

[00:05:13] practice. What do they need to know about DSOs, OSOs? What are some, some of the questions that you guys get, um, about the marketplace and, and, you know, do I sell or, you know, do I sell to, uh, uh, maybe hold out for a younger doctor or, you know, what are some of the stigmas? What's that look like?

[00:05:36] I mean, I would say if you would have asked me this question five years ago, I'd be in a different place. So I would have been, um, on the side of the fence that, um, I was against, you know, OSOs kind of corporate dentistry, if you will. And as time went on, I realized that I've kind of

[00:06:03] found myself at a crossroads where I had built my, my practice too large, um, to the point where it would be very hard to sell. I couldn't really have an associate come in and purchase the practice. One, they can't afford it with a student loan debt coming out. The other is that they can't run it. So, you know, as you start to plan that kind of your exit, I think some people wait too long

[00:06:29] to make that decision and started realizing I needed to go a different direction. And so I had to change my mindset and really look at what was happening in the industry and realizing that the landscape is much different now than what it was, you know, 20 years ago when I came out and practice back then there were a lot of startups, you know, that was what you did as you, or you bought somebody bought into a practice or bought somebody else's practice. And a lot of those opportunities

[00:06:57] don't exist anymore. So, you know, I was speaking with a young orthodontist the other day and who is doing a startup, which is great. And I said, well, why did you choose to do that? And he said, there's no practices to buy. And he said, the values are so high now because of, you know, that OSO industry, you know, now doctors know they can get more for their practice. So some of them

[00:07:23] aren't willing to sell at the normal, you know, 80% of production, you know, sale price that it used to be. Yeah. I think this is a very interesting topic because what I see in this is probably true in all of small business is we don't really plan for the future. You know, we, we maybe do some a little bit, but largely it's put your head down and do the work, you know? And so when you don't

[00:07:51] plan for the future, it's like, you, you know, hip has been in existence for almost 11 years. And it really seems like it's just gone by like that. You know, I could like blink and, um, you know, I could say the same thing for being a parent's like a blink and my daughter's like seven years old, you know, business is kind of the same way. It goes by so fast. And I kind of like to unpack

[00:08:15] some of this because you said you had built your practice maybe too big to sell. And how can people start to think about this sooner and maybe start to set goals? What, what is their vision? How should they think about this as a younger practice owner? As a younger practice owner? I mean, I think you're just motivated. I think, um, most of us are achievers in this profession and want to be

[00:08:40] successful and you're just in that go, go, go mode. And I need to grow. And, but you don't think about those, those next steps. And there comes a point where you get to that point of almost exhaustion where you're like, I, I need help. Well, then you're late to the game, trying to find an associate to come in and help you. And I think things start spiraling out of control. So I think there's a point where you go, your grow your practice, but then you have to think about getting another doctor

[00:09:08] in there to help you. So, and as I, as I look at our profession and I think dentistry as a whole, our dental schools are now over 50% women. And I think that's going to change our profession drastically because if, if we have a majority of our profession as females, you know, a lot of them are going to want to have kids. And I think that, um, that practice life balance, being able to be a

[00:09:37] good parent is going to play in. And I think a lot, I mean, you've probably seen the mindset change since COVID. Um, I think people are putting more value on their time and their families and not so much on their practices. And so as you, as you speak to new graduates coming out, they have a different mindset too. Um, you know, they kind of want to go to work and go home. And I think that's

[00:10:02] where those, uh, DSOs play in because it provides these people that, that better practice life balance. And I think about how much work I put into, I mean, learning the business and all the mistakes I made, you know, how do I do payroll? I mean, my family would want to leave the house when I had to reconcile my bank accounts cause I hated doing it. So you think about all those things that, you know, you do on the nights and the weekends and that you take away from your family. And I think there's kind of a switch

[00:10:31] now where people don't want to do those things and they may compromise a little bit of their pay, you know, for that balance. For sure. Yeah. And there's a lot to unpack here. And I guess from a global view, taking pressure off versus taking more pressure on, you know, um, that is huge because I, I talk to doctors every day. I'm sure you do too. And, you know, bringing in another, another

[00:10:59] associate and it sounds good, right? It makes sense. It's logical, but is that associate going to be able to see the amount of patients you see? Maybe, maybe not. It takes time. It takes training. And I don't think that they ever will perform to the level that the owner doctor did. I mean, not, not in every situation, but I remember when I was bringing my first associate and Chris Benson, um,

[00:11:26] helped me with my transition. I remember Chris sitting me down and saying, Sammy, he's, he's like, I want you to remember one thing. He's like, no matter who you bring in here, they're never going to be able to do what you do. He said, you do the work of two doctors and they will never do that. Nor can you expect that of them. And it doesn't mean that they're a bad doctor or a bad person. You just have to realize you, you function at a higher level and you can't be disappointed,

[00:11:55] you know? And so he kind of had to level set with me on that. Yeah. The right expectation is huge. And I mean, this is also with team members. You see people talk about, you know, you're talking about, uh, um, payroll and, and things like that. And so I'm going to bring in a director of operations or maybe even like a COO or somebody, it could even be an office manager. And it's the same thing. If you don't have the right training for that person,

[00:12:23] the right mentorship leadership, it's like, it's just going to create more stress, you know, then you're going to get frustrated with them. Um, and then it's this cycle of, and that's that entrepreneurship, that business owner cycle that we all go through is how do you grow the right way and maybe see these growing pains ahead of time. But for a lot of people, you have to go through it.

[00:12:48] Like these are, these are the natural stages of the life of the business is just these growing pains. And you think about the sacrifices that you make in, in, in doing some of these things. And especially as a female, um, it's risky because, you know, at the time, like when I had my son, um, I think I had about 16 team members, thousands of patients. And I took two weeks off from maternity

[00:13:14] leave. I had no coverage. I had nobody, you know, to help me. And so those are just sacrifices, sacrifices that you have to make. And I think about my family going skiing and I wouldn't go I'll sit in the, in the clubhouse while you guys go skiing, because if I get hurt, I can't work. And I have too many people relying on me. So there's a huge risk in kind of bringing up a private practitioner or solo practitioner, um, without, you know, some support. And I think

[00:13:42] that's also why you're going to see more doctors going to that partnership or having an associate in there. Uh, cause otherwise it's hard, hard to take time off. Or what if somebody has an illness? It's all those things. Yeah. I never thought about it that way of like even traveling. I mean, yeah, if you even land wrong skiing and like, you know, your wrist and your hands, like all of that factors into every,

[00:14:10] every decision-making moment is so important. Um, yeah, that's a, that's a really good point. And then, you know, we haven't even really talked about scaling by location. So obviously with pressure, we're talking about taking pressure off, uh, a lot of you hear physician burnout all the time. Um, because a lot of people are stressed. A lot of people do have a lot of pressure.

[00:14:34] And another thing that I see other than bringing in associates or other team members and that adding stress is, well, I guess I'll go buy another location. And we could probably talk about this for hours, but it's not really all it's cracked up to be all the time, you know, and, and a lot of these practices I see buying locations, they're like 50% capacity in their main location. So, you know,

[00:15:03] going out and just buying another practice now, do you have to hire more staff or does your staff have to travel? Um, what are doctor days going to be like there? What are some of the things you see or have seen over your profession with multi-location? I think it depends on the practice you're purchasing or that, that location, but I can see why some people would prefer a de novo versus actually purchasing. Um, sometimes it's nice to already

[00:15:32] have the patient base, the revenue, all those things, but I have found it sometimes harder to change the culture or change maybe those things that are set in place at the practice that's purchased. Um, like I know in my practice, we have spent so much time on, on efficiency and systems. So we're very much a systems, um, uh, practice and, you know, I, I purchased a practice and I found it extremely

[00:16:02] difficult to have them incorporate into our systems because they want to keep doing things the way they did. And so, you know, there's sometimes I sit back and think I would have been better off just doing a de novo and, and having it set up that way from the beginning. Yeah. I think about stuff like that too. We acquired a business in, I think it was 21 and same type of thought after you're in it and in the integration, you're like, Ooh, should I just built this sector of the

[00:16:31] business from the ground up? Because you're right. I mean, you inherit their systems, their way of doing business, their team, their culture, their beliefs, their problems. Yeah. So it can be really tough. Um, you know, I always caution people in terms of buying more locations of really maximizing the location that

[00:16:54] you have. And I guess there could be an argument made even, even if it's, um, not at capacity. Well, this is maybe as busy as we could get. Okay. Possibly. I would say though, nine times out of 10, when I look at who's buying more locations, they really should just be doubling down on their current location in most cases, you know, cause now you're going to have to have more marketing spin too. Like

[00:17:19] how are you going to get that location busier? Um, but yeah, all these problems kind of come with that. Um, what do you think are some of the main constraints? Everybody, especially now is looking to grow. Um, you know, it's been a little bit down COVID after COVID, it was this tremendous uptick and then everything's kind of normalized. What do you think are some of the biggest constraints that are keeping

[00:17:47] practices from accelerating growth? I mean, every practice is going to be a little different. So if it's a younger practitioner, they may, they may, may need more marketing. Maybe they need to get more new patients in. Maybe they need to fill their chairs. You know, you're going to have some of those practices who are operating at capacity and maybe they can't grow because they don't have enough chairs

[00:18:12] or, you know, they need another, um, exam room or TC room. So it's hard to say what their struggles are going to be. Cause I think it's different for everybody and, you know, their location in the country. I mean, I'm fortunate that I live in Nebraska where I don't face as much competition, but I think in some of the larger areas, competition is probably, um, what people are fighting with.

[00:18:37] And now you have more general dentists doing orthodontics and it's all those things. But I, when I started in practice for me, the biggest thing was the patient experience and the relationships with the patients and the relationships with my referring practitioners. And I think at some point people have lost sight of that or they say, well, you know, those people aren't going to refer to me

[00:19:02] anyways. I'm just going to, you know, do this. And I, I think there's something to be said about those relationships. And if you do the right thing, treat people, right. I feel like the reward comes and I've had, you know, like our local hospital, when I came in and started doing what I do, they started discussing our practice in their management meetings and what are they doing over

[00:19:28] there? Like, what is their secret sauce? And they'd come to me and say like, asking me for advice. It's like, it's not hard. You know, you just have to have great customer service, treat people well. That's it. You know, do the right thing, treat people how you would want to be treated. How do you maintain that across the team? You know, I think I'm, I'm obviously in a leadership

[00:19:54] position. I'm, I maybe am not the best leader verbally, but I'll always be the best leader by my actions. And so I feel like that leadership is so important and, you know, I will do things that I wouldn't even ask my team to do, you know, and I'll take that burden on myself. I'll be the first one here, the last one to leave. I'll be the hardest worker in the room all the time.

[00:20:19] And they see that. And I see the, the care that I give to the patients going the extra steps. And pretty soon it just kind of becomes that, that culture and they believe in it. And they, you start to see them doing the same things. And then it's about the team that you hire. So one thing I have found that I'm good at is finding great people and recognizing talent and bringing them alongside me. And that goes in my practice and an epic force.

[00:20:48] So, you know, we're, our headquarters is right here in Scottsbluff, Nebraska, and these are the highest quality people you're ever going to meet. They are doers, they're workers. And I mean, we will do anything, you know, to make this company great. And the same thing in my practice. So they believe in what I'm doing. They believe what I, you know, how I treat my patients to the point that I

[00:21:12] have, I've probably had to fire three employees. And even afterwards, they still come in and they bring me their kids because they know the level of care that I'm going to provide for their kids. Wow. And so, I mean, it's things like that. It's, it's, it's the people and your team. And I recently fired somebody because she was not treating my patients the way I thought they needed to be

[00:21:34] treated. It wasn't bad, but it wasn't the customer service or, um, the communication that I needed from her to, um, to live out, you know, our legacy and, and to believe in our culture. Yeah. And that's so tough for business owners is letting people go, you know, this is another big topic, but you know, you just hold on to people. And I think the hope is that one day they'll change

[00:22:01] or one day they'll get it. But it sounds like you really, um, had conviction around maintaining the standard that you set. And that is so respectable as a, uh, another business owner like myself of like, okay, you actually practice what you preach and maintain the standard. And then the rest of the team

[00:22:23] knows I have to show up at this level and I have to have the same value system. Otherwise I'm not a fit. And my first job was at Chick-fil-A and, uh, you know, very big on customer service. They're not perfect, but you know, they do a lot of things better, especially if you look at, you know, what they would be compared to in fast food. And, um, they have this leadership model and it was level

[00:22:52] one and you start as level one, obviously. And then there's level two and level three, and then you would get up into management. But if you didn't become a level two leader within six months, it just wasn't a fit. And you weren't employed by Chick-fil-A anymore, you know? Um, and so there was a standard and there still is, and that's why they're so good. Um, you know, higher profitability per location than McDonald's fastest drive through in America.

[00:23:17] And it's really about maintaining that standard. Yeah. I mean, it's setting those expectations and they know that I won't compromise, you know, in, in patient care. And there's times that, you know, I've heard people say, Oh, you know, she's hard to work for because I have these, these expectations that are, that are high. But what I found is as I've been spending more time,

[00:23:41] because I still practice full time, but I am also on the Epic four side as the CEO. So, um, I've had to take a little bit of time away from my practice to, you know, focus on Epic four. And as I've stepped away, you can see the, the panic and anxiety because, well, there's no, where's our leader? Like we're, we're, or we let somebody get away with something and, you know, you're not holding them accountable. And, you know, and I did a survey to my team just

[00:24:10] recently. I, I, um, I sent them all something where they could send me comments and questions or, you know, yeah. Comments back about, you know, things they, they were unhappy with things. They're happy with the, and the overwhelming theme was that they enjoyed having leadership expectations. And they expected that now of their coworkers. And it was just interesting.

[00:24:35] And they, they say that about kids too, as much as they hate rules, they actually need them and they like them. Yeah. They thrive on it. You know, that's how they grow and mature as people. Um, that's huge. And you talked about finding good talent. Um, this is another thing, you know, people will just literally fill seats. Yep. And I was talking to somebody the other day and, uh, they wanted someone on our team to

[00:25:03] interview a possible candidate. And it was like a no-go, like hard stop, do not hire this person, not a fit. And they're like, but I need somebody. It's like, okay, but you don't need this person. Um, what is your process for bringing in talent and cultivating talent? I have not run an ad, um, in, so I have six locations and five of my locations. I have never

[00:25:32] run an ad for, and I, I won't. So we go strictly on finding people that either we know maybe a friend of one of our team, you know, that they can say like, this person would be great. Um, but I don't like to run ads or anything because I, I need good people and my team expect that too. So you'll

[00:25:57] hear my team say, you know, get rid of this person. We'd rather work harder and not have them here. Wow. Then have them here. That's awesome to hear from your team because they're, they're the ones maintaining the standard too. Yes. Yeah. Yeah. That's huge. If you can have a internal referral network for finding talent. Um, and I've, I've heard this from various people of just how much better it is out of the gate. Um,

[00:26:25] you know, and some people may need to run ads based on what area they're in, or they may not have that option. Um, but just finding the right person, uh, is so key and not compromising. Don't ever compromise. We've worked really hard on our reputation, um, over my career. And so we have a lot of people who, you know, drop off resumes and just really want to work here. So maybe we're lucky.

[00:26:52] So let's just talk a little bit more about Epic four, just real quick. Yeah. You know, some people may still be asking, okay, you know, Epic four, but how is that different maybe than another OSO or DSO? So, you know, what are some of the unique things about Epic four and what you guys have created together? One of the biggest standouts is it's the people in the organization.

[00:27:17] It's the quality of doctors that came together, uh, to create Epic four. And we are, you know, doctor founded or doctor owned and we're doctor led. So that was very important to us to have, um, our doctors in charge of this company, not really, you know, um, people in suits that don't know

[00:27:42] anything about our profession running our company. So we have, um, a great advisor group that has helped us create Epic four. So we've, we really leaned on our advisors and that's aligned dental partners. And they've been, they've been great and really helped us, you know, set up something special. The other thing that, um, is different about Epic four along with our doctors is that clinical

[00:28:10] excellence is, is of the utmost importance to us and our legacy. So many of us has spent our entire careers building our, our reputation. Um, and we really want to see that legacy go on. And so as I look at some of the other companies, you know, you'll see that quality when they sell and all of a sudden the quality of care drops, and then you start to see the associate doctors

[00:28:37] coming in and that revolving door of doctors of which just decreases that quality of care. And, you know, that's what we are unwilling to sacrifice within our company. So we want to have quality doctors and we do not want a door of revolving doctors, um, in our organization. So one thing we've done differently, we really tried to solve that associate doctor piece.

[00:29:04] And so the reason why we're called an SPO or a specialty partnership organization is because we truly want to partner with practices, but that partner word is very important because what, what we have done is set aside a percentage of our company that is reserved for our associate doctors that come into Epic four. And they are basically gifted

[00:29:31] ownership into Epic four. They do not pay a dime. They get to earn their equity and they become an owner in a, in an organization without taking on any more debt. And I mean, we feel like these doctors come out with so much debt already. They can't afford that. Maybe they can't afford to buy practice. Maybe they can't afford to buy into, you know, an OSO or DSO.

[00:29:57] And so we want, we want to find those great doctors and we want to retain them. And, and so that's one of the things we've been trying to solve within Epic four. Um, that was one of our main initiatives and we feel a responsibility to our profession and to the future orthodontists, you know, many generations to come. That's incredible to hear. And it's incredible too, and very reassuring to know that

[00:30:24] quality of care and treatment is number one. Yes. And I'm not, you know, I don't want to bash anybody, but you know, as we all know, when corporate comes in private equity, uh, you know, the spreadsheets, people finance things change because they're, they're just simply looking at line items and numbers, you know, and I have seen, uh, you know, a lot of people sell transition

[00:30:50] and you see what you just talked about where quality drops. And then in a lot of cases too, just due to the changes that, that are happening, the quality and the morale, the, the, the culture drops too. These things kind of dip at the same trajectory. And so, uh, turnover becomes a huge problem. Not just you, you talked about, you know, with associate doctors, but then that becomes kind

[00:31:17] of the culture with the whole team, high turnover and then compromising on care. And then, you know, that really, if you have somebody who's been doing this in the community for 15, 20, 30 years, and, um, they decide to go down that road and then these things start to happen, what does that do to their legacy? How is their name remembered? Because a lot of these deals, they're still keeping the

[00:31:44] doctor's name on the building, you know? And it's honestly like from my position has been really sad to see in some cases, you know? Um, and in some cases it may be fine and may be great, but others, it's like, man, you really feel for that person in that position because everything that they built it in, now you didn't start to see it in the mom's groups on Facebook. You know, my wife was showing me

[00:32:12] one the other day and I'm like, Oh wow. And then you start to see it with reviews or word of mouth, or then the referrals don't want to refer to you anymore. So it's like this chain reaction. And a lot of times we don't see the interconnectedness of how all of this takes place. And it's almost like, you know, kind of like a bomb goes off and you're kind of like, man, what happened? But it's all these little things and it just started unraveling.

[00:32:41] Yep. And that's why, you know, for me, you know, I had, um, a new associate that just came on in November. I mean, my goal is I want this to be his forever home. I want him to, you know, start his career here and end his career here. I want him to ingrain himself in our community just like I did. I mean, this is all about those relationships I spoke about earlier. I mean, I have invested in this community. I mean, I take pride in what we've built. When I see my patients at

[00:33:10] the grocery store and they, they come talk to me and I mean, it's, that's just something that we're unwilling to compromise on, you know, and we, we need to see that quality maintained and those legacies live on. That's awesome. So if somebody watching or listening wants to learn more about Epic Four or yourself, what's the best way for them to do that? I mean, they're welcome to reach out to me personally, even if there's a, you know, somebody out there in private practice that

[00:33:40] wants to learn what not to do or things that I've done in my practice to grow. Um, my email address is just Sammy S-A-M-I at webortho.com. And then our website for Epic Four is just goepic4. It's the numeral4.com. Awesome. Well, thanks so much for coming on the Grow Ortho podcast. This has been amazing and it's been fun just to connect with you and chat. Yeah, absolutely. I am very

[00:34:05] passionate about this and, um, you know, I, I, I feel fortunate to be in this profession and we just want to see, you know, orthodontics and, and pediatrics be great long-term. So. Absolutely. Thank you. Awesome. Well, thank you.