Dr. Kevin Coughlin is a new breed of dentist. He grew up in Feeding Hills, Massachusetts, a small town outside of Springfield. He received his bachelor’s degree from Springfield College, and his dental degree from Tufts School of Dental Medicine. Prior to graduation he spent time as a resident general dentist in Togas, Maine at the oldest VA hospital in the country.
In 1983, Dr. Coughlin began in private practice and is currently on the staff at Baystate Medical Center, Mercy Hospital. Noble Hospital and Mary Lane Hospital. He’s one of only a few dentists in the country with both a Fellowship and Mastership in the Academy of General Dentistry and in the process of obtaining Board Certification. He is also a Fellow in the American Academy of Implantology and a certified instructor in the International Association of Orthodontics. In his practice, Baystate Dental, PC, he performs oral surgery, orthodontics, periodontics, endodontics, pediatric dentistry, TMJ care, implantology, oral sedation, inhalation sedation and IV sedation.
Dr. Kevin Coughlin is a member of the American Dental Society, American Dental Society of Anesthesiology, American Academy of Implant Dentistry, American Academy of Cosmetic Dentistry, International Association of Orthodontics, The American Academy of Sports Dentistry, and the Valley District Dental Society.
He’s written three books, “Just Enough to be Great In Your Dental Profession,” “Your Tooth is Killing Me,” and “Business Processes and Procedures Necessary for a Successful
Dental Career: What you need to know before you graduate dental school.” He’s a lifelong sports enthusiast, who enjoys sailing and playing golf with his lovely wife Karen, and children, Jared, Taylor, and Shayla.
But that’s not what make Dr. Coughlin a new breed of dentist.
In addition to all of his clinical and personal accomplishments, in 2001 he earned an MBA from Western New England College. Early on, he realized his career in dentistry would be shortlived if he didn’t understand how to make a profit, and he’s never forgotten the lessons he learned while working his way through dental school.
There’s an adage in business that you should work “On” your business at least as much as you work “In” your business, and Dr. Coughlin literally follows that advice every day. He begins his day seeing patients in his 14 dental practices in Western Massachusetts, breaks for lunch, then spends his afternoons in his business office interviewing associates, reviewing daily performance numbers, and making decisions about systems and processes necessary to run the business. The result of that effort is a practice with 14 offices, 17 associates, and 150 employees.
He is adamant that, no matter the size of your organization, you have to have “specific processes and procedures that focus on success, and they must be teachable, simple, straightforward, and repeatable.” Dr. Coughlin is a proponent of using technology whenever possible, including a cloud-based practice management system that allows him to review activity in every office in real time, anywhere he has an internet connection.
Dr. Coughlin is also diligent when he interviews potential hires. In his team, he looks for a measure of stability, maturity, and a sense of entrepreneurship, and he rewards them with the same sense of respect and loyalty. In fact, in the forward of his book, “Just Enough to be Great in Your Dental Profession,” he literally thanks each team member by name.
There’s another adage in business that applies to Dr. Coughlin: “Get someone to pay you for something, and you have a business. Repeat that process and make it scalable with sales and marketing and you have a successful business.” So, with all his success, it’s not hard to imagine Dr. Coughlin being approached to sell his practice, which he was, putting him on a new journey in the business of dentistry.
In his seminar talk, “DSO, Friend or Foe,” Dr. Coughlin recounts his experience being approached, learning how private equity works, and about EBITDA. When asked for one piece of advice he learned from the experience, he says, “Spend more time understanding what EBITDA is, and less on the clinical.”
EBITDA means, Earnings Before Interest, Taxes, Depreciation and Amortization. In essence, it’s the amount of money left over after paying the costs of operating the business. Think of it this way; if a practice is generating $1 million in revenue (collections), with 20% EBITDA, and a buyer is paying a multiple of five (5), they will be paying $1 million, and expect to get their investment back in five years. But, if revenue falls, or costs increase, that time period can expand dramatically, or the business could fail before it ever reaches total payout, which is an all-too-often occurrence in dentistry today. Therefore, because of experience and associated risks, the amount banks might be willing to loan on the purchase of a dental practice, and the risks associated, are held at a fairly low levels.
However, if you’ve built a scalable model, proven by your ability to attract multiple producers, a team of people with specific skill sets, such as insurance filing, collections, marketing, treatment plan conversion, etc., marketing, supply and operating costs leveraged across multiple office, and you have track record of three or four years, the probability of failure is dramatically reduced, therefore the power you have when negotiating is far greater. Thus, the higher multiples.
In fact, according to Brian Colao, attorney at Dykema, Cox, Smith, Inc., DSOs in today’s environment, even small groups of three to five dentists, are being sold for 15 to 17 times EBITDA, while solo practitioners are only realizing three to five times EBITDA.
So, when Dr. Coughlin was negotiating for the sale of his practice, he found the finance-backed buyers weren’t even concerned with the number of a particular procedure he performed, or that he was amazing at placing implants. They were concerned with the level of risk that came with a change in ownership, how scalable the business would be after the sale, and how quickly they could get their money back. It was a language he learned getting his MBA, not in dental school.
Dr. Couglin will tell you he was very lucky, financially, in the sale of his dental business, but he was even more fortunate in finding a buyer who wanted to help him grow it even more. He is still a principal at the practice he founded, Baystate Dental, and his days haven’t really changed. He spends every morning seeing patients, and every afternoon working on the business in which he still holds some ownership. He’s found a way to keep doing what he loves, without the financial stress and burden that comes with being the sole owner of a large, growing organization.
In writing his three books, Dr. Coughlin hopes to share his experience with a whole new generation of dentists, and perhaps help some avoid the painful and expensive lessons he learned the hard way.
He currently lectures on business topics at his Alma Mater, Tufts University, speaks nationally, is a regular contributor to The Profitable Dentist Magazine and other national publications, and has a 1 Hour question and answer talk show, “Dental Health Matters,” on WNNZ, New England Public Radio.
If you have the opportunity to meet and talk with Dr. Coughlin, you should. He’s sincere, humble, firm in his opinions, committed in his mission, and a model of success in this developing age of dentistry. He’s truly a new breed of dentist.