Finding an incentive to continue working

[molar roller]

Maybe it's the winter blues and no way to escape it, but seems more melancholic threads than usual lately.
Allow me to add one more.

General dentist in a solo practice.
I work Mo-Th, about 30 clinical hours. Have had the same schedule for 19 yrs.

Will turn 48 in 2 weeks. Happily married, 2 children, one in 3rd yr in undergrad, the other starting college in the fall. Neither is interested in dentistry.

Assets:
$7.5M in investable assets ($4.5M after tax, $3M tax-deferred).
529 plans fully funded.
Practice worth about $1.5-2M.
Home worth about $1.5M with $400K mortgage (3% with 7 yrs left on 15 yr term).

Income from practice $1.4M yr.
Expenses $250K/yr ($150K ex housing).

Had COVID about a month ago, luckily recovered uneventfully. The apathy of the first week or two has passed, and I'm closer to my normal self. But still it's becoming more difficult to work as hard as I used to - physically and mentally. I know many of you guys work double my hours, but the 4 days I do work are hard days. Very taxing on the mind and body.

And it's unclear to me why I do work. Our expenses are minimal relative to our income. Our savings rate is 50%. We have no costly hobbies - nice enough cars, decent enough clothes, wife is happy with her jewelry collection. Our biggest interest is travel - we generally travel at very fast pace to 8-10 countries a year, and COVID border lockdown has affected us tremendously.

My wife is an RN by training, a couple of years older, was getting burned out and quit her job about 2.5 yrs after 20+ yrs of working for various MLTC plans. A short break turned into a long one, during which she hasn't done much. She is starting a new job on March 1, mostly because she received a generous offer. That said, her salary has minimal effect on our budget, and I don't know how long she plans to keep the job she doesn't like for the money she doesn't need.

Most dentists are cuffed to their practices and can't easily cut their hours in half. There are patients who need to be seen and staff who want to get paid.

So at this point, I am vacillating between different options.

Selling outright and spending the next few years traveling is an attractive option. We've never taken a trip for longer than 11 days, and it would be interesting to see if we enjoy a slower pace. In our experience, we don't, but maybe it'll change.

Hire associates and step away from clinical dentistry - very likely more trouble than it's worth. My dental skills are not special in any way, but there is no way a recent grad can produce at my level. It would likely be a lot of false starts, tons of hand holding, and would likely result going back to option 1.

And a pipe dream of selling all or part, and remaining with the practice in limited capacity - an unlikely scenario but probably the best one.

So my questions to those that have achieve FI at an earlier age that they anticipated -
If you couldn't easily decrease your clinical workload - how did you deal with lack of motivation to work as hard?
If you continued working the same hours - what was the goal?
I am particularly interested in experience of dentists who couldn't take easily take time off - or perhaps sold, took a break, and came back?

Thank you for reading and thank you in advance for your responses.

[ENT Doc]

If there’s a market for your solo practice I’d consider selling personally. Given the number of solo dental practices around me it seems more reasonable for someone to just set up shop across the street rather than spend millions buying patient access for patients who may or may not stick around for you anyway. Curious to hear what the market dynamics are in dentistry.

[Hatton]

Surprised at your income level from general dentistry. Kudos on your financial picture. Personally I would sell and not look back.

[molar roller]

If there’s a market for your solo practice I’d consider selling personally. Given the number of solo dental practices around me it seems more reasonable for someone to just set up shop across the street rather than spend millions buying patient access for patients who may or may not stick around for you anyway. Curious to hear what the market dynamics are in dentistry.

Definitely a market. Historically dental practices sold for 70-80% of revenues, regardless of overhead, net income, equipment, etc. In my case, I'd probably ask for more as my overhead is very low (average ~65%, mine is around35%), so I'd be shooting at 80-90% in a private sale. 2020 was 10% less than 2018-2019, so unsure how that would affect the value as well. Not a massive difference obviously.

OTOH, PE is doing to dentistry what it did to medicine. Lots of PE groups buying up practices and hoping to recap. PE sale generally comes with holdbacks and obligations. A typical sale might be for 100-125% of revenues, and an obligation to work for 1-2 yrs to maintain the revenue level.

I'd be leaning towards a private sale as a PE offer would likely result in a massive paycut, negating any advantages.
But I wouldn't anticipate any difficulty selling the practice. 2018-2019 were ~$2.25M (2020 $2M), so probably somewhere in $1.5-2M range after broker fees.

[ENT Doc]

Definitely a market. Historically dental practices sold for 70-80% of revenues, regardless of overhead, net income, equipment, etc. In my case, I'd probably ask for more as my overhead is very low (average ~65%, mine is around35%), so I'd be shooting at 80-90% in a private sale. 2020 was 10% less than 2018-2019, so unsure how that would affect the value as well. Not a massive difference obviously.

OTOH, PE is doing to dentistry what it did to medicine. Lots of PE groups buying up practices and hoping to recap. PE sale generally comes with holdbacks and obligations. A typical sale might be for 100-125% of revenues, and an obligation to work for 1-2 yrs to maintain the revenue level.

I'd be leaning towards a private sale as a PE offer would likely result in a massive paycut, negating any advantages.
But I wouldn't anticipate any difficulty selling the practice. 2018-2019 were ~$2.25M (2020 $2M), so probably somewhere in $1.5-2M range after broker fees.

Nice. Yeah I’d sell personally if I were in your situation. Then travel the seven seas.

[CM]

Definitely a market. Historically dental practices sold for 70-80% of revenues, regardless of overhead, net income, equipment, etc. In my case, I'd probably ask for more as my overhead is very low (average ~65%, mine is around35%), so I'd be shooting at 80-90% in a private sale. 2020 was 10% less than 2018-2019, so unsure how that would affect the value as well. Not a massive difference obviously.

OTOH, PE is doing to dentistry what it did to medicine. Lots of PE groups buying up practices and hoping to recap. PE sale generally comes with holdbacks and obligations. A typical sale might be for 100-125% of revenues, and an obligation to work for 1-2 yrs to maintain the revenue level.

I'd be leaning towards a private sale as a PE offer would likely result in a massive paycut, negating any advantages.
But I wouldn't anticipate any difficulty selling the practice. 2018-2019 were ~$2.25M (2020 $2M), so probably somewhere in $1.5-2M range after broker fees.

That's remarkable. As a young attending I accompanied our hospital CEO and another doc to visit a referring cardiologist with a very busy practice. He wanted to sell and found no interested buyers. He threatened to alter referral patterns unless our hospital assisted him (i.e., purchased his practice). The CEO said nice things and tried to placate the doc, but on the way back told us there was no way he would pay for the practice. He said he could hire someone and start a practice next door and keep most of the revenue with a fraction of the expense.

I remembered that lesson when I sold my solo practice. I recouped the cost of equipment minus depreciation; that's it. Not sure why it should be different in dentistry.

[CordMcNally]

You can Venmo me your taxable account and that should give you incentive to keep working.

Honestly, I’ve always thought that when I think to myself, “why am I still doing this?”, I would put my exit plan into motion. I would sell in your situation.

[Hank]

How many operatories do you have?
Personally, I think hiring an associate or two and doing just as much clinical / surgical dentistry as continues to interest you would be the best way forward, but you have to make the best choice for your situation.

[BruinBones]

You might be burned out, or this health scare may have shown you that you have already given all you had to your career. I would consider retirement.
You are FI by some standards ($250k expenses x 30 years = $7.5 million investments). If you sold your practice for only $1.5 million and retired, that amount would bridge you 5+ years (thus mitigating the sequence of returns risk) before tapping some of your after-tax investments. This would also leave extra for slow travel during those early years. Thereafter, you could then start using your after-tax investments from age 53 to 59.5 before having the option to also take from tax-deferred.

[Anne]

You mentioned winter blues and post-Covid apathy, and being “closer to your normal self”. Are you suffering from post-Covid fatigue? I have seen some patients just feel out of sorts for a while (months) post-Covid whereas others bounce back right away. I wouldn’t make any decisions until you truly feel back to your normal self. On the other hand, could you decrease your hours somewhat if you are feeling fatigued while you reach a decision? Your percent overhead would likely go up if you did that, but seems like a fair trade (temporarily at least) to give yourself room to make the best decision for yourself.

Also, I’m found this statement curious: “We've never taken a trip for longer than 11 days, and it would be interesting to see if we enjoy a slower pace. In our experience, we don't, but maybe it'll change.” How do you know you don’t enjoy slower paced travel if you’ve never done it? I rarely take a trip for less than 11 days. Do you really enjoy fast-paced travel, or have you convinced yourself you do because you feel driven to get back to work?

[fatlittlepig]

11 days seems like a long trip to me.

[abds]

A 4-day, 30-hour work week is not physically taxing. If you think it is then that’s only because it’s more taxing than whatever ever else you’d rather be doing. So in that regard I recommend you sell your practice and ride into the sunset.

I personally couldn’t walk away from $1.5M a year for 30 hours a week. I would work at least until the house was paid off. I’d likely hire an associate or two, knowing that it would be a decrease in income for me personally, as long as that also meant less work.

[fatlittlepig]

Maybe it's the winter blues and no way to escape it, but seems more melancholic threads than usual lately.
Allow me to add one more.

General dentist in a solo practice.
I work Mo-Th, about 30 clinical hours. Have had the same schedule for 19 yrs.

Will turn 48 in 2 weeks. Happily married, 2 children, one in 3rd yr in undergrad, the other starting college in the fall. Neither is interested in dentistry.

Assets:
$7.5M in investable assets ($4.5M after tax, $3M tax-deferred).
529 plans fully funded.
Practice worth about $1.5-2M.
Home worth about $1.5M with $400K mortgage (3% with 7 yrs left on 15 yr term).

Income from practice $1.4M yr.
Expenses $250K/yr ($150K ex housing).

Had COVID about a month ago, luckily recovered uneventfully. The apathy of the first week or two has passed, and I'm closer to my normal self. But still it's becoming more difficult to work as hard as I used to - physically and mentally. I know many of you guys work double my hours, but the 4 days I do work are hard days. Very taxing on the mind and body.

And it's unclear to me why I do work. Our expenses are minimal relative to our income. Our savings rate is 50%. We have no costly hobbies - nice enough cars, decent enough clothes, wife is happy with her jewelry collection. Our biggest interest is travel - we generally travel at very fast pace to 8-10 countries a year, and COVID border lockdown has affected us tremendously.

My wife is an RN by training, a couple of years older, was getting burned out and quit her job about 2.5 yrs after 20+ yrs of working for various MLTC plans. A short break turned into a long one, during which she hasn't done much. She is starting a new job on March 1, mostly because she received a generous offer. That said, her salary has minimal effect on our budget, and I don't know how long she plans to keep the job she doesn't like for the money she doesn't need.

Most dentists are cuffed to their practices and can't easily cut their hours in half. There are patients who need to be seen and staff who want to get paid.

So at this point, I am vacillating between different options.

Selling outright and spending the next few years traveling is an attractive option. We've never taken a trip for longer than 11 days, and it would be interesting to see if we enjoy a slower pace. In our experience, we don't, but maybe it'll change.

Hire associates and step away from clinical dentistry - very likely more trouble than it's worth. My dental skills are not special in any way, but there is no way a recent grad can produce at my level. It would likely be a lot of false starts, tons of hand holding, and would likely result going back to option 1.

And a pipe dream of selling all or part, and remaining with the practice in limited capacity - an unlikely scenario but probably the best one.

So my questions to those that have achieve FI at an earlier age that they anticipated -
If you couldn't easily decrease your clinical workload - how did you deal with lack of motivation to work as hard?
If you continued working the same hours - what was the goal?
I am particularly interested in experience of dentists who couldn't take easily take time off - or perhaps sold, took a break, and came back?

Thank you for reading and thank you in advance for your responses.

If your pulling in 1.4 m a year and saving half why isn't your house paid off and why is your NW so low?

[Rthoma23]

If you couldn't easily decrease your clinical workload - how did you deal with lack of motivation to work as hard?

molar roller, why can't you easily decrease your clinical workload?

If you own your practice and have reached FI, can't you do whatever you want?

You mention that their are patients to be seen and staff that needs to be paid. These are things that never go away and should have no bearing on your decision to decrease or eliminate your clinical workload.

Obviously, I'm not saying to leave patients and staff hanging, but you could transition your clinical workload however you want with some advance notice to patients and staff.

You could sell your practice quickly and arrange to stay involved (or not).

I feel like I'm following a similar path as you but I'm 10 years younger than you. I'm genuinely interested in why you feel handcuffed to your practice. Is there something I'm missing here?

[molar roller]

A 4-day, 30-hour work week is not physically taxing. If you think it is then that’s only because it’s more taxing than whatever ever else you’d rather be doing. So in that regard I recommend you sell your practice and ride into the sunset.

I personally couldn’t walk away from $1.5M a year for 30 hours a week. I would work at least until the house was paid off. I’d likely hire an associate or two, knowing that it would be a decrease in income for me personally, as long as that also meant less work.

I guess I should say it's physically taxing for me. ADA says an average income for owner dentist is $250K. I don't mean to imply that I work 6 times harder than average, but these 4 days are hard days. When I get home, I'm very tired.
And while I work 30 hours/week as a DMD, I also work as a CEO/CFO/HR Director/VP of Marketing running a multimillion dollar business (2M is technically multi ). I am not counting those hours but they are there.

The house can be paid off before I finish this post. I'm in no hurry to pay off a 3% loan, which is mostly principal at this point anyway. But I certainly have the means to do it.