Dental Practice Heroes

Making Multi-Doctor Practices Work: Partnership Risks and Rewards

• Paul Etchison, Henry Ernst, Stephen Markowitz • Season 3 • Episode 92

Share episode

Thinking about making your associate a partner? This episode will help you decide if it’s the right move for you and what other options you have to keep associates in your practice without giving up equity.

You'll learn the must-haves of a successful partnership, the common reasons they fail, and what to look for in a potential partner. Listen now to hear the benefits of partnership and why you might want to stay solo!

Topics discussed in this episode:

  • The first step to partnership
  • The benefits of partnership
  • Why Dr. Henry chose to stay solo
  • Why partnerships fail
  • How to make partnerships successful
  • Alternative ways to structure partnerships

Text us your feedback! (please note: we cannot respond through this channel))

The 2025-2026 DPH Mastermind is now taking applications!  Make this the year you decided to create the practice you've always dreamed about!

Take Control of Your Practice and Your Life

We help dentists take more time off while making more money through systematization, team empowerment, and creating leadership teams.


Ready to build a practice that works for you? Visit www.DentalPracticeHeroes.com to learn more.

Paul Etchison:

Are the perks of partnership worth the risks? What if something goes wrong and you've already signed away part of your business? On the other side, what if your best associates leave you high and dry? Listen, there are real risks, but there also is a ton of benefits. So today we're gonna talk about why partnerships fail, how you can make them work and what you can do to keep associates happy without offering partnership. If you ever see your practice with more than one dentist fail, how you can make them work and what you can do to keep associates happy without offering partnership. If you ever see your practice with more than one dentist, you're going to want to listen to this one.

Paul Etchison:

You are listening to the Dental Practice Heroes podcast, where we teach dentists how to step back from the chair, empower their team and build a practice that gives them their life back. I'm your host, dr Paul Etchison, dental coach, author of two books on dental practice management and owner of a large four-doctor practice that runs with ease, while I work just one clinical day a week. If you're ready for a practice that supports your life instead of consuming it, you're in the right place. My team of legendary dental coaches and I are here to guide you on your path from overwhelmed owner to dental practice hero. Let's get started.

Paul Etchison:

Welcome back to the Dental Practice Heroes podcast. I'm your host, dr Paul Etcheson, and I'm joined today by both of my DPH coaches. Dr Steve Markowitz, who's got a huge multi-practice organization with many, many employees, and when you've got the kind of problems at your practice and you tell them to Steve, he goes that's all you got. That's all you got. And he's like I will raise you this much with the problems at my huge organization, six practices in his group, boston area. And then we got Dr Henry Ernst, living in South Carolina, practicing in North Carolina. He's only allowed to North Carolina to practice and then he has to get back to South Carolina or his bracelet goes off. So welcome back guys. How are you doing? You crushed?

Stephen Markowitz:

that intro.

Paul Etchison:

Good job.

Stephen Markowitz:

Yeah, it's like you wrote it out and we practice it.

Henry Ernst:

It only took five times audience out there. That was pretty good.

Paul Etchison:

So today we're going to talk about something that it comes up often with my coaching clients is, like a lot of people that listen to this podcast, if you're a listener, we want to do associate driven practices. I mean, I'm just telling you that's what we tend to get for listeners, and people that reach out to me is people that want to do something similar, that what me or Henry or Steve has, which are associate driven practices. We're not practicing as many days as the solo dentist, but it comes up a lot. I really like this associate. I'm thinking I like them.

Paul Etchison:

So the next logical step should be I should partner with them, just like when you meet a significant other and you're like I really like this person, I'd like to keep them around forever. Maybe we should get married. So I think it's going to be a good topic to say should I take on a business partner and what does this really mean? And just share some experience. And I'm going to go to you, steve, because Steve's got the huge, just huge, huge organization Jesus Paul. It is so big organization, jesus Paul, in the Boston area. It is so big. I mean, didn't you show up on that like 500 fastest growing companies of Boston County I don't know what county you're in, 5,000.

Stephen Markowitz:

Yeah, I'm going to ignore what you just said and just talk about what we're supposed to be talking about, which is should I bring?

Henry Ernst:

on a business partner.

Stephen Markowitz:

Let's stay on point and the answer is it depends.

Stephen Markowitz:

I think you really need to do some soul searching, just like you did when you were deciding whether or not I should propose to this person or not. When you have a partner, you are married to them, and it doesn't mean that it needs to last forever. There are ways to get divorced, but it becomes a lot more complicated when there are pieces of paper and legalese that says you guys are connected. So before you bring on that partner, it is nice to share responsibilities with someone, but you better be a match and you better understand what you're going to be responsible for and what this person who is now coming into your practice has got to be responsible for. And if you're able to really have that conversation out loud and talk through responsibilities and talk through how this is going to work, what happens if this doesn't work? Then sure, I think there are many businesses, especially in medical and healthcare, that have partnerships that work great. But it is also what I find with my coaching clients the biggest stressor because of the lack of clarity that comes with partnerships.

Paul Etchison:

Asking you, steve, because you've seen this within your organization. What are the benefits Like? Why would anyone even want to do this?

Stephen Markowitz:

Oh, shared responsibility. You guys know it's lonely to be a business owner, to feel like you have to make all the decisions and to not have someone to share and that kind of be stuck in the mud with is what the term that we use. And it feels good to be able to lean on someone and talk out through issues and know that they understand and are responsible and benefit from the growth of the practice. That can be very rewarding. I think it is more challenging when you have this practice and you have a doctor who's a great doctor and they're a great fit, but that doesn't mean that you're an owner Because you're a great doctor. That means you're a great doctor.

Stephen Markowitz:

So what does it mean to be a business owner? And let's define that before we get into this legal relationship. And then, if we do and we're upholding our end of our responsibility, it can definitely be mutually beneficial, because now either I can take more time off because I have someone who cares about this practice as much as I do, or I can go and we can grow even further, because there's one of the John Maxwell's 21 Irrefutable Laws of Leadership is the law of the lid, and it says that I can only go so much. My lid is at a certain level, so if I can have someone who's gonna be here with me, then maybe I can take this thing from one practice to three practices, or maybe I can take this from a $1.5 million practice to a $4 million practice.

Paul Etchison:

I feel like the biggest risk of having an associate-driven practice is the associate leaving and I mean you don't want to have. It looks bad to patients when you just got people coming in and now can you operate like that? Of course you can. I mean you can run any kind of business you like and it's not going to crush your practice if your associates leave. It just doesn't. But it kind of sucks when they do, when you find somebody who really gels well with the team and they really do well with your patients.

Stephen Markowitz:

I'm experiencing that right now. One of our doctors, who's been with me for five years, is moving across the country and it happens. But the path of least resistance is not the reason to bring on a partner. It's because this is what you truly want for your life, for your business, and it's the best thing for your team, for your patients, for your practice and for your life. And if all of those things check off, then, yes, you need a partner. It's not because this magical unicorn is the reason why your practice is successful. Yeah, what do you think?

Henry Ernst:

Henny, I never had business partners as far as like as the practice was ascending, so maybe I'm kind of coming at it from a different point of view and I had prior experiences of not when I was an associate seeing different business partnerships and the bad things about them. I had one group that I was with and there was four business partner doctors and there was two that would always whenever there was a decision. There were two that would always align this way and two this way. So there was never decisions that made, like nobody could ever make a decision, and that was horrible. That practice really was like at a standstill. The worst one I ever saw is I saw this practice when I was looking around to maybe buy a practice a long time ago. There was this practice I don't know if you guys ever saw the movie War of the Roses there were these two doctors that had been business partners forever and they were so vehemently like disgusted with each other that they basically just divided the practice down the line. This is your side, this is my side, this is my side of the front desk, this is the practice was literally, and so I've seen those things and maybe that was always in my mind.

Henry Ernst:

But taking it back to at one point where I was thinking about it, my practice was at a point where we were doing a little over $5 million in collections. We were maybe four years into the practice. I had four associate doctors and, yes, you're right, paul, the biggest risk is associate doctors leaving. So we had two like really great stud doctors that were really good and I was at a point of inflection where I was. Do I need to give these guys some equity or what are my other options? So at that particular point I weighed all the options. I saw what the practice was worth. You know we were doing about 35%. Take home of that $5 million. So part of me just said you know what? I built this thing and you know I just want to keep it. I don't think it's fair that they're going to take my sweat equity.

Henry Ernst:

So I kept the practice running, moving forward, and I used other things in lieu of the business partnership, like EOS, and I brought the doctors in to be part of EOS. So they, you know they felt part of it there and maybe I said to them hey, after you've been here for a certain amount of years, your production's gonna go, or your amount that you get will go up. So I kind of did those little things because I just felt that for me in my specific instant and you said it great, steve it depends. It depends on your personality type, it depends on your why At that point, my why was to get a big sell and give myself financial freedom, and doing partners would like doing all the financial math.

Henry Ernst:

It would have been like 10 years longer for me to get to that financial point. So that was my strategy and my thinking. I would also say, from what I have seen, business partnerships work is where there are specific parameters, like if in that other business, if there's a split decision, how do we decide this? Right, there has to be specific parameters on how we make decisions, so there's not a log jam and the business can still move forward.

Paul Etchison:

It reminds me of like. I mean, we've all seen partnerships fail and we all know somebody that has a dental partnership that has been broken up and it went through the court process and somebody had the key. I mean it's like breaking up a family who's going to keep the kids, who keeps the practice, who moves on All this stuff. But what I've seen is that it's often like you mentioned, steve, you've got to say who's doing what. And I see the problem where the team comes to one person, one owner, and says, hey, what do you think about this? And then no, no, no, no, no, no. And then they go to the other owner and they go, yeah, yeah, okay, yeah, and they're not on the same page, because who is the team looking to for leadership? So I think there's got to be really drawn out roles.

Paul Etchison:

I can say in my partnership that I do because I do have a partner in my practice. I had brought her on. She was a long-term associate, gelled well with the team. I really loved her being there and I asked her if she wanted some equity. But it was specifically like saying hey, like I don't need you to do anything leadership wise except for just being a good example. I don't need you to deal with management, I don't need you to deal with interpersonal conflict with anybody, you don't have to come to our lead meetings, all this stuff, and that was a really good arrangement, and I'm starting to realize that I'm not at the practice barely at all anymore. Now she is starting to step up and take a more of a leadership role, which I like, but we had talked about that. Is this something you're interested in? Do you want to step up and take more leadership role? And she does and it helps her to be engaged.

Paul Etchison:

But I have seen I have a coaching client right now that might be offering partnership to an associate and it's going to be a 50-50. And I think the thing is is if we're going to build a practice that frees us to have a lot of time off, we need to get paid on EBITDA, we need to get paid on practice profit. Otherwise, we need to keep practicing all the time. And when you take and do a 50-50 partnership, you pretty much just said let's have twice the size of the office, I need to make half the size of the profits, and I don't think there's any way that that's ever makes sense for a dental owner. So that's going to be my position.

Paul Etchison:

I don't know if you guys would agree with that as well, but I think if you're going to do a 50-50, you just got a larger, more chaotic office that makes half as much money. So you might as well have just kept stayed by yourself. Now, yeah, do you get to take a vacation and the practice doesn't need to close Big deal. I don't see the benefit as much in that. So I mean I'll go back to you, steve. What do you think about, like the idea of like percentages?

Stephen Markowitz:

I would love to talk about that Also. I wrote down a quote from Dave Ramsey who says the only ship that doesn't sail as a partnership. So I think there are other ways you can structure these deals so that the person on the other side still feels appreciated, cared for, has financial upside, without maybe signing some of those documents that legally bind you. I think the most important thing is there needs to be a ultimate decision maker, and if you're 50-50 and you don't have clear roles and responsibilities, then you are setting yourself up for a real, real tough situation at some point. But that doesn't necessarily need to equate to percentage of equity ownership roles. Mark Zuckerberg owns 13% of Facebook or Meadow, whatever they're called today. He owns 13%. He is the ultimate decision maker on the board, so you can have an ownership of whatever it is, but it's truly who the team goes to, who's responsible for what, and if you can iron that out, you can have as many cut partnerships, whatever's going to float your boat. But it is really hard. It needs to be worked on partnership chartering, the partnership. It's like a workbook to go through If you're ever thinking about bringing on a partner and it's you and this person. Work through this workbook together, make sure you're aligned on you're truly aligned on your values, make sure you're truly aligned on your, on your roles and your responsibilities, and make sure you use everything as much as talked out before. So then, when you go and sign the documents, it's just like yep, we did that, we got that, we got that.

Stephen Markowitz:

And then you need to, as a unit, communicate with the team and then I would say, at least weekly, you are having your partner meetings, which is the owner's box, which is way different than your leadership meetings, and you're having whatever your cadence is Maybe it's monthly, maybe it's quarterly but you're having your owner, your owner meetings and you're talking. Whatever your cadence is maybe it's monthly, maybe it's quarterly but you're having your owner meetings and you're talking about outside, looking in, because you can own a business and not work in it. That is the unique part of what we're talking about here is we're talking about people who are in the weeds in the business and owners. But just because you're an owner of a business doesn't mean you need to work in it. So now you need to be able to have those conversations out loud. It always, always, always, in every one of these situations where I see partnerships failing, it's not a lack of intentions, it's lack of communication and misunderstandings, and you need to have all that ironed out before you jump in.

Paul Etchison:

But you know you say like the, there needs to be an ultimate decision maker. Where we I see this and if this is way common, everybody knows somebody that does this is a husband and wife team in a dental practice, and I'm not saying the husband's always the dentist. I've got coaching clients where the female's the dentist and the husband's the office manager and I see that often that who is the decision maker here in the team is just like it causes tons of problems when there's no set who is making the decisions.

Henry Ernst:

I was at a point where, again, just my decision making process and we were a larger practice. So I was at that decision point where I said, okay, I've got four, you know a couple guys. I can envision maybe giving each one 25%, but, like you said, paul, I'm always going to be the ultimate decision maker, right? So I was going that route and then there was so many different factors, like I wasn't going to get enough, as much money I would have to get married four times perfectly to make that just work and that's just really hard. It's really really hard in my situation. And I kind of looked at it like this I said, you know what, I'm going to quote the great Scarface, tony Montana If you guys have seen that movie, hopefully where he was sitting in the bathtub and he basically was saying, because I was thinking to myself, you know what?

Henry Ernst:

I'm the one who took all this risk over all these years, I'm the one who's expanded this place four separate times. So, like he said in the bathtub, who put this thing together together? Me, who do I trust me, right? So that ultimately I said I'm going to keep moving forward and maybe in a couple years I see this big exit and I'm going to do all this other stuff to keep all the doctors involved, putting them out on the doctor's team as far as EOS having a say in their workplace and a lot of them.

Henry Ernst:

You know, you realize it that the associate model is broken, but it's broken because they put associates in you. You know, in an office they're on their own, they don't have camaraderie, they're told to do certain things. So we were always anti all of that. You know we always have another doc there. There's always at least two or three of us working every day. Just treat the patients right and you know, do good by the patients and you know if you need help with stuff we're here for you. So I kind of leveraged that point of it. So that was how I looked at the whole partnership thing.

Paul Etchison:

I used to have a five-hour practice where we would have an associate but we were split shifted because we couldn't possibly be there at the same time and we would overlap maybe three hours of the day. But it does. It's the same isolating situation. You're almost like a solo doc with no help for most of the day. And yeah, I totally agree, I never thought about it that way. That makes a lot of sense.

Paul Etchison:

The workbook you were talking about, Steve to do, is what it reminds me of, is like pre-Cana classes for the Catholics in the world. I remember we had to do this. Me and my wife did this and we sat back to back and we're in a group of like six other couples getting married and me and my wife have been dating since like we were 14 and 15 years old, so we were dating for like 10 years and everyone was like, oh, I just met them two years ago and they asked how did you know when you wanted to marry her? And I got to go first and I said, well, you know, we've been dating since high school and I just graduated college, I'm going to dental school, she just graduated hygiene school and we're just moving away from our college town. It just seemed like the next logical step. And the next person that went after me was like, when I saw her, I knew and I just looked at her and the way she made me feel inside and I was like I want to go again.

Paul Etchison:

I didn't know we were going down that road. I was being very practical and logical about it and my answer was it was so freaking horrible. It was like the worst. It was like one of my only stringiest moments. It was not good, but you know what? They're probably not learning together? Yeah, they didn't make it. I know they didn't. They were still infatuated with each other. They never made it past that situation. And here we, Almost 20 years. In the name of that book is the Partnership Charter. The Partnership Charter, yeah, I mean, Henry, if you did four, if you had to get married four times. That's a lot of work booking for you, buddy.

Henry Ernst:

Oh man, yeah, I got it perfect in my personal life. I outkicked my coverage. I didn't want to press my luck.

Stephen Markowitz:

Yeah, I mean, yeah, we're. I have partners in my business and I love them. They allow a lot of freedom for me and I think it's really understanding what you want, and if you can spend time and dig on that, then there's not a right answer. It's so dependent on what's the best approach for you personally. This is such a it's like telling someone who they should marry it just does. It's not going to work like that.

Paul Etchison:

Yeah, if you graduate college and your girlfriend graduates too, it's time to get married. That's the answer.

Stephen Markowitz:

I think that's. The takeaway is that you'll have the best marriage if it's just the next logical thing to do.

Paul Etchison:

But you know what? There's a win-win, okay. So, like in every partnership, there is a win-win. Can you figure out what it is? If you've got a doctor in your practice and they're acting like an owner and they produce really well and the patients love them, that doesn't mean they need equity. And if you need somebody to run your practice, they don't need equity either. I mean, my leads run my practice and none of them have equity. So there's always win-win relationships and they get paid a lot to do it, so. So there's always win-wins. It's just finding what it is and discussing it and figuring out what's best for everybody involved. But where it's going to fail is when you don't discuss it and you just run into it. So any closing statements there? You want to add to that, henry?

Henry Ernst:

Look at the worst things, like I did or just happened to see. Look at the failed partnerships. Write some bullet points down. How did they mess up? How am I going to not do that right? Because if you're going to do it, you know, find somebody like anything else. Find somebody who's successful with it, find somebody who sucks at it and learn from it Totally Well.

Paul Etchison:

thank you so much for listening, and if you're looking to have some help or some guidance with your practice so that you can run a better practice and take more time off and make more money and possibly discuss a partnership with multiple associates and walking down this path into wealth and freedom and all the amazing things that Henry and Steve have here, and if you want a huge, huge, huge practice like Steve huge then reach out to us at dentalpracticeheroescom and think about getting yourself a coach and making this the best year for you that you've ever had. Thank you so much for listening and we'll talk to you next time.

People on this episode

Head Shot

Dr. Paul Etchison

Host