Want to Transition Your Practice?

The prospective marriage between new orthodontists and established practitioners desiring to transition their practice has a new broker on the horizon. This broker proposes to recruit residents and educate them in a new program in a modern facility with ample faculty. These students can choose to be financially supported while in school with a practice transition available following graduation. Sound good?

I recently read Dr Mark W. Johnston's interview of Dr Gasper Lazzara in the SAO (Southern Association of Orthodontists) News.1 If you have not followed this innovative development, you will be interested in Dr Lazzara's proposal for orthodontic education and practice transitions.

Dr Lazzara's name is well known for the role he played in the development of the Orthodontic Centers of America (OCA). He retired from OCA in June 2001 and has started the Orthodontic Education Company (OEC). OEC is a practice transition/staffing company designed to identify practices seeking transitions.1

According to Dr Johnston, Dr Lazzara and his wife, Irene, used their charitable foundation to donate $3.5 million to Jacksonville University (JU) in Florida to start a new orthodontic program. The Lazzara Health Science Center will be the home for an established nursing program and a new Orthodontic School. The new orthodontic program will be a 24-month program with the capacity to accept 20 residents per year. The program will have 6 full-time faculty and additional part time faculty. One of OEC's roles in the program will be to insure that there will be a much larger budget to attract faculty. Dr Lazzara emphasized that all decisions regarding faculty and resident selection are under the control of JU.1

OEC's direct, ongoing role with the residents will be to offer full two-year scholarships plus a living stipend to students interested in using the OEC placement service following completion of the JU orthodontic program. OEC would facilitate the placement of a resident with an established doctor who wanted to transition his/her practice. The resident will have no financial commitment to OEC and will be guaranteed a minimum annual salary during the practice transition. The duration of the transition may vary.1

In the six-year transition example cited in the article,1 a practice with a $600,000 annual net income would pay the resident $150,000 in the first year and the two doctors would work together in the office. In years 2–6 the resident would receive $200,000 per year plus the income associated with the growth of the practice. The balance will go to the selling orthodontist who exits active patient care, but continues to act as an advisor and to market the practice.

According to Dr Lazzara's model, the transitioning doctor would receive $1,080,000 for the equity in the practice, the resident would acquire an education and an established practice without incurring additional debt, and OEC would recover their investment through a placement fee which, in the example cited, was $500,000.1

Are there any downsides to this scenario? For example, can a freestanding orthodontic program exist without a dental school? There are already multiple examples of accredited orthodontic programs functioning in hospitals and even in a university without companion dental schools.

Is the devil in the detail? One of the stated reasons for creating OEC was to address the shortage of qualified faculty in orthodontic education. The interview only notes that JU will be able to hire faculty because of a substantial faculty budget.1 However laudable the goal of better faculty support, this approach appears to enable JU to attract faculty from established less well-financed programs exacerbating an already severe problem. All of the details are not yet known and there undoubtedly are other facets to this innovative idea that are not yet apparent.

Will the graduates of this program be able to limit their practice to orthodontics? Will JU design a program that becomes accredited? The information available thus far gives no reason to doubt the potential for this outcome. Dr Lazzara points out that the precedent for parallel programs in other fields is already well established. This model offers a service to the transitioning doctor, which is paid for by a fee to OEC. The fee is derived from the transitioning doctor and goes to OEC who is then able to subsidize students, faculty, and the university.

If this model is successful, will it have imitators? In a free enterprise system that is usually the case. This has major implications for the future of orthodontic education. Heretofore, orthodontic programs have addressed their fiscal problems only with revenue derived from activities within the orthodontic program itself. These efforts have been only modestly successful because the institution usually creates a revenue sharing program, which functions to share the revenue generated from orthodontics with all the nonrevenue-producing programs.

If the OEC proposal is unsettling to you, you probably have a lot of company. Orthodontists have done very well and nothing is more conducive to preserving the status quo than having something to preserve. However, change is inevitable and all that really matters is how we change. Orthodontic education today is grossly out of touch with its potential and the pressure for change is mounting. Whatever the ultimate role of the JU model becomes, let's hope that it will kick-start the change process.