THE MILLIONAIRE DENTIST PODCAST

EPISODE 11 TRANSCRIPTION

Announcer:

Hello, everyone. Welcome to the Millionaire Dentist Podcast brought to you by Four Quadrants Advisory. On this podcast, we break down the world of dentistry finances and business practices to help you become the millionaire dentist you deserve to be. Please be advised we do speak with an honest tongue and may not be safe for work. Now here's your host, Alan Barry.

Alan Barry:

Thanks for joining us again for what is fast becoming dentists' go-to podcast for all things in the world of dental finance. I'm your host, Alan Berry, and joining me in our beautiful Four Quadrants state-of-the-art studio is Jason Smith and Brogan Baxter, president and COO of Four Quadrants Advisory. Gentlemen, how are we doing today?

Jason Smith:

Good.

Brogan Baxter:

Alan, excellent. Thank you.

Alan Barry:

I'm still trying to digest the podcast from couple of weeks ago about either absorbing a practice or spending it on marketing. It really kind of blew my mind to be honest with you. But I know there's been a subject that you guys have really wanted to talk about, kind of the success stories and the horror stories of some technology I never heard about. It's called CAD CAM. Is that right, Jason?

Jason Smith:

It is. It is. CAD CAM technology, Alan, that's the machine in a dental office that will mill crown in supposedly one sitting for the patient, though it can be a heck of a long sitting, it's one sitting for a patient. And if you listen to the manufacturers that make those machines, there's two main ones and to a pick on them a little bit, one of those machines is called a CEREC machine, and one is called an E4D. Very similar in what the final outcome is, how you use them as a little bit different. But we have some people, some bigger offices, say two or three doctors, that are wildly successful with them. The sales person will tell you you're going to save a ton of money on lab fees. But as a side note, we can talk about that later, don't ever underestimate a really, really good lab and what they can do for your practice.

Jason Smith:

But we have some people that are big time experts in CAD CAM technology. And then I can think of one of our clients that got one of these darn machines. Didn't know what she was in for. And it ended up being about $150,000 coat hanger in the corner. And she ultimately got in a huge fight with that manufacturer to take the machine back. She could never get clean margins using the machine and was absolutely miserable using it and had no idea how much training she was in store for before she bought the machine, and just the lack of expectations were set. So we've got stories like that out there too, in regards to who does and doesn't do well with one of these machines. And so, here again, back to the subject matter today, we just thought we would share with average dentists out there, things that should be of consideration before they buy one.

Alan Barry:

Brogan, what would you add to that?

Brogan Baxter:

I would add that there are practices where it makes sense. There are practices where it certainly doesn't make sense. The sales individuals will tell you it always makes sense. So what questions do you need to ask? What do we need to be on the lookout for? And what will they and won't they tell you during the sales process?

Jason Smith:

So for example, we've got two, let's just call them friends of the firm that are dentist third generation practice, and they do a ton of crown and bridge work. They have a lab across the street from them, a very good lab, that will come to the chair when a patient is in the chair, come across the street and we'll match the shade of their teeth to make the crown look the right way, et cetera, or several crowns if there are several crowns involved. And their level of service is impeccable. With that being said, it being a third generation practice, it means they have a lot of old, old patients. And if they were to integrate CAD CAM technology, they would for sure have to buy two machines and they would probably have to have four assistants trained very, very well, which would at least take a year.

Alan Barry:

What's the cost of each machine about?

Jason Smith:

About $140,000 for a machine. And then you have to put a factor on how much does it cost, because there are some initial training that the manufacturers give you of those machines, or the distributors, if you will. But that's not enough to get really, really good at it. For example, to do what they call quadrant dentistry, i.e. just like Four Quadrants Advisory, if you wonder where that came from. But to do, say, three crowns in a quadrant, you've got to get really, really good with these machines at getting margins right. And a lot of people are used to thinking like they're going to do single units with this technology. For example, if you're only going to do eight, 10 single unit crowns a month, in my opinion, you have no business getting one of these machines. But a lot of people who buy these machines, where I'm going with this is don't get trained well enough that they can put two crowns right next to each other and have perfect margins and get comfortable with that. That's a whole nother level of training versus doing a single unit crown.

Alan Barry:

So it sounds like to me, the salespeople may try to play it off like anyone can do this, but there is a skill to doing it. And you usually don't realize how tough that skill is until you've got this $150,000 machine sitting in front of you.

Brogan Baxter:

They way undersell what it takes to get proper training and to actually be more efficient with it. And what happens, people fumble around with it and they ultimately get frustrated because they don't want to buy a machine that expensive, and then dump all of that extra cost and time and energy and effort to go into the extra training. And those salespeople right now are getting ready to ramp up. So dentists out there listening to this, you will be approached now, if you haven't already, about the year-end tax deduction, the section 179 deductions. We got to get those. If you buy that this year, you don't have to pay taxes and blah, blah, blah. So you're going to hear this. Think of these questions when we're talking today.

Jason Smith:

Well, here's another correlation I'll give for you too, that frankly, no offense to sales reps, they just don't know enough about the numbers in a practice, like we do for example. If I have a dentist who was asking us about CAD CAM technology, and then they tell me they're only booked out a week and a half in operative, because one of the sales pitches is with this one time visit, get a crown, is that it'll free up your chairs because people don't have to come back two and three times to get their crown placed and the lab isn't doing it, et cetera. Well, if you're only booked out, optimum is about two weeks, two and a half weeks. But if you're only booked out, for example, a week and a half, I would argue you have a chair time already. So you can throw that sales pitch out the window that you need more chair time. So that would be something you might want to know.

Jason Smith:

And then here's another thing. Supposedly, because it's supposed to cut lab fees, in theory, they're also saying your overhead should go down a little bit because you're going to save lab costs. But if we had a dentist, I would want to know where their overhead is before they did that purchase. If we had a dentist that was, say, sub 55% overhead, which for a general dentist is good overhead, I'd be like, "What the heck are you messing around trying to lower your overhead any more than that?" You're already running a great practice. So maybe you should look at introducing other procedures that might make more sense in your practice. If you're really like just jonesing to add some procedures to your practice, maybe you should do an Invisalign, start placing implants or some stuff like that. I'd have to know more about the practice to really help somebody with that.

Alan Barry:

I know today time is kind of short for you two, so let me ask you this. I hear a lot of negatives. Not negatives, but just thoughts that you'd have to put out there before you think about dumping this kind of money. Where does it make sense? We're kind of hearing where it doesn't make sense. Does it make sense anywhere to buy one of these machines?

Jason Smith:

I think it might make sense if, one, if you're somebody and this isn't really a criticism, because we have tons of clients that have these machines, one, if you're kind of geeked out about the technology and you like it, so you might be attracted to learning how to use it. That would make sense. If you have a couple of assistants in your office as well that are geeked out about it, then that might because then you have some people on board to want to learn it with you. And then, I think you need to be north of 15 crowns a month. And then I also think you need to be fully booked out for two weeks in your chairs in as far as your operative schedule. And if all those things are in alignment, you might be good to go. But like I said, right now, go look on eBay. You'll see a ton of these machines for sale for about a third of the cost they bought them for.

Brogan Baxter:

I think they're even less than that, but I will also add in that if you're not interested in doing quadrant dentistry, you're only looking to do a lot of single unit things, don't waste your time. If you have a staff where you constantly have turnover, don't waste your time. You don't want to put any time training, energy and effort into training staff that just is a revolving door if you can't maintain staff. You need to consider those things.

Jason Smith:

I would also add, if you run just a denture clinic, I wouldn't be buying one of these anyway, because all your clients just want dentures. They don't want crowns. That was kind of a geeky dental joke, Alan.

Alan Barry:

Okay, it went over my head. Sorry. So it sounds like to me, probably the most important thing is the amount of crowns you're doing a month and how far out you are booked out. Is that fair? Besides the dentist being comfortable with technology, are those the two most important factors?

Brogan Baxter:

And the relationship with your existing lab. If you got a lab you're not real stoked about, you've never been able to find one you're really stoked about, it might make sense for you. But if you have one that you, like Jason had alluded to in that story, that could come over and shade match or they do exemplary work, they've done it for years and years and decades, and you trust them with your life, I wouldn't jeopardize that.

Alan Barry:

Excellent, fellows. Well, another great discussion. Some mind-opening things to think about for all you dentists out there. I want to thank Jason and Brogan for joining me today. And thank you to listener for tuning in.

Announcer:

That's all the time we have today. Thank you to our guests for their insight and for sharing some really great information. And thank you to you, the listener, for tuning in. The Millionaire Dentist Podcast is brought to you by Four Quadrants Advisory. To see if they might be a good fit for you and your practice, going over to fourquadrantsadvisory.com and see why year after year they retain over 95% of their clients. Thank you again for joining us and we'll see you next time.