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EPISODE 153: Is Poor Cash Flow Hurting Your Practice?

Casey's back and ready to impart some wisdom on co-host Jarrod. Poor cashflow is a common issue with dental practice owners and our hosts walk through the reasons that cause it.

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EPISODE 153 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.

Casey Hiers:
Hello and welcome. This is Casey Hiers, back at the Millionaire Dentist Podcast, in studio with co-host Jarrod Bridgeman, looking dapper as always.

Jarrod Bridgeman:
Hey, hey, thank you. Look at you, looking sharp. Nice little pocket square going on there.

Casey Hiers:
Yes.

Jarrod Bridgeman:
Yeah.

Casey Hiers:
It's for my tears.

Jarrod Bridgeman:
I figured as much.

Casey Hiers:
My tears of joy.

Jarrod Bridgeman:
So you weren't here last week to record a podcast with us. So we had our founder, CEO, and president and all around head honcho Jason Smith in to talk about DSOs. You missed a lively conversation.

Casey Hiers:
I like that. I listened to a little bit of it as I was traveling, but such good information.

Jarrod Bridgeman:
Yeah.

Casey Hiers:
He's been at this for 20 years. He has seen it. He knows it. When I travel around, people go, "I'm burnt out. I think the only option is to sell out to a DSO so they can handle all the stuff."

Jarrod Bridgeman:
And also part of the conversation was why do people themselves feel like they need to own seven, eight, nine practices. And I didn't think about this at the time but look at, sometimes you'll see a really good restaurant all of a sudden grow too big, and then all the locations fail.

Casey Hiers:
Yeah.

Jarrod Bridgeman:
You know what I mean? The resources aren't there. Maybe the management wasn't quite what they thought it was, but it was, at least...

Casey Hiers:
Germany in the forties.

Jarrod Bridgeman:
Yep.

Casey Hiers:
Trying to take over too much land.

Jarrod Bridgeman:
Yep. Yeah, exactly.

Casey Hiers:
Hitler reference.

Jarrod Bridgeman:
Yeah.

Casey Hiers:
But no. Yeah, it's trying to grow too big or grow too fast. Now, that was a great one. Hopefully, our listeners enjoyed hearing that. Again, all the locations, all the DSOs, it's a hot topic. People need to arm themselves with information. I was at a course recently and somebody is just like, "I'm toast. I'm exhausted. I think I'm just going to sell out to DSO." They thought that was their only option.

Jarrod Bridgeman:
Right.

Casey Hiers:
And that can be hard. But glad you guys did that.

Jarrod Bridgeman:
So that made me think, well, if we're only going to own one practice, what are some of the things that we've often talked about or at least mentioned that is an issue with trying to improve things there? And it often comes back to cash flow.

Casey Hiers:
Yeah. Certainly a big bucket. But ultimately, why are people unhappy or discontent or frustrated or don't feel like they have good cash flow? And then look to multiples, those big decisions that half the time are wrong.

Jarrod Bridgeman:
Right.

Casey Hiers:
It comes back to they don't have consistent and predictable cash flow. Well, why not? Right? As we keep peeling that onion back, boy, there's a lot of areas that can be hard for folks. What's one that you have heard about that can hurt cash flow?

Jarrod Bridgeman:
One of the big ones that we often talk about in here is people not putting in their books what they're actually charging. Right?

Casey Hiers:
Cooking. They're cooking the books.

Jarrod Bridgeman:
Yes.

Casey Hiers:
Expect to collect.

Jarrod Bridgeman:
Right.

Casey Hiers:
Yeah. No, that's accurate data. Talk about the, that's a good one, talk about the foundation of cash flow. How can you manage or improve cash flow if your QuickBooks are incorrect, if they're behind if you don't know your fees. There's all those areas of foundational.

Jarrod Bridgeman:
And I can make that even on a more personal level, this is something that took me years. Again, I'm the marketing guy. I'm not any of the financial people, the really good financial people we have here in-house, but having, keeping a head total of how much money I'm spending each week. Back in the day, people would have a checkbook and write down how much they spent. People don't do that so much anymore, with the prevalence of debit cards and an app on your phone. Sure, you can check that app that day, but maybe things haven't started processing yet, and so now you're spending more than you actually have.

Casey Hiers:
Having a custom chart of accounts in your practice that really forensically line items out what's coming in and what's coming out. That's a good foundation for cash flow.

Jarrod Bridgeman:
Right.

Casey Hiers:
There's so many places we can take this, but if your tax situation is screwed up and you owe $30,000, that hurts cash flow tremendously.

Jarrod Bridgeman:
Right.

Casey Hiers:
Versus if you knew you were going to owe $30,000 more over the course of 12 months and you divide that out.

Jarrod Bridgeman:
Right.

Casey Hiers:
Or if you're getting a refund of 30,000 and you divide that out. Good tax management helps or hurts cash flow. People don't connect those two, they always just think production or more, more, more.

Jarrod Bridgeman:
Well, that makes sense in terms of a society we are raised to believe that the harder you work, the better you'll be. And that's not always the case. It's working smarter.

Casey Hiers:
Yeah. No doubt about it. But yeah, you had done some big things making sure your information is correct. Unfortunately, we also see people where they think their fees are great, but because they might bill a book expect to collect or they haven't done a fee study in their zip code, their fees are 25% off, they're taking a haircut with insurance. They don't really understand some of those metrics. That can crush cash flow.

Jarrod Bridgeman:
What would be a reason why you think that sometimes they believe their fees are right where they should be when they're not?

Casey Hiers:
Because they talked to a person at the study club over a glass of chardonnay and they said, "How much do you charge for a crown? How much do you charge for a crown? OK, great." Well, you might have a hundred line items of your fee schedule, but just because you talked about one with somebody who you think charges a lot doesn't mean you are in line. That's just one random example.

Jarrod Bridgeman:
I'd say that and I would also say possibly inflation. You know what I mean? If you're charging the same thing you were 10 years ago, you probably should look at that again. Right?

Casey Hiers:
Well, but then they go, "Well, but insurance only gives me X, so it doesn't really matter." Well, again, we have to know true numbers. What is your true fee to put you in the 80th percentile? What is the insurance adjustment or reimbursement? How far are you booked out? Right? You should be probably booked out a couple weeks. I talk to people who are booked out considerably more than that.

Jarrod Bridgeman:
Right.

Casey Hiers:
And they take a lot of insurance. And so you start adding these things up. Their production per day is lower. They're not spending enough time with their patients. The case acceptance down because they're on skates because they have so much, they're booked out so far and they have so many patients. But it's a circle. It's almost like a circular firing squad of trouble.

Jarrod Bridgeman:
Right. Right.

Casey Hiers:
And you just have to start picking off these things one by one.

Jarrod Bridgeman:
Because I mean, there are things that you can have a hand in and control, but some things are always going to be, there's always going to be overhead unless you're I guess a back alley dentist.

Casey Hiers:
No. Yeah, no, there's always overhead. We have GPs whose overheads in the forties.

Jarrod Bridgeman:
Right.

Casey Hiers:
Most people I talk to, it's somewhere between 60 and 80. After they're with us for a while, it's sub-60.

Jarrod Bridgeman:
Nice. Yep, yep.

Casey Hiers:
Sub 50. And again, it's not one, two, three, or four things. It's 28, 29, 30, 31 things. And that's what's hard. But we're just scratching a surface with cash flow.

Jarrod Bridgeman:
What's another strong, in your opinion, Casey, you're out a lot presenting, exhibiting, talking to people, talking to people on the phone with your discovery calls, what's a big cash flow issue that most people don't think about? That when you talk to them on the phone, you're like, is it the spouse has gone crazy and they spent a bunch of money if they're a practice manager?

Casey Hiers:
No, no. I've only come across that a couple times. Yeah. It's such a wide and vast question. But I was having a conversation with some people, they wanted to learn new procedures. They were referring out a lot of procedures. And so they just said, "You know what? I'm going to learn a new procedure. I want to learn this. I want to learn that." That can help. Again, when you talk about cash flow, and then if you link it to overhead, there's only three ways to affect overhead, increase revenues, decrease expenses or a combination of the both. Now, when you talk about increasing revenues, that doesn't just mean working more. Think about this. If you learn a new procedure, if you learn two procedures if your fees are correct, if you potentially cut an insurance and more people are on your true fee schedule, you get to spend more time with your patients. Your case acceptance is better. All of those things are going to contribute to lower overhead. That's connected to cash flow. Right? It's all...

Jarrod Bridgeman:
Right. And then when you have that extra cash, you can actually put that towards something else like your investments.

Casey Hiers:
Well, and here's the other thing, so many people don't have a consistent income structure.

Jarrod Bridgeman:
Right.

Casey Hiers:
You need a set W-2. You need a consistent distribution that needs to be right-sized. Once that's an order, then you look at your debt. You can reduce your debt with some strategy. You can retire and save for retirement. There's a system to all of it.

Jarrod Bridgeman:
See, and that's the bonus of being the employee for me, is hey, I get paid every two weeks or whatever it is every time.

Casey Hiers:
There's so many factors with cash flow, and it's linked to so many areas. And again, people think it's just one thing or two things.

Jarrod Bridgeman:
Right.

Casey Hiers:
And it makes me sad. So many practice owners, they'll say, "Well, I just don't think there's any way I can do it better. I know where all the money is, there's just no room for improvement."

Jarrod Bridgeman:
I feel like staff gets blamed a lot for that too. Staff salaries.

Casey Hiers:
Yeah. I mean, that's an easy place to take it. Right?

Jarrod Bridgeman:
Yeah.

Casey Hiers:
I mean, the best golfers in the world. I was just at an event with some clients and some prospects, and we got to go to the Arnold Palmer Invitational at Bay Hill.

Jarrod Bridgeman:
Nice.

Casey Hiers:
And these golfers are constantly improving, tweaking, talking, analyzing, all that, and playing the golf. Right?

Jarrod Bridgeman:
Right.

Casey Hiers:
So if we translate that to dentistry, producing the dentistry is going out and hitting the golf ball and executing what you're going to do, but there's this whole other side to why these golfers are so good.

Jarrod Bridgeman:
Yep.

Casey Hiers:
Well, that's what we do for our folks.

Jarrod Bridgeman:
Right.

Casey Hiers:
We're the analytics. We're the golf coach, the swing coach, the putting coach, the TrackMan technology. Tweaking it. Refining it. As the CEO of the practice and the primary producer, you just don't have enough time for it.

Jarrod Bridgeman:
Right. Right.

Casey Hiers:
Again, there's some great specialists that make a million dollars sort of "figuring it out." They're fat and happy a lot of times.

Jarrod Bridgeman:
Yeah.

Casey Hiers:
Well, what if you can make 1.6? Guess what? We have a lot of specialists that we're making $1 million, now they make 1.6. Is 1 million better or is 1.6 better?

Jarrod Bridgeman:
Yep.

Casey Hiers:
Right?

Jarrod Bridgeman:
Yep.

Casey Hiers:
We don't cost $600,000.

Jarrod Bridgeman:
No.

Casey Hiers:
We don't cost $300,000. So, you know, you do the math. It makes sense to, again, master your financial situation, get your house in order. It's so hard. But yeah, no, cash flow and overhead are stressful. And again, the people that say, "There's just no other way, this is just how it is in dentistry," and it's so shortsighted. But again, most practice owners, they create solutions. And so they get frustrated when they hit a wall with this stuff.

Jarrod Bridgeman:
Right.

Casey Hiers:
And so then they say, "This must just be how it is. It's just a blanket statement how dentistry is. It's going down to tubes. Corporate DSO is the way of the future and insurance is just going to wreck our lives."

Jarrod Bridgeman:
Right.

Casey Hiers:
That is a terrible mindset to have.

Jarrod Bridgeman:
Right.

Casey Hiers:
Because again, we have a lot of clients that collect a million to 1,500,000, they're making four, five, $600,000 or saving a hundred, 150. They're on track for eight digits in retirement. They work three and a half days a week. They're not stressed out. They have a team that takes care of all the minutia for them and they can retire at 50. And then I talk to the 50-year-old who has no savings, tons of stress, has it all figured out.

Jarrod Bridgeman:
Right.

Casey Hiers:
Right?

Jarrod Bridgeman:
Because they're stubborn.

Casey Hiers:
And doesn't understand how there could possibly be another way.

Jarrod Bridgeman:
Right.

Casey Hiers:
And it's hard for me because I'm like...

Jarrod Bridgeman:
Like dude.

Casey Hiers:
I really want to MF this one. But it's like, "Listen, we see this all the time."

Jarrod Bridgeman:
Yeah.

Casey Hiers:
And again, so people just can't get out of their way.

Jarrod Bridgeman:
And it's a weird mix of everybody's different and everybody's special, but you're not special. Your case, we've seen variations of almost what everybody else is going through.

Casey Hiers:
Yeah. I mean, how to make it better is unique and special. But just being like, "Yeah, there's no way this could be, I can't save more. I can't make more. I can't lower overhead. It's just not possible. I've tried everything."

Jarrod Bridgeman:
I mean, we recently had a client in for their annual meeting, and I heard their numbers, I'm not going to give everybody any specifics, but they were saving over 300,000 a year last year.

Casey Hiers:
Yep.

Jarrod Bridgeman:
That's crazy.

Casey Hiers:
It's common.

Jarrod Bridgeman:
In a smaller town, I believe.

Casey Hiers:
It's commonplace, numbers that are unbelievable. And it comes, again, through a lot of hard work. I mean, here's another example. My daughter at seven years old playing basketball could barely dribble the ball. Basketball's hard.

Jarrod Bridgeman:
Right.

Casey Hiers:
Correct. Well, let's work at it.

Jarrod Bridgeman:
Yep.

Casey Hiers:
OK. So we worked at it all summer. We worked on dribbling, shooting, passing, rebounding, hustling. It wasn't one thing, it wasn't two things. It was a whole bunch of things.

Jarrod Bridgeman:
Right.

Casey Hiers:
And this year she's way better. I said, "Emerson, what changed?" "Well, I worked at it and I asked you for help and you helped me."

Jarrod Bridgeman:
Yep.

Casey Hiers:
What do we do for practice owners? We help them. Millions of dollars.

Jarrod Bridgeman:
And all you got to do is sit there and focus on your dentistry.

Casey Hiers:
Yeah.

Jarrod Bridgeman:
Right.

Casey Hiers:
Focus on dentistry and be coachable and enjoy your team. The concierge at the Ritz-Carlton ready to help you.

Jarrod Bridgeman:
That's right.

Casey Hiers:
Yeah. Cash flow and overhead, we could talk about this for hours, but we're not Joe Rogan and unfortunately, I'm not smoking a cigar.

Jarrod Bridgeman:
But here's the deal. But here's the deal, the reason why I kind of wanted to talk about this too is you go to speaking events, we host our own CE events and speaking events, these are the things we talk about. If you actually want more of a dive into this, it wouldn't be a hundred percent deep dive, but if you want to know more about this stuff, we are all over the country now. We are going to be in Tampa very soon, on April 7th. This Friday, you're going to be in Cincinnati at a Topgolf event. We've got you booked out. I know you like to travel and I know you're excited about that, but I know you're even more excited to get out there and talk to more dentists. And I'm telling you guys if you want to know more if you are even remotely interested in trying to find out more and you've heard our podcast, but you want to see how great Casey is in person and don't let him fool you, he's not that bad looking.

Casey Hiers:
I've got a face for radio, damn it.

Jarrod Bridgeman:
But I'm telling you guys, check us out on fourquadrantsadvisory.com/events. You can also follow us on social media. We're always posting on that kind of stuff. Casey is now on social media and doing a great job about that.

Casey Hiers:
It's a professional.

Jarrod Bridgeman:
It's a professional.

Casey Hiers:
I do not have a personal Facebook or Instagram page.

Jarrod Bridgeman:
That's all right. We got you covered, buddy.

Casey Hiers:
Thanks.

Jarrod Bridgeman:
All right, folks. Thank you.

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 go on 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.