THE MILLIONAIRE DENTIST PODCAST

EPISODE 41 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 and on today's episode of the Millionaire Dentist podcast, Jason Ewers and I jump into the topic of the private practice model versus the corporate dentistry business model. Jason, when we talk with dentists and specialists around the country, what would you say the two topics are that we get asked about the most frequent?

Jason Ewers:
Yeah, Casey. Insurance and corporate dentistry.

Casey Hiers:
Well, that's exactly right. Now, why do you think that is? I've got a theory, but I'm curious to what you think.

Jason Ewers:
Insurance is, that kind of explains itself there, but corporate dentistry, they're waving big checks in front of a lot of practice owners these days and it's probably pretty tempting to take that, but hey, what do you think?

Casey Hiers:
These are two areas that can scare a practice owner. And I don't mean that to sound dramatic, but a lot of practices, if they've got 25, 30% insurance write offs, they're producing a boatload of dentistry, they're not collecting and they have insurance reimbursement frustrations, that's an area of stress. And so people want answers. And then conversely, with the rise of corporate dentistry, there's a lot of unknowns around it because it hasn't been around forever like the private practice business model is. And so when there's questions and uncertainty, those topics typically rise to the top.

Casey Hiers:
On today's podcast, Jason, let's dive into corporate dentistry. We've done a couple on insurance in the past, but we haven't really talked about corporate dentistry. And again, for our listeners, we're just going to share the pros and cons of both business models. We've had a lot of experience and conversations with your peers around the country regarding these two models. We're just going to dive in a little bit. And obviously our listeners are very aware of these two business models, but Jason let's go into the private practice, the more traditional model. Let's talk about some pros and cons of the private practice solo owner model.

Jason Ewers:
Yeah, of course the pros of being a private practice is you have complete control. You're your own boss. You own the practice and you get to run it the way that you want to run it. You've got flexibility. You can work four days a week. You can work five days a week and a half of Wednesday. However you want to do it. That's your prerogative since you are the practice owner. The cons of it is you get to make all the decisions, which is great until you realize that the level of authority and responsibility can be overwhelming. Administrative staff oversights, property management, clinical staff, business and financial responsibilities and decision makings. Really don't have a lot of sounding boards to go off of.

Casey Hiers:
Well, and it's interesting because it can be a pro and a con. You're the boss, you call the shots, you call the ball. That's a good thing until a lot of that pressure gets on your shoulders and to your point, most practice owners don't have an MBA. They're not trained in the business or finance side of the practice so that can be overwhelming. But that being said, Jason, despite those cons, high achievers and people that really want to create something or even somewhat perfectionist, they prefer to run their own show and reap those benefits if done well and there's an added risk, but there's an added reward sometimes. The issue is that not all solo, private practice owners have the business savvy to strategically maneuver outside of their clinical expertise. That's really the crux of it.

Jason Ewers:
Yeah. And we talk to a lot of dentists and specialists out there and the ones that do own their practice, there's a sense of love and there's in the pit of their stomach.

Casey Hiers:
Legacy and just pride in a good way.

Jason Ewers:
Absolutely. And that'd be great, so you run your own business and if it's successful, you have that to be able to go back on. And there is, like you said, there's a feeling of accomplishment there.

Casey Hiers:
No doubt about it. And shifting to corporate dentistry, listen, it has its own pros and cons. And the underlying value is perceived support. The most common term used in corporate dentistry is DSO or dental service organization and they offer business management and nonclinical support areas that someone coming out of dental school may not feel confident or strong in. That's the allure of that corporate dentistry, there's an infrastructure there. And current DSO networks can range in size from four locations to over 900 locations. There are at least six large DSOs around the country and their primary selling point is that they handle that business side of dentistry so that the dentist doesn't have to. And this can come at a price however, but the pros, again, the dentist has a singular focus on the clinical. Start off some of the cons of corporate dentistry model though, Jason.

Jason Ewers:
Yeah. You're held to a standard of production goals, micromanaged around your daily, weekly production goals, less patient relationships sometimes because of those production goals.

Casey Hiers:
And when I say it comes at a price, that's it. And each person has to weigh what's important to them and getting into some data. The ADA says that, overall there's only about seven and a half percent of dentists that are affiliated with DSOs right now, that they are on the rise. But an interesting statistic from the ADA, young dentists, they are affiliated with dental service organizations at about 16 and a half percent. And so that's interesting if you look at general characteristics of folks, those ages. Some of that added responsibility is not attractive to someone coming out of dental school and a DSO is an option there. And clearly a larger percentage of folks are getting into the corporate model on the front end of the career. And that really can align with their vision. But the nice thing about when somebody gets into a DSO or corporate dentistry on the front end, it does instill an incredible work ethic.

Jason Ewers:
Yeah, absolutely.

Casey Hiers:
You're working nine, 10, 11, 12 hour days and you are turning those patients quickly. You're not getting that relationship, but you are really learning how to produce. That's exactly right. Let's look at a couple examples that we've experienced. Talked to a young dentist a couple months back and works in the DSO model, works about three, three and a half days a week and makes a lot of money makes, more than a lot of practice owners make without the headaches of ownership. And guess what our conversation was about? They wanted to buy a practice. They wanted to own. And it's fascinating because I've had the converse conversation as well, especially in this pandemic. Practice owners being frustrated by all of this added areas of responsibility around COVID and safety and some of those business and financial decisions and they're just thinking about hanging it up and going the DSO route. Both models have their upside, but both have their downside. And what's the worst scenario, Jason? What would you say what you don't want when evaluating these two models?

Jason Ewers:
Yeah. here's what you don't want. You don't want to be practicing for 25 years privately, get burned out, not making enough money, poor retirement savings and then all of a sudden, a corporate dentistry comes over and waves a check in front of your face and that's your only option to be able to retire is by selling your practice. We talked about it earlier, the practice that you've built and you've got all this pride in and end up selling that out to corporate dentistry. A lot of this has to do with your lack of options and not going out on your terms is a sad state of affairs.

Casey Hiers:
Well, and again, we're sort of outside looking in with our experience with this, but to your point, the younger dentist who gets involved in this model of corporate dentistry, there's a lot of benefits on the back end. Again, those are the sad phone calls where they don't really have the option. And really it's out of fear as well. They say, "Well, my friend down the street wasn't really able to sell his practice because a lot of young kids aren't buying up practices." And so there is a sense of legacy that's being diminished. And a lot of older practitioners, solo owners, they sell their practice not because they want to, because they feel like that's their only option.

Jason Ewers:
Yeah. I've had a call with a gentleman that options were limited. He was 59, I think, almost 60 and they didn't know what to do with the practice. He wanted to cut back a little bit on his practice, on his time to do some of his own hobby stuff and his practice wasn't strong enough to support bringing in an associate but he had that pride and love for his practice and his patients that he didn't.

Casey Hiers:
Didn't want to turn over the keys.

Jason Ewers:
Didn't want to turn it over but his options were limited on what he wanted to do and what he could do well.

Casey Hiers:
Well, and again, whatever model someone chooses for their future, they've got to ask themselves, "Will it sustain your philosophy and standard of patient care? Will it sustain your individual and collective practice culture that you and your team value? Will it sustain your profitability now and set you up for the retirement you deserve?" We've walked through both models and some pros and cons and examples. I always liked the, all of the above. Well, what if you can have it all?

Casey Hiers:
And so if a practice owner does have an MBA or maybe is passionate about the business and finance side and accounting side and has the time to do that, maybe they can be that private practice owner and flourish on the business and financial side. Again, those that may not have that as a strength, if they could find help and a team comprehensively that can help them master those areas that we talked about, the business, the finance, working with team and staff to manage that the right way. We know a lot of people, they collect 1.1 million, they make over 400, they're saving a hundred, 150 a year for retirement. They're on track for an eight digit retirement as a private practice owner who has a team to help them master it. That's kind of the best of both worlds. And that's really what we try to help people do as well. But again, there's options out there. And I think that's important. You have options. There are pros and cons to both. Don't do it out of fear. Don't do it out of lack of options, educate yourself and understand what's out there.

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.