September 28, 2022 | Podcast
In this episode of The Art of Dental Finance and Management podcast, Art meets with Chief Strategy Officer of Fortune Management, Jennifer Tyson, to discuss strategies for dentists to preserve their private practice ownership.
Reach out to Art if you have any questions regarding dental finance and management for your dental practice. More information about the Eide Bailly dental team can be found at www.eidebailly.com/dentist.
Reach out to Art if you have any questions regarding dental finance and management for your dental practice. More information about the Eide Bailly dental team can be found at www.eidebailly.com/dentist.
Being more strategic in all aspects of your dental practice will lead to increased profitability.
Art Wiederman, CPA: Hello everyone and welcome to another edition of The Art of Dental Finance and Management. With me, Art Wiederman, CPA. I am a dental division director at the CPA firm of Eide Bailly, and I'm located in Tustin, California. And it's a beautiful Friday morning. And I have a wonderful, wonderful guest, a friend for many, many, many years. Jennifer Tyson is the chief strategy officer at Fortune Management, which is the largest dental management company in the country. And I've wanted to have Jennifer on my podcast for a long time and she's busy and I'm busy.
And I finally got her this morning and I said, Jen, what do you want to talk about? And she says, I want to talk about keeping the private practice of dentistry going for generations to come. I said, I love that topic. And Fortune Management works with over 1000 practices across the United States. They have over 100 coaches. It might even be more than more than that. She'll share that with us. And her insight into what's going on in the dental profession is absolutely gold and important. Critical. And Jennifer and I talk dentistry all the time. That's one of the privileges I have in being a dental CPA and having this platform is I get to talk to the top, top people in the country about dentistry and what's going on so that I can share that with you. So we'll get to Jennifer in a little bit.
First, I want to again, as I do every show, tell you about my wonderful partner, Decisions in Dentistry magazine, the best clinical content of any dental magazine in the world. My friend Lorene Kent and her team have a platform with 140 plus continuing education courses that you can buy for a very, very, very reasonable price. Go to their website www.DecisionsinDentistry.com.
If you are looking for a dental CPA, we at Eide Bailly, we work with over a thousand dentists and are from 300 plus now it may be higher, I don't even know. And our office in Orange County, California, where our office is about 15 minutes from Disneyland. And so if you're looking for that, my number 657.279.3243. My email is AWiederman@EideBailly.com and many of you have reached out to me.
I want to tell you that we are going to have our Business of Dentistry series. We're going to be having a three part series, October, November and December, October 21st, November the 11th and December the ninth. And then we're going to be having a transition series, which is going to be with my friend Pat Wood. It's going to be with me, and then it's going to be Kathleen Johnson. We're going to be talking about due diligence and things like that and legal issues and all kinds of stuff. But anyway, couple other things.
Remember that if you received more than $10,000 between January one and June 30th of 2021 from the HHS provided a relief fund. You need to report that in the portal by September the 30th. If you don't, you will have to give that money back. And the other thing is that if you have not looked at the employee retention credit and believe it or not, I've been talking about this for over a year and a half now, and there's still people calling me, say, Art, can I qualify? And yes, you can. If you meet the 50% reduction test for 2020 or the 20% reduction test for 2021, we have helped over 100 dental practices all over the United States were upwards of $5 million in tax credits that we have got to our doctors. And it's been a wonderful thing. It is 100% legal. It is not fattening or anything like that.
So I'm going to now go right to my guest because Jennifer and I can probably spend 10 hours talking about what's going on in dentistry. So Jennifer Tyson is the chief strategy officer and an executive coach with Fortune Management. Jennifer grew up in the world of practice management and personal development. She's been involved in the dental profession. I mean, she even when she was in high school, she was drawn towards dentistry and considered a path towards going to dental school. That did not happen. But she stayed in the dental field. She was able to work in some of the most elite dental practices in the Bay Area, learning how the best practices work in dentistry. She was able to work in almost every front and back office position, learning them through thoroughly, and she discovered her passion for business and how creating successful private practices lead to improving the standards of health care.
Jennifer is a graduate of San Jose State University. She got her B.A. emphasis in marketing and a minor in communications, and she actually started working as a marketing consultant for many private practices. And then she came in contact with Fortune Management, which again is the nation's leading and largest practice management organization in health care as a marketing client. And as I mentioned, she's now their chief strategy officer and is involved in all the aspects of the company's growth initiatives and has a lot of really exciting stuff going on. So, Jennifer Tyson, welcome to the Art of Dental Finance and Management.
Jennifer Tyson: Thank you so much. Now, this has been a long time coming, so it's great to finally be here.
Art Wiederman, CPA: We've been talking about getting on a podcast. I know you've done a webinar too with me and we talk all the time and I'm glad we finally got to this point. So I mentioned a little bit about your history and your journey. Kind of fill in the blanks. Tell our listeners a little more about what you do and maybe a little bit more about what you do at Fortune.
Jennifer Tyson: Yeah, absolutely. Well, I love the fact that I've got to update my bio to not point out that, yes, I didn't go to dental school because I was failing miserably in organic and I knew very early.
Art Wiederman, CPA: You and me.
Jennifer Tyson: Both.
Art Wiederman, CPA: You and I are.
Jennifer Tyson: Not going to work for me.
Art Wiederman, CPA: I wonder how I graduated college by passing on my science classes.
Jennifer Tyson: But it's so I always like to ask people, you know, what did they want to be when they grew up? And my answer was always, I wanted to be a dentist. Believe it or not, I actually had an amazing experience as a child going to the dentist, and I just thought it was one of the coolest things. And so yeah, early on, even in high school, probably under the table, I was about 15 and I was being a dental assistant, some clients, and it was just a phenomenal experience. I loved absolutely everything about dentistry. I loved working in the practice, but I did find myself loving the business side more than I did the clinical. I'm still fascinated by clinical and I stayed very close to it. But I really found that, you know, these doctors went all through dental school and they're expected to then own a practice to fulfill their life's dream. And they're given such little training on how to be a business professional. And it really you know, I see fantastic clinicians really struggle to make ends meet and then others that maybe weren't the best clinicians but knew how to market and knew how to do sales, enrolling patients in dentistry. And I just really wanted to level that playing field for doctors that really deserve to see more patients. And I could see the dynamics that are in a practice. And so often patients never get past the phone call because they're not handled correctly or, you know, we're just we're not studying the human nature and making sure that we're building our processes around it.
So very fortunate to be a part of Fortune for the last 15 years and even longer, because it was my father actually that started with Fortune over 30 years ago. And so it was really, you know, second nature to me. And being able to grow up around it was a major gift in my life. And, you know, Fortune is Fortune is different. Fortune allows people to really pursue their dreams in business ownership, but also in their life. And our tagline of extraordinary practice, extraordinary life. We always say that many people have extraordinary lives. And because of that, we'll have extraordinary practices. But it doesn't always work the other way around. I've seen a lot of people with extraordinary practices have not so extraordinary lives, and that has been a mission of ours, is to make sure that there's a balance of both and that the way people get to whatever they want as part of their vision for owning a practice that we help them get there.
Art Wiederman, CPA: I just think that that is so important. I mean, I talk about this on the podcast. And my listeners know I have two boys and I right in the middle of tax season and I didn't miss one. Well, I probably count on one hand the number of high school sporting events and college sporting events that I missed because I was doing tax returns. And it is just, you know, family first and enjoying yourself because you don't you don't get a trophy for working the most number of hours. We both know that. So, you know, everybody works hard and I think you're spot on with that. So before we get into our topic, which is, you know, the private practice of dentistry and what's going on with all that, you guys work with over a thousand practices and you're talking to your coaches every day. How many coaches do you have right now at Fortune?
Jennifer Tyson: You know, I think we're up to a little over 120 on the roster nationwide.
Art Wiederman, CPA: You work all over the country?
Jennifer Tyson: Mm hmm. We do.
Art Wiederman, CPA: Yes. 2000 foot view. We're now, you know, half almost two and a half years past the beginning of the COVID 19 pandemic. And we all know what happened there, and I'm not going to go back and re revisit that. But where do you see the profession right now? How are your dentists doing?
Jennifer Tyson: That's a great question. Our. So, you know, I think 2022 looking back on where we've been. Right. And I think that the pandemic specifically helped practices that were strong before are even more strong now. And the practices that were struggling before, I think, are ever either struggling more or they found a way to get out. And so it definitely weeded out some of the weaker practices in there or even just people that were really checking out of the industry as far as dentistry is concerned. I think we're still so blessed to be in this industry. It is a phenomenal industry. And you know, if my boys grow up to choose to be a dentist, I support them 100% because I still think it is a phenomenal industry to be in.
With that being said, on the terms of private practice and honestly, why my passion has changed towards preserving private practice is because there are several headwinds that are hitting private practice owners right now, and a couple of those that I know every practice, not just private practice, is facing as the war for talent, right? So we've had a major shift in our culture, in our environment right now of people working from home, people realizing that they can maybe live off of less, having that life balance conversation. And, you know, some of it's maybe even burnout, too, right. And so there is a massive challenge with the war for talent. And the reality is, is that 50% of dental are full of part time people. And that's really, really hard to depend on. 20% of a practice staff changes annually. So, you know, those are big statistics to build a practice on in dentistry and really, really difficult. You know, more than 50% of the dental students now are being hired by DSOs. That also causes a massive headwind for private practice. So I think war for talent is a really big headwind right now. And I think there isn't any practice, I know that considers themselves not looking for at least one position.
Art Wiederman, CPA: So we're going to talk about we're definitely going to talk about that. But I'm sorry to interrupt you. Go ahead.
Jennifer Tyson: No, that's okay. I think, you know another big one right now and obviously this is all over the country, if not the world, is the increasing costs of just about everything. So whether it be student debt or actually acquiring a practice or starting up a practice, if it's increased costs of payments, increased costs of supplies, I mean, everything has gone up. And so that everything's gone up except maybe the cost of dentistry itself. Right. You know, how often are our practices really keeping healthy fee schedules? I know ours are in our fortune system because they are required to we make them. But you know, a lot of practices, it's not uncommon for me to walk into a practice, especially a 15, 20 year practice, and they've never adjusted their fees. And that is really, really hard to keep up with everything else increasing.
Art Wiederman, CPA: Well, I'm glad you bring that up, because this is going to get us into a conversation. And, you know, one of the things that that you and I have talked about and are passionate about is what's going on with insurance reimbursements. And I have seen Jennifer, I have seen many of our clients are having a change in their feelings about their relationships with insurance and, you know, with this pandemic. And they're seeing their costs go up. I mean, what kind of a you know, you're a businesswoman, what kind of a business model? How happens in a business where your costs go up and you can't raise your fees or your revenue source, that that's what you have in this situation. So. Well, let's start that conversation. Are you seeing dentists change their feelings about relationships with insurance companies? What are you seeing out there in that marketplace?
Jennifer Tyson: Yeah, I mean, I think it starts a little bit with even the consumer's perspective, right? So I think that patients still to this day are convinced that they can't see that dentist without insurance. And I think that is a very misleading belief. And it's something that as a profession and as an industry, we have to change the narrative there because it's becoming more and more that people don't have dental insurance. Or that people are putting off their dental work and they need to understand that they absolutely can see a dentist without dental insurance. And it's our job as the profession to make that even more appealing and more affordable, to make sure that our dental practices have the right payer mix. So if we're looking at, you know, the mix up of a practice and how they receive money, it's not necessarily the patient demographics so much as it is your actual payer mix.
And sometimes we will look at a practice and, you know, those checks that they receive or the W-9 that they get or the 1099 that they get from those insurance companies, you know, those are their clients. They're receiving a healthy amount of money from those clients. And one of the first things that we look at is what is your diversity with your payers? Are you 30% with one carrier or are you 50% with one carrier or are you 80% with one carrier? That can really dictate how successful and also the strategic moves that you have moving forward. If you're a 30% demographic of patients utilizing one payer, you still have the option to walk away from that payer. Most likely, you're giving a pretty hefty discount for a marketing cost to be able to get patients on that plan. But you could make up for that with just going out of network and being able to diversify a bit with cash patients or patients of a different plan, 30%, you've got options at 50%. Your options are a lot more limited, and you've got to be a hell of a lot more strategic in the plays that you make. With dropping a certain carrier at 70 or 80%, you are pretty stuck. You can make some adjustments for sure, but you have to know that you are in a very high risk potential at that point. So one of the things that we look at from doctors that are looking to acquire practice is evaluating what that payer mixes and making sure that they are prepared with each and every one of those levels. If it's 30%, they've got the choice. They can continue to take it or they can move away at 50%. They're also looking at options, but they've got to have a lot of plans in place, and it can sometimes be a year to two year process before they actually pull the plug on something like that. But at 80%, you know, they've got to realize that they are getting married to a situation that they are not going to undo for quite some time or without dramatic risk. So as far as dentists feelings about contracting with the insurance companies, I think that it's been a growing concern definitely for the last 15 years. It I think that there's some spectrum of the dentists that are ready to rip the Band-Aid, and they're just done. They're willing to go, you know, completely fee for service or completely out of network. But they must have the systems in place. That does not just happen overnight, and it certainly doesn't happen with usually the existing systems they have when someone is ready to actually, you know, get rid of a lot of those payer relationships, it is a massive task on the entire team and having the verbal skills and having also the tenacity to be able to have these conversations at nauseum is really, really important and they must have an alternative. So, you know, we're big supporters of dental health and in-house dental plans. Absolutely. To make it affordable for patients without insurance and actually make it so that it's a better option for them. You know, one of the things we always said was if we're going to design a dental plan and we didn't have the restrictions of insurance, then let's actually raise the standard of care. You know, the standard of care and dentistry of two pro fees a year was adopted back in the 1950s from a Pepsodent commercial who said, you know, go brush your teeth for 2 minutes a day, two times a day and see your dentist two times a month. Well, that business model worked for the insurance companies and they adopted that. And it has not changed in 72 years.
Art Wiederman, CPA: And, you know, it's interesting, too, and I think I've mentioned this on the podcast is when the first dental insurance company in America was formed back in the 1950s, a pro fee was $9, a crown was $100, and the maximum limits on insurance were 1000 to 1500 dollars. Fast forward to 2022, Jennifer and a crown. It depends on what part of the country you're in. Call it 12 to 8. $100 a fees, 100 to $175. I'm given a real wide range. And what are the maximums on insurance? Maximum is, what, ten, $20,000 a year per patient, right? No, no. I was being facetious there. Yeah, I learned the word facetious last week. So there you go. But yeah, that's what we're talking about. And, you know, you can't just and this is another conversation. You can't just call up the insurance company and say, insurance company, X, Y, Z. I would really like you to raise my reimbursements by 10%. What happens if they do that, that that's not going to happen? Right.
Jennifer Tyson: They're lucky if they get a response and if they do get a response that they get, it's just a giant. Aha. Nice. Nice to hear from you and know that.
Art Wiederman, CPA: Now, I know you and I have talked and you've got something going on at Fortune that maybe share a little bit about what this is. It's I think it's called the True Blue Dental Network. Talk about kind of what you're doing with that.
Jennifer Tyson: Yeah. So in all of my spare time, I do wear another expert. I, you know, because of my passion for preserving private practice, it was really necessary to take some serious action. And, you know, I was tired of just watching it. You know, it's been a very unlevel playing field for private practice over the last ten years. You know, I don't believe DSOs are bad, but it's my personal preference that we make sure that we help preserve private practice. Because if we just look at how medical has gone, I will speak for both of us in saying I don't believe dentistry or medical is better off today than it was 30, 40 years ago. And if we don't do something about it, I believe that that is exactly where we're headed. And so in order to help preserve private practice, we did start I would helped co-found a company called True Blue Dental Management with their initiative to really being about preserving private practice. And they help doctors who are private practice owners create that level playing field for against the DSOs. And so one of those initiatives was really to tackle the insurance conversation, because that is clearly a significant headwind in dental practices. And what we know is where the unlevel playing field was is that just because they had numbers on their side, so those had the ability to engage carriers and actually receive a higher fee schedule than a regular private practice with one location. And how did we know that? Well, because if somebody sold to a DSO one year later, not changing the provider, not changing any staff, not changing anything, those reimbursements went up. And so it got us really scratching our heads of, hey, why can we not have that same benefit to private practitioners who invest more and spend more and create phenomenal facilities? And that just seemed really unfair to me. And so it has been done in other industries. It's just never been done in dental. And we have a brilliant law firm out of the state of New Jersey in New York called Mandelbaum Salzberg, who really put together a solution for independent dentists for the first time ever. And we launched it this year in California, because California is one state that really is it has a glimmer of hope left. There are states already in this country that are totally gone. And what I mean by gone, meaning they have complete payer dominance in that state and California is headed that way. It's been a yellow light for a while, meaning warning? Warning. It's coming. But now it's pretty flashing red right now. And so our first initiative was to come to California to see number one. California is the sixth biggest economy in the world, but it is one of the largest in the insurance industry. And so if we were going to tackle the problem, we decided to tackle the 500 lb. gorilla of California. And what the insurance dental network will allow private practitioners to do is to sign on to be in the dental network and allow the dental network to engage the carriers on their behalf. And one of the doctors that we were talking to even this week on the webinars was so basically you're lobbying for us. And we said, Yeah. It's we're able to, you know, talk on your behalf. We are targeting some of the, I would say, higher end or high end practices, the technology oriented, the ones that have made a significant investment in their practice. And we're making a case that we have doctors all across the state. That make up some of the best in California. And we will engage those carriers requesting fairer and fuller value for the service that they provide. And we're very excited about it because it is the best solution that is out there and it is the only hope that our private practices in California have to really taking a stand for themselves. And after California, we'll go on to other states and prove the model. But we're excited to share this innovation with the industry.
Art Wiederman, CPA: So how would somebody get information about this?
Jennifer Tyson: They could go to true blue dental network dot com. This definitely is a very exclusive offer. So it does require a conversation and we will be having more webinars coming up. But I would go to the website, fill out a contact form, and we can let them know what the next steps would be.
Art Wiederman, CPA: So at the end of the day, folks, I have a saying that I've used for the last three and a half years in this on this podcast and on this platform, my life is a math problem now, not all of it. My you know, I guess when it comes to my golf score, that's a math problem, too. But the fact is, is that it's a math problem. And if you are receiving X reimbursement from, you know, being contracted with an insurance company and you can now receive X plus whatever the percentage is on a positive note that 100% drops to your bottom line. I mean, Jennifer, you're a businesswoman. You know, there's no overhead when I can get an increase in my reimbursement, right?
Jennifer Tyson: Correct.
Art Wiederman, CPA: Yeah. So that drops right into your pocket, right into your retirement contribution, right into your ability to pay your rent on the building that you own. Right in your ability to take an additional income and fund a college fund for your children. I mean, you know, those are the types of things. So that's exciting. And I'm looking forward. You know, I look forward. I work with all kinds of companies in dentistry. I know everybody well, not everybody, but a lot of people. And any time anybody tells me, folks, that I've got something that can help my dentists be more profitable and have a better life and a better practice, I'm going to listen I'm going to tell you about it. Okay. And so that Jennifer, that's wonderful. I'm looking forward to kind of following what goes on with this, because I know that you're kind of in the beginning stages of this right now. Right.
Jennifer Tyson: That's true. Yeah. We have just launched it in California and we're moving quickly. So we'll have some updates here for you soon.
Art Wiederman, CPA: So do you have a number or an email that someone, if they wanted a contact, you could do it or they should just go to the website?
Jennifer Tyson: Yeah, I would just recommend going to the website. And I should mention True Blue, we made it really difficult on ourselves and we have no e's in it. So it's tr you, brl you and then dental network icon. So true blue without any ease.
Art Wiederman, CPA: Well, that that you're marketing yourself and you're branding yourself. So you're doing all the things that you teach your dentist to do. So. All right. So, so again, you know, and again, doctors, there's I just want to touch on this and then we'll move on to some other topics here. So if notwithstanding what you were just talking about with your true blue investment and product that you're talking about is if a doctor wakes up one day and just says, I'm tired of this fortune, Jennifer, help me change my relationship. I mean, give a little bit of a, you know, kind of it's not something you walk in Monday morning and say, Susie, at the front desk, I want you to write a letter to all the insurance companies. We're going out of network. That's not how we do it right now.
Jennifer Tyson: That is not how you do it. And I definitely recommend, you know, working with a professional to create a strategy and a game plan to tackling this. And like I said, this is not a decision that you make in a silo. It requires the entire team to be on board with this because the doctor isn't the only one having the conversations with the patients. It's everybody in the team and everyone has to be in complete chorus on what they're saying, how they're saying it. We usually advance, you know, give advance notice to the patients and start those communications, sometimes up to a year in advance before we actually disconnect from the carriers. Because the reality is, is once you let the carriers know, they're going to let the patients know immediately. And it won't be a letter that says, hey, you should continue going to that doctor, so you have to have your ducks in a row. Absolutely. And you know, there are professionals out there, including ourselves, that do this day in and day out. And you don't have to recreate the wheel you can get. From A to point B much quicker and probably much more effective than if you were to try and do this on your own.
Art Wiederman, CPA: When I did my lecture, Jennifer at the Academy of General Dentistry meeting back in the end of July, I did some math which I'm required by law to do in these lectures, and I just I took three codes and one hypothetical X, Y, Z, insurance company, and I said, if you had a certain number, if you lost 50% of your patients, you would break even and work half as hard on those three procedures on one insurance company, if you were able to retain 80% of your patients. Then you would make just on those three procedures with that one insurance company. It was over $25,000. And you and I have both seen doctors who have methodically made that decision. If it's the right decision for them and they do it right and they do it by working with a professional and they make a lot more money, don't they?
Jennifer Tyson: They absolutely can. And I think you targeted something really important if it's the right move for them. Right. You know, there is no preconceived notions on how to be successful in this industry. There's several different ways. We have so many various different visions that we've seen come to life within our practices, and no practice is really the same. And so why? Because no owner is the same, no provider is the same. And so once you've made that gut check of, hey, what kind of practice do I really want to run? Because it can vary. You can have a boutique practice, you can have a very large scale practice, you can take no insurance, you can take all insurances. You can work three, four days a week, you can work seven days a week. There's so much philosophical engineering that has to be done on the vision and then really looking at the actual strategy and tactics to getting there. And so if you find that that is something that you want to gravitate towards, absolutely, you can make it successful either way. There's plenty of doctors that may get successful with insurance and there's plenty of doctors that make it without. It's honestly a personal decision at the end of the day.
Art Wiederman, CPA: And that's why it's so important, folks, to have a coach who's been with thousands of practices, hundreds of people. I don't care. I mean, it's you know, you guys, Jennifer, have helped hundreds, maybe thousands of dentists over the years change the relationship, if that's what's right for them. Right?
Jennifer Tyson: Right. Absolutely.
Art Wiederman, CPA: All right. Let's get into the next elephant in the room, which is which is you had mentioned DSOs. And again, I don't ever say good, bad or indifferent about DSOs. DSOs were not around very much when I started in the dental profession back in the mid 1980s, and they have evolved and now they are a part of dentistry. You know, they are anywhere between, as far as I know, 20 to 30% of the dental profession, depending on who you talk to. And they are basically I am seeing more activities of large dental service organizations and groups coming to my clients and your clients and saying, Hey, why don't you join us? So I'm sure that you've gotten lots of your coaches who get the call from their long term clients of fortune and say, hey, I got this call from so-and-so. And that sounds really good and I really think I want to do it. Can you kind of walk through what you guys at Fortune when a client comes to you and says, Hey, we've been approached by one of these organizations. What's the conversation got to be?
Jennifer Tyson: Sure. Well, I think even before we get into that, I think it's talking about, you know, how do DSOs unlock value and how have DSOs become so successful? Right. Because, you know, you're right. Probably when you started in the industry, there weren't that many. Or if there were, there were some that grew very quickly and failed. There were quite a few that actually did not do well at the beginning. They quickly learned how to take advantage of really four major categories. The first one is they learned how to buy and sell and arbitrage the value, which that just means that, hey, I'm going to pay 3 to 6 times even for a practice, but I'm going to value it and sell it at 6 to 10 times EBITA, Right? Right. So they can immediately take practices and then double or triple the value. They have lower costs of debt, so they have financial leverage. They have higher leverage debt to equity and lower total cost of. Up until then an and then a practice normally would have just on its own. They also have asset leverage. So what does that mean? It means that when they do buy a practice, they immediately expand the hours and they expand the operating days. A lot of times as a single practitioner, there's only so many days that you can or are willing to work if they're a day. So they're going to come in and they're going to hire more people and they are going to make sure that those facilities are operating as often as possible.
Art Wiederman, CPA: And they're going to turn them into multi-specialty practices also.
Jennifer Tyson: Absolutely. Absolutely. Every square inch and every asset that they have in that practice will be used all the time. Then they have certain synergies. And obviously one of the big synergies that we already talked about is the higher insurance reimbursement rate. And they also have cost synergies. They have purchasing power, they have shared services. You know, their investment in digital technology is much less when it is used so much more than an individual practice. So I think that's really important for private practices to know is how do the DSOs unlock value now? They need they don't need your practice, but that's part of their plan. Most of them I said go through acquisition or through de novo and startup. And so when one of our clients receives a unsolicited offer from India. So I think that it can, especially being on the heels of what everyone just went through in the last two and a half years, it can come off very appealing, the idea of relinquishing your practice to somebody else, and it's not even relinquishing the practice. But I think when people read these letters, they immediately say, Oh, I can get rid of all my headaches. I can just focus on the dentistry, which is what I wanted to start with many years ago. I don't have to deal with Susie, the hygienist that just gave me notice. I don't have to deal with so-and-so. That said, they're sick and not coming in and all those things build up and build up and it's like an opportune time for them to receive this letter and they wave this shiny amount. And what we usually do at the doctor's, we step back and we go back to why are the reasons they got into private practice to begin with? And a lot of times they say, Well, I really wanted control over my future. I wanted control over how I practice dentistry. I worked for corporate or I worked for another doctor and I didn't have a tournament. I didn't have the ability to buy the technology I wanted. I didn't have the ability to specialize in certain procedures. I didn't have the ability to say no to a patient that I didn't want to deal with. And the reason they bought that was they wanted a certain lifestyle, but they also wanted control. And the second reason that they usually went into to dentistry is to be able to provide an unbelievable service to the type of patients that they wanted to they wanted to be able to have an asset as well that once they were ready to maybe step back, that they weren't just working for a salary every year, that they actually had an asset to be able to monetize. And after we've decided, Hey, okay, what were the reasons for coming in? What was your initial plan for maybe exiting dentistry or putting down the handpiece? And I I'll comment on that too. I think there's kind of a misinterpretation of most people that think you have to sell your practice in order to stop doing dentistry or to retire. And that's really so not true. What we've seen over the years is we've not been able to help our doctors continue to own a practice, put down the handpiece, not do dentistry, but still add massive value as a practice owner. And you know, when we look at what are the four ways a dentist can make money, it's number one, obviously doing the dentistry. But today, more than ever, that's the optional way. They don't have to do dentistry to make money in this industry. So doing clinical dentistry is an option number one. Number two is actually being paid as the CEO of that organization, which all of our doctors in our system know that they're paid for ways. They're paid as a clinical dentist. If they're doing dentistry, they're paid as a CEO of that organization. They're paid as a shareholder. The one that actually took the risk to putting their money where their mouth is and going out and taking a loan or making continuous investment in their practice. And fourth way that we usually, you know, if the opportunity arises. We want our doctors to own the real estate and be the landlord. And so those are really the four ways. And when they do sell to a DSO, we have to look at how are those ways affected and does that flow into their future plans after we've gone through all of the, I would say self check and look in the mirror as to where we want to go. We start to evaluate the actual offer and more often or not, when we start to dissect these offers that are being made, they don't usually make a whole lot of sense. And the money is usually much less than if the doctor were to just hold on to the practice, continue to grow it for 3 to 5 years, and they could even stop and close the practice in five years and probably get more than if they were to sell today and have to work back. And so that just like the insurance conversation is a very personal conversation and requires, you know, the specific individual requirements of the practice owner itself to see if that really fits. But more often or not, I have seen these offers when they're broken down and a doctor can look really at the numbers and look not subjectively, but they look objectively. It usually doesn't pencil out for the doctors.
Art Wiederman, CPA: And you've got to read the legal documents, because I've read the legal documents on some of these deals. And when you get into the fine print and what you are going to be required to do and what you're going to give up, you know, obviously you need doctors if you're going to do this. I couldn't have said it better, Jennifer. I mean, you just nailed all the key points right there is that you've really got to take the back. It is going to be the biggest financial, professional, personal decision that you're ever going to make in your life. And once you do it, there's no turning back. I mean, if you buy a house, folks that you know, you get into a house, you don't like the neighborhood, you can sell the house. Maybe you'll take a little bit of a loss, but you can get another house. It doesn't work that way once you go down this road. And so it's so important to evaluate what your goals are. And I call it Jennifer. I call it peeling back the onion. And in most of these deals and we're not going to go deep into the weeds of this, but as a general rule, folks, they will offer you an amount of cash for your practice upfront. They will then offer you equity in an entity. And will you ever see anything from that? We don't know. It's early in the game. Some you will, some you won't. And then you are going to be working for a percentage of your production and maybe a bonus. But you are not you know, you no longer have the control of your practice that you had before. Now, Jennifer, that does not mean that combining with a DSO is not right for everybody. It is right for some people, isn't it?
Jennifer Tyson: Yeah, I think that there absolutely is a scenario where it makes a lot of sense and depending on the offer and depending on the, you know, where they are in their stage of life I think is really huge as well and how much risk appetite they have. And, you know, the other just caution to the wind is, you know, people do a lot of due diligence when buying a practice, but very little due diligence do I see happening when people are selling a practice to a DSO or any kind of organization that's going to require them to roll over a portion of their equity? And that's always mind blowing to me as when we do work with practices that are looking to sell how the part the other party when we make a document request like we need to see your financials, we need to see, you know, basic things to do financial due diligence. You know, they reply back often saying, Oh, we've never had anyone to ask us for that. That's crazy to me that you would make that kind of investment and not know everything there is to know about that organization. And you know, it it's just there's a lot more to it. And I, I think that the financial savviness needs to be raised to a whole new level because this is a different ballgame. And they're not selling to other dentists. They're selling to private equity firms that do this for a living day in and day out. And so just make sure that you're armed with a team of professionals that do this kind of stuff, like you said. Read the legal documents. I know plenty of doctors that read the legal documents, but don't necessarily know how to interpret it or know what it means to them. And so making sure that they have a legal team. They have their CPAs. They have an executive coach that really makes sure that this truly is what it seems to be and that it is what is right for them.
Art Wiederman, CPA: And here's the last thing is I want to move on to a couple more things before we have to end our time, which I hate doing with you because I love talking to you. But but here here's the thing, doctors and I've said this on the podcast before, any business negotiation that you are involved in, before you even start negotiating, you need to look at what your leverage is. And for most of you out there, your leverage is you don't have to sell your practice to anyone. You can continue working your practice. You can continue to grow your practice to become a better clinician, to obtain better verbal skills, to train your team. You don't have to do this. So if any of these groups that come to you or anybody says, Well, if you don't do this by 10:00 tomorrow, the opportunity is lost. You don't have to do this. So let's I want to move on kind of in the same kind of some realm. So. So let's say I get a dentist who's there doing okay. Not great, but a new corporate dental office opens up down the street some practices where they get this competition thrive and some others fail. What do you do? What do you. I've had doctors say to me, oh, my God, this big dental clinic opened down the street and I'm going to lose all my patients. What do you tell people like that?
Jennifer Tyson: Honestly, we lean in to an opportunity like that because more often or not, our doctors have invested heavily in their team, their facility, their image, their brand, their reputation, so much so that I have way more belief in them than I do a big corporate down the street. And it's only a matter of time that every patient that goes to that and has an experience at that corporate will most likely be running for the hills of, Hey, how can I go to somebody else? And I actually I mean, I know a couple of doctors where their sole strategy was to build practices around a predominant DSO Y because they knew that they were going through patients faster than they could serve them and they were also going through team faster than they could serve them. And so I think using the disadvantages that DSOs, you know, some are better than others. Right. But more often or not, I believe that private practice can offer a better experience clinically and professionally than corporate. And so use that as your biggest leverage.
Art Wiederman, CPA: And see, here's an analogy that I've also made. I make it in my lectures, I make it to my clients. So if all people wanted dentistry to be cheap and delivered as a commodity, okay, then, you know, we wouldn't have fee for service. But think about this. You can go shopping at Wal Mart or Target and they Jennifer, they have a marketplace, right. They are the low cost alternative in in retail. Right. Does that make sense? Yep. Okay. But if that's all there was, there would not be a Mercedes Benz, there would not be a BMW, there would not be a Morton's or a Ruth Chris Steakhouse. There would not be high end businesses, because people, human beings are not all of them, but many of them. They want quality, they want the best, and they're willing to pay for it. And that's why I. I won't. Well, I guess I will speak for you for a second, Jennifer. You and I believe that that's why the private practice of dentistry, we hope, will never be taken over by turning our profession. And I call it our profession into a commodity. I mean, does that make sense?
Jennifer Tyson: Absolutely. It reminds me of one of my favorite business terms out there, which is the three E's of business, and that's efficiency, economy and excellence. And you cannot be all three. You can be two at most. And the way that I always coach my practices is, you know, depending on whichever two you pick, whether it be efficient and excellent or B, efficient and economic, it doesn't matter. You'll be successful at both. But what tends to happen is in private practice, they do go on excellence and they do go on efficiency. And when they try to also be economical is when it usually fails. And so, you know, you look at Mercedes Benz and BMW and, you know, all the nice brands that you mentioned, you know, they've kind of gotten into their they're lower entry point models, but they'll still tell you they don't sell as well as their higher end models. And I think that any of those brands, they exist for a reason, but they are for those excellence and for the efficiency. And there's a market for all of it. But you cannot be everything to every person. And the sooner that practices understand that it's a part of their brand, it's a part of their image, it's a part of their vision. The more focus they can get, the more accurate and more likely they will be to arriving at that destination.
Art Wiederman, CPA: And this comes into something else that that you guys at Fortune I know talk about is called culture supersedes strategy and likability. And the fact is, let's talk a little bit about leadership. And if a doctor is just like, oh, god, Jennifer, I can't be a leader. I do dentistry. I'm not I don't know how to communicate that to my team. I don't think it's that hard, to be honest with you. But how important is it for the doctor to communicate their vision of we are going to be the high quality, help improve the quality of people's lives? Dental office and that is everything that we do here. That is what it's about. How important is that? That.
Jennifer Tyson: But it's very imperative. And what I will end on with what we started with is one of the biggest headwinds is the war for talent, right? Not only is attracting patients so important these days, but attracting the right team. And if you do not as a leader and as a practice owner, do not have a clear vision or destination point of where you want to go and truly who you are today. Not only as a leader and an owner, but also as a practice. You will definitely not gain the faith and loyalty of people being your team or a patient. People want and are attracted to brands that are very clear on who they are and who they want to be and who they are where they are going. And that's clarity that a lot of people seek. And I think it's clarity that a lot of practices struggle with. And the more that they are clear about their vision and their mission and where they're going, who they are and who they aren't, the better people they will attract with similar values and beliefs. And it fits into that culture. And culture, I think, is really it's misunderstood a lot of times that, oh, we create this culture and if we don't create one, there isn't one. Now there is a culture there no matter what, its what you mold that culture into being and as the owner it's really they're there, they're the culture keeper. They are determining how that culture is really molded thus far forward. And I totally believe in the law of attraction. And if they are, they are who they are. And if they don't work on that constantly, the people coming into their lives are going to show up with, you know, who they currently are, not who they want to be. So I believe that is super, super important. And moving forward in battling different corporate entities for either people or patients, culture will always eat strategy. Absolutely.
Art Wiederman, CPA: And the thing is, doctors I and yet I'm a broken record. I don't apologize for it because this is the message that is my legacy to deliver after 38 years in the dental profession is as a leader, you set a vision. Do you have all the answers? No, you don't. I think the best thing I ever did running my CPA firm for 33 years was to go to people and say, This is my vision, this is where I want to go, but I need your help here. I need your opinions here. And if you engage people in general, I'm curious as to your comments on this this topic. If you engage people and get their opinions, it doesn't mean that you're going to follow everything that someone suggests. But if you at least listen to your team who's in the trenches and you engage them in the process. I mean, that's a much more successful leader, even not knowing that you're a leader, isn't it?
Jennifer Tyson: Sure. I mean, I think one of the most valuable skills any leader or coach for that matter, can have is your ability to listen and listen with the intent to understand and not to reply. I think so many people listen, but they're thinking, Oh, when am I going to speak next? And what am I going to say next? And they're so focused on their reply that they're not really hearing the message from what people are saying. And so listening skills are huge. And no one wants to be a part of a process where they're not heard, nor do they have a voice in it. And I think more and more what, you know, the pandemic really brought out was the ability for people to be a lot more picky and a lot more selective of where they the way and where they spend their time and energy. And so much of that is our working hours. And so if they're going to work 40 hours a week or more in a practice, it better have those compelling assets like, hey, I just want to be appreciated. I want to be valued. I want to be understood. I want to be heard. And, you know, those are commonalities of every human being and some have higher tolerance than others. But at the end of the day, you know, treating people with kindness and creating an environment where they can foster and grow and continue to evolve as human beings will always be worth more than any paycheck.
Art Wiederman, CPA: And doctors, if you are in an office where people are bickering. With each other and they're not talking to each other and they're making faces at each other, or they're talking about you or the hygienist behind their back or your back. You don't have a good culture and that's a cancer. And you must cut that cancer out. I, I just that's not negotiable to me. Jennifer Tyson, you are a dear friend. I am so thankful that I know you that you are doing what you are doing for the dental profession, for I call it our doctors. When I talk to people on this podcast, whether it's you or anybody else that I've interviewed in the last three and a half years, we as professional advisors to the dental profession, this is this is kind of our profession. We have taken it under our wings because we know how wonderful it is and we don't want to see bad things happen to it. So I know you had mentioned the true blue dental network and how if someone is interested in that or just engaging with fortune management on anything in the management field, what would be the best way to look at that?
Jennifer Tyson: Yeah. So obviously our website www.fortunemgmt.com is available we like as you said in the call we are a nationwide company so we have coaches boots on the ground. If not in every 50 states we can get to all the 50 states. We're pretty diverse in that nature. And if there's any conversation that anybody on this line listening wants to have with me, feel free to email me as well. JenniferTyson@fortunemgmt.com. I'm just there to help and try to you know drive as much preservation of private practice as I can. And if there's anything that I can do for anyone individually, I may be able to connect you with somebody or help you directly. So my line is always open.
Art Wiederman, CPA: Thank you so much. And if you'll just hang with me while I take the podcast out, I would greatly appreciate it. Folks, don't forget if you are interested in our Business of Dentistry Webinar series, which will be in October, November and December, or our Dental Transition series, which will also be October, November, December. Shoot me an email at aweiderman@EideBailly.com and I will make sure that you are on the list. There is no cost to attend these webinars. They are going to be live, but then they're also going to be on demand on our YouTube channel and our website.
Make sure you check out our Decisions in Dentistry, our partner Decisions in Dentistry magazine, their website www.DecisionsinDentistry.com. Wonderful, wonderful world class clinical content articles and 140 plus continuing education courses at a very, very reasonable price.
Again, if you're looking for a dental CPA, I'm a member of the Academy of Dental CPAs, which is 25 CPA firms across the United States that represent over 10,000 dentists and our CPA firm Eide Bailly. We have dentists throughout the US. Yeah, we have done throughout the western United States and we are and again Eide Bailly is at our firm and my number is 657.279.3243. And again, my email awiederman@EideBailly.com.
Well, that was wonderful. Jennifer, thank you so much. And I want to thank again, as I do every single time that we publish, I love doing this. I've always mentioned I think I've got three happy places on a golf course in a fishing boat or either on a lecture space stage or behind a microphone. I really enjoy this. I hope I'm giving to you some tools that you can use to help make your life better. We're all only on this planet for a certain number of days, months, years, and we all want it to be really, really good. So please continue to listen to the podcast. Please tell your friends about the podcast. And with that, my name is Art Wiederman. I'm a dental division director at Eide Bailly and that is it for this edition of The Art of Dental Finance and Management with Art Wiederman. And we'll see you next time.
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