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VIDEO - DUwHF #903 - Kevin Coughlin
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AUDIO - DUwHF #903 - Kevin Coughlin
Dr. Kevin Coughlin is an expert on the business of dentistry. Growing his practices from 1 to 14 during his career, he’s learned what works and what doesn’t.
And he knows that once you “get it right,” it’s not a great leap to replicate that success over and over again.
Today, in addition to his work as an actual dentist, Dr. Coughlin coaches, consults and speaks to dentists across the country on how to build the practice of their dreams – based on proven processes and procedures.
Howard: It is just a huge honor for me today to be podcast interviewing Dr. Kevin Coughlin, all the way from Longmeadow, Massachusetts. Which is about eighty miles west of Boston. He is an expert on the business of dentistry. Growing his practices from one to fourteen during his career, he learned what works and what doesn't. And he knows that once you get it right, it's not a great leap to replicate that success over and over again. Today, in addition to his work as an actual dentist, Dr. Coughlin coaches consultant and speaks to dentists across the country on how to build a practice of their dreams based on proven processes and procedures. We met probably two decades ago at the Matto brothers TBSC?
Kevin: We sure did, Howard. You were impressive then and you're still impressive.
Howard: You're too kind. There’s a lot of kids. I'll tell you the truth. You have three kids, I have four. Mine are twenty-two, twenty-four, twenty-six, twenty-eight. Your three are from twenty-one to twenty-nine?
Howard: A lot of these kids, Kevin, they're coming out of school and saying, “Man, did I mess up? Was dentistry good thirty years ago when Howard and Kevin got out of school? I just walked out with $350 000 dollars of student loans and there's corporate dentistry and PPOs. Did they mess up?
Kevin: I don't think they did. I do think they need to position themselves. I do think they have to take the time and effort to understand basic business principles. But like so many of us in the health care since the 8th grade you're taking science courses, calculus courses, biochemistry, organic chemistry and quite honestly the day you graduate you're in a small business and you're not prepared. And my lecturing, my association with dental schools have indicated consistently that these new graduates need some basic fundamental business background. And I was happy to hear in 2015, 2016 for the sixty or so dental schools in the United States, they now are mandated to keep their accreditation to provide between eighteen and twenty-two hours of practice management. So, somebody like myself or yourself can go into that school and provide some of the fundamentals, the break downs. Is it better to lease? Is it better to own? What to look for in your first career or first job. And the list goes on and on and I think that's a step in the right direction.
Howard: When you and I were little all the pharmacists owned their own places, just like dentists do today. And now all the pharmacists work for Walgreens and CBS and others. Do you think that's the way dentistry is gone with all the MSOs and DSOs?
Kevin: My personal opinion is it's based on personality, drive and commitment. Somebody like yourself, I don't think you'll ever be happy working for someone else. You're an entrepreneur and you beat to your own drum. So, my personal experience over thirty-four years in this business, in this profession, is that your personality falls into basically three categories which I narrowed down to two. You've got somebody with a disposition and personality that wants to be the boss, the owner, the decision maker, the achiever, the believer. And you have another group that quite honestly is quite happy having other people make the decision and their focus is more on the clinical aspect. And I don't really know until they are later on in their life, they wake up at age sixty, sixty-five and they go, “Why did I let someone else make all these decisions and find myself in this particular position?” But my personal opinion is it's based on your personality and how you look at things and what kind of life you really want. Personally, I don't like anybody telling me what to do or how to do it and never have.
Howard: That's because you're half Irish and half Italian.
Kevin: It could be. They tell me that a lot.
Howard: Do you think these millennials born after 1980 are different than the boomers? Do you think when we got out of school all the boomers wanted to be their own boss, owner, decision maker, achiever, believer and now millennials are different? Or do you think the personality traits of a primate called homosapien hasn't changed?
Kevin: I read a book that made a tremendous influence. It was called Clogs to Clogs in Three Generations. And basically, if you look at our profession of healthcare I believe we're similar to a family. That first generation breaks their [0:05:03.5 unclear], they work hard, they build. They're interested in building and creating something. That second generation sort of reaps that harvest and then that third generation just sort of flounders along and then that last generation better start all over again because all the wealth was dispensated and lost. And I see that in most professions. But I believe right now we're seeing this work-life balance. Whatever the hell that really means. People are actually trying to say they want more time, better quality of life etc. I'm not pooh-poohing it. It's just something that I don't particularly believe that much in. But I do think there are demographics working in our profession. My wife was a stay at home wife. She raised those kids and is the direct result of those kids probably being great kids and I worked my tail off and still work it off today with the twenty or so associates that I have in my organization in literally thousands of associates I've dealt with over the last thirty-four years. There's generally two incomes. You know the acronym DINK, Double Income No Kids. And the issue there is that that drive for perhaps a little more financial freedom may not be as great with two incomes coming in. But I'll always go back to my same thought and concept: your personality, your background, your genetic makeup guides you one way or the other. And I think if whether you're a millennial or an old timer like myself that drive will push you in one direction or another. And my goal is not to dictate what's right or wrong, but give you information and data so you can make the decision for yourself.
Howard: I love that what you said about Clogs to Clogs. And as far as the work life balance goes, I've always said I'm going to cut down and be able to spend more time with my four boys. And they say, “No dad, no, don’t, keep working. Leave us alone.” They tell me I'm supposed to work twelve hours a day, seven days a week. You talk a lot on your podcast, but by the way how many podcasts have you done now?
Kevin: I think we're approaching about sixty-five.
Howard: Tell us your journey. How did you get into the podcast?
Kevin: To be perfectly honest with you, I'm not a real techie guy. I’m more a in the face kind of person. And I had the tremendous opportunity to run into a Mr. Doug Foresta who quite honestly in my opinion is a podcast expert in his company Stand Out and be Heard. Basically cold called me. One day I got a knock at the door and it was, “Can I have five or ten minutes of your time?” And I think you know and I know how many times people say, “I just need five minutes.” But he caught my ear and he said, “I don't see a lot of dentists doing podcasts.” Certainly in the Massachusetts region. He said, “I noticed that you have some entrepreneurial background and spirit. You're doing things that most dentists aren't doing and would you give me a few minutes?” I did. And he introduced me to the podcast world and has been instrumental in getting my message and my meaning out and I'd have to say I really can't take the credit for it. I'd have to give that credit to Mr. Doug Foresta and his company Stand Out and be Heard. And I think he realizes that this is a relatively inexpensive medium to reach, as you have, hundreds of thousands of people at a very minimal cost. No fluff. It's in your face. This is how I feel and you'll either agree or disagree.
Howard: Well can I make another request on Dentaltown? I put up the first podcast on the app. If you got to the app, you can get more. I put up the first podcast and it was eight hundred and fifty days ago. And some of these guys are posting their podcast on Dentaltown. It's free. You put it on iTunes for free, but you can put it on Dentaltown for free because they get in their car, they got to hour commune, they look at those podcasts and say, “I'm tired of listening to Howard. What else is going on?” And every single person and dentist put their show. Let's start posting it on the town. Their views exploded. Look at this guy, he says, “How to open a dental office?”. He has six hundred and seventy-nine thousand three hundred and fifty views.
Kevin: Well that’s a credit to you and your family and particularly your son Ryan who is doing an unbelievable job for you.
Howard: That is all true, but you if he were to put it on iTunes, they wouldn’t have found it.
Howard: So have your guy put those shows on Dentaltown and quarter million dentists around the world will find it for free. Be the best at marketing you ever heard and the reason I want them to find it is I've listened to your podcasts and you’re an amazing dude.
Kevin: Well thanks thanks for the compliment. And if it's not downloaded by tomorrow morning Mr. Foresta and I are going to have some words. Thank you for the invite.
Howard: That is awesome. But in all seriousness probably 20-25% percent of our audience, they’re still in dental school. Some of your podcasts you talk a lot about MSOs, DSOs, they don’t even know what that means. Can you go back to the beginning? Explain the difference between an MSO, a DSO and talk about that? To them it’s just alphabet soup.
Kevin: Well the first thing I would tell the listeners is by definition a DSO or Dental Service Organization or Dental Support Organization is generally owned and managed by dentists. That doesn't make it good or bad, but their strategy short and long term is generally different. An MSO for Management Service Organization or Management Support Organization is basically associated with this third entity. that third entity is an equity partner, a venture capital group. To me what's important for the listeners because a large group of new graduates are moving towards that MSO because these companies have that work-life balance promise. They have processes and procedures in place and that dentist who may lack some business acumen really just has to show up, go to work and do what they are comfortable with, rather than hire, fire, look at insurance contracts, understand the marketing and business plan. So the MSO to me when I talk to groups large and small is understand that the MSO, the equity, is another person in the pocket. They are taking part of the profit. They're not doing this out of the goodness of their heart and generally their strategic plan is between three and seven years. The little guy gets beat up by a bigger guy and then that bigger guy gets beat up by a bigger guy. You can either learn as I say compete with them, fight them or work side by side with them. And again as an educator, a lecturer, my opinion is give you the information and data, if you put it in my face and ask me what I think, I'll tell you. But what's right for Kevin Coughlin may not be right for Howard or Doug or John or Mary. So the basic difference is the Management Service Organization is going to have outside money, where your 401k, my 401k, my pension plan, your pension plan and others have invested in these companies and some of them are open meaning they're invested on the public market and some are closed and the people during these transactions and sales can get IBTDA of eight, ten, twelve, even fifteen IBTDA. And for those millennials IBTDA stands for Interest Before Taxes Depreciation and Amortization and basically my experiences, MSOs really look at one thing: what’s your IBTDA? And for those young men and women or new graduates I should say, they’re not necessarily always young, you need to understand that I could calculate IBTDA one way, Howard could calculate IBTDA another way. And when you're dealing sometimes with sharks, people who really understand, business you better make sure you're both on the same page calculating IBTDA because you're IBTDA is a thousand bucks and you think you're going to get ten times. Okay, so you've got ten grand and company B has calculated your IBTDA at hundred, and you're only getting five grand. And I think the insecurity, the lack of understanding of basic business principles. So in a whole, MSOs got another entity. They're supported by outside interests that could be good, could be bad, but what I would tell those young graduates: if you think it's the greatest MSO in the world, you'd think they’ve got the best structure, the best processes and procedures, understand that in three to seven years it will probably have been merged, gobbled up or changed in some shape or form that could be better, but it also could be worse and you need to know to ask questions in perhaps a little later on in this podcast these new graduates need to know the specific questions to ask before they sign that employment agreement or service agreement. So they go in with their eyes wide open.
Howard: You said that DSO stands for Dental Services Organization or Dental Support and MSO stands for Management Services Organization or Management Support. What is a technical? Is it support or services?
Kevin: Well depending on who you read, whether you go for the health policy institute. Personally, I don't care. To me the initials. What's important is one is backed by financial men and women. They are in the business to turn a profit and they want to turn that profit in the shortest time possible for their benefit and their shareholder benefits. And that's critical. I think they want to change the title to support because they realize the legality. If you were to do a swat analysis, Strength Weaknesses Opportunities and Threats. One of the threats and weaknesses with these support organizations from a legal standpoint is many states won't allow a Management Service Organization to control a dental office. So the games that people play is they create clinical directors, they create service arrangements, so that it appears that the dental director or the dentist is actually making the decisions and in some cases that may be true, but if you don't have enough business understanding to ask these pertinent questions. If somebody controls who you send your cases to for a dental lab, if they determine who provides the supplies, if they're in charge of who hires, who fires and what they're paying, then in essence they're actually controlling and running your clinical practice. And that's where that gray area is and these men and women are smart. They understand their risks and they take the steps to reduce those risks.
Howard: So, you remember back in the day Michael Douglas's plan in the 1987 movie, he was playing Gordon Gekko.
Kevin: Greed is good.
Howard: Greed is good for lack of a better word is good. He went on to make the point that greed is a clean drive that captures the essence of the evolutionary spirit. Do you think these VCs are Wall Street’s Gordon Gekko? Do you think greed is good or do you think that dental offices legally should only be allowed to be owned by a dentist?
Kevin: My opinion is almost irrelevant, but to answer the question the best I can. I think there is good greed and there's bad greed, just like anything else. A couple of beers probably won't hurt you, but if you're an alcoholic I'd advise you to stay away from it. So if you're greedy just to continue to accumulate more and more cash more and more money. I think ultimately it will be your demise. Capitalism I think is still the best system out there. I think data has proved that out, but like any system it can be gained and it can be manipulated to be bad. So, I would say to you there's some phenomenal Management Service Organizations that I've met and dealt with and there are individuals in those groups that quite honestly I have very little respect for and I don't really think they have the interest of our profession and our patients at heart, but that's true of the solo practitioner, too. We've been around for over three decades and there are some phenomenal solo practitioners in small groups and there are others that I would say are less than phenomenal. So, it's like any group. So, in my eyes I think greed is good. If it's used in the right way it creates innovation, it creates competition. It forces you to get up and do better and if you don't you're going to come in second place.
Howard: Very well said. There’s a picture on Dentaltown today of a root canal. It's just horrendous. He didn't even make it halfway down the canals. And people always throw rocks in glass houses and there are so many people knocking some of these DSOs, MSOs. Look at associate turnover. People are saying, “Man, some of these big DSOs, their average dentist doesn't even say a year and a good one they say two years.” I’m like, “Okay, well 80 % of associates work for baby boomer dental offices and they have the same turnover rate.” And then when you leave dentistry and you go to Apple and Google and Facebook and eBay where they're supposed to have the fun bean bag chairs and foosball and all the snacks and all that, their average millennial only stays two years. So, I guess you could always find data to support what you want to believe, but associate millennial turnover is high everywhere because maybe I'm working at Google and they treat me so well and I love everybody, but I'm really kind of bored with what I've been programming on for two years. And somebody from Facebook or eBay or Twitter just contact me. And it's a different platform and a new technology and it's all about me and I want to go there and learn this different deal. So you've had a lot of associates for thirty-four years. You said you have twenty working for you right now. What are your thoughts about associates in general turnover?
Kevin: You may have to edit this out, but we're roughly the same age. When I graduated top school of Dental Medicine in 1983 there were I believe six females in my graduating class. Today close to 60% of the graduates are females. So, this isn't a sexist comment. It's just my data. The reflection of the data and my personal feelings. The data that I shared with the American Woman's Dental Association indicates that only about 4% to 6% of the female dentists actually own their dental practice. The majority are associates. In my opinion that's a huge advantage to quote corporate dentistry. In most cases you can have a thousand partners. You need employees because those employees are driving your platform in your business. And right now at least at this point in time that influx of female dentists seemed to be working towards the corporate advantage. The other data that at least I was able to find in share is it says on average a female dentist works between nine and eleven hours less per week. That's neither good nor bad. It's not a push or a kick to the female profession. I think we both know that there are many female dentists that I've come across that are far better than I'll ever be and there are some that aren't that good. It's true of men and women, but the dynamics of it are. If you have a workforce that is not putting in forty or fifty hours, but putting in twenty or thirty hours, it changes the situation. You can't open a full-time office if you're only there twenty to twenty-five hours a week. So, you have to bring in associates and you have to augment that overhead and also provide a better service by expanding your hours. And I think the corporate entities understand this very well and in many cases, may appeal to a large segment of that population now graduating.
Howard: When I talk to CEOs of corporate dentistry there’s thirty-five of them that have 50 or more locations. They tell me two thirds of all their associates are women.
Kevin: And again, to me the emphasis is I'm not here to offend I'm just here to share the data and information and I'm sure we can find female dentists that are working a hundred hours per week and they own their practice and are enormously successful, but on average that appears to be the trend right now and the reasons for it aren't necessarily that important to me. I just know from an MSO, DSO corporate standpoint that probably is an advantage to those organizations.
Howard: Earlier you said DINK, Double Income No Kid. If you're the breadwinner and you're stay at home spouse has three to four children like me and you. That's a complete different high amount of hunger and need and drive, and ambition and motivation to feed your family. But if you're a female dentist. Three out of ten times your husband is a dentist. And the other seven out of ten times they’re professional with a great income. So, if you and your spouse are each making six figures well of course you can work nine to eleven hours a week less because you don't have to. I mean I know this is politically incorrect to say, but to two crazy men talking to each other. Dental corporate CEOs have that told me you give me a Mormon kid who had two kids in dental school half a million dollars of student loans. He'll work twelve hours a day, six days a week and smile, but you give me a dental associate whose dad paid for his dental school. He's single, he has no debt. He wants to leave at 5:00. He wants to go buy fancy drinks at the bar with umbrellas in them and go dance with the girls. It’s just a completely different mindset and you can't create a bonus structure to make that kid with no debt, with no wife, no kids no nothing. You can’t create something to make him ambitious and do twelve hours a day, seven days a week. He doesn't even have to. My dad used to always tell me in Kansas. He said, “If you show me five hungry coyotes walking down a dirt road, something's going to die.” You know what I mean?
Kevin: I hear you.
Howard: You talk about the missing link for young dentists, understanding the business of dentistry. If someone was listening to you right now. You talk about how they have taken eighteen to twenty-two hours in school and the business. How else would you recommend them to fortify their missing link? Understanding of business is the answer. Their books or their courses. There's your podcast. What do you recommend to these guys?
Kevin: Well I think joining a communication link like Dentaltown, it's a start in the right direction. How do you communicate? I would tell these new graduates when you're interviewing, when you're going through the correct process and procedures for a job, really what you should be looking for is a mentor. So, if you're interested in doing dental implants, orthodontics, paediatrics, hospital dentistry, sedation dentistry whatever the case may be and that dentist doesn't have the supplies in their cabinet, doesn't have the equipment and tools, you’re never going to learn how to do it. And if you're interested in business and you walk into that office and that dentist doesn't have any marketing plan, doesn't have a business plan, he doesn't even know what the accounts receivable are or how to interpret how many procedures are accepted or not accepted. I would say you're probably not going to get a great amount of business mentoring. Again, from my standpoint these young graduates fall into two broad categories. One group just simply wants a job, make money and want no stress, no headaches. They want to close the door at between three and four and enjoy their life. And I'm not here to say good or bad. It's a free country. That other group, probably more of your personality and mine, are going, “You know what? I want to make it. I want to do it.” It's in your gene pool. It's just a drive, a determination. Whether it came from your parents whether it came from your background or a combination of both. I just know that the example that you just gave I can tell you I'm not hiring that associate because it's the wrong fit for me in my business.
Howard: How many offices do you have now?
Howard: Holy moly. How do you have time to lecture? By the way, I always go to your website. It’s ascent. A-S-C-E-N-T. What is that called?
Kevin: Dash hypen dental hyphen solutions.
Howard: So, ascent-dental-solutions.com. What are they going to find on your website ascent-dental-solutions.com?
Kevin: Pretty much whatever they want. I've broken our dental profession down into three broad categories. There is that group of dentists getting ready to graduate or recently graduating and they just need help deciphering where they should practice, how they should practice, how they get that first job to make sure they don't get screwed. They want to make sure they got a service agreement, they fully understand the restrictive covenant. They understand the bells and whistles, the perks. They understand whether they're on call and they fully understand what their accounts receivable are going to end up when they leave. It's just basic business principles. The second group is that group of dentists that came out like gangbusters. They're generally been practicing eight to twenty years and they get up every day and they go, “Why the hell am I not financially better off?” My personal opinion is they lack mentorship, they lack teaching, but ultimately, it's their fault. They haven't taken the correct actions, steps, processes and procedures to make an improvement. Whether they can or can't, that second group, they can get that on ascent dash dental dash solutions. And the last group are generally those dentists over the age of fifty-five that should really be saying to themselves, “We're all going to have an exit strategy, whether you want it or not.” And if you're not prepared for that exit strategy, it's like going into your hygiene department and not knowing the patient's chief complaint, not knowing whether they're financially approved or not knowing whether their treatment is complete or incomplete. You go in unprepared. You might win sometimes, you might lose some other times, but if you don't have a cheat sheet and you're not prepared to walk in there and find out and know exactly what Mr and Mrs Smith need, want and desire then you're probably not going to make the sale. You're not going to make the treatment plan. It's not going to be accepted and ultimately your biggest asset for most in the health care is the sale of that practice and that practice on the eighteen times that I've purchased. I have always found a consistent thing. They're selling on the low, not on the high and basic business tells me you're always better off selling on a rather than a low. And I just don't think they have the mentoring, the background or are not working with people that can sort of guide them and say, “Start this plan five or seven years in advance.” If it doesn't work out you still get a better practice. And if it does work out you're going to make a much better financial killing at the end. So those are the three segments that I see in ascent dental solutions. Try to have books, podcasts, webinars my lectures all in those three areas. So, the individual who's fifty-five or sixty may not necessarily be interested in listening how to get their first job and first career. And that twenty-nine to thirty-two-year-old that's just finishing up their last MOD really doesn't care about retirement 401ks and having a savings plan. So, I tried to segment that marketplace and provide information, knowledge, development and training in each of those areas.
Howard: So, you do coaching too? That individual personalized coaching?
Howard: And you do coaching programs for new dentists, coaching programs for dentist owners and coaching programs to prepare a dental practice for sell. So what's the low hanging fruit? First of what’s the low hanging fruit for coaching programs for new dentists? You know in your fourteen locations would you hire a kid out of school or do you have to have five years’ experience or something?
Kevin: This is my opinion. When they’ve had five years of experience no matter how hard I bang my head against the ground I'm not going to change them. Their systems and processes that are in place. It's like a newborn. I can mold and manipulate a newborn. Try doing it to somebody eighteen or nineteen years old. The bad is already ingrained so for me personally although most dentists disagree, I always look for the newbie. I don't really care about their skills, okay? What I care about is their desire, their drive and their ability to communicate. And although this seems poor, but your ability to sell. When people tell me they don't sell, they're professionals. I look at them and I go, “People are selling all the time.” I’m selling during this webinar. You're selling me I'm selling you. If you don't understand you're selling in my opinion you don't belong in business. You're lying to yourself, you're lying to your guests, your customers, your patient base whatever you want to call them. So I'm more interested in their personality, their drive and their background. When you just profiled the example of somebody who has no school debt, hasn’t had a job in eight years, chances are that individual’s not going to be successful in my business, my practice because we're not going to meet. We're not going to mesh. There's no drive, there's no desire. All they're basically doing is filling a need and in twelve to twenty-four months we're probably not even going to shake hands. It's going to be a bad divorce. After this many years and this many associates that's what I'm interested in. And I could take that new graduate, explain the processes and procedures. Explain to them why they were effective when they work. And I get a greater likelihood of molding them in a particular direction. So, they're not just simply taking a radiograph right now or a referral pad looking at their watch and saying, “I've got to be out of here at a quarter to five.”
Howard: By the way, what's your success rate? You were talking about exit strategies earlier. Are you going to go from fourteen to twenty to thirty and then sell it to a DSO, a MSO? What is your exit strategy?
Kevin: When we met over twenty years ago I would've said I'd have about two hundred by now. Part of it is my own inability to do better and the other part is sharing my personal feelings. I honestly believe I could have two hundred practices, but I think I'd be divorced. I think my children would be less grounded or young adults. I had to make a decision what I call the mind body spirit or BLT Believe Like and Trust the balance. When you get too far out of balance something gives way. I got a great mom and dad I got a great wife. My kids seem well-adjusted. So yes, I didn't achieve the goal that I had expected, but it's more of a balanced. So, I put 100% of the blame on myself. I made these cognitive decisions because I didn't have the skills or the ability or I was just maybe not hungry enough. I made a decision that I'm going to try to have it all, but I'm not going to be a superstar, but I am comfortable in my skin. I'm comfortable with what I've accomplished and I hope to continue. To answer your other question, I don't ever plan on retiring. Retirement to me just doesn't move me. It bores me. I like the business. I'd like to continue to improve. I'd like to continue to grow, but in all honesty, I don't think I'm going to be able to achieve those two hundred practices. So my exit strategy will be to continue to accumulate and eventually that exit strategy will be probably be in my case a 100% will be sold to an MSO if they'll take it. But more than likely it'll be just a percentage of an MSO because in most cases they want to keep you under their thumb a little bit to make sure they get a return on their investment. So if they write a check for a few million bucks and you're gone in twelve months that's not good for them. So generally, there's either going to be a hold back or they want you to continue to keep some kind of percentage to guarantee you're going to continue to spin your wheels and make their return on investment. So, in a nutshell that's what I'm thinking of.
Howard: And how many MSOs are there do you think?
Kevin: What I look for is Heartland in my opinion would be considered an MSO, Pacific Dental would be an MSO, Aspin would be an MSO, Dental Care Alliance would be an MSO. Those four in my opinion are the largest in the United States at this point I believe last count. I think Heartland was somewhere around nine hundred practices. Pacific was around six hundred practices. DCA is around two hundred and eighty, two hundred and ninety practices and I believe you're going to see a consolidation in those areas. I believe the East Coast and West Coast will eventually merge and the central part may fight the battle but eventually it's like Home Depot Lowe's as you mentioned the pharmacist. You know there's a CBS there's a Walgreens. There's a Wal-Mart. You're either big and strong or you're going to get gobbled up.
Howard: Wow. And if you had an exit strategy be gobbled up by one of those that you listed, what would be your first choice between Heartland, Pacific, DCA, Aspen who would be your first date?
Kevin: Well it's a great question and if most of the listeners are younger and not practicing there's basically two schools of thought out here in these equity groups or Managed or Dental Managed Service Organizations. One group like Heartland you 100% know that your company name, your brand is going to be Heartland and the patients or guests that walk into your practice know 100% they're walking into Aspen or Heartland. There is another strategy out there that they're going to allow you to keep your business name. The community and the patient base believe you're still this relatively small mom and pop, but they're not going to try to change your identity, at least not in the beginning and there is no right or wrong. I think the corporate entities have two different philosophies. I think from a business strategic standpoint ultimately to get the best return for their investors you have to have the infrastructure. And I believe ultimately the best strategy from an investment standpoint will be a Heartland, an Aspen, a Pacific, where it's one name that customer patients understand exactly what they're getting because it's easier to sell it. The infrastructure’s set up. There's no guesswork. I could be wrong on that, but I don't think I am.
Howard: The top four distributors in America are Wal-Mart, Costco, Kroger and Amazon. And are those for Kroger when they do an M&A like they when they buy Dillon’s grocery stores in Kansas they leave the name Dillon’s out there in Arizona. They bought fries they leave it at fries. So, there's several ways to skin a cat. You know another thing about you. One of the rarest things about you. I think you're the only dentist that was ever born who isn’t screaming against mid-level practitioners. I mean on Dentaltown you would think mid-level practitioners are the children of Satan and Lucifer. You don't see it that way do, do you?
Kevin: No, not at all. Never have. The way I look at it is.
Howard: How does it feel to be the only guy that doesn't believe that?
Kevin: In my opinion, it doesn't even faze me, actually I probably feel good. I'm a contrarian by nature. But the bottom line is these people who complain, their complaints could be legitimate, but no one has a problem hiring a dental assistant. No one has a problem hiring dental hygienists. Why would you want to expand the duty, delegate out more care and more service and improve your bottom line. So, I look at as an asset and quite honestly, I don't run from competition. Competition makes you better. So, if that mid-level practitioner has the training, the qualifications and the skills. Let me tell you something. There's plenty of dental assistance in my thirty-four years that have been with me. I'd let them fix my teeth any day of the week. They have the skills, they have the bedside manner and they have the background. I believe out of pure necessity, you will see this continue to expand regardless of what the profession feels or wants because there is a need and it makes business sense.
Howard: Competition does make an industry better. I look at corporate. These dentists complain, “Corporate’s going to ruin dentistry.” It's like dude, “You leave Thursday at five and you don't even answer your phone till Monday at eight. You really think America should not have a dentist Friday and Saturday, Sunday waiting for your lazy ass to crawl up Monday morning and then when you finally get it Monday morning and they call you, you can't even get them in until Tuesday or Wednesday?”
Kevin: I average about nine hundred and sixty-eight new patients a month for the last five to six years out of the fourteen practices and the number one reason is the dentist either couldn't get in, couldn't get the patient in and quite honestly based on my research and background, I don't even think the dentist realizes that. It's that front desk reception area, that patient scheduling coordinator, whatever the hell correct political term you want to give them. The doctor doesn't even know it. So, my personal opinion is when you call that telephone number. You should come down immediately. If you can't come down immediately, come down when you can. We're in a service industry. I think corporations understand that and I think the solo practitioners that actually want to compete and win are going to have to learn that real quick. You could argue it's impossible for a solo practitioner to be open twelve, fourteen hours a day, seven days a week. Something's going to give. And it most likely will be their health, their personal life or both. So that's another huge advantage that corporate dentistry has over that small group or that solo practitioner.
Howard: So, are your fourteen offices all the same name, brand, hours? Is it like Southwest Airlines where everyone in your office is a Boeing 737 300, the same color and everything?
Kevin: I would say at this point pretty close. Probably one of them which was a recent acquisition needs to be gutted and renovated, but I would say thirteen out of the fourteen are pretty much the same. It's like Cheers in the 80s. Everybody knows your name. They look and have the feel of a small practice. The staff there is comfortable, but it's part of a bigger organization. So, the idea, the goal is to make them, other than the color coordination of the offices, as similar as possible. But as you expand for our listeners sometimes the demographics, sometimes the locations, will dictate our style over another area. And as you get larger and move further and further from the Hub sometimes those subliminal issues play a part in the decision process.
Howard: Of those fourteen offices, how many of them did you acquire versus a de novo starting from scratch?
Kevin: Well at the beginning in the mid-80s I acquired probably four after that when I felt the infrastructure was laid out. I quite honestly didn't have the disposition, the patience or the time to fuss and muss. I did the same thing. I went to a community in the area. I contacted the dentists and asked them if they wanted to have a coffee or a drink. And I said to him, “I'm thinking of coming in the area. I'd love to have you join me if you're interested. If not, I’m coming to the area. You're open three and a half days. I'm open seven. You're not open weekends and evenings. I am. You’re not providing specialty care. I do. You don't have hospital privileges. I do. I've got the best and latest equipment that money can buy. You don't. So, I'm not here to squeeze anyone out. I'm just simply saying the location is right for me.” So, to answer your question completely, once I got the fundamentals of processes and procedures down I found it easier and more cost effective to just go de novo. Okay, I didn't have the stress and aggravation of sitting here saying, “How can you not want $1.500 000 for your practice? You don't own the real estate and are going to have to invest in other one point five million to build it out, improve it to keep the brand the same.” The money didn’t make sense to me. I said it's easier to start de novo. So that's for my own personal story.
Howard: So, do all fourteen dental offices have the same hours and what are those hours?
Kevin: Those hours from 07:30 in the morning to 8 p.m. Monday through Thursday, 07:30 to 5 p.m. on Friday, Saturday from 8:00 until 2:00 p.m. and Sundays because of blue laws, as needed.
Howard: So, you’re not open on Sunday?
Kevin: If you told me you had a problem, I’d be there at seven thirty in the morning. So basically, if they call the office and you said I really can't and I hope to God my training lives up to this webinar they should be saying to you, “Typically we're not open on a Sunday, but if that's the only day that you need to be accommodated, we'll make the accommodation for you.” Keep in mind that as businessmen and women, these patients are screened and programmed. And what I mean by that is there's a profile. So, I probably would not come in Sunday morning on what I'll consider a type four, type five patient, but would on a type one, type two patient and that may be for a future podcast, but I think subliminally everybody does some kind of profiling in their life. I take it to a higher level in a more sophisticated stand, but in general terms we have good patients and we have not as good patients. And the goal is to really go over the top for those patients who are exceptional and try to provide the best care and service we can for those that are less. So, when you have a broken appointment history or a last-minute cancellation history you got two or three strikes against you. I'm not a happy camper. So, the data has to drive your decision. Sometimes your heart gets in the way, but in my opinion your brain should take precedence. The data supports that if Mr. or Mrs. Smith have ten broken appointments, why in God's name would I be giving you an evening or Saturday or weekend appointments? It just doesn't make sense to me. Doesn't mean I don't like you, it doesn't mean I won't give you a 110%, but I may not be as accommodating.
Howard: Some of my favorite patients or my worst ones. I love crazy monkeys. So, Monday through Thursday, you’re 07:30 a.m. to 08:30 p.m.
Kevin: 8 p.m.
Howard: Till 8 p.m.?
Howard: So 07:30 a.m. to 8:00 p.m. What did you say it was Friday and Saturday?
Kevin: 07:30 to 5:00 p.m. and Saturday 8:00 to 2:00 p.m.
Howard: So, four hours on a Saturday from eight to two. No, that’s six hours, right?
Kevin: Correct. No lunch, no breaks.
Howard: And Friday 07:30 to 17:30?
Howard: To me, are you dentist centric or patient centered? I mean if I was a patient in that town, I would want Monday through Thursday, 07:30 to 08:00 p.m., Friday 07:30 to 17:00, Saturday to two and Sunday as needed. I certainly wouldn't want a dentist centric office in town open Monday through Thursday and if I broke my tooth or had a toothache they had to wait Friday, Saturday and Sunday. And then when you try to tell a dentist that they're making $175 000 a year. They see corporate role in and do these extended hours and think they're ruining dentistry. Now I'm ruining your laziness. I mean the hospitals are open twenty-four hours a day, seven days a week. I tell everybody in Phoenix, “If you have an emergency on Sunday you better break your leg because the ambulance will pick you up and they'll take you to a hospital and fix you. Because if you break your tooth nobody will take you. And in the United States of America 7% to 8% of all emergency room visits are odontogenic in origin and that is sad. It just really is sad.
Kevin: And when you think how sad it is 99% of the time the problem isn't resolved. They're getting a prescription for percocet, oxycodone, Tylenol with codeine, some Motrin and say, “See your dentist on Monday, if you can get an appointment.” They're not extracting teeth in most of the emergency wards. I'm on staff at four hospitals here and I've never seen it in my thirty-four years. You know they'll call someone like me. I'm on call once a month, once every other month and two of the hospitals are set up for dental care and on occasion I will actually do the treatment there. But for the vast majority the physicians aren't trained. The equipment isn't there. They identify the problem is odontogenic in nature and really you know unless you have an airway problem you're given a prescription and said, “Follow up on Monday.” Because they're not open.
Howard: So, do these fourteen locations participate in PPOs?
Kevin: Yes. What I call the one, two, three, four and five again based on my demographics, my personal situation, which may not be appropriate for anyone. My job is to keep that revenue rolling in, keep that business growing, but you have to control it. It's like anything else. So, if you allow a PPO to be 100% of your practice, then suffer the consequences and the problems that are associated with it. But in our particular area and based on my own research those are the insurance programs that are selling to small, medium and large businesses because the HR departments find them less expensive to purchase. So, what they're mostly interested in, I am generalizing, is they want to be able to offer their employees a dental insurance program. I don't know if they're necessarily that interested in how good the program is. They just want to say there's a dental benefit and if all they are selling are these type five-type plans, then that's what people are buying. So, to my key I would tell those new graduates, “Look for the procedures in those plans that aren't covered.” Most of the time TMD does not cover, most of the time IV sedation is not covered. Most of the time orthodontics over the age of eighteen or twenty-five isn't covered. And there is a way to improve your financial bottom line. And again I look at this website. This webinar is a business webinar. I know it here and I don't want to be judged as a clinician that’s always interested in money. I’ve probably taken as many or more continuing education courses than almost any listed and you can imagine. But this to me is about business. And you have to understand the business and make business decisions and then you have to monitor, look at the feedback and you may have to curb back, but it's based on what's going on in your particular area. So, you know, yes, I take it, but I control it.
Howard: And what about hygienists? A lot of dentists listening to you right now are saying, “Hygienists in my town get $40 an hour and the PPO pays fifty-five for cleaning and I got 65% overhead.” How do you pay a hygienist $40 an hour for a $55 cleaning? Do your hygienists get $40 and do they get an hour to do a prophy or have you the expanded function where they work two rooms with an assistant or what’s your thoughts on the hygiene department?
Kevin: Well I can tell you what I believe. Theoretically in the reality of it, but theoretically what they're supposed to be doing is working two rooms. They do have a dental assistant that's taking the blood pressure, the review of medical history, update of radiographs, the periodontal charting and the review of medical history and they'll place the sealants, they'll basically do the flossing in the prophy and then the hygienist goes in and does the root planning scaling or the hygiene portion of it. That's in theory. Does it always work that way? No, it doesn't. I wished it did. It should. When it doesn't, there's nobody to blame but myself. But in the end, that's the goal. And you can be profitable, but again if your schedule is booked in my opinion with more than 10% to 15% of these PPOs, then I think that system is a failure. You're spinning your wheels going nowhere. So, you either make a determination that you're going to give ten or fifteen minute appointments and try to do a volume game or you're going to lose money and you're hoping that you can do the elective procedures that aren’t covered by the PPO to make up for your losses which doesn't necessarily make sense to me. So, to me the key is know your overhead, know your patient base and control the damn schedule so if you're scheduling patients and you don't know whether they’re a PPO or an indemnity plan or a combination of both or a government subsidized plan or a fee for service cash patient or somebody who's retired and saying you can't possibly schedule efficiently and effectively because it's like filling out a crossword puzzle and you got four across and you never looked at the clue. You just put in four letters and hope to God it works. So, I'm a big believer in before you put someone in the schedule, you better know for what and what potential revenue can be generated and you can't do that accurately if you don't know their insurance plans.
Howard: On your fourteen locations, do demographics matter? Or are they all in big city urban Boston or are they all rural?
Kevin: They're mostly rural in suburbia. Most of the towns have a population of between eighteen and twenty-five thousand. Okay. I am near downtown Springfield, Massachusetts. Springfield Worcester in Boston are the three largest cities in the state of Massachusetts. I'm closer to the Springfield area which has a population of about a hundred and fifty-five thousand.
Howard: So, you'd think demographics matter. And what did you say it was Boston, Springfield and what?
Kevin: Worcester are the three largest cities in Massachusetts. Worcester and Boston are more east, Springfield’s more west.
Howard: But as far as the actual city limits not the metro. Do you have any of your fourteen locations in Boston, Springfield or Worcester?
Kevin: Only Springfield. Nothing in Worcester and nothing in Boston.
Howard: But Springfield’s only, what did you say, a hundred and twenty-five thousand?
Kevin: About a hundred and fifty-five thousand.
Howard: So, it sounds like you are a big believer that demographics matter and you're not in the big urban cities of Boston where there's a dentist on every corner. You went out rural. You said your average town has only eighteen to twenty-five thousand people.
Kevin: Right. I decided to be a big fish in a small pond rather than a small fish in a big pond. That doesn't mean I'm afraid of the competition. But I said get the infrastructure set. Get the processes and procedures set and once I feel I've got him set, then it's time to expand.
Howard: So, what do you think the dentist to population ratio is in Boston versus the towns you're in that have thirteen, twelve to fifteen thousand people?
Kevin: I should know the answer. I don't. I believe in the state of Massachusetts there's roughly forty-six hundred dentists in the entire state. About 70% of those dentists are west of Worcester. So, the population as you try to grow and expand any business. If I was to tell you my most difficult thing of expansion over the last thirty-four years is the new graduates, the newbies, the young men and women, they don't want to be out here in Western Mass. They're single. They want to be where the action is. They prefer Washington D.C., New York, Boston, Chicago, Miami. Springfield although I find it a great area for young people, if I was in my mid to early 20s. What most of the young men and women do is they’re leaving Friday as early as they can and they're going towards the city. That's where their friends are. That's where the action is. So, there is a threat to my organization, into my game plan, because people want to be where the action is. And after a few years they go, “Kev, I like you, you're a good person, but I am bored out here.” And you don't get integrated into the community. You don't make connections when you're gone every weekend. So basically, you're not building my business. You're building your social life and I need people to build the business.
Howard: Yeah, I'll tell you what man. I bet the odds are ten to one. It would be easier to find the best damn woman on earth in a small country town with twenty-five thousand people than it downtown Boston.
Kevin: Not only did I, Howard. I married her.
Howard: The best damn women in the world all live in small town country girls. They can change your oil, cook dinner. I mean they're just real world down to earth. If they think it's a numbers game that you'd rather go to Boston because there's a gazillion times more women. But you're right, they don't listen and they don't go rural. I just talked to a kid the other day. Found a town of eighteen hundred in this county in the Midwest. This town of eighteen hundred. The town had no dentists. So, he went there. He didn't realize the county had no dentists and there’s seventy-eight hundred people in the county. I mean no PPOs, no HMOs. He’s charging twelve fifty for a crown. He hates endo's so he charges fifteen hundred for a root canal because he figures he has to do the damn root canal he’s going to get paid for. I mean he's just crushing it and I mean he’s just crushing supply demand. God, we're out of time but I got one more overtime question. What about equipment like your fourteen offices? How many of them have CAD/CAM chairside milling or digital impressions? Does that matter? Is that a part of your formula for success?
Kevin: It is. Obviously, you know that it's an expense issue. What I would tell people is once you get the process and procedure, it's very difficult to change because if Dr So-and-so says, “I won an east west elevator A B C D.” Unless you put it in the hundred and fifty surgical kits, it's useless. So, you've got to understand what some of your issues are. But to answer your question: they're all digital radiograph. We do have the Ceric unit. We do do digital impressions. I also have the i-CAT in a central location. I do not have fourteen of them. All right. All of the offices have electric handpieces, all of them have rotary endo. All of the offices are equipped for full band and bracket endo. All of the offices have at least two. In most cases more surgical implant systems than two for blade implants, periosteal implant, cylinder implants. They're all equipped for bone grafting and periodontal surgery. But I don't have an i-CAT scanner in each office. I don't have the Ceric unit in each office, but pretty much the fundamentals. One of the advantages of keeping the offices relatively close to each other is it's not a huge stretch to ask someone to drive ten or fifteen miles for a specialty film. And in my opinion, it's still a hell of a lot more convenient than going to the hospital and getting it done.
Howard: How many operatories is your average office?
Howard: So that's small.
Kevin: It is. but if you consider that you're open. So, one of the advantages of keeping him at that number is you don't need an enormous amount of employees for that size office. So, in my heyday I had an office which I think thirty, thirty-four employees and I had eleven operatories. And for me personally it wasn't my cup of tea. It wasn't the image or the brand that I wanted to produce. I was very financially successful, but I looked at it and said whether it was luck or pure guesswork, whatever it is, my prediction was we were going to go the same way that the pharmacists went and I decided to improve the footprint for a better exit strategy and a better pot of gold at the end of the road, as they say.
Howard: So, you have twenty associates in fourteen locations. So, the average dental office has just one and a half dentists or do you have…?
Kevin: What we try to do is one dentist works from 07:30 to 01:30. Another dentist works from 01:30 to eight. I find that when you have more than two dentists in a practice at a time there's a lot of talking and not a lot being done. So, my preference is particularly with associates and for the listeners, don't take this the wrong way, but when they're in one practice only you've got a gun to my head. They have more control than I do because the staff, the team members, the patient base gets this strong connection and at some point, it's like any relationship until you sign on the dotted line, you're probably going to be leaving it sometime so some of it is because they want to and others are because I'm not interested in making a partner.
Howard: So, you have one doctor work Monday through Friday 07:30 to 01:30 and the other one works 01:30 to 8:00 p.m. Monday through Thursday.
Kevin: What I find is based on their age and their personal circumstances some want to work a full shift from 07:30 to eight and they'll only work three days and have a long weekend. Others only want to work weekends and not work during the week. Others only want to work mornings so perhaps for another webinar I tried to entice people to come out to western Massachusetts by paying more than they could make anywhere. And quite honestly, and again I'm generalizing, I couldn't entice these young men and women, new graduates, on money. What they were looking for is a quality of life and I said, “Okay, how about if you only work half a day? How does that suit you?” And that seemed to improve the interest so that I could continue to expand my business. And it was just something through trial and error. My brain really didn't think like that. But after you get the same responses in the answers you've got to look in a different direction and that direction for me personally seemed to work.
Howard: Oh, man we went over the average podcast which I do in an hour because we’re in an hour and ten minutes. But hey, I just want to tell you that I'm a big fan of following you on Twitter. Big fan of your podcast. I hope you like your post on iTunes right now and your website ascent dash dental dash solutions dot com. I really hope you upload all those onto Dentaltown so my homies can find you on that because I think you're keeping it real. My God. Not even one tenth of 1% of all the dentists who ever lived had fourteen offices and were willing to be transparent and be humble and tell everybody what you did right. What you regret, what you changed. I just think the world of you. I think you're an amazing man and you're just keeping it real in Massachusetts and I just want to thank you so much for all that you do for dentistry and for coming on the show today and talking to my homies.
Kevin: Hey, thank you. I really appreciate the opportunity. Thanks for giving me a chance.
Howard: The next time I'm in Boston, I’m staying with Marky Mark Wahlberg. We'll stop by and have a beer with you.
Kevin: We'll go to his restaurant and get a burger too, okay?
Howard: All right buddy. Thank you very much.
Kevin: You're quite welcome. Thank you.
Howard: Have a rocking, hot day.
Kevin: You too.