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Howard Farran:
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It is a huge honor today for me to be podcast interviewing my buddy for years, Kim Bleiweiss.
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Kim Bleiweiss:
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That's right.
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Howard Farran:
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Did I say that right, Bleiweiss? What is that?
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Kim Bleiweiss:
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Absolutely.
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Howard Farran:
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What is that?
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Kim Bleiweiss:
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Actually it's Yiddish. I'm on the few Mormon Jews you're ever going to run into.
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Howard Farran:
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Is that right? You're a Mormon Jew?
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Kim Bleiweiss:
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Yeah. (Laughs).
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Howard Farran:
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I don't think I've ever met one and-
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Kim Bleiweiss:
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Well you have now.
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Howard Farran:
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When the wall fell down in Cuba, I was telling everybody that I have a lot of Jewbans on Dentaltown. The Jews that were kicked out of Cuba, they call themselves Jewbans.
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Kim Bleiweiss:
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Oh, I didn't know that. Yeah.
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Howard Farran:
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What's the slang for combining a Mormon and Jewish? Is there a nickname?
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Kim Bleiweiss:
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Not that I know of but we do have chopped liver at Christmas.
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Howard Farran:
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You have been on Dentaltown since literally day 1, 2001. I'm a big fan of your posts. Let me read your bio.
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Kim Bleiweiss:
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Thank you.
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Howard Farran:
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Kim has 40 years experience in the dental trade, having started with a local dental supply company in Salt Lake City right after graduating from college in 1976. During his 40 years in the industry, he has worked in sales, manufacturing, R&D, marketing, and product development. As the Endo product manager at Ultradent, with my buddy Dan Fischer, he was tasked with the responsibility to manage the development and bring to market Endo-Eze AET. Later, as SybronEndo, Kim managed the development and release of a number of Endodontic products, including TF Adaptive, Apex ID, K3XF, and System B Cordless, and the System B, the B was for Buchanan, right?
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Kim Bleiweiss:
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Yes.
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Howard Farran:
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Steve Buchanan, an amazing man. Currently Kim has his own company, Lean Dental Solutions, and that's why I had him on the show, and has developed into selling the Grasshopper Mouse dental office inventory control system. Kim was married 40 years ago in June and he and his wife Laura have 4 children and 13 grandchildren. Ryan, how come I have 4 children and only one grandchildren?
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Kim Bleiweiss:
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(Laughs).
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Howard Farran:
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What the hell's wrong with you, Ryan? You need to go drop a dozen frogs this afternoon so I can catch up with Kim.
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Kim and Laura live in Santa Ana, California. Is that where Steve Buchanan is? Oh, no, he's in Santa Maria?
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Kim Bleiweiss:
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No, he's in Santa Barbara.
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Howard Farran:
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Santa Barbara?
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Kim Bleiweiss:
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Yeah, we're kind of the low rent Santa Barbara. We're in Orange County.
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Howard Farran:
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Same with me. I live in Phoenix and all my rich dentist friends live in Scottsdale.
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Kim Bleiweiss:
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Right, yeah.
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Howard Farran:
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I'm just down here with the lower class. Kim, the reason I had you on this show is that basically when I got out of school at '87, we were on a margin business model where we just took our cost, add our profit, arrived at our fee, submitted it to the insurance company, and they paid 100% of cleaning, exams, and X-rays, 80% of root canals and fillings, half on your crowns and dentures, and now we've moved from a margin business to a volume business where now the insurance company, they just send you your damn fees and these fees are significantly less than when I even got out of school, so now we've moved from cost + profit = price, to here's your damn price. If you want any profits, subtract it, and now you arrive at a budget and of course the biggest overhead is labor, second lab, but you're number 3 at dental supplies and there's so many issues that dentists ask me about. They hear things like gray market and black market and all those things.
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Kim, tell me, can you help dentists lower their supply bills?
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Kim Bleiweiss:
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Yes and no. What this is all about is it's giving a new perspective on inventory control because what happens is you should actually try and have your supply budget about 6% of your gross, 10% of your overhead, okay? People really don't-
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Howard Farran:
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You said 6% of your gross, 10% of your what?
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Kim Bleiweiss:
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Of your overhead. Okay, so you're assuming that your overhead is 60% of your gross and 10% of that 60% is supplies ideally.
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Howard Farran:
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You're talking about supplies in lab? You're talking about sundry?
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Kim Bleiweiss:
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Okay, yeah, exactly. We're talking about sundry. We're talking about everything, that's all your dental supplies, your hand instruments, your other supplies like office supplies and cleaning supplies as well, so all those things fall under that 6% of your gross. It's easier just to say 6% of your gross.
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You divide your spending on supplies by your billables and that's where you get your percentage.
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Howard Farran:
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You're saying that supplies, dental supplies, hand instruments, office supplies, cleaning supplies, should be 6%?
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Kim Bleiweiss:
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Right. I'm just throwing this number out cause it's easy math. You have a practice that's producing $1 million a year. You shouldn't be spending more than $60000 a year on your supplies for your office, including your dental supplies, your office supplies, and other sundries such as cleaning supplies.
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Howard Farran:
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That does not include lab?
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Kim Bleiweiss:
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It wouldn't include lab, no, because labs typically, if you have an in-house lab even, they're told that they're going to be running around 20% of gross, so this is not counting whatever your lab fees are and if you have an in-house lab that you're running in your office somewhere, then you've got to account for those costs separately. If you send out to have a crown made, that is not part of the consideration with supplies.
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Howard Farran:
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Where I see it, I don't care. For me, what I just want, is I want everybody to have the same vocabulary, apples to oranges. People say, "Well, my labor's 20%," and I would say, "Does that include their health insurance?" "No." "401k?" "No." "Uniforms?" "No." "Staff online [inaudible 00:06:16]?" "No." I like total numbers, so dental supplies, hand instruments, office supplies, cleaning supplies. You see people saying that range should be 4-6%, but what's confusing to me is on [inaudible 00:06:30] lab fees when you send impressions to the lab, is now a lot of dentists got CAD/CAM and I think their blocks that they're milling and all that should be under lab because that's a lab thing and a lot of these guys are buying them through their supplies and wondering why their supplies went up but then their lab went down, so now some people are starting to say, "You know what? Let's just mix lab and supplies and just get one total number because if you got 14000 American dentists doing CAD/CAM, that's kind of blurring all the numbers and the averages."
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Kim Bleiweiss:
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Sure. What we recommend is, and our system has a way of doing this, is that they account for their CAD/CAM and their implant separately. For example, if you have a dentist whose dental practice is running at 10% on their supplies, 10% of gross on their supplies, they're going to start panicking cause they're going, "Hey, that ought to be around 5 or 6%," but if they take the CAD/CAM, blocks, and the implants out of that mix, then they might very well be at 5% because they're having to stock some very expensive stuff with a low margin and things that they're not going to be using often. They don't have the turnover with blocks and with implants and stuff like that than they would with the impression, material, anesthetic, and those sorts of things, so yeah, we tell them they should just pull those things out of the supply mix and account for those separately.
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Now, I'm not sure, I haven't honestly taken a look at what the percentage the lab bill should be of your overhead or of your production cause it's so variable in every office because you have offices doing implants, not doing implants, doing CAD/CAM, doing all these different kinds of things. People saying, "You know what? I'm not going to monkey with CAD/CAM. I'm gonna take the scan, I'm gonna send the digital file off to the lab and have the lab cut the block and have them do all that kind of stuff so I don't have to stock those kinds of things." There are a lot of different considerations in here. I hear what you're saying, understand what you're saying, and I agree with what you're saying but I have not sat down and really figured out what portion lab should be of a practice because of all the variabilities that are involved in there.
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That's a conversation stopper ain't it?
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Howard Farran:
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You have 2 websites.
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Kim Bleiweiss:
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Yeah.
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Howard Farran:
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You have Grasshopper Mouse inventory control systems at GHMouse.com and you have Lean Dental Solutions Inc. at LeanDentalSolutions.com. Explain these 2 websites.
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Kim Bleiweiss:
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When I left SybronEndo back in 2012, wow 2013, anyways it's been a long time ago, they reorganized, they're not around anymore, I wanted to go into business for myself. My first thought was I want to be a dental consultant. I'm going to use all this great knowledge I've got to be a consultant. Well, a consultant's just another word for being unemployed lots of times, on a resume anyway.
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I decided I needed to come out with a product and the product I came up with was an inventory control system, cause I saw a need for it. Basically, as I set things up, the Lean Dental Solution site became more of a consulting site and Grasshopper Mouse is my product, but I'm really leaning more and more towards Grasshopper Mouse. That's something that's taking the bulk of my time, it will take the bulk of my time. On the Lean Dental Solution site is where you're going to find my blogs where I'm blogging on practice management, on communication, on lean management, and all these kinds of things, and that whole lean idea kind of goes hand in hand with your supplies and those sorts of things.
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Howard Farran:
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In all your experience, what are ... Cause I'm thinking my homies, they're driving to work right now and they're focused on placing an implant or they're trying to think about how to do an X-ray, how does this person even listening to you know if their inventory control system is getting an A, a B, a C, a D, a F? How do they even know if they're doing good or bad in this department?
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Kim Bleiweiss:
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They don't. What happens is the way most dental offices, from my experience in the industry, take a look at this thing as the doctors got in his head about how much he wants to spend on supplies and what happens at the end of the month? He looks at the billables and then he'll look at what his supply bill is and then he'll have a fit. He'll go, "Holy smokes! We spent a lot more than we should've this month. What am I gonna do about it?"
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Things are changing. Dentists are learning more about business and about business metrics, but they really have no way of printing up a report right now, giving them a metric on where that money went, where it can be shaved, if indeed it's a problem. Immediately their knee jerk reaction is to go to the dental assistant, whoever's responsible for ordering and saying, "We gotta start drilling down and getting cheaper prices. We gotta get lower prices. We've gotta get on top of this and start shopping all over the place to see who's got the lowest prices and who's gonna help us out. I want you spending a couples hours a week going through all the catalogs or whatever the case may be and then what he's doing is he's adding a hidden cost to his overhead-
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Howard Farran:
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Labor.
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Kim Bleiweiss:
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And all that labor, yeah. I told Dennis once when I first started business, "Time is money," and he threw something at me and told me to get out of his office. He says, "You don't know that time is money in my office." Well, it is and their time is worth something, so what a dentist needs to be able to do is go, at the end of the month, print a report that says this is what we purchased during this month and look that over and if there's a problem with it, then the dentist does it the next month and the next month and looks at it over a quarter, like a business does. You go by quarterly things. You don't tend to use a month as a trend in anything.
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So you look at the quarter and you see that the quarter is way out but you've got a metric to look at. You've got something there that you can look at, and if you've got something, for example, with our system, they can run a report that shows what they've received, which is what they've actually purchased, and then a report they can run, it's called a scan out report, which is what they've actually used, and if there's a big discrepancy between those 2 reports, then the question comes.
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Okay, one of 3 thing's is happening. We're either ordering too much and have stuff sitting on the shelf we're not using but we've paid for it, and that's called opportunity cost. That's another cost they don't think of. Once you've bought something, the money's gone. The other possibility is that somebody's just not keeping track of what they're using. They're just grabbing the stuff off the shelf without scanning stuff out, whatever the case may be. The final possibility, which is rare but is becoming increasingly less rare, is the stuff's growing legs and walking out the door. You can't know these things unless you're monitoring it.
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Howard Farran:
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What do you mean by that? You mean theft?
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Kim Bleiweiss:
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Yeah, I mean theft.
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Howard Farran:
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What's being stolen in the dental supply business?
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Kim Bleiweiss:
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Go on eBay and put whatever you want in there and you'll see some things. Often it's small equipment but people can just nickel and dime a doctor out of ... They decide they need toothbrushes so why go to Walgreens? There's a couple of dozen on the shelf over there, just snag one and chuck it in your car and take it home with you. No problem. It's just toothbrushes. Who's going to notice?
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Howard Farran:
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Do you think staff are stealing more than anyone talks about?
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Kim Bleiweiss:
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Yes, I do.
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Howard Farran:
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Most of the embezzling consultants and most of the dental consultants I know, they say if they go into any dental office, 1/2 someone's embezzling from the office. 50% of the time someones embezzling.
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Kim Bleiweiss:
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In the statistics I've seen is the second most common thing is pilfering.
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Howard Farran:
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What's pilfering?
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Kim Bleiweiss:
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Pilfering is just what we used to talk about, taking the paper clips and the paper and stuff like that home except dental supplies are really expensive and so it can be anything from stealing pharmaceuticals, if somebody's got a habit, to grabbing toothbrushes to maybe slipping a hand piece in your pocket. There's a lot of very expensive stuff out there right now that is very portable. Do you think that a dentist, for example, would miss if a package of CEREC blocks, it costs a couple hundred dollars, went missing?
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Howard Farran:
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No.
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Kim Bleiweiss:
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They wouldn't notice it. They wouldn't notice it. Then the person who takes it, those CEREC blocks that cost a couple hundred bucks are now on eBay for $50, $75.
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Howard Farran:
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Tell me more about that because Patterson just put out a video and it was talking about, I'm sorry if I'm mixing this up, gray market or black market, that that's a big deal when basically a pharmaceutical company will sell a pill in America for $10 but they'll sell it in Hong Kong for a buck. Then, I believe it was Wal-Mart who started saying, "Well then hell, we're just gonna start the stuff in Hong Kong," and then George Bush passed a law that you cannot reimport pharmaceuticals. That's called geographical price discrimination. They obviously sell $500 bottles of bonding agent in the United States and Canada and Australia, for $50 in Africa, India, and China. Is that stuff getting back in the United States? Is that called gray market or black market?
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Kim Bleiweiss:
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That's called gray market and yeah, it happens.
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Howard Farran:
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Is it significant?
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Kim Bleiweiss:
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Yeah, it is. One of the issues you had ... When I was at SybronEndo, I was the product manager and we were always trying to figure out a way to mark our product that was going offshore so that we'd recognize if it came back on shore. The reason you have to do it, and price discrimination, I understand what you're saying, but if you're in a country where you could only charge the equivalent of $25 to $50 American for a root canal and they want to give their patients the best treatment possible but it's going to cost them $50-60 to get a package of files, it just doesn't happen, so I know that the largest manufacturer of rotary nickel-titanium files would sell, when I was with SybronEndo, would sell a product here in the US for $55-60 at retail and the MSRP in Asia was $19.95, but what are you going to do?
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Then the problem is controlling it coming back into the country because then you get people over in Asia who snag that stuff and they know what's going on and they'll sell it back on shore. It is all, as far as I know, the same stuff. I don't want to get myself in-
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Howard Farran:
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Is it legal?
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Kim Bleiweiss:
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As far as I know, it's not legal because it's coming in under any regulatory stuff so you don't know, especially if it's chemical. Impression materials, bonding materials, root canal filling materials, you don't know how it's been stored, you don't know how it's been handled, you don't know any of these kinds of things. The stuff could've been sitting in a container in Malaysia in 100 something degree temperature.
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Howard Farran:
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Schein sells a quarter of the supplies, Patterson sells a quarter of supplies or more, Benco, Burkhart, probably those 4 is probably, what would you say, 75% of the market? Schein, Patterson, Benco, and Burkhart?
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Kim Bleiweiss:
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Oh, yeah.
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Howard Farran:
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Is that 75? Would you say it's higher, 80?
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Kim Bleiweiss:
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No, I'd say it's probably around 75. Those as far as the full service suppliers go, then you're looking at the places like Darby and that that have a good share of the market, but more and more dentists, I think, over the years have come to the conclusion that they're better off with a full service dental supply that'll give them value added service. They can see the value, depending upon the rep they have, they can see the value of having somebody come into their office and make up that difference that's probably over only 10%.
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Howard Farran:
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I can prove that point, yes, because when most everyone of my friends, including myself, has switched from Schein to Patterson to Benco to Burkhart, whatever. Do you know why we always switched? It wasn't on price. Their rep switched.
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Kim Bleiweiss:
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Oh, yeah.
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Howard Farran:
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People say to me, "Why did you switch from them to them?" "I don't know, ask Val. I don't know why she switched." Yeah and it's emergency stuff. You can't have a $1500, $2000 case stop because you're out of something when you got Val on the cellphone, you know what I mean?
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Kim Bleiweiss:
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Oh, yeah. When somebody buys one of our systems, I have them provide me with a year's worth of history on what they've bought so that I can do an analysis to come up with what should be their minimum and maximum inventory levels. We figure they should have no more than a month's worth on hand at any time and actually Patterson and Schein agree with that, and no less than a couple week's worth to cover you for back orders, so when you hit your minimum, you order your maximum.
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That's what minimum and maximum is, but anyway, I go through and they send me a printout from Burkhart or from Schein or from whoever and I go in and I do a spreadsheet and I put all that information in there along with what they paid for it and what surprises, or never ceases to surprise me, is the fact that this doctor who's thinking he's getting a great deal is paying more than this doctor who thinks he's getting a great deal and this doctor, who switched over to this person to get a better deal, is paying more than they were before and then some products are much higher from vendor A and much lower from vendor A, so the hours that their people spend trying to match prices, in my opinion, from just observations, I haven't done any statistical analysis, but it pretty much evens out. No matter where you buy your stuff-
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Howard Farran:
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What would you say if someone says this market, the dental supplies, is so competitive that if you take Patterson, Schein, Benco, and Burkhart, their prices don't even vary 5%.
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Kim Bleiweiss:
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I think that's probably true overall because you're going to pay x at Patterson for impression material A. You're going to spend x + $5 at Schein for the same material, but at Patterson you're going to spend x - 5 for anesthetic B and at Schein you're going to spend x - $5. It just all evens out but what happens is is people, doctors and office managers, get a panic when they see the prices and they say, "Okay, it's $5 less here."
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It reminds me of my mother. My mom would, and maybe yours did the same thing back in the day, she'd shop the ads, the grocery ads, and she'd go to Safeway and get a few things, then jump in her car and go over to Albertson's to get a few things, then jump in her car and go over to this grocery store and get a few things and jump in her car, just buying the things that are on sale. Whereas if she would've stayed at one store, which is what my wife and I do, we found that overall a certain store has some stuff more expensive, some stuff less, but we end up paying you know.
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Howard Farran:
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That's funny you said Albertson's. That was a Utah play that moved down to Arizona but they pulled out of the Arizona market. Are they still in playing in Utah?
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Kim Bleiweiss:
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No, I don't think so but they're in Southern California now and if you want to spend $4 a pound for asparagus, there's a great place to go.
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Howard Farran:
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Huh. These gray market guys, who's the major player American gray market?
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Kim Bleiweiss:
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The suppliers aren't buying gray market as far as I know, Schein, Patterson, those guys aren't.
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Howard Farran:
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Oh yeah, I know the big guys won't.
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Kim Bleiweiss:
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But as far as coming back overseas, it's generally stuff that you can find online. If you go to-
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Howard Farran:
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It's eBay?
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Kim Bleiweiss:
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Yeah, it's not necessarily eBay. If you go to alibaba.com-
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Howard Farran:
|
Alibaba.com?
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Kim Bleiweiss:
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Yeah.
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Howard Farran:
|
How do you spell Ali?
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Kim Bleiweiss:
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Alibaba. Alibaba.com.
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Howard Farran:
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Okay, Aliba?
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Kim Bleiweiss:
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Ba.
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Howard Farran:
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Alibaba. Okay, Alibaba.com.
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Kim Bleiweiss:
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What they do there is they, anything you want in the world, you can get there, so what they'll do is is you'll say okay, I want-
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Howard Farran:
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I can just type in mail order bride and it'll just pop up?
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Kim Bleiweiss:
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I haven't tried that, Howard. I've been married 40 years. I don't do stuff like that.
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Howard Farran:
|
You type in dental supplies?
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Kim Bleiweiss:
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Yeah, dental supplies or you could do a specific dental supply. You could type in NiTi Endodontic files and you'll see a whole bunch of different companies come up that are offshore companies and the prices that they charge for those products or they're being cagey because they're really gray market, they'll say, "Email us and we'll give you the price."
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Howard Farran:
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What does that mean? You said those types will be really cagey. What does really cagey mean?
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Kim Bleiweiss:
|
In other words, they don't want to show what their prices are because they're just worried about getting in trouble or having their competition go, "Well, then we're gonna have to lower our prices." The ones that are the most reputable gray market are ... There are gray market and then there are people who are legitimate manufacturers selling the product and they're selling a product that the patent is expired on.
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Howard Farran:
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But again, if anybody wants to make a major play, they got to move ... When you want to deal with overhead, the only thing you think about is labor so when you're on Alibaba.com, you're paying your dental assistant $20 an hour to do this.
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Kim Bleiweiss:
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Yeah, exactly.
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Howard Farran:
|
How does that really work?
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Kim Bleiweiss:
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It doesn't and that's the thing. Then you're not sure what you're getting.
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Howard Farran:
|
The S&P 500 averages 53% labor. That's what really Dennis says. The ADA says that the average overhead is 65% so the dentist is getting 35% and he's a human. That's his cost of labor or her cost of labor. Staff's making about a total cost about 25 to 28, so there you are, there you're at 53%. IKEA figured out that the furniture people spend 53% of their labor assembling the furniture for you and they could get rid of that and just say, "You assemble the damn stuff." All these restaurants are going to, "We'll just give you the cup. You go over there and self serve your pop." If you pay your staff $1 a day and you do a dollar's worth of dentistry, your overhead's 100%. You have to figure out how to get your staff at $1 a day to do $2 of dentistry and now your overhead's at 50%.
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Kim Bleiweiss:
|
Yeah, that's what the whole lean thing is about, is finding ways to do things more efficiently.
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Howard Farran:
|
How do I do your Grasshopper Mouse inventory? Do you do that for me or does my assistant do that?
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Kim Bleiweiss:
|
No, your assistant does that. We do the hard work for you. We get all the data online for you and then what the assistant does is there are 2 changes they have to make to their daily routine. One is whenever something's taken out of stock, it has to be scanned out of stock.
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Now, that's time and nobody's going to do it, I guarantee you that, so what we have them do is wherever there are strategic places in the office when supplies are kept, if somebody takes something off the shelf, pulled the barcode label off and chuck it in a box that says Barcodes, then once a week when the assistant does her ordering or whatever, she sits down with that or he sits down with that box and just goes through and just scan those barcodes, beep beep beep. You could scan 100 barcodes in 60 seconds. Then that's how all of your inventory is adjusted. Then the system, when you hit the minimum, tells you it's time to order the max, so when you order a product, you're just basically doing the same thing you're doing now, you're building a shopping list but you're building it in the system.
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Then when an order comes in from whomever, an order comes in from Patterson and it's PO #25, then what the person does who's receiving it ... Well, what they're doing now is that order comes in from Patterson. That box comes in, they open the box, they take the stuff out of the box, they take out the packing list, and I haven't found anybody that's not doing it this way, takes out the packing list and starts checking off the stuff off the packing list to make sure they got everything they ordered.
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With the system, what they do is, when the order comes in, they print the barcode labels from that order. Then they label the product and scan it into stock, so it's about the same amount of time. Now, if there's a barcode left over, so you've ordered 10 items and 9 come in, so you label and scan 9 items to put them into stock. There's a barcode left over. The system says hey, it looks like you're missing something. What do you want to do with this?
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It says is this on back order? Yeah, it's on back order. Okay, you click yeah, it's on back order. If, though, the packing list, and this never happens, the packing list says ordered 10, shipped 10, but there's only 9 in the box, what you're going to do is you're going to call up Patterson or Schein or whoever and say, "Listen, it was short shipped. There were only 9 in the box." They're probably going to say, "You know what? Let's just send you a new one at no charge." Fine, you could mark it's on back order or you could say, "You know what? 9's enough for now. I'll just order it next time. Please give me credit." Then you tell the system I'm going to get credit on this and the system leaves the order open until you tell it you've got credit.
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That's another thing with those hidden costs is bird-dogging on credits. How do you know you've gotten credit or when you've gotten free goods that have been promised to you or whatever? The system won't close an order until you tell it you've gotten you credit or gotten your free goods and after 45 days of you telling the system you're going to get a credit, it sends an alert saying have you received this credit? Then you don't have to worry about remembering it. The system remembers all the stuff for you and kind of helps you so you don't have to waste your time with all this paperwork and stuff like that.
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Howard Farran:
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You know how sometimes you just give a job to a certain person, like when someone's operating, you need a great set of hands, and so since it's dental supplies, they always give it to the dental assistant, but sometimes your dental assistant is the best assistant in the world but she has 0 organization skills. Then you go up front and there's the treatment plan coordinator who's doing all the insurance, or your insurance coordinator, just complete attention to details but they never think of going and giving it to Shirley because she just totally demonstrates attention to organization and detail and they give it to their assistant who is just great with people, great with assistance, and has never reconciled her own check book, yet she's in charge of 6% of your cost in supplies.
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Kim Bleiweiss:
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Yeah, exactly. That then comes into the idea of management. How are you managing your office and things like that? Compliance is really important with this stuff. It's not that much extra work. It's certainly a whole lot less work to barcode label your product and scan it out of stock and scan it into stock than it is to, "Oh, we're out of stuff. Quick, call the supply house. See if Cindy, our dental supply rep, can drop one off if she's got one in her trunk or something like that," or whatever the case may be or, "I have to order it and have it overnighted to you." You tell people, "You've just gotta comply with this. This is part of your job now. You have to do it because we have to track this 6% of our overhead. We have a high volume office here. We're spending a lot."
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I've got an office here that's spending $9000 a month on dental supplies. Now, I don't know what their production is but I know it's high and they're happy with what they're doing, but how do you keep track of $9000 a month in dental supplies? They're able to do it with this system.
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Howard Farran:
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Okay, I'm on your website, which is GHMouse.com, so GHMouse.com for Grasshopper Mouse. My first question is what the hell is a Grasshopper Mouse? How did you come up with that name? Were you out there doing peyote in the desert when you came up with Grasshopper Mouse?
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Kim Bleiweiss:
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Oh, no. I'm a Mormon. I was watching the National Geographic Channel.
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Howard Farran:
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Is there actually a Grasshopper Mouse?
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Kim Bleiweiss:
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There's a grasshopper mouse and it's down in the American desert, southwest. You have them in Arizona. They're in Arizona, New Mexico, Texas.
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Howard Farran:
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Have you ever heard of that, Ryan? Wow.
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Kim Bleiweiss:
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Yeah, you're in Arizona. Anyway, it's a little mouse about this big and it is a very ferocious predator. It'll eat giant centipedes that big. It'll kill and eat scorpions, tarantulas, snakes, things like that. They did a study on it, believe it or not, the University of Texas, and found that a scorpion sting to it is the same thing as giving it a shot of lidocaine. It doesn't feel anything after that scorpion sting. It's a cute little thing but it's a very ferocious predator and that has absolutely nothing to do with this company but you'll never forget Grasshopper Mouse. It's a sticky name is what it is.
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Howard Farran:
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I almost lost Ryan to a scorpion.
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Kim Bleiweiss:
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Did you?
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Howard Farran:
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Did you know that, Ryan? Yeah and Ryan knows that. They only got enough for about 10 pounds of flesh, so in my life, one time I went out and I got the newspaper. I was driving around, I opened it up, a scorpion fell on my forearm and stung my forearm, and my arm is numb, it's about 10 pounds of flesh. Ryan was in his room. His mom went in his room in the crib and he was newborn baby, he was 10 pounds, and his eyes were pointing different ways and he's foaming out of the mouth. She didn't know what to do. I was out lecturing so she called Dr. Bob Savage, a dentist friend of mine, to say, "Can you come over?" He was there instantly. She ran to the hospital and they had the antidote deal but the doctor said, "You go back to that baby bed-" cause when they brought him in, they couldn't figure out what was going on and the doctor, luckily, said, "Yeah, this seems like a scorpion."
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They had the antidote and it worked and she went back home. She tore apart that newborn baby crib and sure enough, found a really little centimeter long scorpion, so Ryan almost got killed by a scorpion and every time I think about that story, I just think how much money that would've saved me, Ryan. I'm thinking what, a third of a million bucks, college, everything. God, so close!
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Kim Bleiweiss:
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If I could train it, I'd get a grasshopper mouse and keep it around as a pet.
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Howard Farran:
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That's why I don't care when my doors are open cause people always come over and they say, "You're gonna let a snake get in here," or whatever. It's like, "I got 2 cats."
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Kim Bleiweiss:
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Yeah, there you go. Yeah. I had a neighbor one time say, "Have you got rats over there?" I went, "No, we have dogs."
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Howard Farran:
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Cats, they just don't care about scorpions. They smack them to death with their paws like it's a game. They're just playing with them. They just beat them to death.
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Kim Bleiweiss:
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Oh, yeah.
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Howard Farran:
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How much does the Grasshopper Mouse cost?
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Kim Bleiweiss:
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The Grasshopper Mouse system, I discount it for people who are Dentaltown folk, it's $1500 one time fee and that's a discounted price and that get them the system, it gets them the upload of all of their data, any consulting that goes along with it, all that other kind of stuff. It also includes the equipment for it, which is a barcode printer, some labels, and 2 scanners, retails for about $600. I charge my cost, which is $295, but I've been giving that as part of the system. To get into the system, it's $1500 and then it's $1200 a year for support. I charge $900 on the initial promotion for Dentaltown people and what that support is for, it's all the updates and upgrades and we're web-based, we're on the cloud, so I don't have to send out new discs every few months to do the updates.
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Howard Farran:
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Is this on the AOL update disc?
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Kim Bleiweiss:
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(Laughs).
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Howard Farran:
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Do you remember that?
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Kim Bleiweiss:
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Yeah.
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Howard Farran:
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These young kids probably don't even know what we're talking about. When the internet came out in the early '90s, it was basically AOL and you got these discs, these CD-ROMs, and anytime you told anybody about the internet, they're looking at this AOL disc, this dial-up system where they'd give you like 6 numbers, and people would walk by like, "That internet thing, what a bad idea that is."
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Kim Bleiweiss:
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This is probably going to offend somebody and get me in trouble but if I ever get a prospect with an AOL email account, I kind of think well, that ain't going to be a sale for me.
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Howard Farran:
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They're usually 60 years old. I'm 53. I'm like the youngest one that had a AOL account.
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Kim Bleiweiss:
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Oh, yeah.
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Howard Farran:
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They're usually 60 year old people. Ryan's grandma has an AOL account.
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Kim Bleiweiss:
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I'm 64.
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Howard Farran:
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Are you really 64?
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Kim Bleiweiss:
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I'll be 64 next month.
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Howard Farran:
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Man, you're looking good, dude.
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Kim Bleiweiss:
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Thank you. It's clean living.
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Howard Farran:
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It's that good clean warming living. No smoking, drinking, drugging, just good clean living.
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Kim Bleiweiss:
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If I lost 50 pounds, I'd look like a prune. I wouldn't look good. That's an excuse but anyways, and the support, all the updates and upgrades and any major data ... So if they're buying form Patterson and Patterson comes out with a new price list, I tell him, "Just have your rep give me that and I'll update all the prices in your system, do those kinds of things." Any additional training they need if they get new staff or any of those sorts of things-
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Howard Farran:
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Now I'm going to get you in trouble.
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Kim Bleiweiss:
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Not at all.
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Howard Farran:
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There's 4 major players. There's Schein, there's Patterson, there's Burkhart, there's Benco. Any of them better than the others as far as being more likely to ... Cause it's not just the cost. It's the price, the terms, the least amount of errors, and I got to pay my labor to be getting on the phone with them. If I wanted to be lean, who's the best one if I just wanted to be lean and efficient, less headaches, best price, less chasing orders?
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Kim Bleiweiss:
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Whoever has the best rep.
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Howard Farran:
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Yeah. It really comes down to that, didn't it?
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Kim Bleiweiss:
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It does. It does come down to that.
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Howard Farran:
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I want to make an example also. I also want to make an example on the implant guys. All the implant guys buying on price online, they don't place any implants, but every dentist that's crushing it, doing a dozen implants a month, it's all because they got a buddy, a rep, that's just helping them get it done. It's all the soft stuff. It's all this, "You need to go talk to him. Let's go have lunch with this guy. Oh, you're doing that? Take the X-ray to here. I'll take the study." They just get her done. They get momentum and they get her done.
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Kim Bleiweiss:
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And they're accessible and if you've got a problem and you're in the mouth, you can get on the phone, on your cellphone, and call to say, "Hey, I've got this going on or that going on," or, "I've got Mrs. Jones. This is the anatomy. What do you suggest I do," etc, etc, or, "She's got osteoporosis. She's taking this drug and that drug and the other drug," all these kinds of questions. Buy something from somebody who can say ...
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When I was selling with Ultradent and somebody would say, "What do you do to control this or control that with this product?" I knew my product. Howard, I could say, "Okay, with this product, with the EndoREZ, these are the conditions that you have to have for this product to work for you and if you do these things, it'll be unsurpassed. You'll never find anything better," and if they come back and say, "Well, I had a failure," or, "It didn't set up," or this or that, then they had me or their Ultradent rep that could say, "Okay, did you do this? Did you do this, did you do this, did you do this?" These techniques are important.
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Good grief, you wouldn't go fix your car without looking at a manual and it's always better if you've got somebody who will service you, service. It's the same thing with a dentist. People are going to go to a dentist that gives them value added service. It may be nothing more than a hot towel, but it's something that makes them feel like they're valued as a customer and that you're just tickled to death to have them come in and you'd do anything for them. That's the kind of rep you want and that rep could work for any full service dental supplier.
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Howard Farran:
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Now I'm on your website LeanDentalSolutions.com.
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Kim Bleiweiss:
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Mm-hmm (affirmative).
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Howard Farran:
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Let's go there. What's the value added proposition to go to LeanDentalSolutions.com?
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Kim Bleiweiss:
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I've got blogs in there, and I also post those blogs on Dentaltown, on how to better manage your practice by better managing your people. If you wanted to pay me to come in and do [inaudible 00:41:59] for your practice, obviously I've got an MBA and all this other kind of stuff, but frankly, my thing would be to come in and say, "Listen, I will teach you how to communicate with your staff and how to make them more productive and do those sorts of things." That's not something I do but I do have the blogs on there and if people have questions for me, I'm happy to help them out.
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I've written about making changes in your office and then people make changes. How big are the changes? How do you decide if it's time for a change? We're talking about things like putting in a new inventory control system. How do you decide you need a new inventory control system? What makes you think you need one? What's driven you to it, all these kinds of things? Okay, you've decided you make the change. Here's how you make the change. Now the how you make the change with your people is the important thing cause you could spend a bazillion dollars.
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I used to work for a company that every few months they'd come in with some new program to teach us how to do something and we're all, "Yeah, that's really cool. That's great," and 3 weeks later we're back to doing things the old way. The next question then is how do you get your people to incorporate the change? How do you get them to invest in the change? Who are the stakeholders in the change? How are you going to motivate them, all these other kinds of things?
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Why would it be important to your dental assistant to scan product out and scan it into stock? Why would it be important for them to do that? Okay, it's not important. Okay, well you better figure out a way to get it important or else they're not going to do it. When you believe that this system's important for your office, then you got to work with your assistant to help them understand why you're doing this and why it's a benefit to them as an employee.
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Howard Farran:
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Kim, one of the advantages that you have is most dentists, they only see their dental office or if they live in a town where there classmate/drinking buddy is from, then they maybe see his/her office, too. They just see a very small sample. You've seen a gazillion for decades.
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Kim Bleiweiss:
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You see some of my posts on Facebook where there's an antique Weber unit and chair and I say, "I think I've called on that office." I probably have.
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Howard Farran:
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Do you think compared to 2016, compared to the '80s, is it harder to earn a living in dentistry today than it was 25, 30 years ago?
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Kim Bleiweiss:
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That's a really good question.
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Howard Farran:
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Is it more competitive, the same competitive, or less competitive?
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Kim Bleiweiss:
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What you've got is the cost to get setup and to get moving are big considerations. It's much greater than it used to be. When I started in the business, nobody had ever heard of an orthopantograph, a [inaudible 00:44:45], X-ray, doing those sorts of things, let alone doing implants and all sorts of stuff.
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Howard Farran:
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The student loan debts were a joke.
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Kim Bleiweiss:
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Oh, yeah. We used to tell people, and it may still be true, if you got the [inaudible 00:44:57] all by yourself to start in a practice and do it right, then you'll make more money than anybody else will. Yeah, but you've got to get the right people to help you and you've got to do this and this and this because what you're up against is you're up against the DSOs, Dental Service Organizations, like Pacific Dental and other ones where they've got all these dental offices that they're managing and they're taking over the things that dentists don't want to think about and paying the dentists and dentists are kind of thinking okay, the way to get business is I've got to offer a free bleach or I've got to offer this or I've got to offer that.
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I've got an account that does dental crowns in an hour, things like that. That's wonderful if that's what people are looking for. You've got to do anything you would when you're doing marketing or selling. You've got to find out what motivates the people that you want to have as patients. You've got to figure out how you want to position yourself. You've got to figure out how you're going to be segmented and you've seen all the different segments.
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We've got people that do anywhere from ... The dentist I'm going to this afternoon is in Newport Beach and boy, when I go in there, I know I'm in a Newport Beach dental office and all the way to the other end, which I'm not saying is down, but the other end of the spectrum, people who are just handling Medicaid, MediCAL, those kinds of things. There's nothing the matter anywhere on that spectrum but you've got to decide where you're going to be, what services you're going to offer, who your customers are going to be, and how you're going to motivate them to come to you, and that's more training than most of us get in life, to understand those things, so it takes a lot of thought before you ever go into practice.
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Maybe the thing to do is to start out with a DSO or something like that when you first come out of school and see how things are run and see what you like to do. I knew a dentist who went back to specialize in endo when he was 56 years old. He just decided at that point in his life that's what he wanted to do and that's great, happy as a clam till the day he retired.
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Howard Farran:
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I know a lot of dentists who say, "Okay, I'm 55 and I've already done 5x as many root canals as anyone who just graduated from endo school, so I'm not gonna go back to endo school and specialize. I'm just gonna say practice limited to endo," and I've seen so many people do that and what's really cool is a lot of them will find a small town that's got 4, 5, or 6 general dentists with no endodontists and they'll go around there and find that 4/5 hate doing molar endo and they'll just open up a shop and say, "Practice limited to endodontics. I only do endodontics," and they're doing their 8 molars a day for $1000 just loving it and that's thinking outside the box.
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There's a huge lawsuit in Texas about the ADA says this person can't say they're a specialist in implantology, that's not a specialist, and the courts are saying, "Who cares what the ADA says? That's a membership. That's not a licensing body. You can say whatever you want if it's true and it's not fraudulent," so now that case is going to turn upside down, so now people are going to start saying, "I'm an expert in TMJ. I'm a specialist in implantology," if they are, and that way someone can take you to court and say, "You have no training in this," and it's 10% of your practice. The norm in your area is that if you're a specialist in endo, that's all you do, but yeah, that's really been a game changer.
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Kim Bleiweiss:
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The thing is it is more complex and more expensive to get into dentistry than it's ever been before, even, like you said, just going to school and getting ready for it. You've got to decide what it is at the end of the day that's going to make you happy, let you sleep at night, and stuff like that. If you want to be a general practitioner and say, "Okay, these are my limitations. I'm gonna refer this, I'm gonna refer that, I'm gonna refer the other thing," ... My physician's a general practitioner and I'm happy to go see specialists when something's going on. Or it may be, like you said, a GP who says, "I just love endo. I'm just gonna start limiting my practice to that and I'm gonna learn all I can about doing endo and be the best darn person whose practice is limited to endodontics."
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I have an oral surgeon who is a DDS, specializes in oral surgery. He doesn't have a DDS MD or a DDS MS or any of that. He's a DDS and he has a very good practice. He's a very good oral surgeon.
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Howard Farran:
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He's a general dentist that just does oral surgery?
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Kim Bleiweiss:
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Exactly and all he does, and he does very complex oral surgery as well. He's learned, he's gone to courses, he's done the things he's needed to do, but he's never bothered or taken the time to go back and get an MS in oral surgery or to become what [inaudible 00:49:55] now, a DDS MD to do oral surgery.
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Howard Farran:
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What I like on these high overheads, since we're really having a discussion on our high overhead, is where are the margins? There's 9 specialists. The lowest overhead specialty is endodontics, so whenever I see high endo, the first thing I'll hear them say is, "Well, I don't like endo." Extractions, there's no lab bill, there's no CEREC block, there's nothing. It's an extraction. "Well, I don't like blood and guts." Orthodontics, it's the only big case where the customers are coming in asking for you for it. "Well do you do Invisalign short-term ortho?" "No, I don't do that," and the only margin thing they really have is crown and bridge and crown and bridge, it's an expensive procedure. It can be $800 on a PPO, $1000 to $1300 on a [inaudible 00:50:40] service, and that's the only thing I really see them doing that's margin dentistry and if you want a lower overhead, you've got to love endo or do Invisalign short-term ortho, you've got to pull teeth, you've got to place implants, and if you just say, "All I want to do is fillings and crowns," well there's no margin.
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When you're paying your hygienist $40 an hour, the hygiene departments, everyone that says to me their hygiene department is profitable, if you put a gun to their head, couldn't tell you their return on assets return, couldn't tell you one flipping number but they know they're making money in hygiene. It's like, "Okay, have another drink." Then fillings, they're placing a rubber dam, they're doing all this stuff. They're getting paid $225 for a filling and they're in there spending 45 minutes to an hour on it. They have no idea they're losing money on that and if it wasn't for their 2 or 3 or 4 crowns they do a day for $1000, if it wasn't for that margin to subsidize all the shit they're doing at a loss, they wouldn't even be making money.
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Then you go find the guys that can do the root canal build up and crown, boom, that's cash. You see the guy who can pull the teeth. Invisalign, how long does that take? An impression?
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Kim Bleiweiss:
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When I was at Ultradent and still, probably 75% of endo in the US is done by GPs and 84% of all GPs do endo, so there's 16% who aren't doing any endo. They're, like I said, doing crown and bridge and stuff like that and we used to talk to them and say, "Okay, doctor. You've gotta bicuspid." How much do you charge for a bicuspid, a full ceramic crown on a bicuspid? I don't know, what is it, $400, $500? I'm out of touch with things like that. Let's say you charge $500 for a bicuspid crown. Look at the time you take on it, look at all the materials that are involved in it. You've got to pay the lab, you've got to do all these other things, you've got all this time you've spent on it. Now, let's look at a $500 root canal. How much margin is in a $500 root canal? A whole lot more. You're probably at 30% margin on crown and bridge and you're probably a 75% margin on a root canal, if not more, because the materials are just not that expensive.
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Howard Farran:
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I also think it's interesting that not only endodontics have the lowest overhead at 40%, but you could break in oral surgeons and just basically pull wizzys all day or you got a big implant practice and the bigger the part of their implant practice, the higher their overhead. The people who basically just pull teeth and all that kind of stuff, they're down there at 38-40% and then by the time you get to an oral surgeon, he says, "You know, I really don't even pull teeth. I pretty much just do implants," their overhead is up to 60.
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Kim Bleiweiss:
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Yeah.
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Howard Farran:
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That means there's a lot of more nickels and dimes that go into implants than people are realizing.
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Kim Bleiweiss:
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I'll give you a good example. I've gone into endodontic offices and said, "Let's change you over to a new root canal file," and they'll literally pull out a box this big full of root canal files they're not using anymore, hundreds and hundreds and hundreds and hundreds of dollars worth of stuff, but if you go into somebody who's doing implants, somewhere they've got a box this big that costs as much as all this root canal stuff that doctor's not using anymore on old root canal files that he's just not using anymore, but you still got to sit on that thousands of dollars of implant material or CEREC blocks or whatever because you need a certain amount in order to do the procedures.
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There are dental labs, for crying out loud, who will stock all that stuff for you. Why would you want inventory when the dental labs will do that things for you? You want to be full service? Well there comes a point where you've got to say the value added service I give to my patients isn't balancing out the overhead when it comes to me doing everything in-house. Let me inconvenience my patient by having to seat them an extra time and I'll send the digital file off to my lab and they'll take care of everything. I don't have to worry about it til it comes back to the office and pop it in the mouth and there you go.
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Howard Farran:
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Final question, how's this Grasshopper Mouse doing?
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Kim Bleiweiss:
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We're doing pretty well. It doesn't sound like we're doing well but we have 50 offices that we're in. That doesn't sound like a lot considering there's 150000 some odd dentists in the United States, but I financed this thing myself and I put all the money into development and all my marketing's been word of my mouth and I have a really low attrition rate. Of all the people I've sold, I've had 2 that have just stopped using it. Once people get using this, they love it.
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Howard Farran:
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You've got a 96% success rate so far?
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Kim Bleiweiss:
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Yeah.
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Howard Farran:
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Are these mostly your homies and your Southern Cal that you can drive to or?
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Kim Bleiweiss:
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No, interestingly enough, most of mine are coming from the Northeast. I have 16 offices in the Boston area. I have some in New York, Minnesota, Illinois.
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Howard Farran:
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Why do you think that is? Do you think it's because it's more competitive there or do you think it's more higher costs, more overhead? Why do you think you're doing better in the Northeast?
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Kim Bleiweiss:
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I think that's a part of it. I think these guys have some of these larger offices. They're very inventory intense, they're more concerned with ... Oh, Howard, I don't know. I'm just BSing you. I ain't got a clue.
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Howard Farran:
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I do know. I do know the answer. Do you want me to tell you?
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Kim Bleiweiss:
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(Laughs). Yeah, I'd like to hear it. By the way, I'm getting a lot of these people say, "I found out about you on Dentaltown."
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Howard Farran:
|
Right on. It's because the bacteria landed on the cheese in Boston, in Plymouth Rock, and right now, to this day, 2 out of every 3 Americans live within 500 miles of Washington D.C. 3 out of 4 Americans live east of the Mississippi River. When I fly home from Boston or New York, especially New York, it's just suburb. You just see lights as far as the eye can see and then you cross the Mississippi River and there's just no lights. In fact, that last 2 hours home, when you're flying over Kansas, New Mexico, and Phoenix, there's just no lights. Every statistic, 3 out of 4 tax dollars are paid east of the Mississippi River, 2 out of 3 Americans are right up there in the Northeast. In fact, did you know that if all 7 billion earthlings lived at the density of Manhattan, we would all fit on New Zealand.
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Kim Bleiweiss:
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[crosstalk 00:57:49]. Yeah, okay.
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Howard Farran:
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We would all fit in the land of New Zealand.
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Kim Bleiweiss:
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I've heard Texas and I'd rather be in New Zealand than Texas. Sorry, folks.
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Howard Farran:
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All right. Hey, Kim, I'm a big fan of yours.
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Kim Bleiweiss:
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Thanks, Howard.
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Howard Farran:
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I just think you're a hell of a great guy. I've been a fan of your posts on Dentaltown since 2001. I wish you the best of luck.
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Kim Bleiweiss:
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Thank you.
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Howard Farran:
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Thanks for coming on my show and getting dentists to start focusing on lean practice management, inventory control. Even when you watch Shark Tank, people will come out there. The minute they start talking retail, all the sharks are out because they said, "Okay, you want to get this in retail, so now you have to have a gazillion amount of inventory. You gotta ship that to all the stores. Then once they sell out, they're not going to pay you for 30 days." Just those 3 variables alone, I am out. That's why they like make a product, sell it online, and you've got to have a 50% margin.
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Whenever I see a dentist that controls their inventory, controls their spending, and gets their overhead to 50% and starts driving a margin driven practice with root canals and implants and crowns and dentures and partials and Invisalign and short-term ortho, those are all procedures where the PPO is not setting the fee. They're setting the fee at basically your cost for cleanings, exams, X-rays, and fillings, so you're just volume driven for nothing and coming home stressed and you're just drop dead busy all day and didn't make a nickel.
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Then you switch these dentists to managing their inventory with guys like you, listening to their elders, like guys like you, on reading your blogs on Dentaltown and Lean Dental Solutions Inc. and then trying to drive a margin driven practice by saying, "Okay, if my practice is at 85% PPOs, what fees are these PPOs not setting?" They're not setting ortho, they're not setting Invisalign, they're not setting implants, they're not setting a bunch of procedures. I go to Praxis in Asia where they say everything I do is a break even or a loss but if I do one Invisalign case a week, that's how I feed my family and then you're sitting there thinking well, who the hell's got any money in Indonesia and Malaysia but God dang women do. I don't care where they are, if they want an iPhone, Invisalign, lipstick, and a high heel shoe.
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It's so funny. Wherever you go in the world, they've got high heels, lipstick, an iPhone, and Invisalign, and the thing I love about Invisalign is it's nothing but margin. Same thing with molar endo, so learn to love margin.
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Kim, seriously, thanks for all you've done for Dentaltown since 2001.
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Kim Bleiweiss:
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Thank you.
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Howard Farran:
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Thank you for all you've done to so many dentists. Does your wife ever make you want to move back to Utah? You ever thought of moving back and working with your buddy Dan Fischer again?
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Kim Bleiweiss:
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We've thought about going back there but it just passes and we feel much better about where we're at.
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Howard Farran:
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Is it cause of the winters?
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Kim Bleiweiss:
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That's part of it, yeah. We just really love it down here. It's really great.
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Howard Farran:
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Thanks, Kim!
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Kim Bleiweiss:
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Thank you, my friend.
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Howard Farran:
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I hope to, before I die, to find a grasshopper mouse and then I'm going to catch it live and come home and throw it to my 2 cats and see what happens. (Laughs).
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Kim Bleiweiss:
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Yeah, I'll put the money on the mouse.
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Howard Farran:
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Okay, buddy.
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Kim Bleiweiss:
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Okay.
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Howard Farran:
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Have a great day.
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Kim Bleiweiss:
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Take care. Same to you. Thanks, Howard.
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