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Wayne Oplinger - Transition Analyst at Benco Dental
Wayne Oplinger, started with Benco Dental as a local Territory Representative 6 years ago, in 2011, covering Westchester County NY, Southern CT and Northern NJ. After 3 years, he successfully built his territory sales in excess of $3 million dollars.
After 4 years, Benco Dental asked Wayne to take on a new position, Practice Transitions Analyst. In this capacity, Wayne would be the single point of contact for Benco customers, TRs and transition partners, by developing customized transition solutions for Benco Customers.
Prior to joining Benco Dental, Wayne was a small business owner
for over 15 years. Wayne can relate well to dentist owners because his small business, albeit not in dental, was very similar in production figures, overhead, and
profits. In addition to being a transitions resource for Dentists throughout the country, Wayne is well sought out speaker, speaking at major dental meetings, local study clubs, as well as dental schools.
Kay Huff RDA - Director of Dental Coaching at Benco Dental
Kay Huff RDA began her career in dentistry as an assistant to an assistant” in 1981. With great determination, Kay gained knowledge and experience as she worked her way to the front office team. Kay defined herself as being a “true team player” in positions of Treatment Coordinator and Office Manager, always doing whatever it took each and every day to make a difference in her practice.
It was over 30 years ago that Kay began helping teams as a Dental Practice Coach, and she proudly has been the driving force for hundreds of practices to reach and exceed their professional goals. Kay is passionate about her work and carries a strong background in dental business systems, team motivation, leadership, and practice profitability.
Kay is a dynamic dental speaker who fills her programs with plenty of laughs and tangible practice management tools they can take directly back to their practice and apply immediately. She is a Certified Consultant in Employment Law Compliance with Bent Ericksen & Associates, as well as a board member of the Academy of Dental Management Consultants (ADMC), the Speaking Consulting Network (SCN) and a member of the American Association of Dental Office Managers (AADOM). Additionally, Kay received first place in the Spotlight on Speaking Competition at the 2016 Speaking Consulting Network conference in Santa Fe, New Mexico.
Howard: It is just a huge honor for me today to be podcast interviewing, Kay Huff and Wayne Oplinger. Kay is passionate about coaching dental practices, and Wayne is passionate about helping older dentists transition their practice correctly, and helping younger dentists buy their first practice. Let me hear your bio.
I'll start with Kay, because ladies first. Kay Huff, RDA began her career in dentistry as an assistant, to an assistant in 1981. With great determination, Kay gained knowledge and experience as she worked her way to the front office team. Kay defined herself as being a true team player in positions of treatment coordinator and office manager, always doing whatever it took each and every day, to make a difference in her practice.
It was over 30 years ago that Kay began helping teams, as a dental practice coach, and she proudly has been the driving force for hundreds of practices to reach and exceed their professional goals. Kay is passionate about her work and carries a strong background in dental business systems, team motivation, leadership, and practice profitability. She is a dynamic dental speaker who fills her programs with plenty of laughs and tangible practice manager tools, that they can take directly back to their practice and apply, immediately. She's a certified consultant in employment law compliance with Ben Erikson Associates, as well as a board member with the Academy of Dental Management Consultants, The Speaking Consulting Network, and a member of the American Association of Dental Office Managers.
Additionally, Kay received first place in the spotlight on speaking competition, at the 2016 Speaking Consulting Network Conference in Santa Fe, New Mexico. Congratulations on that Kay.
Kay: Thank you. Thank you.
Howard: That is amazing.
And Wayne Oplinger is a transition analyst at Benco Dental. He started at Benco Dental as a local territory representative six years year, in 2011, covering Westchester County, New York, Southern CT and Northern NJ. After three years, he successfully built his territory sales in excess of three million dollars. After four years, Benco Dental asked Wayne to take on a new position, practice transitions analyst. In this capacity, Wayne would be the single point of contact for Benco customers and transition partners, by developing customized transition solutions, for Benco customers.
Prior to joining Benco Dental, Wayne was a small business owner for over 15 years. Wayne can relate well to dentist owners because his small business, although not in dental, was very similar in production figures, overhead and profits. In addition to becoming a transitions' resource for dentist throughout the country, Wayne is a well sought out speaker at major dental meetings, local study clubs, as well as dental schools.
Thank you so much for getting up on a Saturday morning, and coming on the show today. I can't wait to talk to you guys. How are you guys doing?
Kay: Fantastic. We're excited.
Wayne: Glad to be here.
Howard: Where are you guys at right now? Texas and Pennsylvania.
Kay: That's correct.
Howard: So where you at in Texas, Kay?
Kay: I'm in Houston.
Howard: Houston, Texas.
Kay: Houston, Texas.
Howard: And where are you in Pennsylvania?
Wayne: Wilkes Barre. Wilkes Barre, Pennsylvania, home of Benco.
Howard: Wilkes Barre, okay. Very good. I love that place. I forgot when Chuck had me ... I was speaking somewhere in Pennsylvania. What's that really famous resort that everybody goes to, where there's deer, everywhere?
Wayne: Is it Mount Airy Casino or is it Mohegan? No.
Howard: Some place crazy, but I have the most insane story about that place. It's a really common dental meeting place. It's way out in the woods. It's out in the middle of nowhere. Anyway, true story. You just can't make this stuff up, just unbelievable.
So, I wake up in the morning and I open up the sliding glass doors, and there's snow. I just wanted to walk out there and check it out. I didn't see the big huge, red sticker on the window that says door locks from behind. [crosstalk 00:03:55] I walk out. I guess it's a security thing, cause it's around a lake. The door closes and I'm standing out there in my underwear for a couple of seconds, taking a deep breath, looking at it all. Then I go back, and I can't get in. It's like 05:15 in the morning, and I'm clear in the back of the resort, by some lake. I swear to God, it was a mile to the front door. When I came through, everybody instantly knew what had happened, cause the lady says it happens all the time. I said, if it happens all the time, don't have the damn door lock from behind you. It was just ... good God. Coming from Phoenix, where it's 118 degrees there, I just don't do good standing there in my underwear, in the snow.
Other than that, so what do you guys want to talk about first? You want to talk about ... Who wants to go first and what do you want to talk about? You want to talk-
Wayne: Ladies first. Ladies first.
Kay: Absolutely. My role at Transitions, is I'm the Director of Coaching, for Transitions. We have 12 coaches that work underneath me. We have 6 business and 6 clinical. Part of my role that I do with Benco, is that Chuck is really passionate about, is not just selling some equipment and supplies, but really helping a doctor's office succeed, all the way around.
He's always been, and I mean ... Practice development has always been a part of Benco. Fifteen years ago, we used to be called the Insight Division. Then we've merged. Now, we've actually, because we've grown so much, we have coaches all over the U.S.. My role is that I actually go in, and I do a process assessment. If you've ever had an assessment on your practice ... What I do is I get the doctors to fill out a bunch of information and then I start reviewing it. It immediately starts telling me the story of really and truly where's the doctor standing, right now and what he wants to accomplish.
A lot of the things I look at, are like their vision. Do they have a vision? If I go in, and start pulling out data, I really want to know, where do you want to go, this year and where are you headed? Also, looking at their overhead numbers. It seems like lately, I've had a couple of practices that don't even know what a profit loss statement looks like. It kind of surprises me.
What I do is I actually pull numbers. Set up some guidelines for them. Then, we actually review. There's 44 systems that kind of manage a dental practice. So what I do, is when I'm in the practice, is I review those 44 systems. It doesn't really matter what software they're on. I pretty much know all the softwares. Then I do interviews with team members. It's funny, you can ask a doctor a question like, does your team know your vision? You ask a team member a question and they don't know their vision. It's really kind of starts telling me a lot about the practice.
Based on that, once I gather all the historical data, I sit down the next day and I have a, usually it's four but, it's been four to six hours, just review, with the doctor, and where they are and what they can do to get to where they want to go. Just break it down for them. They decide to go on the coaching program. Then we sign it off to the coaches.
It's very exciting.
Howard: Where can my homies get a list of these 44 systems?
Kay: I'll be happy to give you a list of the 44 systems. When we go over the systems, I actually review all the systems in the practice. We look at the KPIs. I know that there are several KPIs. I can list 12 that I think are important. The one thing that I see about a practice, that when we go into a practice, having the team really understand what's going on with the practice, is really important. When I do the interviews, it kind of tells me, where's your practice headed. Normally, a doctor ... An example would be, if I go into a practice and a doctor writes in his information, that he's spending $60,000 on marketing. When you go into the practice, when you're interviewing the team members, one of the questions I would ask is, so tell me about the marketing? Do you know what percent really even know what their doing?
Howard: Would that be none?
Kay: It's probably more like 5%. There are a few that do know. Some team members may know. Maybe they'll tell one or two. What happens when I go in and start pulling the data, it doesn't really matter. They could be actually gaining 30 to 60 new patients, in the front door. What they're not watching is, they're not watching their attrition.
Before they go into marketing, we believe there are six steps that they should follow. Number one is they should set up their vision, for themselves. Maybe, have a vision of their team. They need to have their mission. They need to put their goals in place. They strategize on how their going to do it. Then they implement their systems. Then they should do their marketing. Then they can be excited about their growth and do their celebrating. What I find, is a lot of people will do their marketing, before all their other systems are in place. What happens is that, you are gaining but because your systems aren't in place, to keep your patients in your practice, you're also losing them, out your backdoor.
It's not unusual to go in and ask a doctor, so say, I'm gaining 60 new patients a month. Next question will be, how many hygiene hours are you adding on? He'll tell me none. Is he really gaining 60 new patients?
Howard: Yeah. It's just an hourglass. This whole dental consulting industry ... The only parallel I can find in it, was Microsoft and Apple. Microsoft, Bill Gates, made such horrible software, riddled with bugs. All he wanted was money, money, money, money, money. An entire industry popped up of people trying to teach you how to use this shitty software, PowerPoint, Word, Excel. There were DVDs. There were all these classes. Then over here, was Steve Jobs with Apple. Says, we're going to make this so intuitive that when we come out with a product, a 60 year old grandmother with her six year old granddaughter, can figure it out, without anyone helping them.
That's what dentistry is. The practice management software ... In a nutshell, they're just blind. So, if I make this bottled water for 80 cents and I sell it to Kroger for a buck, I know I make 20 cents on each bottle of water. There's not one dentist in America, who knows the cost of doing two fillings, in operatory four, for an hour. Then he's signed up for 12 different insurance plans. He's getting anywhere from $100 to $190 for the filling. It's just all voodoo because there's no practice management software, hooked up to an accounting package.
When it comes to marketing, it's even crazier. You do $60.000 of marketing and we know that 10 people have to land on their website before one coverts to a call. We know that three people have to call before one converts to coming in. We know three people have to come in with a cavity, before the treatment plan coordinator can convert one to getting it done. If you want one filling, you need three patients to present that treatment to. To get that, you need nine people to call. To get that, you need 90 people to land on your website. Then on a hygiene, you'll have eight people scheduled, on an eight hour day, for a recall. The hygienist will maybe, reappoint six. So, you just lost 25% attrition, on that one day. Then when the six getting around to coming in, one might call and say, I can't come in today. Let me call tomorrow. No one will ever call again.
The funnel to get in and the funnel blowing out all the attrition, means that by the time the average dentist has 5,000 charts, 4,000 of them haven't been in one time, in 24 months. Then the dentist says, what are you going to do? He says, I'm going to go to a bonding course. I want to check out the eighth generation bonding agent because I think if I could just get a little better glue. Even that's insane.
The composites all shrink and fail in six and a half years, on the back teeth. The amalgams all corrode and seal and last 38 years. If you look that doc in the eye and say, Doc, what lasts longer? Does metal silver filling or that plastic thing you put in the tooth? They'll say, well actually, the plastic one because it takes eight years of dental school to be this insane. It's just crazy.
So what practice management software is, of all the horrible software out there, which one do you think is the least horrible? If you had a 25 year old kid, is working at Aspen and she's thinking, I'm going to break out and do a don ovo and start up my own. What software would you tell her to go with.
Kay: I like PracticeWorks and I like SoftDent. I like PracticeWorks because it's easy to work on and it's easy to pull reports in. SoftDent, better for a larger practice. This is it. All the software is capable. It's a matter of training the team to be able to use it. When you talk about all those things you're talking about, that's 100% true. When I go in to look at an office, I'll find out ... I'll started pulling off their software and their data, normally their active patient count ... I've seen and active patient count for one dentist, be in the 6,000s, which we know isn't possible. They really don't track it accurately.
I think that, as a coach, the one thing I have to tell dentists, is that they really just need to back up and start training they're team members. They hire team members. They put them in a place. I'm a big Linda Miles fan. I've done a lot of her courses and she's like my mentor. Even when I ask her a question, she says, You know Kay ... We ask her, what's the value of a team member? Depending on how well that team member is trained, you could get a lot more value out of her. It's what you hire. If you hire two mediocre people, you're going to get a mediocre job.
I'm a big believer in training the team to use the software. When I go in and start pulling the reports, they have no idea. I will pull reports just based on their recall. What seems to happen is, they seem to work their recall. All of sudden, they don't review it, in their team meetings. What I try to teach them is that, every single team meeting, once a month, you should actually go on there and say, Okay. We have 25 openings in hygiene department this month. According to the reports, we have 100 people that are due this month, without appointments. As a doctor, what would that tell you?
Howard: What it would tell me is, that the hygienist wants $40 an hour and she wants a dollar raise, every time the earth goes around the sun because raises are based on astrology, not profit and loss. She wants $40 an hour, and this doc is signed up for this PPO, that's paying him $45 for a cleaning. If you looked at it analytically, you'd probably want to burn the hygiene department down. Again, the hygienist will come to you and say, I want raise. I'll say, why? She'll goes, because the earth went around the sun, you idiot. I'll say, you know, when I got out of school 30 years ago, Delta gave me $1,000 for a crown and $1000 for a root canal. Now 30 years later, they give me $600 for a crown, $600 for a root canal, and you still think you're a legacy. Registered nurse, getting a raise every year.
When dentists tell me ... You want a raise. You just did a cleaning, an exam and bitewings. Did I make a dollar or lose ten? She has no idea. [crosstalk 00:15:40] She can be using PracticWorks and SoftDent for a thousand years and still not know the answer.
Kay: I definitely think that if you take the time to train your team, and this it ... When they're a high performing team and they come to a team meeting, usually as a doctor, you should just be sitting there. We should be presenting our findings. If I'm accountable for your hygiene department, I should be presenting to you. What's the perio utilization, right now? The downtime, like you know ... The downtime, if it's any more than 8%, we should be worried. Anymore than 8%, you're definitely losing money. We're going to have fallout, but 8%-
Howard: You said if it's 8%, they're losing money. I can go into any dental office and within four hours, if they have one hygienist, how many hygienists they'd have to declare bankruptcy.
Kay: Yeah. Yeah.
Howard: It's kind of like you're going down with the Titanic. It's like, well, do you want to put some boots on? How about a helmet? How about -
Kay: The thing is that you have to at least know ... If you train the team members. So we have to look in the mirror and go, how well are we training our team members? Now, we have software that will hook up and pull numbers for us. If we don't really train the team members, where do those numbers come from? They have no idea really how to fix it. I think we have to step back and listen and train. We have to say, if I'm a hygienist, there should be three types of dental appointments in my schedule, every day. If there's not, there's an issue there.
If my downtime is more than 8%, I definitely need to figure out what am I doing. I really think that when you do your team meetings in a practice, you should have them actually ... They're the voice of their department. They need to speak about it. They need to say, this is where I'm at. The next words out of the doctor's mouth should be, tell me what the solution is. They need to be a part of the solution. When you make the team members a part of the solution, and I call it empower. When you empower them to help you grow, you'll do phenomenal.
Sometimes what happens is, they really just stay with the doctor. They're not really happy. They've been there for 20 years. They collect a paycheck. We forget about the excitement and about really and truly being clear about what we expect from them. I expect any of my team members to bring me the stats that I need. Also, when I'm not hitting those marks, give me solutions. We do it together. It can be as simple as looking at which insurance companies we're on. Figuring out, can we get off of them? If you're patient count is over 3,000 and you're on all these insurance plans, absolutely, it's time to start looking at that. Figuring out where can we start changing these ways, and getting off.
I'll also say this, I love the computer systems but sometimes when I'm in there pulling reports, what happens nowadays is, they will allow team members to enter in these schedules. Then they'll allow them to bill out their full fee. Then when we look at the adjustments, we really don't see what's going on.
One of the things that I really think is important for team members to do is, when they utilize their software, is to understand insurance utilization report. What that's going to do ... Just recently, I've been in an office and they literally are writing off a million dollars. A million dollars of production was totally just being written off. It's kind of buried now in our computer systems. We'll see the adjustments but because we bill out the full fee and we use the fee schedule attached to the insurance, the adjustments don't seem that high. Unless they literally go in and pull those certain reports, they don't really see what they're fully doing. Sometimes, they're really working hard. They're just not getting paid for it.
Howard: So you said there should be three types of cleanings in the hygiene department. What are your three types?
Kay: It's going to be continuing care, which is the normal continuing care appointment. We call it PM, periodontal maintenance, which is when someone has had-
Howard: PM is number two? Is the second one?
Kay: PM, and that's periodontal maintenance. The third one, we call it AT, which is active therapy, which is root plane and scaling. A hygienist needs to have all three of those. This is it. When you talk about block scheduling, in order to properly block the schedule, so that the doctor has downtime too, and able to see his primary appointments. You really want to make sure you put next to the doctor's primary, I call it the hygienist primary. When you put those blocks together, it allows both the doctor and the hygienist to have a smooth day. The whole point of this, is that, you can't hit the numbers that you need to hit, to cover you're overhead, and allow your hygiene department to get three times what they need to make, for their salaries, if all you're doing is continuing cares in your appointment, all day. It's just not gonna work. There has to be a mixture of both.
I would say this, part of what I do, is when we teach a team members, we teach them to put those blocks in place. We teach them those blocks based on historical data. What have they done in the past? Then, measure those blocks in. Sometimes when they put the blocks in place, they really don't do the homework. They end up with too many blocks. Then, when they end up with too many blocks, they don't honor the blocks. Then they start getting moved around. Everything is placed there for a reason. Every team meeting, the hygiene team needs to actually come on and do a review of where their blocks are and how their filling them. What's open. Again, going back and pulling their historical numbers and seeing when they should add on more blocks, to make the block scheduling run smoothly.
Howard: This is dentistry uncensored. I didn't start this show to make friends. I'm not the fluffy guy. I'm just brutally honest. There seems to be only two industries in America that are completely insane. That's healthcare and government. You go into food, beverage, hotels, making cars, trucks, they know all their numbers. The S&P 500 averages a 5% profit margin. When you go into healthcare, and when you go into ... You walk into any hospital in America, they don't know their costs. It's insane.
Look at the entitlement mentality. Dentists are usually conservative Republicans and they always make fun of government. Let's look at them. I'll sit there and say, well are you patient focused? Or, is it all about you? Entitled. Oh, no. I'm totally focused on the patient. Okay. What are your hours? Monday through Thursday, 08:00 to 05:00. When do you take a lunch? 12:00 to 01:00.
The federal reserve says a 112 million people can't go during those hours. You ask the hygienist or the doctor, can you start at seven, two days a week and stay until seven two days a week? Maybe work a half day, Saturday, once a month? They laugh.
Look at the hygienist. You talk about 8% cancellation. She'll have an 11:00 to 12:00 cancellation and she'll sit back there, on Facebook. At 11:10, someone will call for a cleaning. You say, oh, I'll put it in over lunch. She goes, no. That's my lunch. I go, you're sitting, you're eating in the break room from 11:00 to 12:00. It's so entitled that you're going to go to lunch from 12:00 to 01:00. You always see that behavior at the Department of Motor Vehicles. It's insane. If they don't have a break-even point number for the day, if they don't have their bam number, their bare ass minimum ... It's totally crazy how many dental offices do nothing an hour before lunch and then still take a lunch, and didn't make their breakeven point. But, by God, they're all leaving at 05:00.
Wayne: I just want to interject, Howard. On that point, the most requested appointment times is after 05:00 on a Friday and Saturdays. When I share that with a dentist, they go, most of them say, I'm not going to work on a Friday. You know, late. The other ones say, Wayne, you know that Saturday's are the most canceled times, so I'm wasting staff dollars and overhead. I agree 100%. Saturdays, until we leave this earth, are going to be the most canceled.
You have to have systems in place. When someone cancels, you have to have somebody that canceled a week or two ago, where you said, I'm sorry. I can't get you in for eight weeks, but because you canceled, Dr. Smith said, I don't have to charge you the $75 fee because you have to do me a favor. I'm going to get a cancellation, in the next few weeks, on a Saturday. Things come up. You know what? You have to come through for me, Mr. Patient or Mrs. Patient. When I call you on a Friday at 05:00, and say, I need you to come in on Saturday. You're going to come in. The places that have a system in place, where they say, they have whitening for life. When they have whitening for life, if you break any appointments, you don't get your whitening for life. So when they can say to the patient, you know, if you break this appointment on Saturday, you're not eligible for the free tooth whitening gels and the work we're going to guarantee. It kind of voids that.
If you properly have systems in place for Saturday appointments, you will not have the cancellations. I just hate when I hear that. They don't want to work Saturdays.
Howard: Humans always start with what they want to believe and then they fill in the blanks. They do it in politics, religion, child rearing. They always start first with what they want to believe and then they start looking for things to justify what they want. They hate ... What subject do they hate most? Math. Two plus two equals four. Even though you might feel that it should be five. You might wish it would be three. You might think in a fair world, it'd be nine. It's just-
Wayne: In my position, I get to see a lot of financial reporting from the doctors. The ones that are open Fridays or at least open two extended days, during the week, and open Saturdays. Those are the ones that are the most profitable. Those are the ones that they're growing. Those are the most healthy. Somehow you have to figure out a way to have like [crosstalk 00:25:54]
Howard: All my friends, in Phoenix, open Saturday. 110% of them, Saturday is the biggest day of the week. That's the only day that they can always count on 10 grand. It's Saturday. And why? People will say, well you know, this city has too many dentists. It's over populated. I shouldn't go here. Well, that depends on what hour the 168 hours in a week you are. There is no dentists in this entire city, on Sunday. Like Phoenix, Arizona. There's like not a dentist on Sunday. If you literally, had a toothache on Sunday, you'd have to go to the emergency room. Eight percent of the emergency room visits, in the United States of America, are ontogenic in origin.
I want to go back to they're entitled. They take a lunch even though they had a cancellation at 11:00. They go home at five, even though they didn't break even. Two things Kay. When you go into the softwares, do you run a report that shows you, which reports have never been run and, which reports are ran?
Kay: I can tell by the last time that they were ran. When I go in, I can see a lot.
Howard: Let's start with Dentrix and Egalesoft. How many reports does Dentrix and Egalesoft have, would you guess?
Kay: They all have the same.
Howard: But how many?
Kay: When I go in, I probably pull about, I would say anywhere from 12 to 15 reports will tell the story I need.
Howard: That's 12-15 reports out of how many possible reports, could you pull out a day?
Kay: Oh my gosh. You can pull any. They can actually customize whatever you want. Any of the softwares can do that. Whatever report ... I really wanted a customized report and really wanted to break it down, even more. All the softwares ... You may have to pay special to do that. When I go in, just looking at the active patient count is usually ... The one thing that I look at is, anyone that is considered active, that hasn't been in, in the last two years. I will find that count will be maybe 5,000. Then I'll run a report, I think it's in Eaglesoft, that says, active patients that've never been seen. That report can come up to 200.
It tells me that ... I want to say this. I really like dentists but I know that the biggest problem is that they're just kindhearted. I really feel that when they graduate dental school ... My nephew just graduated. He wants to be the best boss ever. I know that. When I go in and see all this, it's because the doctor really wants to be a good doctor. He doesn't really know what to get the teams to do. Then, nothing ever gets done. I think sometimes the team members really just don't know, what they don't know. They want to work and when I show them all these reports, they're like, oh my gosh. How did you get that? Where did that come from?
When you start coaching people on really and truly, how to put in really good systems, just like cancellations and no shows. We have a system that says, after you've missed three appointments, we don't dismiss you as a patient. Yet, you just don't get another appointment. At that point, if you've missed three appointments in the last 18 months, we put you on what we call, our same day call list. Guess what? We'll call you and ask you. We'll say, please let me know what time would work for you? Do you prefer Mondays or Tuesdays? If we have something available during that time, we'll call you. At the same time, if we call you, and we put you on that appointment and then you no show.
I look at doctor and I say to the doctor, at some point you have to decide, when do you want to release this liability? It is a liability, because as soon as that patient comes in, and you touch a burr to that tooth, you are liable. Whether they come in now and you've done a crown prep and they've missed four appointments. Do you really think at the end, that you've made any money on that appointment? No. I had one doctor tell me, Kay, by the time seated that crown, he had missed so many appointments, I was in the negative.
I do think that we have to put systems in place that control these things. We have to teach doctors how to look at reports. There's new codes out now where you can track these, no shows and cancellations. I just think that we need to put in really good policies. We need to teach the team how to communicate it. The front desk person could answer the phone and say, we can't schedule you another appointment. It seems like we've missed several, in the past. Then, that patient comes in. Sits in the hygiene chair. She looks at the hygienist and the patient says, you know that girl in the front. She's really mean. She wouldn't give me another appointment. There's a lack of communication there, in the team. The hygienist will say, yeah, I know. I can't believe she wouldn't give you another one. They need to know the policy that this patient has missed two appointments.
I go back to, you have educate your team. You have to have a great vision. You have to have, what I call, the target patient. You have to be a good leader. When I look at dentists today, and I go in and sit with them. When I sit those six hours with them, they really pour their heart out. It's their livelihood. They just don't know, what they don't know. All the tell me, at the end, is, well, how do I do it? It's really what I want. I've just never known. It makes you feel good.
Howard: That's so awesome that the number one complaint of our homies, is that they're so kind and they want to be ... I mean, I love dentists. I do.
Kay: They are. They really are.
Howard: Look at you. I can tell you guys are in dentistry ... You spend the night in anybody's house, if they're not a dentist, a physician or a lawyer. They just got a couple fiction books, a people magazine, 50 Shades of Gray. You go over to any dentist's house, and spend the night. They got a 100 if not 1,000, nonfiction books. They're smart as hell.
Kay: They are.
Howard: They just don't have any systems. They don't know, what they don't know. Every time they have an ounce of excitement, they go try and make a better filling, a better root canal, a better crown, while their business is not poised for growth. They don't how [inaudible 00:31:50].
What are your four key performance indicators, that you want them to focus on?
Kay: Number one, they have to know their overhead. Just recently, I've gone into a couple of practices and I've asked the doctor for their profit and loss. They've never seen one. Can you believe that?
Howard: I know. Every teenage kid in my chair, that graduates from the high school up the street, Desert Vista in Mountain Point, I say, Do you know how to balance your check register from Chase, or Bank of America? They're teaching them algebra. They're teaching them algebra and they can't even do their online banking, on their Chase app.
Kay: Yeah. I even ask them, well, call your accountant. I've had two of them recently, tell me, my accountant says he doesn't keep anything like that. Where do I go from there? As a coach, I have to go, okay. Can I talk to your accountant? One of the main things that I want to look at, when I go into a practice is, what are their overheads? I usually will find, that usually team compensation is way out of line. It's crazy. I'll be sitting there interviewing the team members and they're complaining they need a raise, when the doctors' not even bringing home any money. Somebody's not talking.
Howard: We need to stop the earth from rotating around the sun. That's the problem. Every time it goes around the sun, they all get another dollar. We've got to get-
Kay: You're right.
Howard: ... to stop the earth's movement. [crosstalk 00:33:28] What do you think labor should be and what are you seeing it at? What do you think labor should be?
Kay: When we look at team compensation, I would say, it should be anywhere from 25 and 28 percent. That includes everything. I'll say this. I know Wayne feels the same way. What happens is that, and Wayne, you can speak on this. When a doctor goes to sell his practice, I've seen the team compensation up to 35 to 40 percent. I'm not joking. If you were a young doctor and you were coming in to buy that practice and you looked at that overhead. What would happen?
Howard: You'd buy it.
Kay: No. You wouldn't buy it. I tell all these young doctors and we start immediately, you have to keep your overhead under control. Because, even doctors in their fifties, who are thinking about retiring, if they ... You're right. Team members think they need to have a raise, every single year. I don't believe that. I think you should base ... Everyone should get paid really well, based on what you make. Then you should put an incentive program that incentivizes the whole team, once all the bills are paid. Once the doctor has funded their 401K. Once the doctor has put away money for solvency. All of that stuff. It's just the basics. They don't have to share the numbers. Just share the percentages. When I go to a team to do a presentation, and I look and you're at 35%. Our goal is not to come in here and lay anyone off. Our goal is to get you at a healthy number. So that if something does happen, you will be able to keep your jobs.
When Wayne comes on. When Wayne sees these numbers ... You want to hop on that, Wayne?
Howard: I want to interject one thing.
Wayne: OK. Go ahead.
Howard: That's what my corporate dentistry CEO guys are getting out of the buying dental offices and moving towards de novo. It's so brutal to go into and office with 35% overhead and the only way you can solve it, is you gotta fire a bunch of people that've been there 10, 20, 30 years. I can't go up to you and say, well, Sally, you make $27 dollars an hour and starting on Monday, you're going to make $17 dollars an hour. That's going to go over like a lead ballon.
Howard: So, they buy and office and then they have to fire all these legacy people. Replace them with people with market wages. Then the patients are upset. They bought all this blue sky. They all fired. It's crazy. They'd just rather start from scratch.
Wayne: Right. The personal example ... you're absolutely right, Howard. You don't want to have to fire anyone during any type of transition. It's not good for patient retention. I tell the doctors, my personal in 15 years in business, I give them my personal story where ... The reason your overhead is so high is one of two reasons. You psychologically thought, as your debt decreases, that you should reward the long term employees with more money. That shouldn't be the thinking. You should know what the market rates are. You should know what performance they should be paid for. It shouldn't be, like you joke about all the time, the sun rotates around the earth. The earth stops spinning.
My personal example that I give them Howard, is simple. If you were at a high percentage ... In my personal business, I laid off three people and we did just as much business. What I did was, I didn't know that I had bad apples, that were bringing down the rest of the staff. If you have a productive staff, that likes what they're doing, you can have a 25 to 28 percent overhead. You have to have great, passionate people. When you lay someone off, you have to share that with the rest of team. Say, hey. We're reorganizing.
One day when you look at that percentage ... When Kay ever tells me, hey Wayne, this gentleman is thinking about selling his practice, but his overhead is this high. What are we going to coach him on? He has to do reorganization. Thirty five percent is not healthy. I want to tell dentists. They say, Wayne, 25% is unrealistic. I'm never going to do that. That's what I hear. I say, you could absolutely do that, if you have great staff, that are productive, that want to work together and want to be there. You could absolutely have 25% overhead.
Howard: When I was with Wayne in St. Louis, when I first met him, he said his name was Wayne Oplinger. After two beers, he told be his name was Bruce Wayne. Which one is it?
Kay: That's hilarious.
Howard: So Kay, back to your numbers. The four performance indicators.
Kay: The number one would be your overhead. You have to make sure you keep that. Definitely-
Howard: What's total overhead, you think it should be?
Kay: I personally say anywhere between 58 and 65. I like the lower number. We can see that. I've actually seen that. It's just a matter of managing your practice. I'll say this, too. One thing I'll tell you, that when we go in and coach teams and we talk about this. We tell the doctor, we don't share the number, we share the percentage. We lay it on the line. Sometimes team members will bury their feet in the sand. They're not really wanting to change. But, when you put it out there and show them the opportunity and what can happen. Team members do want to be empowered. There are a few that couldn't stay and will eventually ... You'll be able to pick those out. You'll be able to see who's actually on board and who-
Howard: ... You say labor should be 28 and total overhead 58 to 65. When you are in the real field and you walk in office initially, what do you initially finding and how [crosstalk 00:38:58] What's the initial that you see?
Kay: I've seen a lot more than that. I'm barely ever seeing 65. I'm usually seeing 70% to 85% overhead. They're numbers are just not healthy. It's all areas. It's all areas of the practice. Really, when they are in their 50s and late 50s and they're really wanting to start selling their practice, we have to get those numbers good so that it looks good to a buyer. We have to make sure that active patient count is correct. I've seen offices where the go in and purchase a practice. They think they have this many active patients, but they really don't. They may have been in, but they're really not a true patient.
The number one thing is the overhead. That's number one. Number two is definitely setting goals for your production and collection, based on your overhead. Then, making sure that you monitor that. There's a different between gross and net. Making sure that you keep up with what your net is. You're net is what you're going to pay your bills with.
I definitely think you should always look at your adjustments. I think adjustments are something that we need to monitor. Again, if you are on a computer system where you are ... You could put your fee schedules in and then you can ... There's a button you can push to bill out your full fees, which you want to. You want your full fees to go out, but it's set up, you also have to make sure that you're looking at your full adjustments. Making sure you're looking at that report, also.
I would also say, capacity. Making sure that you keep your capacity numbers really healthy. If you're running anywhere ... If a doctor makes $450 an hour and he has a 5% overhead, you're looking at $68,000 in lost production, due to lost time. Nobody is in your chair. You definitely want to make sure that you monitor your lost downtime. Have systems in place, when someone cancels their appointment or the last one has an opening, that you have ways to fill it. You have backup or you have a purging system or a re-care system, or a last minute call system or and asap list. Whatever you have in place, make sure that you control your downtime. That will probably be my four.
Howard: I just want to make a few comments on everything you've said, so far. I noticed that when you hire a receptionist and you think she's all great because she's got 10 years experience, at the dentist across the street. The reason she left that office, cause he went bankrupt and killed himself. You say, my gosh, she's got ten years experience. I want some more of that.
In my experience, when you hire bookkeepers ... The people coming from dental offices want 25% more money. If they come from government or healthcare, they want 25% higher wages because those are entitled industries. If they come in and they're a bookkeeper, a person who's interested in bookkeeping ... She gets on Dentrix, Eaglesoft, SoftDent, Open Dental, and she intuitively, just figures it out, all by herself. But, if you hire her from dentistry, you gotta have training. You gotta spoonfeed her. You gotta keep having all these meetings. The bookkeeper mentality ... The first millionaires I ever met, like Dan Carney, the founder of Pizza Hut. He went to my church. I went to his church, I should say. The people that started Sonic and all these great companies. They all told me the same thing, when I was getting out of school. They said, by the time I had my first five employees, two of them were bookkeepers. I always knew my numbers. It's the most important thing. When you have and opening ... Same thing with an assistant. I can train a bookkeeper how to make a temporary. I can not a dental assistant to have management skills on supplies, and lab costs and all the accounting. I can't train her on that. I'd rather just start with a bookkeeper then teach her how to make temporaries or use OpenDental, or whatever.
Then, number two. What I've also noticed is that some people, like myself ... I got a whole bunch of people on my team that are just workaholics. Everybody in our circle, calls us all workaholics. We just love our work. We just love it. Other people are trading time for money. They're staring at the clock. They're just only doing it cause they need to make money to go do what they really want to do. I think, if you can just keep a dental office, just 2 out of five, if 40% of your staff is workaholics, they'll carry the whole team. Do you just love to work for the sake of working. Like my Jan's been with me 30 years. That woman shows up an hour before work every day.
Howard: Why aren't you in bed, sleeping. She's just ready to go. She's ready to go an hour before. She was just born to work. Yeah, so.
Kay: I will tell you, I am so blessed to love my job. Even though I go in ... If these things, these problems didn't exist, I wouldn't have a job. I am blessed. I love to go in and look at a doctor. Sometimes they're so passionate. I really ... When I sit down with them and I go over all these findings, it's hope. They always tell me, I knew it was there. I just didn't know how to find it or I didn't know what to put in place. Sitting there, going over all that with them just ... Key indicators, that are so important, that they don't talk about. Also, really empowering their team to manage their practice. You can't do it all alone. You have your son. You could never be this successful on your own.
Howard: Did my son tell you he's helping me?
Kay: Your son is amazing.
Howard: Did he really say he's helping me? My God.
Kay: Those people that you have surrounded yourself with have helped you get to where you are today.
Howard: Oh, yeah. Every person on earth knows it. When it's applied to a soccer team, or a basketball team, or a football team, that you just want Tom Brady to be your quarterback. Then they go into dentistry and they don't take HR seriously. The assistant will quit and they'll put an ad on Craig's List. Two people will show up and they'll hire one of the two.
Kay: You got it.
Howard: Imagine if they did that at the Patriots. We need a quarterback. Three drunk guys show up from University of Pittsburgh, and they hire one.
Kay: That's a great example.
Howard: When you go into the NFL ... I've got a lot of friends that ... When the Cardinals moved here from St. Louis, to Arizona, their headquarters are like literally, one mile from my office.
Howard: I got a bunch of those patients. They tell me when it comes to HR, they'll have a quarterback scout. He knows the total number of all people that have ever played quarterback, in college, that could even possibly be in the NFL. That's how serious as a heart attack, these people are, in HR.
Then you go into dentistry and they just don't take it serious. HR is every ... I could never have done what I did, without my Jan for 30 years, my Lori for 19, my Stacey. I said that to the first editor of Dental Time magazine, Tom Jacoby, from the year 2000. Now it's 2017. I don't manage those people, at all.
I disagree. I think when people talk about training staff, I think the most important thing in training staff, is getting rid of staff turnover. If you can keep someone 5, 10 20 years, they're eventually going to be Beethoven in their position. But, if you have a bunch just training, and your employees quit every two years, and it's a revolving door. Which I see in corporate dentistry. [crosstalk 00:46:31] Everybody tells me that corporate dentistry is going to take over half of the industry. I just beg for them to show me any evidence of this, at all. Some of the biggest chains out there, can't keep their dentists for a year. The best ones, keep their average dentist for two years. Hell, if you can't keep your dentist for two years, how are you going to build a brand, when you can't even keep the damn dentist?
East West Bank, up there, they quit funding ... Did you know they pulled out of funding?
Wayne: Yes. Yes.
Howard: That should have been a front page story on the Wall Street Journal. They said this is a disaster. Well, of course it's a disaster. They can't keep their dentists. Nobody would take them public. Name me one corporate dental chain that could go down to Wall Street. SnapChat went public for 27 billion. Name me one dental chain that could go to NASDAQ, and go public.
Howard: Look at the debt sheet. They're growing their business with debt. They get a million dollars of debt, they go buy and office. They say, look, our sales went up a million. Yeah, so did your debt. Then they get more money and they go buy another office for a million. They're like, look, now we're at two million. Yeah. Your debts at two million.
Howard: It's this huge debt machine.
Kay: It is.
Howard: If in fact you're listening this and you're sick of drilling and filling and billing. You know what the hottest, hottest, fastest growing business is? It's all over LinkedIn, is these corporates are paying bank. If you can find them a dentist to go into some office for some dentist that gave two weeks notice and is gone. Most of these big corporate chains could hire 35 or 50 dentists, today. If you can deliver them one, they'll probably give you five grand.
By the way, if you list that, the classifies on Dental Time are free. There's usually about 6,000 ads. The hottest sections are selling a practice, or I want to buy a practice, or I'm looking for a job, or I need to hire someone. The classifies is coming out on the next version of the app.
Kay: Fantastic. That's where[crosstalk 00:48:32]
Howard: I hope you use that.
Wayne: While where on that, Howard, I help find associates. My list of 14 things to do, you're number three on there. The Dental Town classifieds. They should have an ad on there, absolutely immediately, when they're looking for a dentist. Its great feedback, I'm getting from it. So, thank you very much, for having that on there.
Howard: I want to talk with you a little bit. We've been talking about dental office practices. You keep saying these older people. I'm going to turn 55, next month. I want you to know older-
Wayne: I'm 50.
Howard: ... is 60 and over.
Kay: I agree
Howard: You said, these older 50 year olds ... You meant to say older 60 year olds. Right?
Kay: That's exactly it.[crosstalk 00:49:16] I'm older than you, so, yeah.
Howard: You're older than me?
Kay: I'm older than you.
Howard: My God. You look like my baby sister.
Kay: We must be kin. I'm sure we are.
Howard: Practice transitions. If you look at the macro, all the old guys, 60 and over, when they got out of school, they were pumping out about 4,000 dentists, a year. Now, they're pumping out 6,000, a year. Supply and demand would tell you that for every four offices, that go up for sale, there are six buyers. It's got to be a seller's market. What do you seeing out there?
Wayne: It's absolutely a seller's market, Howard. The biggest thing that I wanted to get through on this podcast, to let people know, two things. That 2008, that financial collapse, that crisis, what that caused as far as transitions are concerned, is in about five to seven years, two classes, two age groups are going to meet. The baby boomers that were hit financially very hard in 2008, they have to continue working beyond 65, the majority of them. The dentists that were early on in their career, in their young 40s, they didn't have any money invested in 2008. Now, I'm talking to those dentists. When they started investing, they got to realize the appreciation. They got to realize the comeback. There are dentists that I'm talking to, that did a great job. They're ready to retire at 55, 57. They're going to be selling their practice, so are the baby boomers.
These two groups are going to collide. There is going to be, I don't want to say and exact year. I will say, in the next five to nine years, it's not going to be a seller's market because of those two factors. I'm not sure if you're hearing much of that, but that's being in this now for three years. That's what I'm seeing, based on the numbers and the dentists I'm talking to. When they're going to sell, when they're thinking about selling. If anyone is currently thinking about selling ... I feel bad for the dentist that when he tells me, during the first call. Wayne, I think I'm going to sell my practice or I think I want to retire in five to seven years. To me, I go, I'm sorry to hear that. He'll say why. I have to explain because of the whole 2008 thing, I don't feel, the seller's market is not going to be a seller's market in five to seven years.
What do you feel about that, Howard?
Howard: What do you think was the bigger impact on the dentist's financials? The 2008 meltdown or their last divorce?
Wayne: I think they got divorced after the 2008 meltdown. They got twice as hard.
Howard: Yeah. Yeah. That would've been it. Crazy. The thing that's tough to talk about, what we're talking about, is the ridiculous use of the term, United States of America. No one uses the EU, because no one would compare Germany to Greece, or Italy to Sweden. The United States is really a dozen countries flying under the same flag. Like right now, Houston ... Texas is the number one booming state in America. You can't compare Texas. What's the price of oil at? That effects Louisiana and Texas. There's all these regional economies. When people say America has 2% growth, there's no place with 2% growth. There are places growing at 4% and places at zero. It's just an average.
If some kid came out of school and said, I'm single. I've got $350,000 student loans. I want to go where the jobs are. I want to go where the best condition is. You guys have macro economic numbers. Where would you tell him to go and where would you tell him to stay away from?
Wayne: I'm going to give you a shirt, Howard. I'm going to make up a shirt with, Give Rural a Chance. I'm on a nationwide mission, every dental class I speak to. I first heard you say this probably, two years ago, when I wanted to ask you a question at the New York Dental Meeting. A young dentist came up to you. She said to you, I want to go to Atlanta. I'm going to open. You're like, no. Don't go to Atlanta. Go two hours outside.
I was only about a year into this position. I thought, okay. Let me study this a little. I will tell you now, the practices that I get to see the financials on, the practices that I get to see that are the most profitable, the doctors who are just having an easier time with overhead and debt, are all two to three hours. I am preaching to the dental students. Anytime I get to speak to dental student class, I am telling them, please give rural a chance. That was all because of you. I want to thank you for that. It's the right thing to do. They're needed. There's a dentist I heard about just last month, up in Maine. Opened a practice. He's getting over 100 new patients, a month. He was working in Boston. Somebody said, go up to Maine. He said, I'll give it a chance. Brand new, brand new practice. Opened from scratch and he's seeing over 100 new patients, a month.
Howard: And his kids can go out on the back porch, and shoot a 22 rifle, at Coke cans. I'd like to see you do that in downtown, Boston.
Wayne: Like you said, he can fly into Boston in his private helicopter, if he wants, or take a private jet. He'll be able to drive his new Porsche down in downtown Boston, if he wants.
Howard: It is a Porsche. I got a friend, I'll just call him out here. Classmate of mine. Jim Casdine did that. In Bakersfield, Stephanie Vandine, did that. They went to small rural. Did four great 10 hour days, and the literally, got in their black Porsche. These are two classmates, UMKC, class of '87 and then get in their black Porsche. Drive into Kansas City and have your condo. Party on the plaza, Friday, Saturday and Sunday. Then, Monday morning, drive back out there, two hours away from town, and crush it. I mean they just crush it. What's even crazier, they won't do that, but then they'll join the Army, Navy, Air Force, Marines, and go to Afghanistan or North Korea or Iraq. It's like, really? Parsons, Kansas was worse than Iraq? Really?
Wayne: I love that analogy. I love it. Or they'll do ... They like to say they'll do an underserved area or they'll go work on a reservation. I say, that is great, but consider your first three years, working in a rural area. That's where you're needed.
Kay: I'll say this. My nephew just graduated from dental school at Houston. Him and his wife both just graduated. The debt that they owe to the school ... Just to pay that back, they need to be productive.
Howard: How much debt, total, do those two have?
Kay: They almost have a million.
Howard: A million. But you know, the good news on that. The good news on that is, 20 countries do the love, marriage thing, where young kids in heat go find their mate. They have a 50% failure rate. The arranged marriage thing, like in India, has a 9% failure rate. Your parents can pick your mate better than you can.
Kay: I'll tell him that.
Howard: In America, the only place you see a 9% divorce rate, is when both the man and the wife have a master's degree or greater, in the same profession. Those two dentists that got married, they have a 91% chance. So that million dollars, if they got divorced in 10 years, the divorce would be a million dollars. They really didn't have any student loans. They just waxed out that they're not going to have a divorce.
Kay: That's right. I'll tell him that.
Howard: Here's the other problem about the student loan debt. You borrowed other people's money, OPM because you knew working at McDonald's for 20 years, to save up to go to Houston Dental school with cash, is a dumb idea, if you can borrow other people's money. Then get a doctorate degree and then start making $50 to $100, $150 bucks an hour. That was smart. If you go down the road of other people's money, you have to go all the way to then end of the road. You can't go $500,000 of debt and then go get a job at corporate dentistry. You have to go out and buy a dental office big enough to pay that back. That's going to be at least a $750,000 investment. If you borrowed a quarter of a million dollars of other people's money, dude, you're going all the way to a million.
Some of these LDS Mormon guys come out, with a stay at home wife. They've already got two kids, walking them to school. They're going to have to buy a one million dollar, dental office or a 1.2, 1.3. They've got to start making bank, right out of the gate. These guys are $500,000 in debt. Then if they went on to ortho school ... I mean, hell. They may have three kids by the time they get out. You can't use other people's money half the way. You gotta go all the way. I say to these kids, if you're that much in debt, that's just no big deal. If-
Kay: I'm excited. He's in a great rural office and definitely going to look into purchasing that. Wayne is actually working with him. Again, I think they'll be very successful, working together and paying that back. It's when you purchase a practice, purchase the right practice. Don't you agree?
Wayne: Absolutely, absolutely.
Howard: Wayne, what's the right practice? What should these kids be looking at?
Wayne: Here's what I wanted to talk to you about, today. The right practice is one that I tell them, I say listen. It doesn't matter if it's $600,000, for the price of the practice, $700,000, a million. The debt doesn't matter. What matters is, what you're going to cash flow. They go, what? Cash flow? What's cash flow? I said, listen. You have to after you pay the loan, make what money you want to make and after you pay for the car you have or the house you already built. You have to pay the bills. I want you to be able to sleep easy at night. Don't think buying ... You may not sleep easier at night if you buy a $200,000 practice, because of all the debt you have. If you can buy a 600, 700, 800 thousand dollar practice, and you're going to be able to pay that loan off. Pay yourself, pay your bills and you still have thousands of dollars left, as a cushion, that's okay. I try to tell them, don't worry about the debt, what the number is. Worry abut what the payments are, what payments you have. Focus on that. They kind of understand that a little better.
I also tell them, just because the bank will loan you the money, you're a statistic. You're a number. Like you said, it doesn't mean it's a good deal. When I first went into business and the bank was going to lend me money, you know what I said to myself? I said, oh, the bank wouldn't loan me money if it wasn't a good deal. I tell them, the bank does not care about your deal. You have to care about your deal. You have to do your due diligence. You have to do everything right.
That's where I get Kay involved. If the young dentist says, I'm not sure about this practice. Then you have to bring in someone like Kay, and do an assessment on the practice. She will do a deeper dive than you could ever imagine or deeper dive than that dentist owned it has ever done. She will tell you where there is growth. Where there's opportunities for growth.
Does that make sense, what I'm saying? I hope so.
Howard: Yeah. It makes total sense.
Back to cash flow. One of the earliest guys who taught me that, I kid you not, was actually our current President, Donald Trump. I remember reading, The Art of the Deal. He taught me that. He said, price doesn't matter. I'll buy your house for a billion dollars if the term is a dollar a month, for a billion months. I can rent your house out for a thousand and make $999 cash flow. I don't give a shit if there's a billion dollars of debt on the sheet. I'm cash flow of $999 a month.
These dentists that have way too much overhead, way too much student loans, married to someone not working, with family, and I get all that. Gosh, darn. If you've got, not. You gotta buy a cash flow that can pay for all that. There's plenty of cash flows. In real estate, we call it liquidity. In Phoenix, Arizona, you got a three bedroom, two bedroom house, it's liquid. You could sell it today, a week. It won't sit there for a month. If you've got a 15,000 square foot mansion, it's no liquid asset. There's houses up the street from me that have been vacant, literally for 10 years. They're just too, too big.
What is the liquidity, sweet spot in a dental office? What's moving? Is it a $750,000 practice? What's ill-liquid? Is it over 1.5 million? Is it rural? Talk about liquidity.
Wayne: The practices between $600,000 and $850,000 are selling, absolutely the quickest. There are many dentists that want to buy a million. They say to me, Wayne, if you could find me an office for $950,000 to 1.4 million, I'll buy that in a heartbeat. Every bank out there is giving approval letters up to a million to a million-five, for any dentist that has good credit. The problem is there are not a lot of good offices to buy at $900,000 to 1.4 million. It just seems that nowhere in the country, there are.
Then the ones that get above that 1.5 to 2 million, I don't get a lot of requests for those because that's usually a multi-doctor practice. So, a sole practitioner that's looking to buy his first practice, can't buy a practice like that. He has to have a partner. You're right. Once it gets above 2 million, it's a little rough to purchase.
Howard: The biggest disasters I see in these kids buying these practices to the dream ... What's the difference between the dreamboat and the shipwreck? The shipwreck is with this 25 year old kid, walks into this office and this guy is selling major, full mouth reconstructions. Presenting these $25,000 cases. This guy can't sell a crown. So they buy these big offices and the production drops 40%, 50% because they don't have the chairside manner. They can't sell. They know algebra, geometry, and trig, and they can't sell.
Wayne: I'm glad you said that, Howard. You will love to hear this story. You just triggered something I want to share.
A dentist who I started calling on my first year at Benco. He was working out of three operatories with one hygienist and all he did was family bread and butter dentistry. No major construction, no major implants. He took his practice up to $900,000. Then he built a brand new facility with eight chairs. He took the big jump. He took the big leap. Brand new office. He added another hygienist. He started with six chairs. He jumped from $900,000 in a year and a half, doing bread and butter dentistry. He jumped up to 1.5 million, within a year and a half. His staff has been with him since he started. He's only had one staff turnover. I'm sorry, two, but they left because of personal ... He didn't have to fire them. He pays his staff well. He does his team meetings. Again, it's possible to due bread and butter, restorative dentistry, a few crowns here and there, good hygiene. It's a great success story.
Howard: I just want to say one thing. A shout out to Benco. Jan was on my case for a lot of years. She said, Howard, we've been here 30 years. A lot of this stuff was put in, in '94. We just really need to redo everything. She wanted to redo the whole damn clinic. All the chairs. She wanted to gut all eight operatories. Just gut it and start new. I just couldn't make that decision. Jan finally talked me into flying to San Diego, to that Benco Center out in San Diego.
Wayne: Yes. Costa Masa.
Howard: Costa Masa. That's a suburb of San Diego? Right?
Howard: We went in there. It was like an arena of every single thing. It made it so easy to visualize, see, point, click. She was running around like a kid in a candy store. Come see this. Just being able to see everything laid out, we made, we did it. We bought all eight chairs, all everything. It was like treatment plan presentation. It's hard to do that in a catalog.
Wayne: I call them the dental Disneyland [crosstalk 01:06:13]
Howard: That was a great move. McDonald's, on their costs, they plan on redoing the guts every seven years, every 84 months they gut it. They plan on that. They know in their overhead, that this is going to have to be gutted. That's why, when you walk into any McDonald's, you walk into any 40,000 locations, they're all between brand new and 7 years old. You walk into some of these dental offices and you think you went back in a time machine. Some guy in a Lamborghini is going to show up.
Wayne: I'll touch on that, too. They'll always ask me, Wayne, I don't need an appraisal. I know what my ... It's collection. It's based on my last average three year collections. I'll say, yeah, but what if I told you the ratios from 40% to 80%. What if I told you that a practice that was doing $750,000 in collections, sold for more than a practice that was collecting a million. How could you use that ration then? So, the practice that was collecting a million, his payroll was out of line. He had old technology. He was collecting Medicaid. The million dollar practice sold for $450,000. The $750,000 practice that had great employees, no staff turnovers, had a great hygiene program and on and on and on. That practice, Howard, sold for $675,000. So-
Howard: Which also explains the dental entrepreneurial curve. The reason the banks are writing all these loans, up to 1.5 million, is because ... They've come on my podcast and told me. They don't even run a 0.4% failure rate. Dentistry is so noncompetitive that 99.6% of the people will pay their bill off. The ones that go bankrupt, almost always have the same thing in common. They have license taken away. That's usually for booze, Vicodin-
Howard: What'd you say?
Howard: I like that. I said Vicodin and you said-
Wayne: Howard. There was just a dentist was forging a care ... up in New York State, a dentist, I couldn't believe it, that was forging a care credit applications. For like, $110,000. He did it on like 40 to 50 patients. They're still uncovering. I was like, come on.
Howard: Dentist get mad at me. I get a bunch of mad emails when I post a case about some dentist doing something crazy, from shooting Cecile the lion, to putting cameras in the staff changing room or bathroom. I always say, dude, you have to put that out there. There's 2 million dentists on earth. If one guys doing it, there's probably ten other guys doing it. They need to know-
Wayne: ... you're getting caught.
Howard: When these kids are working at corporate and they're afraid to buy a practice because it's overwhelming and all that stuff. I mean, come on. You got a 0.4% change of failure. If you don't have a substance abuse problem and you're not a criminal, you shouldn't have an issue.
Number two, what you just said about the office doing 750, has his overhead in line and sold for more than the office doing a million. What I think is most interesting is ... You know what the sweet spot is, to go bankrupt? Between 1.5 and 2 million. So that office doing 750 and their labor's out of line and they start taking Medicare and Medicaid. Labor's too high, and all that stuff. Those are just a doberman pincher. By the time you get to 1.5 million to 2 million, that's when the wheels come off. You do a BK. You do a bankruptcy. I think that is so ... because they're not aware of their problems at a million.
Wayne: They think they'll sell themselves to profitability. They think the more dentistry they sell, the more profitable and the more money they're going to make. As you just said, that's not the case.
Howard: What are other things?
Wayne: I want to talk about the associates.
Kay: And one more thing, Wayne. The only thing we see the most of, right now, is that dentist that don't move forward. They plant their feet and they go, oh, I don't want technology. I don't want that. Wayne and I have come across this, a lot too. We end up having to sell their charts because they didn't keep up with their technology. They fell behind. They didn't want to get rid of their charts. When it comes time to sell their practice ... A lot of them plan on that as their retirement. Right, Wayne? They just basically just have to sell their charts. That's really sad.
Wayne: They slow down for four days a week to three days a week. The patients don't mass exodus, all at once. It's slowly. Before you know it, three years later, they've lost 500 to 700 patients. They go, oh my God. So many dentists, Howard, call me and say, Wayne. I'll say what's your last three years' production? Well, I was doing $700,000, but then I slowed down to three days a week, I guess lost some patients. Now I'm around 375. I just go, ugh. They say, what's the problem? I go, it's going to be very, under $500,000, say under $450,000, it's very hard to sell your practice. It's hard. I feel bad, but somebody should have advised them. Get an associate. Get help. Don't slow down to three days a week, unless you're missed 2008 and somehow you had everything in CDs, in 2008. You know?
Howard: We were talking about shipwrecked to bankrupt. I see dentists buying too big of offices that are doing big treatment plans that they don't know how to sell it. A lot of times they can't even clinically do it. They buy and office that's placed an All-on-4 and they've placed four implants, in their life.
The really sweet spot is when you find some old geezer, referred out all his endo and you need the number of how many root canals did he send out. If he's sending out a molar a week, that's $50,000 a year. What is he not doing? If he's not doing any of his pedo and you love pulpotomies. Is he referring out all his endo and you love doing root canals. Is he referring out all his wisdom teeth. You need to be able to go in there and do everything that doc is doing. But, the real sweet spot is you can get a free practice on the side, if he referred out all his kids, his pulpotomies, all of his endos and all of his wisdom teeth. You can do all that.
That seems to be a problem where half the graduating class ... I call them pulp lovers. They just want to do pretty stuff, bonding, bleaching, veneers, sleep apnea, and Invisalign. The other half are bloody barbarians. They love pulling teeth, root canals. They love scalpels. They love all that stuff. If you send in a pulp lover to some practice that was an apical barbarian, it's going to be problems. They'll buy some $800,000 office and then shed that down to $500,000 cause they're sending out all the endo, the oral surgery, everything bloody. You gotta match up. My first question to an associate is, do you love blood and guts? Do you just like the soft, fluffy, white stuff or do you like blood?
By the way, if you're listening to this, the bloody ones make the most money.
Kay: Another thing, too[crosstalk 01:13:44]
Howard: ... dentist is about what? $145 and the average oral surgeon is about $350. The average endodontist is about $350. The average endodontist and oral surgeon are making twice what the average general dentist does. I have to sell you on veneers. I don't have to sell you on, you have a toothache and you need a root canal, and your wisdom teeth are impacted and you're swollen up. You don't have to sell that stuff. You're firemen, putting out fires. They just show up on your door. You put them out and you feel better and you make a lot of money.
I do want to share about the associate, before we get off the call, Howard.
This is the one thing dentists will tell me, Wayne, thank you for sharing that with me. When you're thinking about hiring an associate or you're transitioning your practice, you have to make that person equal to you. For instance, if they're coming to be an associate, so many associates will tell me, cause I'll ask them. Why did it not work out there? Associateship fail 90% of the time. I'm going to try and do my best, I tell everyone, to 40%, or 50%. You are doing an awesome job at sending the message on how to make associateships work. You talk about old man, McGreggor, all the time. When old man McGreggor hires his first associate, he has to tell the staff, hey, I hired this person because they are better than me. I believe in them. They have to make them their equal. On the website, they should put him above his picture. Move his picture down.
I just talked to an association yesterday, that in California is buying a practice. Everything sounds great. She's been there four years. I said, where's your picture on the website. Oh, he's first. I'm below him. God, after one year, after two years, three years, she should have moved up there because his goal was to sell her the practice. You have to make them your equal. You have to give them equal amount of work. You have to tell the patients.
The most successful associateships are when the associate isn't just hired to do all the crap work and you're going to look at it as the big boss. When you transition your practice to a new person, you have to say to the whole staff, at that initial meeting, the first opening meeting, I'm selling this practice to this person because they are better than me. When you have a problem, you go to them. Never, never in front of the staff, ever denounce anything they say. Never contradict. If you have a problem, do it behind closed doors. The whole thing has to do with personalities and all that.
I hope that makes sense. That's what I'm hearing works best. When we talk like that.
Howard: Yeah. I just want to say one thing. Back to the picture on the website. Dude, you can't have a picture on the website. I'm telling you, ten people go to your website before one will call. When you have a picture ... like when I'm talking to you guys. I can see your smiles. I can feel your karma. I like you guys and this is on a computer. This is video.
The dental offices with the highest conversion rate have a YouTube video. You see that picture of that older guy and the younger female associate. That's ten to one conversion. Where had that been a YouTube video, and he's sitting there spilling out karma. You want your best. You want your friends with you. You know how when you try and make a baby look at the camera, for the picture. You need the people who make you come alive, standing behind that video camera. You need to be standing on your feet, so you have more energy. You need to have more ... whatever just makes you likable.
When you walk into that operatory, you walk into that hygiene check, you walk on that video, you've only got 10 or 15 seconds before they decide if they like you or not. Likeability is everything. I tell the kids that at school. I say the first thing you should learn is a chairside manner and be likable. I tell them to go to the comedy school. Houston has comedy schools. They're two nights a week, for a couple of months. There's improv classes. I tell most dentists, they could double their money, that if on Friday and Saturday nights, they got a job as a bartender. Just learn to talk to drunk people, at a bar. If you can be likable and communicate and talk, then you can start converting, you have a cavity in your mouth to lets getting it numbed up, drilled, filled and billed. That's how you attract and retain staff. That's how you attract and retain your patients. It's all the chairside manner.
I also want to say to the associates when you're out there looking for a job. It is my experience that for the last 30 years, when a dentist says he's going to retire in two to three years, it never works out. You just always never wake up one day and say, you know what? I never need a pay check ever again. Just when he starts thinking he doesn't need a paycheck, then he decides well, my car has 150,000 miles. I need a new car. Then the wife says, can we get new furniture? It's always, always something. Or it's a family emergency. Or you gotta pay for grandma's funeral. When you're walking in there and your goal is you're going to work for this guy for two years and buy it.
If it's not in writing for Judge Wapner, it doesn't exist. It's a fantasy in your head. No different that the tooth fairy and the Easter bunny. I'll say to these people, well, he was going to sell it to me in two years. It's four years and we haven't even arrived at a price. Haven't arrived at a price? You don't have anything in writing?
Wayne: You gotta have it in writing. I'm looked at with blank stares or there's silence on the phone when I tell either the associate or the selling dentist, cause they'll say to me, Wayne, how can I put something in writing? I don't know if this person's going to work out. I say, easy. You make a 90 day or 100 day trial period. You put parameters in there, what you expect, what they expect. There's all sort of ways that you could put it in writing and have it be a legal document. That way, everyone's on the same page. You're right.
Howard: Here's the other mistake they make. They've been going to this church, this Baptist church in Texas, for 30 years. They go ask their minister, who's the best lawyer. They go give them Gerry. And now, you're Gerry's first dental client. When it comes to a CPA, when it comes to a lawyer, you need ... I wouldn't go to ear, nose, and throat if I had a broken foot.
The law is more specialized than medicine. There are people that only do dentistry, and they've done it for 10, 20, 30 years. I don't care that your cousin, Eddie is going to give you a deal on your legal contract. Your cousin Eddie is an idiot. He doesn't understand dentistry. It takes a long time to learn all the nuances of an industry. What's that book, Outliers? That Outlier book shows that most people, it takes 10,000 hours, which is 10 years to really master anything, in this sophisticated and competitive economy. You don't want to be your CPA's only dental client. You don't want the guy representing you because you sit by him in church. You need to find dental specialists. I think it's really cool that Benco is putting this as its own department.
You say you got six business consultants and six clinical consultants. Any of those guys want to come on the show and talk, love to have them.
Kay: I absolutely will but I will tell you, you really need to get Chuck and Rick and Larry on next. If you really wanted to figure out ... I don't know what it is but they just have this secret potion to make things work. People love working with them. I would love to see you talk with them. Larry is such a hoot. Like I said, this last week, alone, he walked into the room where we were all working. Pulled up a chair and just sat there for one hour. Talking to our coaches about Benco. You don't find that too often. Wayne and I are really blessed to be with such a great company.
I definitely will let the coaches know, but I really hope that you tie those loose ends and get in touch with Larry and get Larry on the show.
Wayne: I love my position, Howard. Benco let me invest their dollars and their time in me asking all your peers, what they wanted in a transition person. What would they need. Benco said, Wayne, we want a transition position. We don't know what we want to offer. Go out there. Ask the doctors. See what they want. Benco likes doing first of its kind, in industry.
My position, the way I explain it, Howard, is, there's no fees. There's no ... You don't have to pay me anything. There's no percentages. Doctors will go, why would Benco invest in your position, Wayne? Because, we are trying to earn respect in the business. We are trying to build goodwill. We're hoping me helping a doctor sell a practice, or a young doctor buy a practice, we're hoping you're going to think of Benco Dental. They go, okay. That makes sense. I love that there's no fees. I'm giving unbiased opinions and help. Like you said, I'm referring them to accountants that are specialized in dental. I'm referring them to attorneys. This is what I'm doing every day. Learning on which places they should go to and, which resources they should use.
Howard: So the founder, it's third generation. Is Benco from Benjamin Cohen or Benjamin's company? Does the Co stand for Cohen or company?
Wayne: They took it from Benjamin's name. Benjamin and his last name Cohen. That's how they came up with Benco.
Howard: Okay. So it's from Cohen, not company.
Howard: That guy was amazing. His son, second generation, Larry. How old is Larry, now?
Wayne: I don't think he'd like us saying but-
Howard: He would. He's like that.
Wayne: I think he's 82. I think.
Howard: That guy is the most amazing man. He's so good. Larry, and now third generation, Chuck and Rick. Not only do they make a religion out to availability. Not only will they give their shirt off their back. They're just good, good people. I just love those guys. You can trust them.
Wayne: Right. Larry, for his age. I got, I don't want to say from who, but I got a new customer for Benco, in my third year in. A very large customer, in the city, in Brooklyn. The customer had a problem with a sterilizer, that I sold him. Larry took care of it. Two and a half years later, I get a call from Larry, yesterday. He said, Wayne, how about that customer in Brooklyn, that you got. How's he doing? I'm going give him a call. I says, Larry, you are still on top of your game, at your age. That's how much he cares. He reached out to that dentist and that dentist called me immediately. He said, guess who called me today? Larry did. Asking me if things are still going.
Howard: I got a call from him, too. When I completed my first Ironman. I did Ironman three years in a row. When I completed Ironman, he called me up and said, if he could have picked one person, on the entire planet, that could have never done and Ironman, it would have been his fat, lazy buddy, Howie. He was so happy for me but he was so unbelievably shocked. He said, what's next? Shamo's going to win a dancing contest? I love that guy.
He's also a genius. He didn't buy any of those proactive management softwares. How telling is that? Shine went out and bought Dentrix. Patterson went out and bought Eaglesoft. That's why we have this entire consulting industry, because the dentist has no data. He has no steering wheel. He doesn't even know if he's on the Titanic. He doesn't even know if there's an iceberg. He's blindfolded. He's Stevie Wonder, standing on the bridge of a ship, with no steering wheel and can see out.
Kay: When you look at three out of five dentists get embezzled on, the software is such an important issue. Knowing where your number are. There's a lot to say on that.
Howard: Yeah. With the embezzlement, the thing with going all digital, now there's a hundred new ways to embezzle from your employer. You go back when I started, it was a pegboard system. You had physical checks. Everything was physical. There wasn't that many ways to steal. Now, there's literally, a hundred ... Hell, I could embezzle from you ten different ways, just on your credit card machine, when you take the credit card.
I think you guys are incredible that on your day off, it's Saturday and you decide to come on the show and talk to my homies. They learned so much. I think the world of you guys.
Let's do the Hollywood Squares thing. Let's get Larry, Chuck, Rick and me. I want to start with ... I would love if he would just go back in time and start at day one and walk us over the decades of dentistry. That would be so damn fun.
Kay: I will send him a text. I'll send him a text today and tell him to call you.
Howard: Have him call Ryan because-
Kay: I'll do that.
Wayne: Will do.[crosstalk 01:27:12]
Howard: I'll wake up in the middle of the night. Yeah. What an amazing-
Kay: You really should come up to the new home office. They're actually updating it. They do it every year. I was just there last week. I don't know when the renovations are going to be over. They're doing a major renovation just to keep everything up to date, with the new technology.
Howard: In Wilkes Barre?
Wayne: Yep. It's called Pittston, Pennsylvania. It's about five minutes from Wilkes Barre.
Howard: So it's Pittston, Pennsylvania?
Howard: What town do you fly in, for that? Philadelphia?
Wayne: [crosstalk 01:27:42] AVP, Avoca.
Howard: AVP airport?
Wayne: Yep. AVP. It's Wilkes Barre and Scranton International Airport.
Howard: Does Southwest go there?
Wayne: Unfortunately, not, Howard. They go to Philli. You got to make some business in Philli and then Philli, you're only about an hour-
Howard: How far is Philli from Pittston?
Wayne: About an hour and forty-five minutes.
Howard: This is a sad state of affairs with airlines. So, I got money. I could fly first class on American or United. But, do you know why I only want to fly Southwest?
Howard: Because they always take off and land when they say so. Every time you buy a ticket, it takes off on time. You go to American, they say, oh, we oversold the flight. I'll give you a $200 voucher of some retail price that nobody pays, on the planet. I fly Southwest Airlines because they're the only airlines that have never crashed. No one's ever died on Southwest. U.S. Air had eight planes fall out of the sky. They always blame it on, whatever. It's never that their company sucks. It's always some external factor. No one's ever died on the plane and it always takes off and lands when they say. If you're a busy guy, you don't have time for this United stuff where they oversell the planes. If you don't get out of the seats they beat you and drag you off. And, they all got a great attitude.
Kay: Yeah. They do.
Howard: I love Southwest. Okay, guys.
Kay: Well, you'll have to come up to the head office and see us because we would love that.
Howard: All right. I'll do it. Tell me when and I'm there.
Have a rocking hot Saturday and Sunday.