Dentistry Uncensored with Howard Farran
Dentistry Uncensored with Howard Farran
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897 Questions for your CPA with Bill Owens, MBA & Steve Owens : Dentistry Uncensored with Howard Farran

897 Questions for your CPA with Bill Owens, MBA & Steve Owens : Dentistry Uncensored with Howard Farran

12/13/2017 8:48:47 AM   |   Comments: 0   |   Views: 504
897 Questions for your CPA with Bill Owens, MBA & Steve Owens : Dentistry Uncensored with Howard Farran

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897 Questions for your CPA with Bill Owens, MBA & Steve Owens : Dentistry Uncensored with Howard Farran

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VIDEO - DUwHF #897 - Bill & Steve Owens

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AUDIO - DUwHF #897 - Bill & Steve Owens

Owens & Bondell PLLC is a CPA firm that specialize in working with dental offices, both general and specialists in Arizona and parts of Nevada, Utah, Texas and New Mexico.  They started almost 40 years ago with 13 clients and today they work with over 360 practices on a regular basis providing accounting, tax preparation and business consulting.  They help Doctor’s prepare for the purchase or start-up of a practice.  This ‘Due Diligence’ process helps buyers understand what the numbers mean and what future income might look like based on past performance.  They help Doctor’s stay compliant with the IRS and state agencies.  They help Doctor’s organize the numbers and meet quarterly to review them and what they mean, including tax planning.  They maintain an extensive network of dental contacts in Arizona:  lenders, attorneys, insurance brokers, practice management consultants, practice brokers…….that ALL cater to the dental community.

Howard: It is just a huge honor today to be podcast interviewing two role models, idols, mentors of mine: Bill Owens and his brother Steve Owens. The reason I love these guys so much, I lectured for them ten years ago, go back to 1900 there was one doctor, one physician, no specialties. He did your head to your toe. He did everything. In 1900 healthcare was 1% of GDP. A century later there were fifty-eight specialties and it was 14% of GDP and then dentistry had nine. Now it's 2017, it's 17% of GDP. No industry rose faster in the last hundred and seventeen years than health care consuming seventeen cents of every dollar.

When I get out of school 30 years ago, CPAs were just a general CPA, like 1900. You would ask your CPA for advice and when he got off the phone with you, he talked to a corn farmer, a dry cleaner, a restaurant. They didn't know anything. All they did is prepare your taxes for the IRS. They only give you a P&L, a profit and loss, with artificial numbers, depreciation, deferred taxes. It had nothing to do with managerial accounting. They didn't give you a statement of cash flow, a balance sheet. But you didn't have a guy, where these guys are in a firm, where what is it? Twenty-eight different firms are a part of the what is it called? The Dental CPAs.

Bill: The Academy of Dental CPAs.

Howard: The Academy of Dental CPAs. They have twenty-eight firms from coast to coast. You can't even apply to be a member unless you have one-hundred dentists as clients. It is my guaranteed expertise that in the last decade I can give you so many names - they're talking about it on Dentaltown, where they switch from a generic CPA to a dentist-specific special CPA and their whole world turned around. You come out of school and you try to do the right thing like, you go to your church, so you ask your pastor, "Pastor, I need a CPA, someone I can trust. I don't want him embezzling or anything." "Oh, here's Frank. He's a good man. He's been in this parish for ten years." You did it all right but he doesn't know anything.  And these dental CPAs - like they'll say on Dentaltown, "Well, if I bought a CEREC machine I'll never have a lab bill, so it'll pay for itself." And you say slow down, Spanky. We've got eight-thousand dentists in a databank. We can separate periodontist, endodontist, pediodontists, chairside milling dentist, other dentist. These guys know their numbers in finance with the taxes, managerial economics, financial accounting. They know shit that I couldn't explain to you in a day. Thanks so much for coming on the show.

Bill: Thanks Howard

Howard: How do you get this little girl, she started her office, she's twenty-nine years old, and she's using a CPA who's a deacon at her church and he's the nicest guy in town, but she's the only dentist that goes there. She knows what she knows. She doesn't know she doesn't know. The same with her CPA. He knows what he knows. Mainly, let's do everything so we have lower taxes. I'd rather have a business that doubles its profit than save some money on my taxes. You know this. What would you tell her?

Bill: It depends on how involved she wants to be. We have clients that want to be involved on a monthly basis. Some just want to check in at the end of the year and make sure they're not going to go to jail and that everything is okay. Usually we'll taper a program to where we can meet with them once a quarter. And a new dentist in your scenario, I think that's long enough to be able to take out some of the ebb and flow of produce here, collect here, spend here. Those don't always match up, but it's short enough to where if there are problems with spending or collections, you could attack those without too much time going by.

I think to a newer dentist you want to have them be comfortable when they look at the numbers that they're not looking at too much, that they're looking at them in the right time frame, not let too much time go by, and they see value.

One of the things that we do is we try to fit everything on one piece of paper. When we're meeting with a doctor, you could have a ten-page report with graphs, that's great, but after a few minutes they're either busy doing something else or they're not getting every single thing that's on there. We're going to put it on one piece of paper, we're going to make sure it's explained clearly, and that there's a good time frame function to what we're looking at.

Howard: You know what CPAs remind me of? I went to a Catholic grammar school, St. Patrick's, (00:05:00 unclear), St. Patrick's, Bishop (00:05:01 unclear) High School, then Creighton University, so I was in Catholic school from first to - in fact dental school was the first public school I ever went to. My favorite priest growing up was Martin Luther because the Catholic priests were saying, "Oh, your grandma died, your mom died, she can't get to heaven until you give me six silver pieces," and Martin Luther knew that wasn't true. And so he was the first guy to convert the Bible into a common language, Germany. The Catholic Church, they wanted him dead.

I see the CPA is the Catholic Church fifteen-hundred years ago. I'll meet dentists that have been using a CPA for twenty years and I'll say just tell me the difference between a statement of income, a balance sheet, and a statement of cash flow. He doesn't even know. What is a statement of cash flow? I don't even know. Can you balance your check statement from Chase? No. What are your numbers like? What is your overhead? I'm not sure. Labor should be twenty-five, does that include is that included FICA matching and uniform health insurance? I don't know. It's like, this is shit you have to know. How did you give a guy money every month for twenty years and you're basically deaf and blind and you don't even know what's going on.

Bill: Yeah I think part of our model, and anyone who is interested in their business should be interested in this model, I think is to really dig below the surface. Filling out the forms is great. There are lots of people who can do that, keeping you out of trouble, etcetera, making sure the tax deductions are correct. But understanding the business of dentistry, understanding these different ratios, letting them come to light inside this doctor's brain so that it starts to make sense. Okay I have to produce X amount per hour to meet some of my overhead demands or I have to schedule my office in a certain way in order to get to certain goals of revenue and then overhead kind of stems down from there to meet other goals. Digging beneath the surface, it's a lot of what we do. It's fun too because we're a small business, they're in a small business. Our client base is one or two doctors with four to ten employees and so it's fun because little things can make a big impact. That one extra hygiene appointment they can fit in during the day by moving their schedule from sixty-minute blocks to forty-minute blocks or fifty-minute blocks, it could bring them an extra $15 or $20,000 a year by the end of the year. That sort of in-depth analysis as we meet each quarter starts to, I think, trigger something that says, "Oh yeah, I need that. We need that to show to light what the practice is capable of."

Howard: Think of the articles you could write for Dentaltown magazine looking at your group data of eight-thousand practices or - how long you guys been in dentistry

Steve: Our firm has been almost forty years. Our dad started this firm out of our house, speaking of working out of the house

Howard: Nice (00:08:11 unclear). Listen up here.

Steve: There were there were thirteen physicians and dentists.

Bill: I had to sleep in a living room so there could be room for a desk and stuff.

Howard: Seriously.

Bill: Yeah.

Howard: Nice.

Steve: He was doing payroll taxes and tax returns out of the room. It's grown now. We work now with over three-hundred and sixty offices. But that was almost forty years ago, four partners now and about twenty employees. I'll tell you, Howard, the two -

Howard: Is your dad still around?

Steve: Yeah he's probably playing golf right now.

Bill: He retired eleven years ago.

Howard: Your dad retired and you've got four partners - two brothers.

Bill: Two brothers.

Howard: The other two partners, they family or anything?

Bill: No. Matt Bondell, he's been there longer than both of us, and then John Smith, who is our newest partner who just came on this year.

Howard: Wow. And twenty employees?

Bill: Twenty employees. We house the bookkeeping portion within the CPA office. A lot of CPA firms, and your listeners will be acquainted with their CPA, who may say to them, "Well you got to have a bookkeeper do the books and then just bring me the QuickBooks and we'll get the tax return done." Our model is we do the bookkeeping in-house which takes care of a lot of questions and issues that could arise.

But a couple of things that I think that are important is we meet with our clients every quarter, face-to-face, and we bill a monthly retainer. Let's go back to this new dentist that's just starting off and as she's starting her practice, I think as she gets going she's concerned about spending money and every time she calls her CPA, cha-ching, there is another bill or the attorney. Find someone that you can get on a monthly retainer where you can rest at ease because you're going to have a lot more questions the first few years later on as things get going. Number two that regular financial reporting and understand that you're not going to get everything the first year or the second year. I'm sure after ten-fifteen years of practice you had some light bulbs that went on too, that, "Oh yeah," and that's what happens to everybody because nobody gets it all at first but the repetition thing helps to build on that.

Howard: How many dental offices do you guys work with?

Bill: About 360.

Howard: Oh my - you live in Coffeyville, Kansas and you're using a CPA that doesn't even do another dentist. I mean it's insanity. You can't do that, any more than if I got prostate cancer do you think I'm going go to an oral surgeon, you think I'm going to call my endodontist. It's a molar; it's a testicle, what's the deal. I mean you want a specialist. Fifty-eight specialties in medicine. There are nine in dentistry. These guys know dentistry.

Bill: Coffeyville, Kansas. It would be Grant Woody in Oklahoma City.

Howard: Nice, and Coffeyville, Kansas was home of Roger Carpenter, who had a hundred Sonic drive-ins, who Got my dad into Sonic drive-ins. He knew my dad was a poor Catholic guy with seven kids making eleven thousand a year and convinced my dad to buy a Sonic drive-in. It got my attention because I never forgot first time I ever visited Roger Carpenter's house, most people have a garage with a car, he had a plane parked on the side of the house. I thought okay these guys are a little different.

I think the fundamental problem is their practice management software. It has all the scheduling information, the billing and all that, but it is not hooked up to an accounting package. The staff doesn't clock in and out. They signed up for twelve different PPOs so when they do a filling they might be doing this filling for a hundred, a hundred and ten, a hundred and thirty, nine different prices. Imagine I buy this bottled water and sell it for twelve different prices at Circle K and I don't even know what the water cost me.

If this knew that this was a PPO and this filling, the revenue was one-hundred and twenty and that room cost me two-hundred, and the receptionist scheduled an hour for an MOD, it could turn red and say you'll lose $86. Then she moves it down from an hour to a half hour and now you make $20.

But it's the only industry I've ever been in where the accounting software is over here like Quicken or QuickBooks Pro and then they have Dentrix from Henry Schein or Eaglesoft. When a dentist tells me, "Oh I have Dentrix," I love it. I'm thinking okay, you're in dental kindergarten. You're not even smart enough to know that that's the worst thing that ever happened to you. How long do you think it will be before the accounting and their dental schedule and billing even talks to each other because they don't even know what they don't know.

You'll go to the dental office and this dentist will say, "I got one, but I just think I should get two." "Well, Susan just got done doing a cleaning exam (00:13:12 unclear) did you make twelve dollars after taxes or lose seven bucks?" No idea. All right, Spanky. I mean flip a coin. It's voodoo. If they would have not gone to dental school and spent the $500,000 on a Long John Silver's franchise, all that shit would be in the cash register. Remember National Cash Register, NCR, they got bought by IBM

Steve: Yeah.

Howard: The cash register my old man had at Sonic is ten times better than Dentrix and I was ten years old when I was using it. Now I'm fifty-five and I feel sorry for him because Stan Burton is the CEO of (00:13:51 unclear) I told him all about this. He goes, "Howard, you're like the only guy that would get it." He spent money. He got an MBA from (00:13:59 unclear). She flew to Phoenix, she talked to me. She made this big survey, mailed it to a thousand Dentrix users and it was like almost all of them were interested in it. I had a full head of hair before that happened, I looked like Fabio, and all my hair fell out. Look at me now. I mean so they clearly don't even know what they don't know.

Steve: Has Dentrix done their cloud-based thing yet? I've heard they were trying to work on that. Have you heard anything about that?

Howard: I can't even look at it because when you say Dentrix or Eaglesoft, I get this pit in my stomach, I get nauseous. We've had one to three suicides a year in Phoenix since I've been here and I'll be here thirty years Thursday and so many of them, it's financial problems. They're all stressed out. They don't know their overhead. They sign up for all these PPOs because they think I should work hard and hustle. I'll work hard. They don't know the score. I mean imagine watching the damn NFL team on Sunday and we said, "We're not going to have any refs or a scoreboard."

Steve: The two different softwares talking to each other is kind of where you're going. There is a space a little bit in between there that is growing and the word is dashboard. People are developing their software.

Howard: Middleware. They're all popping up in Utah you have Silicon Valley. They call that the - what is it?

Bill: Silicon Slopes.

Howard: Silicon Slopes and right where Dentrix is, that's where all these dashboards are popping up. If Dentrix would have done its job, there would be about eight other companies.

Steve: Well there's that group. There's also a group DentaMatrix is another group. That's more southeast. That's got an ADCPA affiliation with it as well.

Howard: Which one is that?

Steve: DentaMatrix.

Howard: Can you send me DentaMatrix

Steve: DentaMatrix is similar

Howard: And it's out of where?

Steve: Out of Atlanta.

Howard: Who's the CEO of that?

Steve: Rick Willeford. This is our old ADCPA. Rick is developing that one.

Howard: I thought he was in Baltimore.

Steve: That's a great tool. Allen Schiff is in Baltimore.

Howard: Allen Schiff is in Baltimore.

Steve: Dental Intel is a group I've heard about in Utah. I've heard some things, but these dashboards started off simpler and are getting more and more complicated, so to your point, it will be nice-

Howard: More complicated meaning good or bad?

Steve: Bad in my mind. I want five or six key indicators or monitors that I could look at rather than eight-hundred things to monitor.

Bill: But I think too there's still a disconnect that I know of between overhead and what the practice management software gives. So these reports will give you nice graphs, monitors, matrices. If you can see this much more in hygiene, this many more crowns, here's your financial revenue impact but very rarely have I seen where that connects also with a profit loss statement.

We do a lot of bookkeeping, which is a brilliant point I think. Logistically though, it comes down to the question who's going to do that because the doctor went to school for dentistry and now the CEO, COO, everybody of their own little business here, the front desk people, bless their hearts, usually don't have enough accounting or know-how, whatever, to merge the two. Sometimes they bring in an internal bookkeeper; sometimes they hire folks like us. So it's always just kind of a hodgepodge of how do we connect what we're spending with what we bringing in into a uniform system.

So our simplistic approach is well, just send us reports from Dentrix, Eaglesoft, sorry, cover your ears, and we'll work with that, and we'll reconcile, and we'll code, and we'll make sure things get spliced together into another third-party software. Is it the most efficient way? Probably not, but does it work and does it give them what they need in the short term? Yeah. It's kind of that work in process to try and figure out well, how can we let the revenue - and as collections hit the practice management software, how do we get it to automatically export into QuickBooks or into accounting software, and can I then look at some of those overhead items that come out over here and look at ratios relative to what they're bringing in? That's higher level analysis too. Whether or not that overwhelms certain dentists, it very well could. They just kind of say, "Hey Owens & Bondell, or whoever, tell me what I need to know. Give me the five main monitors and keep me out of trouble. That's kind of our job, so to speak, is to try and-

Howard: Wal-Mart closes out all of its books for the year every hour on the hour. You know what practice management software is at McDonald's, which they average $3,000,000 a store, you're a twenty-seven-year-old punk ass kid and your computer says, "Hey buddy, it's Wednesday night at nine. We close at midnight. On every Wednesday from nine to midnight, since the store is open, we're only going to do $300. You're supposed to have a 19% crew labor, 31% food costs; you've still got three people checked in out front, three people in back. Send home someone up front, someone in back."

Bill: Software dictates it.

Howard: With artificial intelligence around the corner you, the dentists that graduate ten years from now - I had SoftDent because when I got out of school thirty years ago SoftDent was the big kahuna. It was owned by Kodak.

Bill: Kodak Company, yeah.

Howard: Who's bigger than that? After thirty years the reason I switched is because I switched to Open Dental. I have no financial connection. I didn't get it for free. I paid for it blah blah blah. I switched to Open Dental because it's open. That's the only company who will listen. On Dentaltown you just search for Dentrix, Eaglesoft, there's just hundreds of threads bitching and moaning. You go to Open Dental - raving fans. It was founded by a dentist. What I would love to do - who's the ringleader of your group? Is it Allen Schiff?

Steve: Yeah, ADCPA, Allen Schiff.

Howard: Jordan Sparks is the dentist that founded it, but he's a dentist. His brother, Nathan, runs Open Dental. Nathan said if you guys want to get together, they will program what you need to hook that stuff up. By the way, it's the only dental practice management software company that doesn't advertise. All the other ones are advertising. They (20:54 unclear) word-of-mouth referral and they don't want any advertising. He didn't even want me plugging them on the show because they've had to buy a building twice as big. Now they just bought another building twice as big. They're in Oregon. But we finally have someone that will (21:10 unclear).

Howard: Look at divorce, one-third of it's over money, one-third of it's over substance abuse, one-third of it's over infidelity. But the money, the stress. When I see some of these dentists and they call up their CPA and he usually tells them about March 30th, "Oh, April 15th you need to check to the IRS for forty-eight grand." He's like, forty-eight grand, I don't have $4,800." It's one of the biggest issues in dentistry. A lot of the older dentist jokes like, "Well, you know when it's time to pay taxes because you realize you've got some money saved up in the savings account and you know none of that is yours times two."

Steve: Two more thoughts on the dental software before maybe you're moving on to taxes next. Just one of the things that we've always done is we take these reports from Softdent or Eaglesoft or Dentrix and by hand we're looking at what the practice collected for the month, what it produced, what it adjusted off. What we found, and this has happened over the last couple months, is embezzlement can be spotted by a) looking at the adjustments.

When you've got ten different categories of doctor courtesy, doctor write off, courtesy adjustment, family, friends. That's been one way that we've spotted people at the front adjusting stuff off. Then the patient comes and re-tiles their bathroom and that's the tradeoff for getting free dentistry and the dentist never gets paid. Looking at those adjustments.

Number two what the practice collected and then breaking that down and comparing that to the bank statement. You've mentioned the accounting software, you've mentioned the Dental Software, you haven't mentioned the bank statement yet. And so a) you're producing this, writing off, are you collecting what you could have produced a) and b) are you depositing what you collected or is that money somehow walking away.

Even though the two are not talking together electronically, we're still able through looking at those reports and knowing what we're looking at, dental specific CPA firm, spot things with regard to embezzlement that have saved a lot of clients a lot of money and financial stress.

Howard: Your homework right now is when you get to your office, I know you've got an hour commute to work, you get to your office. You call your CPA. Don't ask the CPA, ask the secretary. Say, "Hey I'm just curious, how many dentists does Harry work on?" She's going to say, "I think you're the only dentist." Or you can round about and say, "Well, do you do dry cleaners? Do you do corn farmers? Do you do tanning salons?" Do you think a CPA who only did three dentists would understand this?

Steve: There's a lot of good CPA firms out there and they do a lot of good work. They know the tax code great. I don't know whether they would involve the dental software reports or not. The clients that we get that comes from other CPA firms, 99% of them don't.

Howard: Yeah, so another one to ask, say, "Which practice management software do you recommend?" Say, "I'm thinking about changing practice management software. Which one do you recommend?" And he'll say, "What?" If he can't say Dentrix and Eaglesoft in point zero one seconds, you know what you know, but you don't know you don't know. You work with three-hundred dentists, what percent of them do you think have been embezzled from

Steve: Probably 95% but I say that because the number one form of embezzlement is employees padding their hours. That happens pretty much at every office, so I'm being a little facetious there.

Howard: Should I be clocking in on the practice management software?

Steve: They should be clocking in. That should be done.

Howard: Does Dentrix, Eaglesoft, can you clock in, clock out?

Steve: They have functions like that. Yeah. I'd say big embezzlement dollars of those practices.

Bill: Our group is pretty low. I've come across a couple of cases where - hard to track down exact amount but it's less than $10,000. We haven't had a real big one, knock on wood, but it's out there, definitely is out there. Folks who want to tout that as a service will use numbers like 25% of offices get embezzled from. I think that's a little high for our group and it may just be because we're looking at a little bit more in-depth.

Howard: It might be a big deterrent.

Steve: It's a cultural thing. It starts at the top, if the doctor is not concerned about cheating insurance companies or cheating this, the employees aren't concerned about cheating the doctor. So that starts at the top and filters down with the employees, but I'd say less than 5%. We catch those. We have a lot of clients that have come to us that were embezzled before and they want a closer look at things.

Howard: I've been embezzled twice. Once was back when we were doing checks and this check never came back, never came back, never came back. Chase bank (26:18 uncalled), I called the branch manager, Bernie, who just passed away just a couple of months ago. She was my branch manager forever. I outlived my branch - just a lovely lady. She said, "Well, yeah it cashed." I couldn't believe it. This is like thirty years ago. She says, "Every time someone comes to the teller and cash out, we take a picture, so I'll get a copy and the picture. It was my dental assistant. I walked over to her. She had gone in my office, taken out a check, and wrote a check for $3,000. I said what the hell is this and she just bust out crying and ran out the front door and I've never seen her again. I thought to myself, did she think I wasn't going to know. Then the second time was a week ago and I still haven't figured it out. Somebody took my dental laboratory check that went to the lab right up the street and-

Steve: Copied it.

Howard: Yeah. Somehow the money got in his (27:17 unclear), so now I got the bank, my accounting team, had to repay the labs separately. Then the bank I think is going to refund me because they said that it was such a mistake on their part. They shouldn't have cashed it. But somehow I signed the check, mailed it to the lab, and somebody got the check and deposited it in their account. I didn't find out about it until the lab says, "Are you going to pay me?"

Steve: Yeah.

Howard: I'm like, "What?" It happened two times in thirty years. I'm probably not smart enough to ask you the questions, but seeing the data from three-hundred offices and being part of a larger data bank of eight-thousand offices, what do you think they don't know. Let me go some of the low-hanging fruit. If I buy a chairside milling machine for $150,000, I won't have a lab bill so it pays for itself.

Steve: Yeah. It's a deep issue.

Howard: Your first response was laughing.

Steve: Yeah right. There's a there's that misnomer out there. Hey, great tax deduction, saves you $50,000 in taxes. Buy it. I'm looking for a tax break. I'll do it. You've got to analyze are we doing enough units each month for this to pay for itself. Yes, it does replace a portion of your lab fee, but you've got a $2,600 monthly payment to make now to whatever vendor you bought it from and are you doing twenty-two to twenty-five units a month to help compensate for that machine? Do you want to go into an operatory thinking, I've got to sell a crown here or else I'm not going to meet my twenty-five units this month? This is the last day of the month. I've got to pay the payment each month.

In addition, you are not going to lose all your lab. There's still going to be stuff that are going to be outsourced. Usually when we look at it we'll say, "Okay, what is your percent of lab relative to your revenue. Is it over 8, 9, 10 plus %?" And then we say, "Well, how many units are you doing? Is this a comfortable piece of technology because there's nothing worse than $150,000 coat hanger.

You want to be able to kind of fully analyze that and realize too if I do take the big tax write off, I had a great year. I want to save the taxes. You've still got to pay for it. In years two through five when you're making those loan payments, you get virtually no tax write-off so that monthly payment, 30,000 plus a year, is all with after tax money. So there's five or six main bullet points to analyze when you look at a milling unit.

The scanning unit, digital impressions, bingo. That's a great investment I think. I think most offices who do that tend to love it. I think the doctors or clients really love the margins, love the way that patients like it, assistants like it. They don't have to worry about the impression material. I mean there's time-saving. There's lots of different advantages there that I would guess within the next five to ten years most offices will have one. Whether or not they want to invest the extra hundred grand or hundred and ten grand into milling their own crowns on site, kind of just depends on the doctor and a lot of the ebb and flow of the practice.

And two, can you manipulate your schedule or change the paradigm of your current scheduling model to say, "Well as opposed to seeing this patient for thirty minutes this week and forty minutes two weeks from now, or whatever, we're going to do it all in an hour and a half to two hours in one day. But you can't just have the doctor in the room the whole time, right? I mean he or she is not efficient (00:30:59 unclear)

Howard: An hour and a half is a joke. What I see in the field, they're in the room three hours.

Steve: Okay.

Howard: And then they go to all the lectures, "Oh yeah, I do it every time in an hour." I just don't see it. I mean I hear about unicorns and tooth fairies I just don't see them. But you have to have these attitudes and beliefs from a sample size of three-hundred, how many chairside millings do you have in your backyard that are now coat hangers?

Bill: I can think of a couple. I can think of two.

Howard: And how many can you think that said it was one of the best moves they ever made

Bill: Of those who buy them, 85 to 90% level.

Howard: That's damn high.

Steve: It's very high.

Howard: 85 to 90% love it

Bill: I think I'm being too generous.

Steve: I've got a few that they tried to resell. I would put 75% use them. Of those 75% that use them, maybe little more than half use them correctly, use them to their advantage. The ones that use them to their advantage, it's awesome. It's everything that (00:32:-8 unclear) say it is.

Howard: By the way if you want to sell one or you want to buy one, the best thing that you've never heard of is Dentaltown's had free classified ads since 1998. It's on their app. It's right on the app. In fact, I shouldn't say this, but you're going to you're going to think this is crazy, we even have dating on the classified ad because we have had people meet on Dentaltown and get married now and they have kids. It's amazing.

Steve: It just depends on the doctor, Howard. I would say to my clients that are considering it, do some shadowing, do some classes, know what you're getting into before you buy it.

Bill: One last point on that, Steve did a study on this a little while ago and found that in response to this argument of, "Oh my lab bills going away. I'm replacing it with this loan payment," if you produce the same amount of dentistry, you will lose money on it, but if your production goes up, even 3 to 4% increase, it's a money maker so that has to be part of the financial plan is this is going to help you produce more dentistry. But it's not a one-for-one trade of my lab bills are going away because my loan payment.

Howard: If you buy a new car and you drive it off the car lot and you try to sell it a month later, what percent of the value did you lose?

Bill: 20 - 30%.

Howard: 20 - 30%. Some of the most amazing stuff you can buy on Dentaltown used. It's amazing. If you're too lazy to do it, do this, I know a lot of dentists who told (00:33:55 unclear) you all have a dental museum back there; go tell your dental assistant, "You take pictures. You sell it all on Dentaltown and split the money with her." That's amazing.

What trends do you see? What do you think is the low-hanging fruit in the sense they only see their office and their books. You see three hundred offices. Let's enter this debate - overhead, PPOs. If my labor, lab supplies, all my costs is a dollar a month and I produce a dollar in dentistry, my overhead is 100%, but if I figure out how to use that same team and do two dollars, my overhead's 50%. Do I lower my overhead by increasing my revenue or do I lower my overhead by cutting cost? I have a dollar in expense and 100% overhead dollar sales. Do I lower my costs to fifty cents to make - do you fix overhead by growing revenue or cutting costs?

Bill: It's a big question. The revenue increase is generally the most effective way to decrease overhead because the fixed costs in a dental practice are high. There are a certain amount that you have to bring in just to just to make dollar one as profit, usually that's somewhere between $20 to $30,000 a month just depending on the facility costs, how many team members, etc. Once you get over that 30,000 threshold then you're making a much higher portion as profit, maybe even as high as 80 to 90%. So now you get into the $50-$60-$70,000 a month, you stair-stepped your overhead down enough that now you can be, as opposed to just a 40% profitable practice you can get into that 45 to 50% profitable practice, even as a general practitioner.

But that's easier said than done. You say, "Oh, yeah, I'm going to go from forty a month to sixty a month like that." Obviously that takes a real concerted effort. Sometimes you've got to spend money on marketing. Sometimes you've got to find the right team members so that they can communicate to patients properly and work with you properly. There's a lot of gray area there to say, "Well, how much do I need to spend to get to the next level." It's not always as cut and dry as you think it would be. There are certain costs that you that you should be in the range regardless, supplies, lab, office expenses, general admin fees, whatever, even accounting fees.

Steve: Wages.

Bill: Wages. I mean shouldn't vary too much. But wages, you'll even have a stair-step approach, where you say, "Oh, I've got to add another assistant." In order to get to that next level of revenue I've got to add $30,000 dollars a year.

Howard: Go through the line items. What's your overhead need? Start with number one costs, labor, labs.

Bill: The four big costs are human resource, lab and supplies, rent or facility, and then marketing so that that kind of goes in order.

Howard: I want to say one thing. A lot of people always separate the lab and supplies but none of the publicly traded companies do. They combine them because let's say that you had a lab bill that was 10% but now you bought a chairside milling, so your lab costs go down but you're buying these $30 blocks for Emax and you're putting that in your supplies, so now your supply is up, so it's a better number to have lab and supplies. What do you think lab and supplies combined? What is the range and what is achievable

Bill: lab supplies somewhere between 13 to 15%.

Howard: And HR, human resources, labor.

Bill: If you're a general dentist practice with hygiene for around 22 to 23% gross wages plus you've got benefits, payroll tax match of probably another 3 to 4%.

Howard: Benefits, payroll tax, FICA matching, health insurance. Total cost of labor.

Bill: 26 to 28%.

Howard: What's the highest you've seen?

Steve: Forty.

Howard: Forty. You've seen forty. You say twenty-six to twenty-eight, do you see this problem with legacy staff, where doctor gave her a dollar an hour raise every time the earth went around the sun because once a year the hygienist, the assistant, follows you into your office. You're an introvert, shy geek dentist. The only reason you're a dentist because you didn't have enough personality to become an accountant. And she follows you in there and she says, "The earth just went around the sun. I need a raise," so he gives it to her. Then the advantage of having this long term staff is now that these young kids are trying to buy this practice and their accountants are going, "Dude, that overhead is out of sight." And they go, "Well, Shirley's been there for thirty years." Do you see that as the issue - legacy staff? When you see labor thirty, thirty-two, thirty-four, thirty-eight, what's the problem?

Steve: Let me say something because I'm going to tell a quote by Bill says, "The two most successful days, or not successful but hallmark days in a dentist's career, is when you pay off your practice note and when you have a staff around you that builds you up instead of brings you down." That was really good and that's insightful. Now say what you're going to say about that

Bill: I like that quote.

Howard: The day you pay off for all your debt.

Bill: As a dentist, your life will change the day your debt is paid off and the day you have a team around you that takes stress off your plate, rather than add stress to your plate. Everything changes.

Howard: I would say it totally different. I would say the happiest day of your life is your last alimony payment and then you're, yeah! (00:39:43 unclear)

Steve: It's more or less (00:39:47 unclear)

Howard: How you code it.

Bill: (00:39:47 unclear).

Howard: We're just talking about a code. It's the same concept.

Steve: Code 518 - alimony payments.

Howard: How many of your dentists are paying insane alimony payments out of three-hundred?

Steve: Not that many.

Howard: Not that many?

Steve: A handful maybe, a few.

Howard: Just a handful.

Steve: Yeah, a few. To answer your question some of my best practices are younger doctors that have bought an older practice from a retiring dentist that's been tired the last few years, has the overpriced staff. Paid them and paid them, and paid them, whether they've got dirt on the dentist or they just keep giving him raises, whatever, they're making all this money. The young dentist buys the practice, works with that staff for a while and then says you know what, I'm not doing a 401K anymore and I cannot offer health insurance because of this loan, and we're not doing raises. The older staff can't keep up with the younger one, so a) they leave or b) some light bulbs go off and say, "Hey, new sheriff in town. This could be good," and they get going. But it's that sort of mentality of being upfront with the employees.

To the overhead question a second ago, there's really only two things you control as a dentist, as a business owner. You control the patient experience and that's from an aesthetic point of view, from a financial point of view, from how they're treated on the phone to the way your office looks, and of course clinically, what happens. You control that. The second thing you control is the checkbook. You don't control who comes in. You don't control if they accept your case treatment. You don't control who moves in next door. You don't control Aspen or corporate dental that moves in across the street. You don't control the insurance companies.

If we can talk to our clients about reducing the stress that comes from things that are outside of their control and focusing on what you can control, which is create a better office internally. Work on that. Then when it comes to the checkbook and the overhead, Howard, average overhead is 60%. If we show up quarter after quarter and it's 72%, the stress level just rises.

Howard: ADA says the overhead average is 65%, but you're seeing 60%?

Steve: Arizona 60 to 62%. It's creeping up a little bit, but our latest numbers I think was 62%.

Bill: Our numbers are taken from our database and put in a spreadsheet.

Steve: Those are our findings

Bill: Those are actual numbers.

Howard: Why don't you write some articles? You guys know Tom Giacobbi. He's the editor of Dentaltown magazine.

Steve: I owe one to Terry. He and I have been talking. I've got to get one over to him for Inscriptions.

Howard: No Dentaltown.

Steve: And Dentaltown too.

Howard: Inscriptions only goes to Arizona. Dentaltown goes to one-hundred and twenty-five thousand general dentists and then it's emailed all around the world.

Steve: We'll do it. We'll do it.

Howard: You see 300 people you have to know. A lot of people think, "You know what? I'm going to make a lot of money. I'm going to hire an associate.

Steve: Okay.

Howard: Does that usually make me net a lot more money?

Steve: It depends. It really depends.

Howard: It always depends. Chairside milling depends. You said, 75% like it, but only half use it right. But associates - am I going to get rich on an associate?

Steve: A lot of the associate decisions in my opinion are driven by a couple of things one, the production level, two, the stress level of the existing doctor. A lot of guys and gals who come to me and say, "I'm never home. My marriage is struggling. I'm working too much. I'm missing my kid's game. I've got to do something about this now or this could be it." Associate time, no-brainer. If they've got the production.

But to the younger dentists who's ready to rock n' roll and open multiple offices and they have two - an associate over here and an associate over there - that's where we're kind of slow that down a little bit, cowboy. Just relax with your one practice, build that up, get some cash reserves because the minute the associate shows up the cash is going to start to go away. You've got to have some reserves there ready to go and you've got to have your systems in place for this new person, and you've got to have a team that's ready to go.

If you're a Type A, alpha dog that can't work with other people but you're dang good on your own and you're ready to go, it's going to be hard with an associate who's going to want some mentoring. There's going to be some coaching there. You know this. A lot of the super great associates work for you for a while and then they go.

Howard: Isn't Tom your client?

Steve: Tom is my client.

Howard: I know him and it was seven years he started his own. Bob (00:44:33 unclear) seven years he started his own. Sam (00:44:38 unclear) seven years started his own. I've had a couple - Glass and Brad (00:44:47 unclear) gave me a decade but for those five-

Steve: But those were great years though when they worked for you.

Howard: Yeah, those were great years. But for that five, then you have other ones that just after one year they want to start their own. The one thing I've learned is that you get the young guy, who's going to give you five to seven years. I've had that happen three times in thirty years. The longest lasting are the guys that the grass ain't greener on the other side. They've been there, done that. They hate it. They're fried. They're like, "Howard, I don't want to do any of that shit anymore. I just want to come and do my job." Most people think the grass is greener on the other side; the grass is actually greenest where you water it.

But if you've got that dream, you're going to have your own ranch, your own place, or whatever, or you sense that from an associate, ask them during the interview, "Where do you see yourself in ten years? “I’m going to have my own office." "Go now.

There's no good time to have a kid. When I got out of dental school, I had four boys in sixteen months, that's how long it took for me to figure out what was happening. There's no good time to have a kid and there's no good time to start an office. If you have that dream, don't think about it. You can walk around the swimming pool for twenty years sticking your toe in the water, but you know what? If someone shoved in the pool, you're not going to drown.

My God, for ten years I had two California queen beds next to each other because I'd be so tired. They'd come in, crawl in bed, I'd be too tired to pick them up and carry them back to their room, so I'd just crawl on the other side of the bed. It seemed like at one o'clock someone would say, "Dad, I'm thirsty," and you get that. And two o'clock, "Dad, I need a bowl of cereal." I didn't sleep for a decade, but you could do that when you're a young kid out of school. You can't do when you're fifty-five. When I see these fifty-five-year-old dentists having a kid again, I'm just like, my God. That is (00:46:45 unclear.

Good or bad - right now they have one payment, but you know what? I'm going to get a second location because this area over here is really growing. Of your three-hundred clients, how many of them was it a really good move to have two offices instead of one and how many of them was it a bad decision? How many was it good or how many was about it bad?

Bill: I've had folks that want to replicate what they're doing at their current office. They're very successful. I think it's a trend now to try and get multiple locations, try and replicate what you're doing. Enters in the associate conversation where you say, "Well, I can replicate maybe some systems, maybe even some staff members but I can't replicate myself." So you've got to find that right person who's going to be the team leader, the manager, the doctor in those different locations because if you're trying to be the main producer out of office A, where you actually make your income, and then go to office B or C and take days from office A, usually doesn't work out so well.

Bill: Most clients that I've seen try to do that, want to get out of dentistry within a few years because there's just too much travel, too much to manage, they're trying to take on too much. They're looking at themselves still as the main provider as opposed to the business owner. You kind of have to at a certain point just say I'm going to produce at this office two days a week and then I've got to manage. That can work out very well. Again personality, skill set, work ethic. Some of that stuff you can't teach. Some people have it, some people don't.

Howard: You know what number I want to see from your pool of eight-thousand is what the average owner/operator dentist produces and what the average associate produces.

Steve: We were talking about that.

Howard: Because when I go to CE classes, the owner/operator there is skin in the game, he's taking all these notes. The associate the whole time is on Facebook, doesn't come back after lunch. I never did corporate dental. I never rolled out a chain because I always thought the product was the dentist. The great location, the marketing, the advertising, that's the trimming, but the turkey at Thanksgiving dinner is the dentist. The owner/operators say, "Well I'm going to tackle that impacted wisdom. I'm going to try that second molar root canal. I'll see you during lunch. I'll stay at the end of the day." The associate, "I think you need to see an endodontist. You need to see an oral surgeon. Or I can't do it now because we have lunch at twelve and I've got to be out of there at five because I always have some big important reason I have to leave at ten till five."

There's guys like Comfort Dental, like Rick Kushner with around 300 locations, he doesn't even believe in associates. He doesn't even believe in them.

What do you guys see? What the difference between production because if you've got a dollar cost and you only do a dollar (00:49:36 unclear) in overhead, what do you think the average production of the owner/dentist is versus their associate in your sample size of three-hundred

Bill: It's all over the place because of how often the associate is there.

Howard: On an hourly rate or a day rate.

Bill: Most associates are paid 30% of net production of what they produce. There's the piece meal mentality of it that if you produce more. You're going to get paid more. I think that one of the theories behind that is with the rising costs of student debt - a lot of your viewers that's one of their probably top - as we go to dental schools and teach and talk to new dentists that's the number one thing is all this debt I have. What am I going to do? You get a job as an associate and you go to work for Howard Farran. Dr. Farran says, "I'll pay you 30% of net production," should be a motivator to produce more, learn more, and do more.

If you're an orthodontist or a specialist, there's more flat rates that they're paid and that varies across the country what they get paid.

Howard: When you say net production, you sell this, they don't even know what that means. We put up four hundred and fifty online CE courses on Dentaltown. They're coming up on a million views. Your dental CPAs though, you guys need to - I don't even think you can explain (00:50:50 unclear). I think you've got to get your twenty-eight guys and make a curriculum to where-

Bill: Yeah.

Howard: Going in dental school is not scalable. You go in there, it's your time. You could make it once and right and teach these guys dental accounting.

Because one thing on the 30% net production a lot of dentists that are very seasoned say, "Well if I pay the lab bill, they're going to be using the $150 lab across the street. If they pay half their lab bill, they'll be shipping it to (00:51:22 unclear) for $99.

Bill: Most of our associates that I see, I don't know about Steve, most of the owner/doctor takes care of the lab. A few exceptions.

Howard: I do too.

Bill: A few exceptions where the associate doctor is sixty years old. He's moved here from Iowa. He says, "I will not do this unless we use this lab."

Howard: Right.

Bill: So they work a deal.

Howard: It is the number one burned out thing I've seen with dentists where they'll go work for a corporate chain. They have to use this lab. They fricken hate that. I tell all the dentist CEOs that the smart ones give them a choice of like five or six.

By the way, if you're a young kid you're using this lab, I don't care if you're talking about employees or marriage or your children, it's all communication. They say that divorces happen a third over money, a third over sex, a third over substance abuse, but it's not even talking. It's still communication. You've got to call your lab and you've got to explain it because-

Here's what I know from some of the bigger labs and they're going to shoot me if they hear this deal. You've got a sixty-year-old dentist from Iowa and he's never sent in a remake. Those accounts go to the entry level. Then you've got some anally-retentive dentist who's freaking crazy and he runs about a 6% remake. Their head ceramist is the only guy who will work on this account. As you use a lab and you don't have remakes and then we hire a new lab guy, it's like well, here we're going to give you Charlie's account because he's never sent anything back in five years.

They measure all that shit and put you in tiers. You might have got downshifted. Maybe you didn't have any problems. Well, how does the lineman know you know you have a problem? You send it back. You've been working on this new dental office for six months, you've never called the lab, you've never sent anything back, then all of a sudden their work goes south, they might have played you as someone who doesn't wear loops, doesn't give a shit, never saw a crown that didn't fit.

By the way that oral scanner, you're not old enough to be on readers yet, but I'm fifty-five. I think the reason oral scanning is taking off is because when you scan that tooth - when you're fifty-five, I have to buy the biggest iPhone, I have to wear readers. I even have to wear readers who go to the bathroom. That's how much help I need. But when you scan that prep and you see it forty times larger, wow. Those little imperfections are the size of a dinosaur. I've never scanned a tooth where I didn't think, Oh, I need to go back or you get a soft latch or an (00:53:54 unclear).

Magnification is quality. When you wear loops, you're better, but the problem with dentists is they don't have their assistants and hygienists wear loops. They're the only one in there wearing loops. Then they're mad at the hygienist that she didn't get off this (00:54:07 unclear). They're mad at the assistant. They didn't get all the cement cleaned off. It's like, well, doc, take away your loops. Most of the dentists I know that are friends of mine in Phoenix that wear loops, if they dropped their loops and it breaks, they have to cancel their patients. I have two pair of loops because every once in a while I'll drop it or it will fog or something. I won't do dentistry without it.

Then you go to oral scanning, oh my god. It's like a CBCT, once you see it 3-D, you're never going to go back to 2-D, just like how many people do you know that want to be blind. Nobody wants to be blind, but I'm sure Stevie Wonder would like to see those ivories.

Magnification equals quality. Just like practice management equals patient management, which you nailed. What you can control is the patient experience, how they answer the phone, how they're treated, how you greet them, that's what you can control, the patient experience, but you can't control your electric bill, the tax rate, and paying your dental assistant twenty dollars an hour to shop online for gauze. I don't know how that makes sense either.

Your four categories. You said, HR, total twenty-six, twenty-eight, lab and supplies, thirteen to fifteen, rent/facilities and then you said advertise. What should rent/facilities be?

Bill: Somewhere between 6 and 8%.

Howard: 6 and 8%. And advertising?

Bill: Two to three.

Steve: Four.

Bill: Yeah.

Howard: Two to four or two to three?

Bill: Two to four.

Howard: Okay, now I'm going to ask you another (00:55:35 unclear).

Bill: Sorry, just everything else is about 8 to 10%

Howard: Eight to ten and what would you call that line item

Bill: Just admin, general office spending.

Howard: Admin eight to ten. And does that include alimony payments.

Bill: For you, Howard, silver line that.

Howard: Oh, silver line. The big question I have is well, I don't want to throw away rent money every month. I want to own my own building. What do you say to that?

Bill: Your main asset is your practice.

Howard: Well said. Well said.

Bill: Whether you want to rent or whether you want to buy, to me that's a secondary proposition. It's more about long-term investment. I know there are some who don't want to diversify in the market place, stock market, whatever, they love real estate, so that's for them. But as long as let's just say the loan payment and the rent payment are somewhat similar and the square footage is the same and you're producing about the same, yeah, long term it's better to own because you're going to pay that debt off, you're going to have control over the price of your monthly (00:56:40 unclear). There's better long-term potential there, but if you say it's going to cost me an extra fifteen hundred bucks a month, that's a good chunk of dough going out the door and who knows volatility of market. Yeah you're going to pay that note off and have some equity but are you going to step up the production to compensate for that.

Howard: If you were to put $1,500 a month in an S&P 500 index fund, the spider, for twenty - thirty years, who do you think is going to have more money, the guy who owns the building or the guy who put the rent (00:57:12 unclear).

You know we had Greg Cardone come on the show. I think all the boys, we love Shark Tank, Greg Cardone. Greg Cardone thinks that to make money in real estate, you need somewhere between twelve and sixteen units to have enough scale and experience to know what the hell you are even doing. Yeah, Grant doesn't really think you make money in real estate until you're - you've got to reach your critical mass.

Steve: It's definitely not a tax decision; it's an investment decision and hopefully you're going to recoup that down the road if all goes well.

Bill: There is one tax benefit called a cost segregation study that when you own a building, you can bifurcate or separate out the build out, the building components, depreciable life, pretty technical. But if you do own and you haven't done a cost segregation, in particular, a building that was existing, not what you build from scratch, but an existing building you bought, might be a good opportunity to save on taxes. In the current year, even if the building's ten years old or five years old, you can lump a bunch of deductions into your current.

Howard: Final question because I know you both have to meet with dentists shortly after. And we all know that-

Bill: And we've got to go back to Sonic too.

Howard: Sonic Drive-in. I wish you would go. I was trying to see if you had any time.

Bill: Cherry limeade.

Howard: Oh my god, I love cherry limeade.

Bill: Cherry limeade at Sonic.

Howard: Me and my five sisters grew up in a Sonic. From 10 to 20-

Bill: Are you from Oklahoma?

Howard: Wichita, Kansas.

Bill: You're from Kansas. I lived in Bartlesville for a while, north of Tulsa.

Howard: And you lived in England and know another big fan of the show, Chris Barrows.

Bill: I know Chris Barrows, yeah.

Howard: Who was on an earlier podcast. Love him. I had him on the show. I see him every time I go to England.

Bill: Yeah, great guy.

Howard: Great guy. Final question, then you need to go. You have three-hundred sample size, do demographics matter? Because I'll tell you, we're local here, so we'll talk about our own backyard. Seems like if you want a bunch of rich clients that have full mouth rehabs and all those veneers, you go to North Scottsdale. There's a dentist on every corner. It seems like probably 10% of all my friends are LDS because Guilbert is south Utah and they'll all go to Guilbert and Mesa and then I'm sitting here thinking, "Dude, Eloy still doesn't even have a dentist." Some of the early younger dentists, most of them don't listen, but I remember a young dentist walked into my office twenty-five - thirty years. His name was Jared Pope. Do you know Jared?

Bill: Yeah.

Howard: He had this big idea to go to North Scottsdale. I said, "Dude, that's the dumbest decision you'll ever make. Maricopa still doesn't have a dentist. You get your butt to Florence, Maricopa, Eloy." He crushed it. He opened up in Maricopa was getting one-hundred and fifty new patients a month. My question to you is do demographics matter

Bill: I do not have any cosmetic dentists in south Phoenix. If that's part of the answer to the question. They are in North Scottsdale. If that's what you want to do, you go to North Scottsdale. They matter some but I have dentists that work in strip malls, in middle class areas in the Valley that have 50% overhead that make three-hundred grand a year. I have dentists that work in more wealthier areas that have 65% overhead and make two-hundred and fifty-thousand a year.

My mom said, "Don't ever compare yourself to anybody else," so we try not to do that, but we do compare when it comes to overhead. Overhead matters and so when we talk to our clients we're comparing what your overhead is compared across the Valley. Location matters some, but that's more of a dentist thing.

Howard: What would you say your average overhead is?

Bill: Well, the average is 62% for general dentists for our clients.

Howard: For you.

Bill: For our clients.

Howard: What is the range?

Bill: Forty-eight to seventy-two, something like that, most are around sixty.

Howard: The ADA says - they're statistical sampling, the ADA, I don't know if you know this, but they have like the greatest health economist ever. Marco - how do you say his name? It's a tough name. It's Wilczek.

Bill: Vujicic. It's a Slavic name.

Howard: Yeah. He came from the World Health Organization, the United Nations. He had a job making bank in Switzerland. How the ADA got him - I don't know how the hell they pulled that off. The guy is the most meticulous healthcare economist, Ph.D. period. As an MBA, I'm not even worthy to read his stuff. Here's what I noticed is that he has the 65% overhead is the average, but then when I talk to dental consultants, they're saying the average in their office is seven-hundred and fifty-thousand a year and that's one-hundred seventy-four. But you're talking consultants, "No, that's not right because all my clients see one to two million." Yeah, because they use consultants. What would you say your average dental office, general dentist produces a year? The national average is seven fifty. What do you think your average dental office produces?

Bill: I was going to say eight-hundred.

Howard: You were going to say eight-hundred and you said the overhead was sixty-two. Again what you're seeing is a skewed sample that when people use dental consultants, when they use dental CPAs, they just make better decisions and on average their clients overhead is 3% less and they collect fifty-thousand dollars a year more.

When I look at dentists my age who are fifty-five that are doing two to four million a year, over the last thirty years, they've used four or five consultants. Then I look at a fifty-five year old that's burned out, he never had one. When I see people using dental CPAs, I know a lot of your clients, the numbers is not a stressful part of the game. They can pick up the horn and call you. By the way, I know you've got to run. How do my homies get a hold of you and do you take out of state clients or are you an Arizona Play?

Bill: No, we do. We have some that are in a state. Most of our clients are in the southwest, Arizona, Las Vegas. We have a presence in Las Vegas and New Mexico.

Howard: How many of your Las Vegas clients have gambling debt

Bill: Not many.

Howard: Is that figured into their overhead? What is the average gambling debt for your-

Bill: Part of the marketing costs I guess.

Howard: How do they get a hold of you? So you take clients in all fifty states.

Bill: Yeah, we do. We're always happy to talk to anybody

Howard: What about Canada?

Bill: We have a couple of folks that have come down from Canada but not actively living there.

Steve: I'd say go to Arizona, Nevada, New Mexico, Texas, Utah, Idaho call us. Outside of those states go to the to find one of our sister ADCPA firms. I don't think that's on this sheet right here.

Howard: Okay, so that's www.-

Bill: That's the Academy of Dental

Howard: Now if they go to .com, will it go over the org.

Bill: I don't know.

Howard: It should because that's (01:04:30 unclear). It's American Dental-

Bill: Academy.

Howard: Academy of Dental CPAs. Academy Dental Ryan see if that works at .com and .org.

Bill: We're on there for Arizona. We're on there-

Howard: And then your website is OBC, Obi Wan Kenobi, or what is it? OBCPAs, so CPAs, so OB is Owens.

Bill: Bondell.

Howard: Owens Bondell. Owens and Bondell.

Steve: We're your only hope. That's right.

Howard: Your dad was Owens.

Bill: Our dad, yeah.

Howard: Was Owens, so who is Bondell?

Bill: That's Matt Bondell. That's our partner who's not here.

Howard: Okay, so Owens and Bondell is OB CPAs, C-P-A-S. Just remember Obi Wan Kenobi because I know you're driving a car right now. Obi Wan Kenobi you're my only hope. That should be your damn ad. You should do that in your ad. Obi Wan Kenobi. I'm sure it's not copyrighted by Disney.

Bill: Don't think we haven't thought about it.

Howard: By the way, everybody said Disney overpaid for Star Wars. They paid like four billion and they overbought. There were two movies, all their money back.

Bill: Still have another six to go.

Steve: My boys love it.

Howard: Oh my God. But seriously there's two things I want out of you guys. I want you to do a dental accounting online CE, dental accounting for dummies. That should be the name of the course, Dental Accounting for Dummies or whatever.

And number two I've spoke for your group, that's twenty-eight amazing people, but you guys meet twice a year and it's just for you guys. You need to start having one of those two meetings a year at the same time as the townie meeting. Then if we got whoever went to your meeting in a one hour or evening or a breakout session or whatever and then you guys could give them a presentation of the value added of how - because I know that the dentists are going to go in there and say, "Well, you're not a dentist. You don't do root canals. How do you know you?" You say, "Well, Spanky, here's eight-thousand people and here's the range, so how are you going to be outside that range? What do you walk on water? Did you ride here on the tooth fairy?

Because it's my job as a leader that I know I don't have to lead them into learning bleaching, bonding, veneers, just like I want to lead a chef into learning how to make some new recipe Stroganoff. A leader is getting your- I remember Ryan (01:07:02 unclear) remember when I used to wake you up, Ryan, for cross-country before school or wrestling before school, they begged me to go let him go back to bed.

Ryan: Yes.

Howard: But I knew this is part of what they needed to do and now they all thank me. They're not interested in managerial accounting. They're not interested in financial accounting. They're not interested in any of this shit, so we help them make them - we have to go take their nose and say some things in life we don't like.

I know that every time I convert someone to the Academy of Dental CPAs and they start using a guy that knows their numbers, they thank me for it. It's a really good move and it lowers their stress for their spouse, their marriage, their family, the whole nine yards.

It's tough also with the accounting when your spouse is not involved because she hears you say you charge a thousand for a crown she doesn't hear you say that 85% of your crown is on a PPO and the adjusted fee is six-hundred and fifty. Then you come home and she says, "How many crowns did you do?" "I did five crowns today." She's saying, "Five grand. That freaking purse is only four grand." She doesn't realize that the five grand was really thirty-six hundred and the overhead was 65%. I'll tell you what, when you're young and you're married, accounting is something you do as a couple because if you're not on the same page of the spending, there's going to be some fighting and screaming and stress. Same thing with staff, what percent of your three-hundred dentists are transparent with your accounting to their team?

Bill: With their team members at the office

Howard: Yeah.

Bill: I would say most of them are pretty transparent in terms of supplies and lab, those things, but as far as bottom-line profitability and take home, not too many at all.

Howard: I've always been a 100% transparent, except for staff. I was 100% transparent on what each staff made and I couldn't believe after three or four years I threw in the towel because I'm thinking, well, the Arizona Cardinals everybody knows what everybody makes, everybody knows who the President of the United States and every CEO of the Fortune 500 Company. If you want me to explain to you why Suzie gets $14 and she gets $20, I'll explain that all day long, but it didn't work. It just didn't work. It was a (01:09:26 unclear). Now I put labor together.

But you know what, I've had two dental assistants become dentists, Kelly Bradley and Elena Gutu. I've had several assistants go back to become hygienists. Your assistant says, "I want a dollar raise every time the earth goes around the sun." No, when you get a job at McDonald's, they should tell you the pay range. The pay range of working at a front desk of McDonald's, this pay range. If you want to make this much money, well then you need to be a store manager. You show them the overhead, you want to make more money go to hygiene school.

When I went to dental school there wasn't some bodyguard machine gun guy letting me in and keeping everyone else out. I always shared the numbers I made. It's like, you like that numbers, we have two dental schools in town, go be a damn dentist. I don't believe in hiding that number. You know how much the quarterback of the Cardinals makes, why don't you go try out next year or are you going to play for the Diamondbacks or the Cardinals.

Bill: That would be a very, very short conversation. But to your point, one of the things that we do is we do surveys, wage surveys, every few years, where we're gathering numbers across the Valley, East Valley, West Valley, Central Valley, typical pay for hygienists, assistants, and front desk based on years of experience. Whereas we're not advocating like you're saying, "Hey, let everybody know what everybody's making, but the doctor is going to say based on the front, the back, the hygienist, years of experience, and their role, they're going to fit in this range, so it's not a huge surprise really of how that works out. That's valuable information when the assistant does come in every year and ask for a raise.

Howard: When you get those surveys post them on the message boards of Dentaltown. When you leave and go out of my house, three point zero miles, I have my dental office on the right, Dentaltown is on the left because I think that another great move would be that you guys start having one of your annual meetings coincide with our annual townie meeting. Then I also think that we get Nathan of Open Dental to come down.

Bill: You mentioned that (unclear).

Howard: And Nathan.

Steve: (unclear) in Las Vegas.

Howard: We did it in Las Vegas every year for fifteen years, but then I had grandchildren and so now we've already signed up for next two years in Orlando because I'm a selfish bastard and plus it's good because millennial - fifteen years ago Vegas having a martini and a cigar and playing blackjack was what Frank Sinatra and Sammy Davis Jr. did, but the millennial, they think it's gross. I mean they don't want to walk into a casino and smell cigarettes and all that stuff.

We're going to do it in Orlando. I think Open Dental, their programmers will do what you ask. I think if you could lead these guys to go from a general physician accountant to a specialist cardiovascular accountant, they always come out better.

Bill: Let me thank you too Howard. A lot of our ADCP organization, we talk a lot about corporate dentistry. We talk a lot about the growth of group practices and how that's growing. More people are looking at that. Well, that affect us in terms of we work with the little guy, we work with the guy that owns one or two practices, that entrepreneurial spirited person that does that. We appreciate your efforts in promoting that and educating the single-owner doctor because our practice has grown every year. We continue to see more single entrepreneurial dentists here in the Phoenix area. The ADCPA, those practices are growing.

Yeah corporate dentistry is growing, but we still see the person that wants to work for themselves, that doesn't want to work in corporate, that wants to own their own practice but they don't know where to go for the help with the management, the education. We appreciate what you do in terms of providing that that a lot of people throw their hands in the air and say screw it, I'm going to go work for Heartland or Aspen or some corporate place and not worry about this anymore. There's a lot of benefits to being your own boss, to running your own place clinically and financially as well. That's kind of one of the things I wanted to say coming here today (unclear).

Howard: Thank you for that. We should start a mutual admiration society and we'll be the only three members.

Bill: My mom will come.

Howard: Your mom will come.

Bill: Yeah, she likes me.

Howard: The bottom line is not one of these corporate dental chains could go public tomorrow because they're not a rollout, like McDonald's where they got a prototype that works every time, where they're just stamping them out. That's a roll out. Those are the only three publicly tradeds I've ever seen and two are in Australia and one’s Singapore, where they've got a prototype, where they roll it out. You know what they do different? They're open seven to seven, seven days a week and they don't have hygienists. 20% of their dentists flip every year. We hire you, within five years you're going on 20% dental turnover and it's mostly millennials because the baby boomers are loyal to the doctor and the millennials are loyal to themselves or convenience, it's buy here, it's open seven to seven.

The only three examples of a rollout with prototype, two in Australia one in Singapore. Everything in America is a roll up, so they get a million dollars debt, go buy a million dollar practice, say, "We went from zero to a million," yeah, so did your balance sheet of debt. "Oh, I bought ten more projects. Now we're doing ten million." Yeah, so is your debt. By the time they get to a billion dollars in debt, they say, "Look how great I am." It's like, well nobody in Wall Street would touch it. I've seen this rodeo before. Orthodontic Centers of America was big, hot on the NYSE, that imploded. I do see successful, publicly traded corporate dental chains but they're limited to seven to seven, seven days a week. It's millennials loyal to themselves and the doc is going to do their own hygiene. But in the role ups that I see in America the average corporate dental chain can't keep their dentist two years.

Bill: Fragmented (unclear.

Howard: Because the bottom line is if you're going to have five-hundred thousand employees, I hope they're all young and didn't graduate from high school. But by the time you have a lawyer, a dentist or a physician it's like herding cats. You want to herd sheep. You want to herd young, not very smart sheep that will all follow you. But freaking doctors, dentists, and lawyers are cats. You couldn't find two dentists on Dentaltown to agree that today is Wednesday. I mean they're that way, so they're never going to be happy in an (unclear).

They always say, "I just want to be associate. I don't want to worry about it," but you're a dentist. Dentists are a different breed of cat. How many of your friends and family said to you, "What's an average dentist like?" What do you do? Just start laughing or -Your average dentist, your average lawyer, your average physician ain't like your average buddy.

Bill: They're kind of like your typical CPA.

Howard: Yeah.

Bill: Yeah.

Howard: They're analytical. They're overachievers. I'll never forget - final story and I'll let you go. I had a three-star general in my practice. Thirty years ago, my assistant Jan, she stayed with me thirty years. This was thirty years ago when women were hardly ever accepted into the military and they didn't serve combat, not like it is today. And says, "Do you agree that women like me should be in the military?" Ed looks at her and goes, "Hell, no." And Jan is like, "Ahh, Why would you say that?" He goes, "Jan, we have data on hundreds of years of warfare. You know who's the only idiot who will charge the hill with machine gun firing over? Males under twenty-one. By the time we were drafting boys that were twenty-eight - twenty-nine, they'd say, 'Well, actually sir there's machine gun fire and-' Women of every age would say, 'I think that's a bad idea.' Men would have to be like twenty-eight or twenty-nine before they'd start saying, 'Yeah, just because I'm macho, you can't run into machine gun fire.' Who runs into machine gun fire? Young boys under twenty-one." And Ed said, "All women are too smart for battle and a male by the time he's about twenty-eight, twenty-nine he wises up and he ain't good for battle." Anyway, thanks so much.

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