MSD Insider 0:00
Welcome to med shark insider with Bill Fukui, your expert host on all things medical, marketing, and SEO.
Bill Fukui 0:08
Hello, everybody. Welcome to another episode of med shark Insider. And today we’re going to talk about a subject that’s not really marketing related, it really is on practice management and really the the guts of even just getting started in in a in a practice. And today I have the privilege of having on the show, Joanne Tanner, and Joanne is a, she’s a dental business coach. And she’s also a specialist in transitions and Transition Specialists for dental practices. So those practices that are looking to either buy or sell practices, she has a special expertise in that. And that’s really kind of what we’re going to be talking about today is some pearls that she has to help practices, avoid some of the pitfalls and kind of leverage relationships and situations so that they can make the most of their opportunities. So welcome, Joanne.
Joanne Tanner 1:10
Thank you, Bill, thank you for having me.
Bill Fukui 1:13
You know, I’ve known you for a number of years now. And we we both worked with, you know, similar clients, etc. And, and I can say, you, you have a unique way of working in the individual practices. I mean, I’m not in the practices like you are, and see the inner work of it. Everything from financials to staffing to, you know, patient counseling, you know, whatever. Do me a little favor, share a little bit of your background with our audience because they don’t have the benefit.
Joanne Tanner 1:55
Absolutely. More than 40 years ago, if you really want the math it was 45 years ago, that’s Navy recruiter got a hold of me. It’s amazing. And I joined the United States Navy, they promised me training on the job training as a dental hygienist and being from Detroit. I just thought bill I’m stationed in Chicago, you know, that’s what happened and join the Navy to see the world. So after basic training in Orlando, dental technician training in beautiful San Diego, and hey, it was snowing and blizzard in February, March and Detroit. I’m having a great time. So not knowing they’re going to look at my dream sheet any military people that are listening to us, I was an easy one. That means nothing, all right, they don’t. But guess what they want. And they sent me to the Naval regional Dental Center, Naples, Italy. So after serving year there for more than two years, as a dental hygienist, they sent me to Oakland. And then when I did get out two more years later, I decided to study business. So again, I did five years clinical hygiene, and my passion is dentistry. Now, when I finished my undergraduate in business, I decided I wanted to finish my master’s in business. Yes, I put that GI Bill to good use, and use all my veterans benefits for all those waiting in the military. So I started coaching dentists in the early 90s. And that’s when I first met you. And you helped me with website and marketing. And that time we were getting on planes, it was way before the internet. And now of course I have the ability to really help people on all aspects of the business, from buy to growing and preparing to sell. I’m not a dental broker, but everything from graduation and up to retirement, I helped the dentist and every part of the way
Bill Fukui 3:57
that is planned. I think you’re a little humble. And such but but I but I I have to share a little accolades. You have a rapport and relationship with with your clients. That I think, you know, I think that needs to happen when you’re working with a practice. When it comes to really sensitive things and it’s it becomes a very personal thing. You’re able to have those types of relationships with the clients that helped you get, you know, basically peel back the onion is what I call it. And, you know, kudos to you. But hey, a question. We recently started talking at the end I shouldn’t say recently, but your focus on becoming a you know, a dental practice transition specialist. What what in dental consulting and coaching, you know, guided you to to focus on that
Joanne Tanner 4:58
good question at about 12 or 13 years ago, I was retained, unfortunately, by an attorney where there was a transition that wasn’t going well. And after time, I started doing some research. And you know what I discovered bill? Well look at backup, when you buy a home, we certainly wouldn’t consider purchasing a home without a third party home inspection. And it wouldn’t be the brother in law of the broker or the seller. So when I discovered there aren’t any true buyer representatives, yes, there are dental CPAs that play a very, very important role. But you see what I do, in addition to understanding the numbers, I truly get behind the numbers and see how are they producing this $1.2 million worth of production? What are the mix of procedures, the philosophy of treatment, because if the seller is over diagnosing, or maybe doing procedures that the buyer is unable to do, we want to, as you mentioned, peel back all the layers. So we truly understand what are we getting? Yes, part of it is overhead. And again, the CPA plays an important role on that. But understanding all aspects, it’s truly my passion to to help them understand what is it in the practice. So we look at X rays, we look at the schedule, we’ll look at the the mix of dental insurance in many parts of the country. That’s an important aspect if the seller is or is not in network with the different insurance companies.
Bill Fukui 6:46
You know, going back now, now that you’ve mentioned, you know, going back about 12 years, when you started doing this, I remember 20 years ago, I was in the it was more on the orthodontic side. Where were we had these at that time practice management companies there now, I think they refer themselves as DSOs. Now, they were out buying practices and stuff. And they were actually doing IPOs going to the you know, going to Wall Street looking for money, and they were buying up as many practices they could to look good to Wall Street. And through that, process these and we did marketing for these national practice dental practice management companies. When I asked them, How do they, you know, determine the value of practices, I think at the time, they simply use, you know, gross revenue, you know, as you know, is a way of determining there’s gotta be more to it than that.
Joanne Tanner 7:50
There definitely is. And that’s one aspect. The brokers will do at least two most likely three, yes, growth revenue, but it’s also about EBITDA, their earnings before interest in taxes, right. And because it’s not just what they’re grossing, it’s what the take home is, if one doctor is grossing a million, but his overhead is 67%. versus another one, the overhead is only 62. Which one do you want to buy? So that’s exactly what we open the eyes to the young doctor, who may not know what they don’t know. And the broker really wants to sell and so the buyer doesn’t ask, there aren’t any answers provided. So I’m actually lecturing over at the one that one of the dental schools on Thursday morning, and I’ll share with you my opening line, because this is so very true. I’m going to say to the students, that your professors, they don’t want you to hear what I’m about to tell you. And that is that someday, the dentistry is going to become the easier part of your day. It’s not going to be about margins away. It’s a different kind of margin, the profitability margin that you haven’t learned about yet.
Bill Fukui 9:16
Yeah, that’s, that’s you, you’ve got me at the very beginning when he said, he’s not gonna want it or she’s not gonna want you to know this, or what, but yeah, I love the it really is. The business of dentistry is kind of the missing. I think what’s missing out of the dentists toolbox. When it comes to running and really thriving and enjoying a practice. You know, at the end of the day, it is a I mean, we all get into the everything that we do, it’s a lifestyle. I mean, you got into what you did, I got into what I did, because I liked the lifestyle. I Like the lifestyle what I do, and I enjoy what I do, dentists are no different. They’ve got to, you know, at the end of the day, we’re all in a lifestyle type of business when you’re a professional service provider.
Joanne Tanner 10:11
Absolutely. And you’re right. It’s about relationships, and the densest success 1/3 will be about his or her clinical skills. But you’ll find that the other two thirds have to do with management systems, and communication, communication from the dentist to the team, from the team to the patients. So the communication, as you mentioned earlier relationship, that’s critical.
Bill Fukui 10:40
You know, when when I would go into practices before we started doing marketing, and we even did stuff like TV and radio, not just the internet, but you know, big dollar TV ads. Before we started running, that I needed to see how those practices operated, it makes no sense to generate leads and phone calls and get people in here, when I know they’re not going to have a good experience or they’re not going to schedule or whatnot, getting the phone to ring is the easiest part of what we do. And, you know, it’s where the rubber meets the road is what you do. So, we found that that was exactly the case, there are practices that are wildly successful. And that’s because they they are driven from the top down by by either a provider or practice administrator, that that really carries the torch and creates the culture and builds the systems etc. That makes for a, you know, this incredibly wow experience when it comes to dentistry which let’s face it, most patients don’t necessarily look forward
Joanne Tanner 11:57
and doesn’t truly understand the quality of care. They know Are you nice to me Do I like to they don’t understand the margins. But you’re right, Bill, I help the doctor understand what are they buying? What am I getting, and getting behind the numbers? In addition, I tell them what they can do to make it even better because I’m a system specialist from scheduling. Another example is accounts receivables. Although the young doctor may not be buying the accounts receivables, it’s important for them to know how much the accounts receivable credits are. Because you see that the liability that the seller must address if they don’t, that reflects upon the Goodwill or the lack of goodwill by a buyer, because the patient knows the office had that money on the account. So there are things that we can tell them how to make an even a smoother and better transition.
Bill Fukui 13:02
Oh, super. So you’re talking about a number of things when when considering purchasing, purchasing a practice? What would you say would be the most common, like pitfalls or issues that that new practice owners would be owners when they’re looking to buy a practice? Where did they end up either making mistakes or having to go backwards or waste money waste time? What are those pitfalls? What would you say was the most common pitfalls?
Joanne Tanner 13:35
There’s may so it’s difficult to pick one or two. But one of the top ones that comes to mind right now, especially in California is understanding the role of Delta Dental, the new doctor is going to be a network with Delta Dental, we can actually help them assess how much Delta Dental is in the practice, we have an app that integrates with more than 50% of the software’s out there. And so if they listen only to other people or the broker, they may not have the full picture. I’ll give you an example. And we might be getting into too much detail. But the dots of dental, the fee schedule could be as much as 30 to 50% lower on a particular fee. And so the revenues that the buyer is going to be generating will be significantly less unless they’re prepared to create more volume. And how do you do that? You need to be efficient. We need to maximize the schedule. We need to maybe utilize an extended function assistant. If the seller has been doing his own hygiene, you may actually want to hire a hygienist. The CPA says Wait, that’s going to increase revenue that’s going to increase wages. However we need to maximize our doctors time and cleaning too. It’s not part of that. So sometimes Absolutely.
Bill Fukui 15:07
You know, but I think understanding, you know, the roles of, you know, the hygienist, and, and how to create efficiencies and systems within a practice for, you know, really leveraging production in ways that are there. They’re just hidden opportunities. They’re there, they just need to somewhat reveal them in a way, because they probably thought about them at one time. But they never really thought through the entire process of ultimately, it’s their time, they are the most expensive asset in that in that practice. No question.
Joanne Tanner 15:48
I have another pitfall I’ll share another view. And that’s the procedures. And I commented briefly on it earlier, that I have a practice right now that the seller was looking for, and we ran the reports, how many fillings they’re doing compared to how many exams compared to how many crowns that they’re doing. And compared to all the hundreds of other practices, it’s important that we’re able to look to see, wow, there’s certainly a lot of crowns compared to how many exams, and sometimes the buyer doesn’t know how to look at the rate ratios, and what’s higher, what’s low. And again, maybe there’s procedures that I can show them how to add for the billing or coding standpoint. So the pitfalls, what we can talk for next two hours?
Bill Fukui 16:38
Yeah, no, absolutely. And I think the, you know, some of the stuff that you’ve talked about initially are, you know, are pretty, you know, obvious ones that not I wouldn’t say obvious, but I’m saying those are going to be the most common is they haven’t really thought through it. But I think once they start asking those kind of questions, all of a sudden, they start, you know, I really got to ask a lot more questions. You know, it just got to lets them know that there’s a lot more things when it comes to purchasing a practice. You know, one of the things that you also mentioned was was staff, where does the evaluation of staff or your staffing? Where does that fall within, you know, the decision to buy a practice? And so staff come along with that, or, you know, what if there’s fallout? Or what if I don’t like these people, or, or I don’t like this key person or whatnot, how do you work with that?
Joanne Tanner 17:38
And you’re right, the buyer is unable to meet the staff typically, 90% of the time, they don’t know what they’re getting, until the deal is done.
Bill Fukui 17:49
Wow. Yeah, I’ve never heard that.
Joanne Tanner 17:52
They are not, because if we tell the team, by the way, I prefer the word. If we tell the team, that doctor is going to be selling, they get nervous, and the fear of the unknown, oh my gosh, what about and then they start looking, there goes the value to the seller. So as salumeria as it is, the seller, most oftentimes, is unable to share those the information with the team. And so we’re prepared to go into the office remote, or sometimes in office, after hours, frequently on a Saturday or Sunday, especially if it’s a larger practice. It’s not just a two hour in office assessment. Because we look at the treatment acceptance, we look at the schedule, it’s not just looking at five or 10 charts. So understanding what the team who they are, especially if anyone’s related to the seller, if the spouse is working as the bookkeeper as the office manager. And therefore we need to add to that, so understanding what you’re getting.
Bill Fukui 19:01
Yeah, interesting. You know, it just, and I, I’m just thinking off the top of my head, the minute we started talking about not being able to interview or meet with the staff, do you ever do you ever have them look at it at the practices social media, their their Facebook and check and check out what their personalities are online? That kind of stuff?
Joanne Tanner 19:24
And the reviews? Absolutely.
Bill Fukui 19:27
Oh, yeah, that’s a perfect reviews a whole nother thing. Sure, buying
Joanne Tanner 19:33
the history of the practice. So we’ve definitely do an online search. I was thinking of another pitfall to share with you, because just last week, I received a call from a banker, that unfortunately, they’re having to deal with a loan that they provided that they realized now that the client, not my client, in the future, they will refer but the client didn’t have someone verifying the data that Unfortunately, the seller and the spouse of the seller, actually put procedures, added patient names. So the dentrix reports didn’t match the financial. And no one was double checking while is right. Wow. And if no one is verifying the data, then how do you know and it’s so sad she called and I didn’t realize that people still did this. And it’s out there. The data wasn’t accurate. It didn’t match the bank.
Bill Fukui 20:36
Joanne Tanner 20:38
That’s a big pitfall and D, that she’s happened. Yeah. Jesus. Yeah.
Bill Fukui 20:44
Okay, so let’s maybe take a step back. I’m not ready here. I’m not in the midst of all the practice, you know, assessments. And, you know, you, I know, you put together a very comprehensive process when when you’re working with clients on purchasing a practice. I mean, just in some of the documents you’ve shared with me, I mean, I’m like, looking at that going, Holy cow, there’s a, there’s a lot of stuff here, man. But before we get to that point, at what point or how long should a practice, you know, a provider, start looking at, you know, the potential of buying the practice of what, how long does this practice? Process take from the time, you know, a dentist is saying, you know, I think I’m ready, both both. From a maturity standpoint, from a philosophical standpoint, from a clinical standpoint, from my personal life, I’ve reached a point where, you know, I’m, I’m ready to, you know, do something, what kind of advanced time do they need to be planning for? What what does that look like? It’s a great
Joanne Tanner 21:59
question. I believe most of the banks want at least if not two years of practice, before they’re actually going to give them a loan. Rarely do you see right out of dental school, so many years, I’d say on average, it’s three to five years, I’ve had some rock stars that have done it earlier. In fact, by the way, but I’m not too sure if I shared with you, you know, I produced a dentist, yes, my youngest son is a dentist. So I have many of his classmates calling me now. And they graduated five years ago. So it’s about time, they’ve learned what they don’t want to do, especially with COVID happening. If they weren’t associate and they were laid off, they’re no longer in control when they go back to work. So that’s why they’re out and about, say, I want to have my own.
Bill Fukui 22:55
Gotcha, gotcha. So it so COVID, you’re saying COVID actually helped accelerate that, that mindset or the desire to
Joanne Tanner 23:07
be in control, as well as it kicked over many of the sellers that said, Okay, I’m done. So we have both at it. So it’s not demand higher or lower. It just we have more buyers wanting to be there. Right. And of course, you mentioned DSL earlier. It’s still a big part of it. And that’s growing fast as well. There are still many private practices, and still a very large section where it will be profitable and important to have the private practices out there.
Bill Fukui 23:42
Right. So what would be the first step? So if I if I make the decision that, you know, I talked to my wife, and I’m like, you know, I think we’re at a point in our lives. Where were, we could make the leap. I’m ready to make this leap.
Joanne Tanner 24:01
And typically, no, yes, buying one word, versus a startup. And by the any of the listeners that want to have our slide that says the advantages of buying versus starting up. And see the startup is beautiful. If you have it exactly where you want it. Everything’s brand new, but I don’t have any patience. So when you’re ready to buy, you and your family need to decide where do we want to live. And that’s important live in your community. Don’t live an hour away. So if you want to be in San Francisco, you want to be in Los Angeles or San Diego, kind of figure out what part of the country you want to be in, and then effort. Focus your efforts in that area. I have a doctor right now. He’s been looking for close to a year. And he finally sent me an email two days ago. He says I think this is the one because you’ve been talking to doctors. Do you have one too? far from him, he says, You’re right, good practice bad location. So focus on where you want to live. And then making sure it’s a good location buried in a medical Plaza isn’t the way to go, I was in the forefront in the 80s, looking at retail centers, and it has to be about convenience, we’re helping a doctor move his existing pediatric practice to a retail center right now. And it’s in a great Safeway, CVS and plenty of parking. So Location, location, location.
Bill Fukui 25:36
You know, that’s so you know, it’s very interesting that you, you say that, because I would have just assumed and I, actually, my dentists works in an office, you know, one of those, you know, medical office buildings, and it didn’t even occur to me, but you’re absolutely right, I never would have found them otherwise. I mean, I had to do a lot of searching to find them, they are not getting a lot of, you know, exposure, a lot of other types of patients and locations. You should be, you know, part of your decision on a location has to be on that the vet help help business development. Not just do I like to face does it help with business development doesn’t help
Joanne Tanner 26:23
with it. And of course, they’ll You’re so good. I’m getting the phone to ring. As you mentioned earlier, it’s important that the team is engaging while talking on the phone. When I help my clients do any HR, placing the ad or screening of the applicants, especially for front office, I make the phone call and make sure that they are how do they sound on the phone? Are they? are they smiling? Can I see and hear that smile while they’re on the phone? Because if they’re not, that’s not a good fit for the front office.
Bill Fukui 27:00
Yeah, you know, I wonder, have you ever had a potential buyer actually secret shop that practice?
Joanne Tanner 27:09
Oh, indeed, sometimes I don’t want to. I can’t do that for them. But yes, we’ve talked about it. Just there’s another marketing service for you.
Bill Fukui 27:22
Yeah, I love love. Because I guess, you know, they don’t know what they’re buying. And that first impression is what you’re buying in many cases, you know, impression. Well, super. Hey, Joanne, do me a favor. I appreciate all your time. You’ve given me probably 30 minutes of your time with some really good stuff here. How can one of my audience members that are either have friends or they’re actually looking themselves? How would they go about finding you? Go to our
Joanne Tanner 27:55
website, Joanne tanner.com, that’s J L A, N E, T A N N E r.com. Or send me a text 916-591-2720. And I look forward to hearing from them.
Bill Fukui 28:13
You know, Joanne, I did you mentioned the website. And I recently went there and you have a great video on on the On the opening page. Nice job on that. And I’m in I encourage people to check out that website. There’s good information there, not just it’s not a brochure. There’s some good stuff in there. And whether you’re an existing practice, or one that’s looking to build one, I think that would be a good place to start. Thank you. You bet. Joanne, hey, thank you again for this. And then you know what I’d like to maybe have have us talk on a future interview. I had a couple other topics. I think that you would be the perfect expert to help shed some light on that would be my pleasure. You have a great day, Joanne. Until next time. Thank
Joanne Tanner 29:05
Bill Fukui 29:07
MSD Insider 29:09
Thanks for joining us for the med shark insider with Bill Fukui join us next week for another dive into all things medical marketing. All episodes can be streamed at WWW dot med Shark digital.com/med Shark Dash insider
Transcribed by https://otter.ai