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- This is Riz Hatt with the Becker Dental Castillo.
So podcast, I'm thrilled to be joined today
by Jeffrey Thoms, CEO of Grand Dental Group.
Jeff, thank you so much for being here today.
- Thank you, RIS. - So could you start off
by telling us a bit about your background?
- Sure. Um, I got into dentistry almost 20 years ago.
Uh, kind of, you know, a funny story.
I was a, a school teacher, uh, one of my, uh, best friends
and fishing buddies, uh, was in dental school.
And, uh, he, uh, knew I had a marketing background
and he asked me to help him in the summertime.
And over the, you know, weekends with, uh, uh, the practice,
he had joined a very small $700,000 practice.
And, you know, of course I said yes.
And, you know, for the next two years I was, you know,
helping on Tuesday nights and, and weekends
and, um, really saw a lot of things going on in the business
that were beyond marketing.
They were more, um, managerial things.
So I started expanding the level of help.
And, you know, one thing led to another
and the, the two docs asked me to join them.
And, uh, I did, uh, that was Tidewater Dental.
Uh, over the, the following, uh,
decade I would say.
We went from about $700,000 a year in revenue
to, uh, about $13 million in revenue.
Um, and then eventually, uh, we joined another larger group
and, uh, we became their Mid-Atlantic arm.
They were in the northeast and, uh, continued to grow, uh,
adding de Novos and so on and so forth.
And then, uh, eventually that sold again, I, I moved out
to Chicago to join Grant Dental, who I'd known for, uh,
over 15 years and really liked their model
and what they were trying to do.
And here I am.
- Fantastic. Sounds like you have a lot
of great experience there.
- I, I think so. I hope so. .
- So my first question for you is,
what are the biggest issues you're
following in dental today?
- You know, Riz, it's, it's been the same story
for about a year now.
Uh, maybe a little bit longer, maybe two years.
And its overhead, uh, since Covid.
Um, it seems that there's been a real shift in, uh,
employee retention and employee cost.
I think the national average is about a 30% increase in
employee costs, uh, which has affected us as well.
I think we may not be as affected as some other groups
because of the way we compensate our hygienists.
They are like our doctors,
they're compensated on their collections,
but overall, employee costs have really hit the bottom line,
uh, our profit margin.
And then, uh, I guess the other element
to overhead is the cost
of doing business in terms of supplies.
And, uh, a lot of our third party, uh, vendors who just,
it just seems like there's so many now in order
to make a dental office function at a high level
that it just really affects, uh, cost.
So that would probably be the main one.
Another one would be employee work ethic.
I also feel post covid, ID um,
the seriousness at which many employees take their jobs.
And this is pretty much excluding hygienists and doctors.
Uh, but in general, your, your front desk employees,
your dental assistants, uh, people at that level seem
to, you know, not feel
that reliability is extremely important.
And of course, I'm speaking broadly, this is not everybody.
Um, they take off a lot.
Uh, they're not as concerned about meeting, um, their goals
or even their responsibilities,
and it's, it's just an uphill battle.
And then I think the third one is, uh,
insurance reimbursements.
All these costs have gone up,
but yet over the past couple decades, insurance has not
one raised their, their, their annual allowance per patient.
And, um, the, the insurance reimbursements are not
where they should be when you consider inflation
and the cost of doing dentistry.
- Interesting. Can you talk a little bit about
what Grand Dental Group is doing to mitigate overhead costs
and to kind of, you know, help out with that issue?
- Sure. Um, so in our budgetary sessions,
we really dissect every line item to see
where we can save money without compromising care
or even experience.
Um, so we may change platforms with a third party.
We may look at, um, not really
where we're buying our supplies,
but what supplies we're buying.
As long as the quality is the same, if, if it's a, a product
that can save us time
or money, um, we might switch to said product.
Um, and then in terms of getting more out of our employees,
we're looking at creative ways to incentivize our employees
for, uh, being here, being on time,
being consistent.
And, uh, we've also put in an educational platform like an
OMS system so that we can, uh,
not only show each employee group what our expectations are
of them in a given day, week, month, et cetera,
but also, uh, train them
and track them so that we have accountability and,
and that's a work in progress, of course.
- Great, thank you. My next question for you is,
what are you most excited about
and what makes you nervous when it comes to dentistry?
- I have the same answer for both Riz.
What I'm most excited about is that we have been able
to grow to the size that we are, and we continue to grow.
I think we're gonna be up 10% at the close of this year, um,
without private equity.
So we are not a big DSO, we are nine locations,
but we are, uh, doing about $30 million in collections.
And we've been able to continue our steady growth,
never having a, you know, a down year
or even really a bad year, um, without private equity.
But that's also my biggest, uh, fear.
What makes me most nervous is that at, at some point,
the traditional banks do dry up in terms
of your debt service.
And if we see a really good practice that we wanna acquire,
but it's, it's larger than a certain size,
we may not be able to get the bank funding without, um,
either private equity or of,
or some other form of, of, uh, of third party financing.
Um, it hasn't happened yet,
and we hope that, you know, our banks
or our bank will continue to be, um, thoughtful,
uh, about lending to us since we are showing good
returns on an annual basis.
But there is always that fear that, that
that will not continue.
- Interesting. Thank you. Do you see private equity becoming
a bigger force in dentistry over the next few years?
- I do. Um, my understanding of private equity
and having, uh, you know, limited experience with it,
but definitely experience with it, uh, a few times,
um, times.
Um, private equity likes businesses that have consistency
in repeat business, like dentistry has hygiene
and hygiene is something that generally is twice a year,
which means there's a certain level of guaranteed,
uh, flow and revenue.
Um, and with the right levers being pulled,
it can be increased or improved upon,
and so it becomes attractive for private equity.
The, the hvac uh, industry has become big with, uh,
private equity because HVAC companies have started doing
their spring tuneup
and their fall tuneups,
which is like a hygiene check pretty much.
So that's made them attractive.
Um, uh,
revenue cycle management is huge in private equity now
because we're always gonna have people
who aren't paying their bills.
So they know that there's a constant
and continuous opportunity there.
And as long as dentistry keeps its model of having hygiene,
um, uh, being a routine process,
I think private equity will stay involved until,
until it's saturated, meaning there's, you know,
it's like the, uh, pharmacy industry when there's only three
major pharmacies out there, there's not much left to
pull in and make money on, then the interest falls off.
So when, when dentistry reaches a point,
and I have no idea when that'll be 10, 15 years, where 90%
of dental groups are associated with A DSO
and the smaller DSOs are eaten up by the bigger DSOs, um,
then the interest will, will taper off.
- Very interesting. Thanks.
What will the most effective healthcare leaders need
to be successful in the next two to three years?
- That's a great question. Um,
definitely thoughtfulness, creativity.
I think in, in American culture, iq,
intelligent quotient has been a really big leader in
what it takes to be a good business person.
And I think, uh, post covid,
we're looking more at EQ and aq,
and for anyone that doesn't know what those are,
EQ is emotional quotient, and AQ is adversity quotient.
So being able to
make decisions, um,
in a thoughtful way that
keeps your employees feeling safe,
comfortable rewarded,
and doing so while in the face of adversity
and having quick creative ability
to pivot is gonna be more important than just being a smart
and perhaps wealthy person or group.
It's gonna be more about the hu the human interaction
and how we maintain our relationships.
Turnover, whether it be by dentist
or any other employee group, is probably the most dangerous
and destructive force in dentistry
because it, it causes turnover of patients as they see,
um, the, the business is not running well.
They can sense it, they can sense
when a dentist doesn't care.
They can sense when a,
a hygienist is only there for a paycheck.
They can sense when a front desk person
or an assistant is not, um, happy, uh, or,
or dedicated, uh, to what they're doing.
- Interesting. And do you have any tips for people out there
who may be experiencing a similar situation on how
to keep those employees engaged?
- Uh, get to know your employees?
I think, I think every employee deserves the right
to share not only their, their level of
satisfaction and happiness
with the job they're currently in,
but they deserve the right
to share their goals and where they wanna be.
And we owe it to them to consider them as,
uh, promotion opportunities come about
to consider them first,
but in order to do that, we have to also create a clear path
of expectation of them so that they know
why they weren't chosen
or why they were chosen for an increase or a promotion.
We need to really be transparent.
- Well, thank you so much, Jeff.
Uh, those are some great insights
that you shared with us today.
I look forward to connecting with you again in the future.
- Thanks, Riz. It's my pleasure.
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