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Hi, everyone. This is Arianna Portallatin with the

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Becker's Dental and DSO review podcast. I'm thrilled

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to be joined today by doctor Peraz Edelat,

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the CEO of Clark Street Dental Partners. Doctor

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Edelat, thank you so much for being here

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today. It's great to have you. Thank Thank

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you so much for having me. I'm excited

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to do this.

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Of course. Yes. To start us off, can

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you introduce yourself for our listeners and tell

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us a little bit about your background as

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well?

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Sure. My name is Faraz. I'm an orthodontist

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in, Southern California.

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I went to, USC for dental school, so,

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go Trojans and, UOP

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up north for my ortho residency.

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About five years ago, we started our company

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with our first practice,

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and

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now we've grown to six, soon seven practices.

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And,

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you know,

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during COVID, we sort of saw an opportunity

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where,

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you know, people were slowing down or wanting

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to get out. So, you know, we took

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it, and

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we're excited to be here.

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Yeah. Thank you so much for that introduction.

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Looking forward to getting into our conversation today.

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My first question for you here is, what

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are some of the biggest issues that you're

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following in the dental industry this year?

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Of course.

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I mean, I think one of the biggest

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things right now is,

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increases in

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not only

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sort of supplies, but also

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just on the margins in terms of, marketing

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dollars. You know, the cost per click has

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gone up, and

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the cost of, patient acquisition has gone up.

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So there is a, you know, sort of,

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a nibbling on the on the margins of

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the you know, from the top line.

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But also in terms of,

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there's a few legislative issues and some, regulatory

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things that are coming down the pike, especially,

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where we practice in California that, you know,

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is gonna throw a wrench into some things,

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but

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isn't anything that, you know, we're not prepared

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for, and we,

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haven't been putting our ducks in a row

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to handle.

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Yeah. Yeah. Definitely. I'd love to to get

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a little bit more detail on the legislative,

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proposals that you're following as well. Can you

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give me some more insight into what you're

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keeping track of there? Yeah. Of course. So,

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July 1, they're

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slated to make some changes to Dentical, which

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is,

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you know, the the, government subsidized

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air

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that the residents of California can receive.

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They're cutting

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a few benefits from adults,

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some to kids. It's it's essentially

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a

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a clawback

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of proposition 56,

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which was the, tobacco

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tax that was passed,

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I believe, in 2014. So,

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you know, Dennis, she was, seeing

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a bit of that money go to them.

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But I think as less people smoke,

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there's less money. Well, so I guess this

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is a good thing. Mhmm. But,

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but,

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again, these are things where if,

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if we can apply a little bit of

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foresight

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and prepare for,

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us as operators shouldn't see a huge

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drop in revenue or, services offered to patients.

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Okay. Yeah. I I know you mentioned also

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not putting all your ducks in a row.

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Can you tell me a little bit more

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about what that looks like at Clark Street?

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How are you adapting?

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What Of course. Any changes you're making? Anything

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that you need to keep the same?

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Yeah. So,

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I think payer mix is huge. I think,

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from day one, I've had really, really great

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mentors who,

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have told me, you know, don't put your

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eggs in one basket. So you don't wanna

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have too much exposure to one payer versus

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another. And, you know, this is true for

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PPOs either. You know, PPOs are

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sort of the holy grail in

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in, dentistry. We get excited when we see

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our PPO patients, but, you know, you don't

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wanna overexpose yourself theirs. And same thing goes

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for, you know, government subsidized patients.

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So we've done as good of a job

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as we could have done in terms of,

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you know, balancing out our,

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payer mixes

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and,

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and offering our services to as many people

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as we can so that there isn't

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any one

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payer type that

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you know, should they go away, we

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we see,

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a huge drop in revenue. But the other

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thing is thinking outside the box and offering

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maybe cash plans to patients or in house

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plans to patients where,

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you know, they they can become part of

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our membership group, and

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they don't they don't lose out on any

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of the benefits that their

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insurance was providing them prior to, you know,

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July 1.

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Alright. Yeah. Well, very interesting. Thank you so

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much for sharing a bit more about that.

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I'm also curious to know, what are you

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most excited about when it comes to dentistry

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right now, and what is making you nervous

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about the industry as well?

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Yeah.

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So I think the nervous probably just went

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over. Right? So, you know, they're cutting huge,

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or or some of the portions of our

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revenue.

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But, you know, I think you know, like

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any business, I don't think dentistry is immune

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from AI and

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the things that it can bring and how

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it can shape not just, you know, back

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office and actually a clinical

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delivery of dentistry chairside, because we've seen that

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with,

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OverJED

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and different AI tools that we have where

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it helps,

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with diagnosis and sort of,

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hunkering down and making sure that the diagnosis

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is, a, accurate,

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b, correct for what the patient needs, and

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sort of and and fits our

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rubric of how we wanna treat our patients,

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but also the front office.

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And,

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at the intake or the call center level,

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I've seen

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really, really cool,

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tools in terms of

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AI. The company we just partnered with called

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Flossy,

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where

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they're able to monitor our, call center agents

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and help us train them on

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different aspects of what makes a call

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successful. You know, and a successful call is

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a call that leads to a patient who

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shows up. So they're able to

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gauge for

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empathy at the AI level where

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they've gone through

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so many phone calls and, you know, they've

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they've ran enough

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verbiage by an algorithm that they know what

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can get a call center agent in or

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a a patient in from a call center

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agent.

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And we've been able to use this to

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sit, you know, side by side and have

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one on ones with our call center agents.

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Hey.

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You know, Liana,

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you did great on this call, and this

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is why this patient came in. So good,

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you know, good on you. Keep it keep

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it up. Or,

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hey, call center agent. You know, let's work

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on using this phraseology to make sure that

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we convert these phone calls and we bring

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the patients in.

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Yeah. Super interesting. Thank you. Yeah. Really cool.

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I yeah. Yeah. And I'd love to talk

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more specifically about DSOs as well. In your

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opinion,

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you know, your predictions for this year, what

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will the biggest challenges for DSOs be, in

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2026?

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I think the biggest biggest thing that we'll

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see from,

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DSOs and, you know, I think we're sort

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of

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hopefully, getting on the other side of that

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is is interest rates. Right? You know, as,

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as the DSOs, we're only

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you know, our value comes from our ability

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to grow and scale. So

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to be able to acquire debt from a

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lender,

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if your interest rates are too high, then

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it might not debt service. So you so

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it does hinder growth a little bit.

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Another thing that becomes important

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for DSOs and DSO operators is having a

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reserve.

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We've been blessed enough where we're actually able

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to do a few of our deals with

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cash. So we've

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been able to sort of navigate this minefield

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of

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of the current debt environment.

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And, you know, we have our fingers crossed

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and, you know,

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think that it's gonna get better. So maybe

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we can go back to a little bit

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more of a traditional lending model outside of

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just, you know, using our own cash to

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grow.

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Yeah. It it's interesting you say that too.

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I think I've heard that from a few

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other DSO leaders, that they are optimistic, but

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maybe more so, like, cautiously optimistic just because

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of what the debt environment and inflation kinda

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looks like right now and some of the

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other economic challenges.

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I know

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the

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ADA recently released its economic report for the

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fourth quarter, and it kinda shows that,

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when you're looking ahead at the next six

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months or so, dentist economic confidence is kind

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of declining a little bit more.

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Are you remaining cautiously optimistic, or are you

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more optimistic than maybe some of the other

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DSO executives are?

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I think so. I think,

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inflation is slowly getting under control.

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I think,

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you know, the Fed shoots for a 2%

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rate, but I think, you know, given what's

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transpired in the past,

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I guess, six years now,

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2% might might be a tough goal to

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reach. But, you know, if you can be

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somewhere between 22.7%

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of inflation,

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then,

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lenders feel better about lending.

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And then

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depending on your relationship with the banks as

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well, it shouldn't be an impediment to growth.

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Alright.

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And last question for you here. What will

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the most effective dental leaders need to be

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successful in the next two to three years?

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I think foresight is very important. I think

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as I grow in this industry and as

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I sort of, you know, take my slings

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and arrows, I realized that,

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you know, you gotta keep your eye on

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the ball as to what's currently happening in

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your business and in the industry. But what's

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coming down the pike is also very, very

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important. And not just the bad things, not

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just, you know,

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cuts from the insurance, but also the good

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things that are, you know, coming down the

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pike in terms of,

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you know, job reports being high. So there's,

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you know, higher higher employment in in certain

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areas, so more people have access to insurance.

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So,

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they can patronize our practices.

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Or, like we were just talking about, AI

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and how to help streamline and bring efficiencies

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to a DSO where,

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previously,

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you know, it it would take three to

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four people to process a claim.

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Now, you know, as long as you have

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one solid person overseeing it, a lot of

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this can happen,

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you know, digitally through AI and through AI

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tools.

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Alright. Well, those are the questions I have

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for you today, doctor Edelab. Thank you so

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much for joining us. It's been a pleasure

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speaking with you on our podcast, and I'm

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looking forward to connecting with you again in

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the future. Of course. Thank you so much.