Hi, everyone. This is Arianna Portallatin with the
Becker's Dental and DSO review podcast. I'm thrilled
to be joined today by doctor Peraz Edelat,
the CEO of Clark Street Dental Partners. Doctor
Edelat, thank you so much for being here
today. It's great to have you. Thank Thank
you so much for having me. I'm excited
to do this.
Of course. Yes. To start us off, can
you introduce yourself for our listeners and tell
us a little bit about your background as
well?
Sure. My name is Faraz. I'm an orthodontist
in, Southern California.
I went to, USC for dental school, so,
go Trojans and, UOP
up north for my ortho residency.
About five years ago, we started our company
with our first practice,
and
now we've grown to six, soon seven practices.
And,
you know,
during COVID, we sort of saw an opportunity
where,
you know, people were slowing down or wanting
to get out. So, you know, we took
it, and
we're excited to be here.
Yeah. Thank you so much for that introduction.
Looking forward to getting into our conversation today.
My first question for you here is, what
are some of the biggest issues that you're
following in the dental industry this year?
Of course.
I mean, I think one of the biggest
things right now is,
increases in
not only
sort of supplies, but also
just on the margins in terms of, marketing
dollars. You know, the cost per click has
gone up, and
the cost of, patient acquisition has gone up.
So there is a, you know, sort of,
a nibbling on the on the margins of
the you know, from the top line.
But also in terms of,
there's a few legislative issues and some, regulatory
things that are coming down the pike, especially,
where we practice in California that, you know,
is gonna throw a wrench into some things,
but
isn't anything that, you know, we're not prepared
for, and we,
haven't been putting our ducks in a row
to handle.
Yeah. Yeah. Definitely. I'd love to to get
a little bit more detail on the legislative,
proposals that you're following as well. Can you
give me some more insight into what you're
keeping track of there? Yeah. Of course. So,
July 1, they're
slated to make some changes to Dentical, which
is,
you know, the the, government subsidized
air
that the residents of California can receive.
They're cutting
a few benefits from adults,
some to kids. It's it's essentially
a
a clawback
of proposition 56,
which was the, tobacco
tax that was passed,
I believe, in 2014. So,
you know, Dennis, she was, seeing
a bit of that money go to them.
But I think as less people smoke,
there's less money. Well, so I guess this
is a good thing. Mhmm. But,
but,
again, these are things where if,
if we can apply a little bit of
foresight
and prepare for,
us as operators shouldn't see a huge
drop in revenue or, services offered to patients.
Okay. Yeah. I I know you mentioned also
not putting all your ducks in a row.
Can you tell me a little bit more
about what that looks like at Clark Street?
How are you adapting?
What Of course. Any changes you're making? Anything
that you need to keep the same?
Yeah. So,
I think payer mix is huge. I think,
from day one, I've had really, really great
mentors who,
have told me, you know, don't put your
eggs in one basket. So you don't wanna
have too much exposure to one payer versus
another. And, you know, this is true for
PPOs either. You know, PPOs are
sort of the holy grail in
in, dentistry. We get excited when we see
our PPO patients, but, you know, you don't
wanna overexpose yourself theirs. And same thing goes
for, you know, government subsidized patients.
So we've done as good of a job
as we could have done in terms of,
you know, balancing out our,
payer mixes
and,
and offering our services to as many people
as we can so that there isn't
any one
payer type that
you know, should they go away, we
we see,
a huge drop in revenue. But the other
thing is thinking outside the box and offering
maybe cash plans to patients or in house
plans to patients where,
you know, they they can become part of
our membership group, and
they don't they don't lose out on any
of the benefits that their
insurance was providing them prior to, you know,
July 1.
Alright. Yeah. Well, very interesting. Thank you so
much for sharing a bit more about that.
I'm also curious to know, what are you
most excited about when it comes to dentistry
right now, and what is making you nervous
about the industry as well?
Yeah.
So I think the nervous probably just went
over. Right? So, you know, they're cutting huge,
or or some of the portions of our
revenue.
But, you know, I think you know, like
any business, I don't think dentistry is immune
from AI and
the things that it can bring and how
it can shape not just, you know, back
office and actually a clinical
delivery of dentistry chairside, because we've seen that
with,
OverJED
and different AI tools that we have where
it helps,
with diagnosis and sort of,
hunkering down and making sure that the diagnosis
is, a, accurate,
b, correct for what the patient needs, and
sort of and and fits our
rubric of how we wanna treat our patients,
but also the front office.
And,
at the intake or the call center level,
I've seen
really, really cool,
tools in terms of
AI. The company we just partnered with called
Flossy,
where
they're able to monitor our, call center agents
and help us train them on
different aspects of what makes a call
successful. You know, and a successful call is
a call that leads to a patient who
shows up. So they're able to
gauge for
empathy at the AI level where
they've gone through
so many phone calls and, you know, they've
they've ran enough
verbiage by an algorithm that they know what
can get a call center agent in or
a a patient in from a call center
agent.
And we've been able to use this to
sit, you know, side by side and have
one on ones with our call center agents.
Hey.
You know, Liana,
you did great on this call, and this
is why this patient came in. So good,
you know, good on you. Keep it keep
it up. Or,
hey, call center agent. You know, let's work
on using this phraseology to make sure that
we convert these phone calls and we bring
the patients in.
Yeah. Super interesting. Thank you. Yeah. Really cool.
I yeah. Yeah. And I'd love to talk
more specifically about DSOs as well. In your
opinion,
you know, your predictions for this year, what
will the biggest challenges for DSOs be, in
2026?
I think the biggest biggest thing that we'll
see from,
DSOs and, you know, I think we're sort
of
hopefully, getting on the other side of that
is is interest rates. Right? You know, as,
as the DSOs, we're only
you know, our value comes from our ability
to grow and scale. So
to be able to acquire debt from a
lender,
if your interest rates are too high, then
it might not debt service. So you so
it does hinder growth a little bit.
Another thing that becomes important
for DSOs and DSO operators is having a
reserve.
We've been blessed enough where we're actually able
to do a few of our deals with
cash. So we've
been able to sort of navigate this minefield
of
of the current debt environment.
And, you know, we have our fingers crossed
and, you know,
think that it's gonna get better. So maybe
we can go back to a little bit
more of a traditional lending model outside of
just, you know, using our own cash to
grow.
Yeah. It it's interesting you say that too.
I think I've heard that from a few
other DSO leaders, that they are optimistic, but
maybe more so, like, cautiously optimistic just because
of what the debt environment and inflation kinda
looks like right now and some of the
other economic challenges.
I know
the
ADA recently released its economic report for the
fourth quarter, and it kinda shows that,
when you're looking ahead at the next six
months or so, dentist economic confidence is kind
of declining a little bit more.
Are you remaining cautiously optimistic, or are you
more optimistic than maybe some of the other
DSO executives are?
I think so. I think,
inflation is slowly getting under control.
I think,
you know, the Fed shoots for a 2%
rate, but I think, you know, given what's
transpired in the past,
I guess, six years now,
2% might might be a tough goal to
reach. But, you know, if you can be
somewhere between 22.7%
of inflation,
then,
lenders feel better about lending.
And then
depending on your relationship with the banks as
well, it shouldn't be an impediment to growth.
Alright.
And last question for you here. What will
the most effective dental leaders need to be
successful in the next two to three years?
I think foresight is very important. I think
as I grow in this industry and as
I sort of, you know, take my slings
and arrows, I realized that,
you know, you gotta keep your eye on
the ball as to what's currently happening in
your business and in the industry. But what's
coming down the pike is also very, very
important. And not just the bad things, not
just, you know,
cuts from the insurance, but also the good
things that are, you know, coming down the
pike in terms of,
you know, job reports being high. So there's,
you know, higher higher employment in in certain
areas, so more people have access to insurance.
So,
they can patronize our practices.
Or, like we were just talking about, AI
and how to help streamline and bring efficiencies
to a DSO where,
previously,
you know, it it would take three to
four people to process a claim.
Now, you know, as long as you have
one solid person overseeing it, a lot of
this can happen,
you know, digitally through AI and through AI
tools.
Alright. Well, those are the questions I have
for you today, doctor Edelab. Thank you so
much for joining us. It's been a pleasure
speaking with you on our podcast, and I'm
looking forward to connecting with you again in
the future. Of course. Thank you so much.