1 00:00:00,170 --> 00:00:03,170 This is s Hatton with the Becker's Dental Pasta. So podcast, 2 00:00:03,710 --> 00:00:06,690 I'm thrilled to be joined today by Elliot Zeal, 3 00:00:06,840 --> 00:00:09,370 c e o of Select Dental Management. Elliot, 4 00:00:09,370 --> 00:00:11,050 thank you so much for being here today. 5 00:00:11,200 --> 00:00:12,330 Thanks for having me. 6 00:00:12,370 --> 00:00:15,530 Could you introduce yourself and tell us a bit about your background? 7 00:00:16,190 --> 00:00:18,280 Sure. Uh, my name's Elliot Zibell. 8 00:00:18,280 --> 00:00:22,240 I'm the Chief Executive officer and co-founder of Select Dental Management. 9 00:00:22,270 --> 00:00:24,440 I founded Select Dental with my, uh, 10 00:00:24,440 --> 00:00:29,040 good friend who I've known since I was five years old, Dr. Jonathan Mason. And, 11 00:00:29,040 --> 00:00:33,080 uh, we started the business out of, um, his experience, uh, 12 00:00:33,080 --> 00:00:37,840 purchasing a practice, uh, growing it significantly, and also the challenges, 13 00:00:37,890 --> 00:00:42,160 uh, that he had just managing the day-to-day administrative tasks. So, uh, 14 00:00:42,160 --> 00:00:45,440 our goal when we started select was really to, um, 15 00:00:45,440 --> 00:00:47,400 provide a differentiated alternative, 16 00:00:47,430 --> 00:00:51,520 a a partnership model where we would really preserve that clinical autonomy, 17 00:00:51,520 --> 00:00:55,120 which is really important to the, the high quality doctors that we support, 18 00:00:55,380 --> 00:00:59,240 but also to, um, help those doctors really, uh, elevate their practices, 19 00:00:59,240 --> 00:01:03,200 patient care, patient experience, et cetera, and to drive, uh, 20 00:01:03,200 --> 00:01:07,480 long-term sustainable growth. So we launched the business in 2018. 21 00:01:07,800 --> 00:01:09,640 Today we sit at, uh, 22 00:01:09,640 --> 00:01:14,400 40 practices in eight states supporting about, uh, 150 doctors, 23 00:01:15,090 --> 00:01:19,440 uh, 700 employees, and, uh, about, um, 200,000 patients. 24 00:01:19,950 --> 00:01:20,750 Fantastic. 25 00:01:20,750 --> 00:01:24,790 What a great opportunity to be able to start a business with your childhood 26 00:01:24,790 --> 00:01:25,623 friend. 27 00:01:26,300 --> 00:01:30,470 Yeah, no, it's, uh, . It's, uh, it, it it's funny that, uh, 28 00:01:30,470 --> 00:01:34,270 when we see people that, uh, we grew up with and, and, uh, it's funny to, 29 00:01:34,270 --> 00:01:35,310 to talk about how we're, 30 00:01:35,310 --> 00:01:37,270 we're in business together now and it's worked out very well. 31 00:01:38,270 --> 00:01:41,800 That's great. Thank you. My first question for you is, 32 00:01:41,800 --> 00:01:45,040 what are the biggest issues you're following in dental today? 33 00:01:45,620 --> 00:01:50,390 Yeah, I mean, I think when we talk about just the, the, the four wall, uh, 34 00:01:50,390 --> 00:01:52,310 performance of practices, I think the, 35 00:01:52,310 --> 00:01:56,510 the major thing I think we're all wrestling with is just the supply of 36 00:01:56,510 --> 00:01:58,230 specialized labor, uh, 37 00:01:58,230 --> 00:02:02,790 namely hygienists and inflation that we're seeing in, in labor costs. 38 00:02:02,790 --> 00:02:04,990 And I think that's the main thing. 39 00:02:04,990 --> 00:02:07,950 It's hard to find people and when you find them, um, you know, the, 40 00:02:07,950 --> 00:02:11,790 I think the cost of labor, um, particularly in those specialized roles is, 41 00:02:11,930 --> 00:02:16,470 you know, has, has inflated substantially, um, and just becomes continuing, 42 00:02:16,760 --> 00:02:20,390 uh, to be a challenge to, to find, uh, the right people, uh, 43 00:02:20,390 --> 00:02:23,430 and put them in the right seats. Uh, that's probably the biggest challenge that, 44 00:02:23,430 --> 00:02:27,310 that we see at the moment. Uh, the second challenge is just, you know, I think, 45 00:02:27,310 --> 00:02:30,670 uh, and it hasn't really manifested or hurt our business yet. 46 00:02:30,710 --> 00:02:35,150 Maybe this is more of a, of a concern, but really the, the macro environment, 47 00:02:35,150 --> 00:02:38,990 right? Um, you know, I think, uh, you know, certainly with interest rates, uh, 48 00:02:38,990 --> 00:02:42,870 substantially higher inflation continuing to, um, increase, 49 00:02:43,750 --> 00:02:48,500 uh, and now issues in the broader banking system, um, you know, I think, uh, 50 00:02:48,500 --> 00:02:50,660 that's certainly something we're keeping our eye on. Again, 51 00:02:50,660 --> 00:02:53,780 we have not seen that impact, um, you know, uh, 52 00:02:53,780 --> 00:02:58,420 any discernible metrics that we track, like revenue per visit or, 53 00:02:58,510 --> 00:03:01,840 um, cancellation rates, uh, et cetera. But, uh, 54 00:03:01,840 --> 00:03:04,120 that is definitely something that we're keeping our eye on. 55 00:03:05,610 --> 00:03:07,530 Interesting. And that sort of leads me to my next question, 56 00:03:07,530 --> 00:03:10,930 which is what are you most excited about and what makes you nervous? 57 00:03:12,050 --> 00:03:15,780 Yeah. Uh, from an excitement perspective, and we're excited, uh, 58 00:03:15,780 --> 00:03:20,620 really about the, uh, organic growth opportunities that, that we are, 59 00:03:20,990 --> 00:03:25,140 uh, capturing, uh, at scale in our practices and across our platform. 60 00:03:25,480 --> 00:03:28,580 And I think a lot of those, uh, opportunities are, 61 00:03:28,800 --> 00:03:33,540 are being created by leveraging technology and, and new technologies. And, 62 00:03:33,640 --> 00:03:35,860 and I think it's, it's an exciting time to, 63 00:03:35,860 --> 00:03:40,420 to see all the innovation happening in, in dentistry. Um, I think, 64 00:03:40,480 --> 00:03:43,340 you know, not only are we seeing much better, um, 65 00:03:43,690 --> 00:03:48,140 access to data and analytics via our own, uh, 66 00:03:48,140 --> 00:03:51,180 proprietary data warehouse that we've, uh, created, 67 00:03:51,240 --> 00:03:55,500 but we're also seeing the ability to take that data and not only just, you know, 68 00:03:55,590 --> 00:03:57,220 um, push out scorecards, 69 00:03:57,220 --> 00:04:01,260 but to actually drive automation of administrative tasks, 70 00:04:01,910 --> 00:04:05,340 um, and, and to kind of free up our, uh, 71 00:04:05,340 --> 00:04:08,740 team's capacity in the practices to really focus on the patients in front of 72 00:04:08,740 --> 00:04:11,940 them. And so I think, uh, as we look out over the next, you know, 73 00:04:11,940 --> 00:04:16,060 one to two years, we've got a pretty robust, uh, set of opportunities, 74 00:04:16,710 --> 00:04:21,340 uh, to really drive, um, you know, improved care and experience and, 75 00:04:21,390 --> 00:04:24,060 uh, you know, we feel pretty confident that we can, uh, 76 00:04:24,300 --> 00:04:28,420 continue to grow our practices, uh, double digits organically on a, 77 00:04:28,420 --> 00:04:32,540 on a same practice basis, which is our, our target over time. And, uh, 78 00:04:32,540 --> 00:04:36,100 and something we, we've achieved over time and we are achieving, uh, y um, 79 00:04:36,100 --> 00:04:37,500 year to date in 2023. 80 00:04:37,840 --> 00:04:41,760 Thank you. And other, uh, any things there that make you nervous? 81 00:04:42,560 --> 00:04:46,540 You know, ho honestly, uh, I mean, I think it's kind of a little bit, uh, 82 00:04:46,540 --> 00:04:50,340 maybe linked to the, you know, the issues or, or the challenges of, you know, 83 00:04:50,340 --> 00:04:55,260 labor supply and, and just general infl inflation macroeconomic environment. 84 00:04:55,600 --> 00:04:59,540 But aside from, you know, those kind of external factors, I mean, 85 00:04:59,540 --> 00:05:02,580 we feel very confident in our ability to, 86 00:05:02,910 --> 00:05:06,180 to drive growth and improvement in, in our practices. 87 00:05:06,410 --> 00:05:10,580 I think the only other thing, you know, we didn't mention as like an issue, um, 88 00:05:10,580 --> 00:05:14,380 and I think this is not, uh, an issue for driving organic growth, 89 00:05:14,380 --> 00:05:18,700 but I think will become and is becoming a challenge with driving acquisition 90 00:05:18,700 --> 00:05:22,860 growth is clearly the, the cost of capital and, 91 00:05:22,860 --> 00:05:26,940 and access the capital. Um, you know, I think that that at, 92 00:05:26,940 --> 00:05:29,780 at the more institutional level have clearly, uh, 93 00:05:29,780 --> 00:05:34,020 changed and cost of capital has gone up substantially and the amount of capital 94 00:05:34,020 --> 00:05:37,620 folks can, can procure has also changed. Um, 95 00:05:37,620 --> 00:05:42,100 and I think it'll be interesting to see how that really impacts multiples 96 00:05:42,340 --> 00:05:43,820 for, um, you know, 97 00:05:43,820 --> 00:05:47,900 kind of these tuck-in or kind of ones z two Z acquisitions that are the, 98 00:05:47,900 --> 00:05:52,700 I think the, the primary drivers of consolidation in the industry. And, uh, 99 00:05:52,700 --> 00:05:54,220 you know, I think there's, there's, um, 100 00:05:54,220 --> 00:05:57,320 definitely some resetting that seems to be occurring and, and, 101 00:05:57,320 --> 00:06:00,240 and that likely will continue to occur, you know, 102 00:06:00,240 --> 00:06:03,160 over the near term as I think the, the, 103 00:06:03,160 --> 00:06:05,560 the changes in capital availability and costs, you know, 104 00:06:05,560 --> 00:06:07,440 trickle down through the m and a markets. 105 00:06:08,100 --> 00:06:10,740 Thank you. My next question for you is, 106 00:06:10,770 --> 00:06:14,500 what will the most effective healthcare leaders need to be successful in the 107 00:06:14,500 --> 00:06:16,180 next two to three years? 108 00:06:17,160 --> 00:06:17,450 I, 109 00:06:17,450 --> 00:06:22,330 I think they're gonna need to have a real ability to drive organic 110 00:06:22,330 --> 00:06:26,650 growth at scale, right? There's only two ways to grow, uh, a, a, 111 00:06:26,650 --> 00:06:30,250 a dental group and one is through acquisitions. And, and I think, you know, 112 00:06:30,250 --> 00:06:34,370 my perspective is that it's gonna be, you know, uh, harder to do and, 113 00:06:34,370 --> 00:06:38,650 and probably less attractive than it was from a financial perspective. Um, 114 00:06:38,650 --> 00:06:41,810 and then the second way is to drive organic growth. And I think, uh, 115 00:06:41,920 --> 00:06:46,650 when we talk to other folks in the industry, um, you know, investors, et cetera, 116 00:06:46,720 --> 00:06:51,370 I think there's certainly been a shift in more of a value placed on 117 00:06:51,740 --> 00:06:56,650 ability to drive post affiliation, organic growth, um, 118 00:06:56,650 --> 00:07:01,290 as being likely a major driver of overall platform 119 00:07:01,290 --> 00:07:03,770 growth over the near and medium term. And I think, 120 00:07:04,000 --> 00:07:08,170 I think people are starting to wake up and realize that the value of a, 121 00:07:08,170 --> 00:07:13,010 of a dental group is not at all really driven by how quickly can you go acquire 122 00:07:13,010 --> 00:07:14,770 things. You know, I think, uh, 123 00:07:14,770 --> 00:07:19,490 it's really driven by how consistently can you, 124 00:07:19,660 --> 00:07:22,530 uh, not only acquire, uh, or affiliate, 125 00:07:22,630 --> 00:07:27,610 but how consistently can you drive, um, growth the right way? 126 00:07:27,610 --> 00:07:32,450 How consistently can you drive best in class operating metrics like, um, 127 00:07:32,450 --> 00:07:37,450 patient retention, doctor retention, team member retention, employee engagement, 128 00:07:37,730 --> 00:07:41,810 patient satisfaction, um, in addition to organic growth, uh, 129 00:07:41,810 --> 00:07:43,410 from a revenue and EBITDA perspective. 130 00:07:43,410 --> 00:07:48,210 And so I think that those groups and those leaders that understand how to drive 131 00:07:48,210 --> 00:07:50,410 that and can get the buy-in of their teams, 132 00:07:50,740 --> 00:07:54,410 because I think the other challenge is, you know, it doesn't work to go and say, 133 00:07:54,410 --> 00:07:58,970 Hey, we're gonna do this cuz it's gonna grow EBITDA or increase our margins. 134 00:07:58,970 --> 00:08:02,530 Like there has to be, um, a tieback to your mission, vision, 135 00:08:02,530 --> 00:08:07,290 and values so that people are really motivated by what you're trying to, 136 00:08:07,420 --> 00:08:11,570 um, have them do. Because if they don't understand the why and why it's, 137 00:08:11,570 --> 00:08:12,120 you know, 138 00:08:12,120 --> 00:08:16,530 good for their patients and for their teams and for them and their practice, uh, 139 00:08:16,530 --> 00:08:20,930 if they don't understand the how, if there's not accountability around it, um, 140 00:08:20,930 --> 00:08:23,930 if there's not a scoreboard and you don't have the analytics platform to be able 141 00:08:23,930 --> 00:08:28,770 to report on those things, then it's just really hard to drive, I think, 142 00:08:28,980 --> 00:08:33,730 um, growth at scale and initiatives at scale. So to me, I think, you know, 143 00:08:33,730 --> 00:08:36,970 the groups that get understand how to, I not only identify opportunities, 144 00:08:37,430 --> 00:08:38,450 but really, uh, 145 00:08:38,450 --> 00:08:41,450 drive buy-in and execution around them are gonna be the ones that really 146 00:08:41,450 --> 00:08:44,490 differentiate, you know, over the, the near medium term. 147 00:08:44,490 --> 00:08:48,410 And I think that will further solidify their value proposition in the 148 00:08:48,410 --> 00:08:52,170 acquisition market, uh, you know, near term and over the long term as well. 149 00:08:52,810 --> 00:08:54,290 Fantastic. Well, Elliot, 150 00:08:54,290 --> 00:08:57,130 thank you so much for being here today and for your insights. 151 00:08:57,280 --> 00:08:59,410 I look forward to connecting with you again in the future. 152 00:09:00,180 --> 00:09:01,580 Great. Thanks for having me.