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This is Ritz Hatton with the Becker's Dental fia. So podcast,
I'm thrilled to be joined today by Scott Kne,
founder of kne U s o Advisory Group. Scott,
thank you so much for being here today.
Thank you for having me.
So just to start us off here,
could you introduce yourself and tell us a bit about your background?
Sure. My name is Dr. Scott Kne. I'm actually a dentist by training.
I went to Ohio State for undergrad and dental school, finishing dental school,
uh, back in the late nineties. I joined my dad right outta school.
I was one of those lucky kids, uh, whose dad was a dentist. And I got to,
got to work with him for seven years before he retired. And when he retired,
one of my early associates and I partnered up and started buying practices
around the Toledo, Ohio area of retiring doctors. And we, uh,
eventually put those into six physical locations, uh,
multi-specialty, and, uh,
ended up selling that to a larger private equity backed dsso from the east side
of Ohio. I stayed around there for a couple of years,
helping them grow a little bit,
but then I had the opportunity to partner with a private equity firm in Chicago.
And in 2014 we formed Elite Dental Partners.
I was the CEO and Chief Dental Officer. Over the next several years,
we grew that over 110 locations in 12 states. And, uh,
eventually had, uh, another exit there.
And my wife and three kids still were in Toledo.
And every week I was going to Chicago spending,
spending the week and then coming home. So after doing that for, you know,
several years, decided to, uh, to call it a day and hand it over the reins. And,
uh, since the fall of 2019,
I've served on several boards of, of private equity backed DSOs.
I'm a non-executive director of Pacific Smiles Group in Australia,
which is 130 plus location, publicly traded dso.
And currently I work, uh, with Beam Benefits.
I'm the Chief Dental officer and VP of network development.
Wow. It sounds like you have tons of great experience there. Um,
I do have to ask,
what was it like working with your dad towards the beginning of your career?
Yeah, it was fantastic. Um,
having a mentor that you obviously love,
trust and, and is,
is immensely valuable. You know, there was never a question of,
Hey Scott, here's uh, how I see this case and here's what you should look at.
And, uh, it was, it was a really great experience. And, you know,
just as an aside, my, my first extraction, um, was at, uh,
a bicuspid. So it had two small roots, and of course I broke it. And, you know,
it was great having him there saying, Hey, dad,
can you come over and help me with this? So, I mean,
that's just one little example, but, uh, it was great.
Now I joked that I had the longest interview process that anyone's ever had. Um,
but, uh, no, it's a fantastic experience.
Wonderful. Thank you so much for sharing. My first question for you is,
what are the biggest issues you're following in dental today?
Sure, and I, I think there's four specifically that, that I,
uh, and,
and following and that really have a huge impact on dentistry as a
whole. One is the, is the shortage of hygienists, you know,
anywhere from five to to 10 plus percent of hygienists
left the workforce during covid.
And really what that's led to is kind of a follow up to this,
which is wage inflation, not just for hygienists, but for the rest of the,
the dental staff as well. And along with that is, is the supply inflation?
I think student debt is, is a really big problem.
And then the, the last one, and we've dentist,
we've known about this forever. Uh, it's just inconsistent diagnosis.
Um, you know, the, the old article from Reader's Digest, right?
You go to eight dentists, you get 15 different diagnoses and you know,
we need to do better. And, you know, some, I'm really, uh,
excited about some of the newer technologies that are gonna help with that part
of it. Um, but yeah, the, the workforce shortage,
inflation and student debt, uh, really are,
are big problems that I'm following right now.
Interesting. So looking ahead to towards the future of dentistry,
what are you most excited about and what makes you nervous?
Sure.
Really excited about the medical dental integration. Uh,
we've known for years that if somebody's mouth has problems that
odds are they have other problems,
but now we're actually having empirical data that shows us
that, you know,
having periodontal disease can impact a lot of your chronic disorders.
Um, we have orthopods,
we have cardiologists and cardiac surgeons now that realize if the patient's
mouth is not healthy, it's gonna impact the, the,
the longevity of our surgery. So they're asking for dental clearances. Um,
I'm really excited about some of the, the DSOs in the US that are getting into,
uh, the, the medical dental space and trying to integrate it even further. Um,
I see this as a huge growth opportunity within, I think within this decade,
you know, so really over the next, uh, you know, six and a half plus years, um,
we're gonna see this continuing to, uh,
be a primary focus of, of dentistry and and of medicine.
Um, another one, getting back to that inconsistent diagnosis.
I think artificial intelligence is going to change dentistry.
There's,
there's gonna be a huge practice level benefit of using it for
patient education. You're never gonna find a dentist that says, Hey,
I I need somebody else or another, I need technology to help me diagnose. Well,
a lot maybe do, but anyway,
what's gonna be like our intraoral cameras that came out in the eighties where
now I can run this through, run my x-rays through ai,
it can highlight areas of concern, I can verify, yes,
those are cavities and, and a pictograph really show a patient what's going on.
Problem in an X-ray right now is, it's,
it's just different shades of gray with this. It's colorized,
it helps and really brings dentistry, you know, kind of from the,
the dark ages. Um, and I equate it to kind of, you know,
I know nothing about cars when I take my car to the mechanic,
they tell me I knew need a new fencer valve. And I'm like, okay, what do I know?
Um, and, and really for the most part, dentistry's a blind item.
You have to trust your dentist and that they're gonna provide you with great
care. And I love anything that helps, uh,
that we can use as an adjunct to help build that trust.
Now I take it a fur a little step further, you know,
being on the insurance side also. Um,
now I can imagine as a dentist, I'm sitting in my ch in the chair,
a patient comes in, I think that they need to have a procedure done.
I submit the x-rays,
they instantly get adjudicated and sent back,
and I can now tell the patient, Hey, insurance already approved it.
It's gonna cost you X dollars, and I had a cancellation.
Should we take care of that now?
And so that will make the entire system much more efficient.
AI can also be used for every, uh,
tons of other things you look at. Now,
3D scanning and AI can now help design, um,
crowns, uh, dentures, night guards, you know, anything that,
that you can kind of dream up and, and makes that process more efficient.
Um, you know, so now it, it, with, with the advent two of 3D printing,
we can move a lot more, uh,
procedures into the dental office, make 'em better, faster, cheaper,
and provide better care for our patients. Um,
so if you look at, at 3D printing,
why not print your own, uh, clear liners? Why not print your own night guards,
your own crowns, and, and now when your patient's there,
you can treat them more holistically,
get them fixed and save them time,
because now they don't have to make multiple trips to your office. Now, the old,
oh, the, the old cad cam process, um,
while it's gotten better, it still is slower and, and expensive,
where I really think that 3D printing, uh,
is going to change that entire dynamic and allow us to treat
more people again, better, faster, and cheaper.
I think some of the other things that I'm really excited about is just the,
the diversity of dentists and the diversity of the dental workforce.
Uh, you look at the demographics of those going into dental school now, um,
a lot more women, I think, uh, there's several years ago,
but the class sizes now are over 50% women, um, minorities.
And so, you know, dentistry is, is becoming a, uh,
a much more diverse and, and a better field.
And as dsso leaders,
we're gonna have to learn how to work with these,
these groups. Um,
now I, you know, I'm excited, but I'm also nervous, uh,
about the growing access to and the cost of capital.
And this is both for single and multi-site, uh, healthcare, not just dentistry,
but you know, healthcare in general.
So anyone who's been paying attention knows that the cost of capital,
when you go to the bank now, it's much harder to get money. Um,
but you're also paying a lot more for it. And so the,
I think for those less capitalized practices,
for those less capitalized DSOs who are gonna have a harder time accessing
capital, uh, there may be some issues coming up, you know,
in the next year to, to, to, to two or three years. Um,
you know, as we sit today, we've,
we've lost a couple of large banks that have been taken over by bigger banks.
And so some of the regional lenders that love lending to dentists,
they're just putting you through a higher, uh, uh, review.
I remember when my dad and I did an addition to our building,
the bank kept calling, and this was in the early two thousands.
Are you sure you don't need more money? I mean, they, they couldn't, but,
but give us as much money as we wanted. And, uh, you know,
nobody knew from loan covenants and, and all those kinds of things. And
we started to see that in the oh 8, 0 9 crisis,
but then lending was back to the 0% and everybody could get money. Uh,
but we are starting to see a little bit of a pullback, uh, in the lending space.
So from just, again,
a single practice to multi-site utilizing capital,
make sure, making sure that your, if you're a single dentist,
making sure that you're making the right investments and technology and your
workforce and those types of things. And at the DSO level, make the same thing,
but also making sure you're partnering with the right practices that are
providing not just ebitda, but cash flow. I always like to joke,
you can't buy groceries with your ebitda, you need cash flow for that. Um,
so, you know, everyone is just taking a, uh, a, a tighter look at that.
Fantastic. Thank you for sharing. My last question for you is,
what will the most effective healthcare leaders need to be successful in the
next two to three years?
I think that two major themes that, uh, that I would, that I kind of go back to,
uh, would be efficiency and delivery and what I'll call
workforce continuity. So on the efficiency and delivery,
we can't keep seeing our fees going up and up and up and up. Now, dentistry,
we are lucky versus medicine where we can still be fee for service
and we can keep setting our fees at, at whatever we want, right?
If I wanna charge $10,000 for a crown, I can do that.
But there's still a lot of dentists that are taking PPOs, and as we know,
those rates are not growing very, very quickly. So, uh,
we need to figure out how can we provide the best care
and efficient low cost manner. And really that's where DSOs,
the good DSOs have, have, have, uh,
been able to grow, grow their market share, grow their, their practice numbers,
uh, location numbers and all of that stuff. Every time. Uh, over the years,
I've always, I, I've, I've, I've done several studies, uh, of patient paces,
not just my own, but you know, I actually hired people to do a study.
The reason why people stay away from the dentist is cost and convenience.
And the old model of, I'm a dentist,
I'm gonna work three and a half days a week in my own practice,
you can still do that,
but getting patients is gonna be a so much harder because everyone wants to do
things on their phone. I wanna make an appointment on my phone. I,
when I feel like I wanna get my teeth cleaned,
I want to be able to do that again, which is going to lead to more DSOs.
And through purchasing, power marketing,
all of those allow DSOs to take more PPOs and leverage their
size to get better pricing from their suppliers, which, you know,
allows you to take, uh, lower fees.
You basically just kind of move your profit structure down, right?
You're making the same profit, uh, because your, your input costs are lower,
you're getting paid less, but your input costs are lower.
So it's the same difference. Um, now,
workplace workforce continuity,
when you, you look at staffing,
we need to figure out how to provide that flexibility.
The staff is demanding flexibility. How can we,
as leaders in the healthcare space,
how can we provide that flexibility for our staff to keep
them happy, engaged, motivated, and not looking for other work?
The board that I'm on in Australia has really done an amazing job with
this. So we have 130 plus locations,
we have over 900 practitioners,
and the average dentist works about 21 and a half hours a week.
And allowing them, again, that flexibility, you know, what, I wanna work from,
from eight to three so I can be home with my kids.
And there's so much competition now for labor,
both on the professional side, as I mentioned before,
with hygienists and dental assistants and everybody else, and supports,
and I talk about front desk, um, and, and the other,
the other parts of the team. And
we need to know how to support them. Uh,
career passing for the support team,
what I really loved about growing Elite was taking
an office manager who, you know, they're an office manager.
They're really in a single practice. They're not going to ever get more,
be more than an office manager if they're taking an amazing office manager and
helping them to grow in their career to a regional manager,
to a, uh, president, to a chief operating officer. Um,
you know, all of these roles that are,
that are available that most people like, ah, I work in a dental office.
What more can I do with my life? And,
and really showing people there is a direction if you want to do something more,
be open to any kind of training and other opportunity because we want,
as, as your employer,
we want people to keep shooting for the stars. And then one more thing on,
on the workforce, again, is creating an inclusive workforce. Our patients,
our staff are more diverse and we need to make sure that they feel safe and
supported in, uh, in their place of work.
That's great. Well, Scott,
thank you so much for your time and your insights today.
It's been a great discussion.
I look forward to connecting with you again in the future.
Thank you. I appreciate your time.