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Howard:
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It is a huge honor for me today to be podcast interviewing John Cotton who's the CEO of Dental Team Performance. Since 1974 John has founded 6 companies and served as vice president of a Fortune 500 company. His performance results demonstrate a clear understanding of how to build a successful business. He is a 2005 graduate of leadership Birmingham, and was at 2007 finalist for Birmingham Small Business Person of the Year award, graduated from High Point University. John is a native North Carolinian. He is a frequent guest speaker for associations, study clubs, and product providers and has published in leading industry publications.
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What I'm so excited about, he is the author of the How To Grow Your Dental Practice in The New Economy, which is on Amazon.com, 5 Key Strategies to Predictable Significant Sustainable Results, and if you order on Amazon they'll ship it that day.
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John, thank you so much for coming on my show today.
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John:
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Glad to do it Howard. It's a pleasure. By the way you can get that book on our website for free, just pay the shipping cost.
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Howard:
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And that is www.whydtp, so that's for why, dental performance.
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John:
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Yeah, whydtp.com.
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Howard:
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Right on. Tell us, what's your views of the average run dental offices today and what value are you helping these dentists see? Why are people contacting you as a dental consultant and how are you helping them?
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John:
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Well, the recession hit and I know of way too many practices that were at the very least stagnant. Many were seeing their production and collections gradually decrease. Some filed bankruptcy. Some of those not necessarily because their practice went down so much but they had over-leveraged some of their investment assets, and anyway it was kind of ugly. We got thrown into this industry. I knew nothing about dentistry and I'm still not sure what a occlusal means. I know where number 3 is and where number 14 is because I've got a crown on them, but the everyday dentist owner that we run into has an upside opportunity of production and collections far bigger than they believe in. My biggest issue is convincing them of that, and frankly the value is really consistent with this thing right here I'm going to show you.
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Howard:
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Oh, my book.
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John:
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It's your book and the title is Uncomplicate Business, and unfortunately in my opinion dentists try to complicate it. I don't think they intentionally do that. They would prefer that it be uncomplicated. You've got a couple of chapters in your book that are similar to mine. One is know your employees. Well, that's incredibly important because at the end of the day the employees are the ones that actually determine what your production and collections are going to be. A dentist doesn't get to do any dentistry unless someone puts a fanny in a chair and keeps them there.
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You had another chapter on know your customers. Well, that goes back to the patient and it's interesting that in your book you call patient customers so I'm going to throw the question back to you. Why do you call them customers and not patients?
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Howard:
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Why do I?
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John:
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Yeah.
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Howard:
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Because they are a customer. I'm in Phoenix, Arizona. They can go to 3,800 other dentists and I have to put them first. It's all about them, not me.
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John:
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Okay, well I agree, and so when I use that terminology I can see that look on dentists face like, well they're our patients. Well, to your point they are a customer and maybe even more specifically they are a consumer because, as you said, you've got 38 other practices they can go to, and they will. If they don't have consistently exceptional experiences at your practice they will find a reason to go somewhere else, and it's no different than going to the grocery store, or going to the drugstore, or going to buy a shirt, or pair of slacks, or a dress, or whatever it may be. They're consumers.
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That's a big deal. It's a mindset change for a lot of dentists to understand that these people that walked into their practices, why do they no show and cancel? Because they don't feel the value, so the value, and one of the values is to create, and I'll say it again, consistently exceptional patient experiences. In my neighboring state, of course I live in Birmingham, Alabama. One of my neighboring states is Georgia. There's a little fast food chicken's place over there called Chick-fil-A. One of my clients actually was the chairman of the Henman last year and Truett Cathy, who passed away unfortunately about a year ago, is the one that founded Chick-fil-A. They make chicken sandwiches, 2 pieces of bread, a piece of chicken, and a pickle. They charge 30% more than the other fast food restaurants do where you can at least get lettuce, ketchup, mustard and mayonnaise, and it's a $6 billion company and they're closed on Sundays.
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If a fast food restaurant Howard can do this, why the heck can't we pull this off in a dental practice? The answer is we can but most dentists have no way of measuring what the patient experience is, and if you can't measure it, if you don't know the score, you can't improve the score. You can tell me it's all wonderful and dandy, and you're getting 5 stars on your Google reviews but that's what, a half a dozen people, maybe 10 or 15, and you've got 1,500, 2,000 active patients. How are you going to score that so you can truly improve it?
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Howard:
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The number of reviews on a dentist's website is directly proportional to how many people he invited over for Thanksgiving dinner.
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John:
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And begged and wrote a check for 100 bucks?
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Howard:
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Yeah, those are all family members so if you see a bad review that's because you made your sister mad. My problem is I've been dealing with dentists for 30 years. I love them. I am one. They only know what they know, so the whole day, John, the bottom line is they're looking into a patient's mouth trying to find the 4th canal. They don't know what's going on in the hygiene room, the front desk. For all they know their receptionist is doing drug deals over the phone upfront, so I want you to help my homies listening to you. How do they know if their patient experience is bad because they found that 5th canal. They got an A on the root canal. Look at the x-ray John it's right there, proof that I'm a good dentist. How would they know what the patient experience feels like?
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John:
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It's got to come from 2 places. There are companies that do telephone mystery calling. That's fine but that's only a piece of the puzzle. What's happening in the practice, and you can't go by what somebody says, oh, we deliver great experiences or we deliver great customer service. You've got to have a way to measure that. Unfortunately some practices might do some kind of survey. It's up at the front desk. It's 15 questions and nobody wants to stop at the front desk to fill out a customer service form, so we narrowed it down to 4 questions that can be answered in 10 seconds. It's a scale of 1 to 10. I'm not going to tell you the secret to what we do here but let me just say that it can be done in the back very quickly and not take one second of extra time, and you end up with a 55 gallon trash bag full of these things. Now we have enough information that we can get a patient experience score in the office.
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If we're doing the telephone mystery calling we combine the 2 and now you've got yourself a legitimate, realistic customer, or excuse me, patient experience score. From that you want it to go up because I can promise you it's not nearly as high as most dentists think it is. As a matter of fact our average in the state of Alabama, Tennessee, and Georgia, and we've got them in New Jersey and Montpelier, Vermont, and Arizona, and California as well, but those 3 states we have certainly a concentration of clients. The average score is a 71. In my book that's a C-. You got to get it to him at 90 or better or you don't have it.
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Howard:
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You're from Alabama. I thought the Bear wanted all the C students. I thought he said, "If you're an A student go to Harvard. If you're a B student hit the Ivy League, but if you're making C's and D's the Bear wants you in Alabama." I thought that's what you wanted at Alabama.
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John:
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Well, that might be what Nick Sabin wants as the head football coach for Alabama but in the professional world of trying to grow a business you've got to be able to retain your active patients, and you've got to add more new patients. We hear this word of mouth all the time, or dentists will say, "John, if I had just more new patients I've have everything solved." The fact of the matter is if you look at the active patient numbers year-over-year it's not uncommon to see that going down, but nobody's paying attention to the active patients, ie the patient experience.
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Howard:
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You say you measure that with the 4 questions?
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John:
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4 questions.
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Howard:
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How do my homies get those 4 questions?
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John:
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Pardon?
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Howard:
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How do these dentists listening to you get these 4 questions?
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John:
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Give me a call or send me an email and I'll send them a sample of it.
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Howard:
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Okay.
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John:
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It's a half page form that has 4 questions on it and the first 3 frankly don't matter. It's just the last one that matters but we disguised that last one so we put 4 in there. They can answer it in 10 seconds. We've got a matrix of how to measure that and you got it going. Get that and the telephone mystery calls done, merge the 2 numbers together, and voila, you've got yourself a for real, legitimate score that any CPA or other consultant would look at and say this is legit.
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Howard:
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How does a dentist create a consistent exceptional patient experience?
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John:
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I'm glad you asked. The name of my book, or the name of our company is Dental Team Performance. There's a reason that it's named that and the answer to your question is not teamwork, not working smarter, not working harder, it's team performance. There's a big difference between, let's go back to your football analogy, a big difference between a football player or a baseball player or any sports player that works hard compared to one that performs. Perform means that you're doing something extraordinary over and above the basics.
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Let's compare it to a dental practice. I know practices have a kazillion protocols and all they want their team members to do is follow the protocols. Our mindset is following a protocol is doing your job. You want me to tell you how to improve your patient experience. You've got to perform to the protocols consistently and exceptionally. How are you going to pull that off? The biggest thing you asked me earlier, what do we see most often, we see very good people working in dental practices. I'm talking about the team members. Nice is they can be, got a heart as big as gold. They've been to every CE class on the planet and they continue to go, and there have been consultants coming through the front door and doing some fabulous training and coaching. How long does it last? Not long unless there is something that puts them in a mindset so that they want to perform, not being told to perform, want to perform, just like you want your patients, excuse me your customers, to want the dentistry. They already know they need it.
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That's going to get into one of our key production drivers called case completion. Just to summarize, team performance to whatever specifically it is that you want to improve.
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Howard:
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You talk about in your book strategic plan is a must have. I would assume 99% of dentists don't even have a strategic plan. You come from the Fortune 500 world were they are that sophisticated. Should a dental office be as sophisticated as a Fortune 500 company and have a strategic plan?
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John:
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No. I've seen Fortune 500 company strategic plans that are 75 pages long. A solo dentist or 2 or 3 or 4 doc practice, be it a specialist or GP, 10 or 11 pages is more than you need but you still need a plan. What is it that the dentist wants to accomplish? I hear dentists tell me all the time, "Well John here's what I'm going to do." Bum bum bum bum bum bum, and they'll have their legal pad out, and they'll be flipping pages, and they'll have 35 things they want to improve. That ain't going to happen. Well, it can happen but you can't look at each one of those things and go do something to help improve them.
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You're familiar with the 80-20 rule. 20% of what you do gets 80% of the benefit, Pareto's Principle. Well, Pareto never told us what's the 20%. What are the main things in a dental practice, the main 2 or 3 things that we can do that will increase our production substantially, back to the 80-20 rule? That's where strategic planning comes in. You can't improve 35 things but I promise you you can improve 3 things.
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Narrow the focus, which was one of your chapters in your book. You got to have focus. Our way of doing things and the results that we have had, in 2015 our clients averaged 28.08 increase in collections. I think that's pretty sporty. I don't know anybody else can pull that off but how did that happen? It happened because we found those 2 or 3 things that have the biggest impact on production and collections. We create an environment where the team members wants to perform to those 2 or 3 things, and get the hell out of the way, and they will chew it up and eat it alive, and perform like you have never seen before.
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Howard:
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What usually are the best 2 or 3 things to focus on to increase revenue like that?
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John:
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We've already talked about one, the patient experience. Always, always, always, I've never seen a practice, and we've served well over 600 practices in 34 states, never seen a practice that scored more than an even B on the patient experience. You want to get them at 90 or above and there's no reason they can't because we do it all the time. That's not necessarily number 1 but it's one of the top 3.
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Number 2, and again not in any particular order, dentists will say, "Well John, you know, we just have so many no shows and so make cancellations. We need more new patients. We need more referrals." I'll say, "Well, timeout. Wait a minute. Why don't we just looked at the schedule? Let's see how many open hygiene appointments you have and go back and look for like 3 months so we can get us a decent average and let's do the same thing with the doc schedule, see how many open appointments we have, because at the end of the day do you really care where the patients come from as long as it's the similar quality to that which you're accustomed?" The dentist will say, "No. I just want to fill the schedule."
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Great. Well, that's what we want to do. You don't worry about no shows, and cancellations, and referrals, and new patients. We've got to create an environment in your practice where the team members want to fill the schedule, so we just call it open appointments, period. Open appointments. Minimize open appointments because it can come from the 4 I just mentioned, no shows, cancellations, referrals, and new patients. It can come from unscheduled treatment. It can come from recall. Do we have to have some massive protocol in place? No, what we have to have in place is an environment where the team members that are responsible for all of this do it, and it's everybody in there, not just the front desk.
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If you have created an environment so that the team members wants to perform to minimize open appointments, it's stunning what they can do.
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Howard:
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You said the 4 things, no shows, cancellations, unscheduled treatment, and what else?
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John:
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No shows, cancellations, referrals, new patients, unscheduled treatment, and recall. Those are 6, so here's what I will suggest often times. I'll say, "Look, Dr. Alexander, you cannot tell me that we can't improve each of those 6 by one per week. You can't tell me that because I know you can. Just one for each of those 6 things. There are 4 weeks in a month so if you improve each of those by one that's 6, times 4, what is that, 24? Yeah, 24. 24 more fannies in the chair in a month. That's 288 any year. I will tell you right now that's about 100 grand new production right there."
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Howard:
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I'm sorry. Just to be clear, 6. Okay, I have 5. I have no shows, cancellations, unscheduled treatment, referrals, recalls, was it new patients?
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John:
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New patients, yeah. One of each. You get one of each. You can't tell me that can't happen if you've got the system in place so that you create an environment where team members want to perform. See, here's the thing. A lot of dentists think that their team members have need a lot of training and education. The answer is not. They don't. They might need some. What they need is this environment. What they need is the desire to perform to the knowledge that they frankly already have.
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Making them sit in the reception area and go over 3 hours of training on telephone skills, okay, it's good. I'm all for that. You want great telephone skills but you can probably pull that off in about 15 minutes. The point is it's not so much of the content as it is what's in their heart and what's in their head. Do they have the desire to perform, and that's the biggest thing Dental Team Performance does is to create that environment.
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Howard:
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Okay. You live in the legendary state of the Bear. How does this dentist become the Bear and lead the team so in their heart they want to perform. The Bear could psych these guys up to get them to run through a wall. How do you become Bear Bryant when you're a dentist and you are trained in math and physics?
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John:
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Well, let me answer this way. You asked me for the 3 key things. There's one more, case acceptance to completion, and that's the biggest one. That's where the 80% of the production is going to come from.
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Howard:
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What was the 2nd one called? Patient experience?
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John:
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Patient experience, open appointments. I don't care whether it's doc or hygiene combined, open appointments, and the 3rd one's case acceptance to completion. Now that's our trademark terminology because case acceptance is irrelevant. If they accept it but don't schedule it, it didn't hit the day sheet and therefore it didn't happen. If they accepted it and schedule it but didn't show up or cancel, it still didn't hit the day sheet so it didn't happen, and it doesn't count, and it doesn't generate any production or collection. It's got to be case acceptance to completion. It's got to get completed. It's got to get on that day sheet for it to matter.
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Okay, so those are the top 3 that we see most often, patient experience, open appointments, case acceptance to completion. There's your 80-20 rule. Don't worry about anything else. If you can improve 1, 2 or 3 of those you're off to the races and it will stay that way for a very, very long time because now you asked me how are you going to create an environment for your team members to, as you said, have Bear run the players through the wall. It is not hard.
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Howard:
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When you're working with dentist in 34 states, 3 countries, and you are increasing their collection on average 28% in 12 months, when you start with them how does the case acceptance to completion, how does it look when you start working with them, and what is the general diagnosis?
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John:
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It doesn't matter what it is. There's always a big increase that's there, and stunningly more than most people would potentially think could occur. Now, we measure case completion off the day sheet. We don't measure it in total production. We measure it off of the day sheet. Now, there's a little bit of math involved and it'd take another hour for me to describe all of that. In fact, it describes it in my book so anybody that's listening just go get the book. Go to our website, get the book, and just pay for shipping and we'll give you the book for free. Chapter 4 is going to cover this exact thing that we're talking about here.
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Howard:
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Do you take emails and phone calls to0? Do you give out your email or phone number?
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John:
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Sure. I can give you my cell phone number and give you my email address.
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Howard:
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Okay, let's have them.
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John:
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My cell phone number's 205-305-4008.
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Howard:
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That's 205-305-4008, and your email's John@whyDPT.com.
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John:
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Yeah, W-H-Y as in the word why, and then DTP as in Dental Team Performance .com.
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Howard:
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I always think at the end of the day that the main job of the fireman is to put out the fire. The main job of the policeman is to catch the bad guy, but the national data shows that for every 100 cavities we dentists diagnose we only drill, fill, and bill 38. Imagine if the firemen only put out 38% of the fires. They'd run them out of town. How do you get that 38% to 48, 58?
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John:
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I'm going to tell you, and again it's in the book, but let me give you my summary. The objective is to get, let's say you're a solo GP and you got 2 at the front, 2 hygienists, and 2 dental assistance. Just to use that as an example you got 16 members. 6 is more than one. The dentist needs to be in somebody's mouth doing whatever their professional expertise is. Operationally you got 6 other people that can have a huge impact on the practice so let's take one of these key production drivers, let's take case acceptance to completion, and let's say for example, that each one of these cases averages 1,000 bucks and production. I'm not going to talk about write offs right now. It could be a fee for service practice. It could be a PPO. It doesn't matter. Just say it's 1000 production. Everybody on this call would know what that would mean to their collections.
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First thing, we got to have a measurement, or what's the score so we can improve the score. Now, vast majority of dentists have some kind of bonus program that's based on collections, the Bam bonus and so forth and so on. Some of them are based on formulas. Some of them are based on the dentist reaching up in the air and grabbing a number that would take care of their collections needs, and anything over that, then the team gets to have 20% of it split amongst them. That's very, very, very common, see a virtually every single day. The problem with the whole philosophy of that though is that it's so far outside of what the team members are thinking all day long, and since they haven't earned it but maybe 2 or 3 times a year and it's a couple hundred bucks, so what? It doesn't matter so therefore they don't care. If they do, it happens about the last week of the month when they realize they're getting close to it and they'll start selling dentistry, which is a bad patient experience.
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Nothing good comes out of that so we're going to look for something that the team members can control, that they can move in the right direction. Well, how about the open appointment numbers? That isn't magic. You can look on your screen, go back 3 months, come up with the average for the hygiene open appointments, and now you know the score. For case completion we would get our numbers off the day sheets, and that again requires some math. For the patient experience score we would get the surveys, we would get the telephone mystery shop, merge them together, now we've got a score. All 3 of these are specific key production drivers that if you improve them, it will mean buckets of production and collections. I'll give you an example with case completion because this is where the big money is.
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Let's say that the way we measure this, we come up with a measurement of 40, 40 cases per month. Now, that is not crowns. It isn't treatment plans. I just won't get into the detail now how we come up with that because that is a fairly in-depth conversation, but let's say we got 40 cases, that's our average, and we've done 6 months of calculations off the day sheets. We know that's the average. The dentist bobs his head up and down, got it. We got 40 cases. I understand it. Each one's work $1000 on average. Got that.
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Now, we can back into the math and create an incentive plan for increasing the 42 whatever we need to increase it to so that the dentist has a return on investment of 10 to 1 or better. Now I don't know about you but a 10 to 1 return on investment on anything you put money in is stupendous. That's 1000%. When maybe in the last 50 years the stock markets generated an average of 8% we're talking about 1000% and we'll create multiple levels in this incentive plan.
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Okay, so now we got a little bit of money involved but we've got a huge ROI. Now how are we going to get the team question, we motivated them already a little bit, but what is it that they're going to do? Now, we're going to talk about the protocol. The protocol for what? Case acceptance to completion. We've got a measurement. We've created an incentive, a reward.
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Now we got to get a protocol in place that everybody can buy into so we'll literally have 2 or 3 or 4 of the team members and the doctor get on the telephone with us for an hour and a half, and we'll work through what that protocol is today, every little step from the time that patient walks in the door to somebody says hello, whether you're filling out the patient history, update, whatever it might be, all the way until the patient walked out that door, whether it's an emergency patient, a new patient, or pro fee patient. Then we'll work with the team in that hour and a half, put it all back together, put it in writing, and everybody has had input and buy in, and they haven't even seen the written copy yet.
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Send it to the dentist to approve. The dentist approves it. We let the team members then approve it, and if so, we've got it ready to rock and roll. We've got a score. We've got a protocol. We've got a reward. Now there's one more piece of that puzzle called skills, but frankly it's negligible. It doesn't matter that much and that skill would go back into the communication skills. I know they're important but most of these people already have it. They just don't use it.
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Howard:
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You say the same about new patients. You say skills, they're important but likely will not achieve your goals. Why do you say that about new patients too?
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John:
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As it relates to what now?
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Howard:
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You just say that when you meet dentists they usually have the skills and that's not the issue, that they're not a successful businessman because of not business. A lot of dentists think they're going to solve all their problems by getting more new patients. What do you say to that?
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John:
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Well, that's fine. It's part of minimizing open appointments but my point is it's not the only part. I gave you 6 different ways to minimize open appointments, new patients being only one. The other thing about new patients is for the most part they're expensive. Somebody's got to do a bunch of advertising. You got to redo your website. You got to get your SEO going. You got to get your direct mail going. You got to get your referral program going, yada, yada, yada. Maybe you're going to do some brochures and all of these things, and you drop 30 grand, and you get 10 or 15 more new patients per month, and here's the bad news. New patients are the worst to cancel and no show so what's the net that you're getting out of that? Not a lot. At the end of the day let's just fill the schedule. No matter where we get them, the team members know where to go get them.
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Howard:
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I also think you're very, very interesting in the fact that a lot of dentists, you say, "Well, have you thought about getting a consultant," and they say, "I just don't have the big money. I just don't have the check for that and I don't even know how to get credit to finance it," but you have a completely different business model. You just say, "Well, if you do better I'll take a percent of that." Tell them how your business model works.
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John:
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We've got it both ways. Some people want to write a check and frankly some want to go to the bank and finance, and our fees are, I would say based on some of the more well known consulting firms, we're lower but not intentionally. It's just a comfort level we have with what we do and the results that we get.
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Howard:
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Do you mind saying what your fee is?
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John:
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Well, it varies. It varies depending upon the practice. It just depends upon the KPDs and the assessment and evaluation that we do. I mean, I've seen them be $35,000 for a full-blown strategic plan including the implementation and all the coaching that has to go on, to 75,000. It just depends upon the practice.
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Now, this other piece of the level that we have though is because we generate such large results in collections, and fast, it's most often there's a financial reward in the first 30 days and then it just goes up quickly 60, 90, 120. Because of that, because of the amount and the speed with which we get results, doing it the right way with the right patient experience, not pushing or selling anything, just creating a great environment in the practice, focused on the right things, as your book notes, we have the ability to either drop the fee and put some of it on the backend, a contingency fee based on the increase that we create of collection. We would look at the last 12 months of collections, divide that by 12, and we would know the monthly average of collections. That would become the baseline.
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If that number goes up by $20,000 then we would take a percentage of that as opposed to perhaps anything on the front end. We've got 10 doctor. DSO right now. We didn't charge them a penny on the front and it's a percentage on the backend of all 10 practices, so we're betting on the upside otherwise we don't get paid. We wouldn't make that bet if we weren't pretty sure that everybody was going to win.
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Howard:
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John, let's switch from the microeconomics of how to run a dental office. Let's switch to the United States of America macro economics where the ADA shows that in 2005 general dentist income peaked at 225, and then all through the next decade slid all the way down to 175, so we've gone from 225 to 175. We've lost basically $45,000 of income. It was actually 219, so 220 to 175. We've lost $4,500 a year net income, over the decade 45,000. Most people think it's still headed that way. Why do you think they went from 219 to 175 and why is the trajectory going down?
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John:
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Well, certainly PPO's have a factor to it. I don't think there's any doubt about that. We have PPO clients that have 12 PPOs. We have clients that our fee for service only and they have no intention of changing. We have some that want to go back from PPO to fee for service and that's a tough nut to crack, so I would say PPOs have a lot to do with that. The other part is the world's changing. Not many years ago Skype didn't exist. Uber didn't exist. I doubt seriously if any of the people on this call have ever heard of not paying a fee on the front but just taking a percentage of the increase and collections on the back. Could somebody else do that? I don't know. If they can get big and fast improvements I suppose they could.
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All I'm saying is the name of my book was How To Grow Your Dental Practice in The New Economy because it's a new economy. Patients are consumers, as we've already discussed. They have more options to do anything they want to, it's unbelievable. Walmart stock just went down. Why? Because you can go on Amazon and buy the same stuff and get it shipped free. The world is changing but the business side of dentistry hasn't. It's like it was in the 1960s or something.
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Now, I know there's some smart people out there. You have your MBA. I don't suggest that you've got to have initials behind your my name. I don't, but you got to step back from the business instead of, you know the old saying, instead of working in it work on it, but you don't have to spend that much time. Just be smart about what you're going to focus on. You can't get everything done. Your team members pull the cart. They're the ones that can load the cart. They're the ones that can optimize case completion. They're the ones that create the optimum patient experience so you better find a way to take care of your team members. They'll take care of your patients. You don't have to put the weight of the world on yourself.
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Most dentists, it's like they're the CEO, CFO, CoO, head of HR, cheat cook and bottle washer. They're putting fires out, HR issues, and it just goes on and on and on, and they're doing that while they're in somebody's mouth, or their thinking about it. Maybe that's one reason they aren't drilling and filling as much as they should. They just got a ton of stuff on their mind, and then they got to go to 4 different study groups and so forth and so on. Then they got to have some family time. It's a crazy environment. They're creating their own problem. They can simplify this thing. Your book says Uncomplicate Business. Yes. Uncomplicate it. Find 3 things that you can improve, unleash your team members, and get the hell out of the way.
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Howard:
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I want to address another macroeconomic problem. The Australian dentists did not listen to, the same ADA chart that says how income slid down, they also at the same time period, the last 30 years, tracked the average wait and American has to wait to get into a dental office. They're a patient record. It's 5.1 days. If they're not a patient record it 6.1 days. It got so bad in Australia that 10 years ago the Australian government said forget it and they just started accepting all these licensed dentist from anywhere around the world. They let literally 1,000 of them move into a small country that only has 25 million people.
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When you talk to dental school deans and when you hear dentist talking to them and they say you're building too many to many new dental schools. You're graduating too many dentists. The Dean always shoots back, are you kidding me? This is America. They have to wait 5 days to see a dentist? They don't have to wait 5 days to buy a microwave or eat a pizza. They could walk into any hospital emergency room and be seen right now. What would you tell a dental office when they're calling and a patient wants to come in, and they're telling them they have to wait 5 to 6 days to get in? Is that a way, are you poised for growth when your patient has to wait in line 5 days to come see you?
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John:
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Oh, I wish it were 5 days for most of the clients that we've worked with. I can tell you it's 3 and 4 weeks. 3 and 4 weeks.
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Howard:
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Put on your customer hat. What if you wanted to get your teeth cleaned this week because you had a big, your daughter, date, whatever on Friday night. What if you had a chipped tooth? How can you be consumer oriented, and patient focused, and patient friendly when you have to wait 3 or 4 weeks to get in?
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John:
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You shouldn't, so why is that? Is it because their work hours? Maybe they're working from 8 to 4 in the afternoon. I see a lot of that. You've got some dentists that have been at it for 30 years or so and they are doing okay, and they want to cut back on some hours, and they want to go chip golf balls at 5:00. Fine. Go for it but there's no reason that for other practices that want to grow, that you can't adjust your schedule. You can add a one day associate. You can get patients in if that's what you want to do. The question is how badly do you want to grow your business? Do you want to get the 45,000 back or how about more like $245,000 in a year?
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We start out this way with me saying there's this huge gap between where they are and what they can have if they'll just open their eyes for a moment. Not get into some complicated coaching and training sessions, just to zero in, uncomplicate the business, focus and find the main things that are going to drive production and collections, and do it the right way for team members and for the patients. It's stunning what can happen.
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Now, as it relates to getting patients and whether it's 4 days or 5 days or 6, I can clearly understand that a practice that has very few open appointments, and I know some of those that have very few. They just don't have it. They're not who you're talking about though. You got somebody that's been in practice for 5 or 6 or 7 years and they're trying to make sure they can squeeze every penny out of the hygiene hours, and if they've got 2 open appointments late in the afternoon they'll send them home because they didn't have anybody in their chair.
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I don't think there's one answer to your question. The fact of the matter is there are plenty of dentists out here that have plenty of open appointments. Now, it might not fit the patient's exact needs, but these dentists have plenty of open appointments to put up new fanny in the chair for whatever reason it is, be it an emergency or a [inaudible 00:40:20] appointment.
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Howard:
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When you consult with practices is the teamwork, the team players, let's go back to football. You're the new head coach of Alabama and is it usually a problem, when you go into a new team do you usually look at the players and say, "No, we're not going to be able to build a team with this quarterback, this running back. We need new players." Is that usually a factor or is that usually not the factor?
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John:
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It may be perceived as a factor Howard. In fact I may have already been told by the dentist, "We've got some dysfunctional situations and I'm not sure that God can fix this organization, but go for it." I could give you example after example where the dysfunction was so severe that if I were going to go in there and whip open the 3 ring binders like I've done years and years and years ago, not anymore, and start training them in the reception area or wherever we might go, they would run us out of town so fast it wouldn't even be funny.
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Now, that's not what I'm going to do though. What I'm going to do is create an environment so that they want to perform because we can evaluate these key production drivers. We can get the score. We can throw the old Bam bonus out because it hasn't worked and the team members aren't any too happy about that collection bonus program. They just do their job and that gives them plenty of fodder, if you will, to complain about the front desk doesn't do thi,s or the hygienists don't do that, or if the dentist would just do this, you know all those complaints you've heard before.
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I've seen time and time and time again just an awful situation flip the switch instantaneously, and all of a sudden they get it. Now, what causes that? There's no pixie dust. It's just a simple, simple focus and a simple, simple formula of knowing the score, let the team members help create the protocol, and then get the reward right. Now, all 3 of those have to be right. You can't just get a reward. You can't just get a protocol. You can't just get a score. All of those have to be right for that particular practice and the math has to work for the team members, and the math has to work for the doctor. When you get that lined up, pull the trigger and get out of the way, and you just unleashed a horde of team members that will take the doctor to the moon and back, and all that rigmarole stuff that goes on in the background, the ying and the yanging and the backbiting, vanishes.
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Howard:
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John, I want to ask you a difficult question that you and I know way no way too well is that you're talking to the dentist, they don't know where they want to go because one hand they're emotionally saying, "You know what? I graduated with $350,000 in debt and I just want to pay that off, or I bought a practice for 600, I just want to pay that off," and then their next breath is, "Well, I want to buy a CAD/CAM machine or I want add operatory, or I want to come remodel, or I want to buy a consultant," and these are 2 conflicting views.
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Do you pay off debt or do you expand? How do you answer that when they're telling you 2 totally mutually exclusive objectives? I want to get out of debt and I want to buy and expand? How do you answer that?
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John:
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Oh my gosh. Well, I certainly see plenty of those situations, specifically CAD/CAM, knock out a wall, bring in an associate maybe, kinda, sorta, what do you pay them, get out of debt, but yet I'm just regurgitating what you've said. Typically I will say "Look, give me 90 days. 90 days from the time we start tracking your results and then make up your mind what you want to do on the purchases or knocking the wall out."If you want to get rid of debt by adding at CAD/CAM you're not going to get rid of debt.
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Now, the CAD/CAM might be the neatest thing that you ever did in your life if you can get the time down and do it in an hour and a half, and you can shortcut, buy blocks for whatever they are, 30 or 40 bucks. I really don't know. I think I've heard that before. That's a great thing to do. A1 visit operatory case, be it one crown. It beats me having to come back. That's a great patient experience, so I'm all in for that but give me 90 days to demonstrate that your team members can perform beyond your wildest expectations and it will drive production and collections beyond your wildest expectations, and they will be happy campers, and you'll virtually eliminate turnover, which is a big problem for a lot of dental practices because there's no reason for them to stay there. They get their paycheck? They can go down the street and get a paycheck and get $.50 more in our.
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All of these things coalesce to create a practice environment where everybody's winning. Everybody's winning. The patients win. The team members win. That's the key. You got to get the team members to win so the patients will win, so the doctor will win. Guess where we spend our time? Dental team performance. It's about the team. You got to get that right, then go by the CAD/CAM. Knock out the wall. Pay off some debt.
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Howard:
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I want to ask you another question. You come from the Fortune 500 before you landed on dentistry and in the Fortune 500 you can't ever pick up the Wall Street Journal without reading all about mergers and acquisitions, but you go in a dental office they think of growing a practice with more marketing, more new patients. Very few of them realize old man McGregor's selling his practice. He's now 102. I'm just going to buy another practice. What do you think about mergers and acquisitions, M&A activity in dentistry? Does it usually work out good? Is it usually a disaster? What are you thoughts on that?
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John:
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It just depends. It depends upon the team that you have, because I'm going to go back to the team members, and it depends upon the team that you got in the practice that you bought. You go buy a practice, and I'm involved in several DSO's. We are involved in several DSO's right now that are aggressively recruiting and part of what we do for those DSO's is to evaluate the practice before they buy it because we can tell them what the upside is in a matter of 30 minutes if we've got the data. I think that's incredibly important.
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Okay, so I'm going to go buy Dr. Smith practiced because he's retiring. He's 67 years old or 77 years old and wants to hang it up. Evaluate what you've got and figure out what your upside is. To me, it's not so much about what the collections numbers are right now. It's where are they going to be 24 months from now because that's what matters, and these DSO's are looking at [inaudible 00:48:01]. They're looking at how they can grow that up and then spend it off, and then go do it again, and so forth and so on.
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If I were a dentist I would be buying practices left and right but I would have my systems in place to grow them, so for example if I can grow a practice sport by 20% for every 5 practices that I buy, I just got a free one because my other 5 are up 20%, which is 100%. All that matters if you're going to buy a practice is, is it going to be, for what reason? If you could try to buy 2, or 3, or 4, or 5, or 6, or so, or 10, or 15, that's one thing. If it's going to be a onesie, just because you need additional active patients, I think that's a smart thing to do.
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We just kicked off a practice in Huntsville, Alabama last week that did that very thing and it's been a lifesaver. Now, he couldn't afford us or anybody else a year ago, or 2 years ago when we first started talking to him, but he did somehow wiggle in, get these 500 active patients, and it's going to be again game changer for him, but we're involved with that practice now and all of these things I've been talking about our in play as we speak, and so he's going to optimize what he's getting out of what he has plus he's going to optimize what he gets out of what he balked.
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Howard:
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Huntsville, Alabama. Wasn't that where the solid rocket fuel boosters for the space shuttle was built?
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John:
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Still is.
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Howard:
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Still is?
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John:
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Yeah, that's a huge, huge area.
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Howard:
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That's a very high-tech NASA, high-tech area. That's one of the highest tech towns in America. You mentioned DSO's. Some dentists think that all their problems are because they're 60 years old and there used to not be any DSO's, and now there's all these Heartlands and Pacifics, and Aspens, and that's a problem. What are your thoughts on DSO? How big of a chunk of market you think they'll have in 25 years?
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John:
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A lot.
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Howard:
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What percent do you think that-
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John:
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25 years, let's back up to maybe 5 years from now. I mean I really don't know their market share now.
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Howard:
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20% they say.
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John:
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20?
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Howard:
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They say 20. Do you believe that?
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John:
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Oh, I do believe that. You go to any of these big meetings, you're at them all the time. We were at the Henman just 3 or 4 weeks ago and there was a DSO right across from us from our booth at the Henman. They have 48 practices, 2 booths up was another one that has 178 practices in 5 states. Right behind us was another one that has 48 practices, 46 practices in 3 states, and these were names you'd never hear of. You never heard of them before.
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It's happening under everybody's nose. It's amazing in this state, Alabama's not known to be the most progressive state in the country, but I can name 8 DSO's in this state, and I'm not talking about the big ones, I'm talking about local, 2 dentists get together, and they go to the bank and they borrow little money, and they start buying practices. It is unbelievable what is going on, so if it's 20% now, 25 years from now it wouldn't surprise me if it's 80% or more.
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Now, you're going to have folks always coming out of dental school but guess what? These DSO's are getting in line at the dental schools hiring these folks for a couple hundred grand with benefits and paying off student loans. What do you think they're going to do?
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Howard:
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Are these DSO founders and CEOs, Are they usually dentists or are the usually just business people?
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John:
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Well, it's across the board. The ones we're dealing with are fine, upstanding dentists of 25 and 30 years that were childhood friends, or become friends in their local community. Maybe they didn't either grow up there. That's where the ended up and they become friends, and they decide one day it let's go do this, so they pool some money and go out and buy a practice, and that say, "Well, that was pretty cool," and then they go buy another one. Well, that was pretty cool and next thing you know they've got 5 or 6. Now, they got to have to have something behind them to get the operations going and that's the problem with the small ones. They don't have the money to go hire a CFO. Frankly they don't need one. They don't have the money to hire a COO. They're not big enough to need one yet, but one of these days they will because somebody's got to put all this together.
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Now you've got the whole issue of how are you going to grow these things? Once you get out to about 20 practices you're hiring somebody to help run the show, and I'm not talking about just doing a P&L statement.
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Howard:
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Yeah, it's going to definitely get very, very, very more sophisticated. If you have some of those local dentist CEOs who have big groups like that, feel free to give them my email, Howard@dentaltown.com. I think those would be a very fun and exciting interviews.
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We're almost out of time. I want you to just paint a picture of my homies in the chair. I just want them to get done. I just want them to be happy and healthy, and a lot of times they're just paralysis by analysis and the biggest problem I see with dental consultants across the board is that everyone who needs one the most won't get help, and all the people who were already doing a million are using all the dental consultants. You look at the data. The average dental office does 675. You talk to your consultant. What is your average office do? It's always a million, just like the average dental office can't get any patient for 5 days, first thing you said is your client can't get anyone in for 3 or 4 weeks.
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It's like everybody that I know, including myself that uses consultants, is kicking butt and we just want to do better, and you're talking to thousands of dentists right now who desperately need help, so paint a picture. They're thinking in the head, what is this like? I call you at 205-305-4008. I email you. How does it start? I mean do you come to my office for a day, 2 days, a week? Paint them a picture these last 5 minutes on how this looks because, like I say, my goal is that they get help and they always jump at the chance to buy an $80,000 laser or $100,000 x-ray machine, that they won't drop 30, 40, 50 grand on a consultant that could make their stress just be there dreams come true. They always want to buy a shiny object.
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That's what maybe you should do. You should wear a tinfoil hat and put some red blinking lights, and then in an antenna, and change your name from John Cotton to John Laser, and then your business would explode.
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John:
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Well, I think that we've made this breaking news announcement on our website last week about this contingency fee. In other words we have to evaluate each practice but 9 times out of 10 we have no problem not charging a penny upfront for anything. We'll wait on the backend because we know it's going to come because we've done the evaluation. You asked me the first thing, it's this. We call it Growth Analysis Predictor.
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Howard:
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Put it up higher. Put it up over your face. Okay, there it is. Dental Team Performance Growth AnalysisPpredictor.
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John:
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Right. This takes about 15 minutes for any dentist to complete. You don't have to go to the front desk. You don't have to pull up a computer. Just get it close and then you fax this into us. I've gotten 3 today, 2 from California and I forget where the other one came from. That initiates it. There's no sense wasting times hooting the breeze about something. I mean I'm happy to do it just to have a conversation if somebody wants to do that. They can ask me specific questions but if they really want to get into it, we need that form done.
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You complete that little form, the Growth Analysis Predictor, and we'll likely request a little bit more information, and then we're going to have a 45 minute telephone call and we're going to get into the numbers specific to that practice, and what we believe we can predict would be your growth. They won't believe it because we're going to be, we probably aren't going to recommend 28.08% because we're not going to make that prediction and then not be able to meet that. We might be in the 15 to 18% range. It just depends upon the practice.
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We can predict, and of course we're always going to shoot a little low, but we're going to get what we predict and we're going to hit quickly, like 90 days. Done. They're going to see an instant change in their team members. I don't care how dysfunctional the practice is or how good the practice is. I mean most of our clients frankly aren't doing poorly. They're doing 800, 900, 1 million 2.
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Howard:
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I know that's the ones that use consultants. That's what I'm trying to change. I'm tired to get the guys who do 500 to use consultants.
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John:
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That's exactly our point Howard. Look at it this way. The top 20% of dentists will hire a consultant in a New York second and they don't mind writing the check because they know what's going to happen. You can go on our website and listen to some of the interviews of some of the clients that we've had and you'll hear them say that, but if you think about it, if the top 20% will hire a consultant, what's the bottom 80% going to do? They can't afford it or they just, a spouse won't let them do it, or they just can't part with it. They just don't see it, so that's one of the reasons that we believe we have opened up a huge market by having this contingency plan.
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The practice that we just brought on yesterday is doing $21,000 a month in collections. Do you think they're going to write a check? No. They can't. We've just got a practice in Chattanooga-
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Howard:
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I think the reason a lot of them don't get help, take alcoholism and substance abuse. They're a doctor. They don't want to admit that they're drinking vodka on the way to work. A lot of it's fear and shame. They're embarrassed for you to come in and see their numbers, and they just would rather just kill it in the closet. They don't want anyone to know so it's fear and shame, but I want you to address this specifically. This is what I hear the most of all the rural doctors. Oh, John. He's from a big city in Birmingham. He don't know what it's like in Fort Scott, Kansas. I'm in Edna, Oklahoma. He's a big-city boy. He doesn't get my town. My town is always different and if you're a consultant from a big city, you're never going to get my town. What do you say to that?
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John:
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Okay homies, This little redneck right here's from a small town in North Carolina where there were 2 stoplights when I grew up. Yes, I rode my bicycle to elementary school 5 miles and rode it back. That's the truth, so I come from very humble beginnings. I have no letters behind my name. I'm lucky, lucky, lucky that my parents could scrape up enough money for my brother and me to go to college. Now, that's not one of these wah wah wah things. It's just to say for those folks, look, I've been there. I have baled the hay. I've fed the cows. I've done it all. I've made my own money when I was 10 years old delivering newspapers so I could buy another bicycle to deliver no more newspapers.
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We have clients that are in the middle of Buckhead, Atlanta, a very ritzy high-end ZIP Code. We have clients in lower Alabama that doesn't have a stoplight, and I could put you in my car, and in an hour and a half take you to places that you've never heard of, and there's a little solo GP there. They might even be taking some Medicaid, doing a lot of PEO, trying to do invisiline on the side once in a while, and they're doing $700,000 a year, and mom is happy, and the kids are happy, and they're all going to church on Sunday, and that's the picture that you're referring to.
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Then that practice goes from 700 to 950. Why? There are similarities and there are differences. The similarities, everybody's practicing dentistry. You got a hygienist, a dental assistant, and somebody at the front desk. The differences are we all have different fingerprints. We all have different DNA. We all grew up from different moms and dads, and brothers and sisters, and aunts and uncles, and grandparents, and next-door neighbors. We have so many influences and our personalities. Every practice is different. Until you create that commonality in the practice for team performance, not teamwork, you aren't going to get there and it doesn't matter where you are.
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Fee for service, PPO, small town, big city, makes no difference. You got to look at each practice, understand what makes it tick, put it back together in a manner that it creates that environment where you have a dental team performance.
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Howard:
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Come on homies. You can get his book for free. Just pay shipping and handling. Get How to Grow Your Dental Practice in The New economy, just go to whydtp.com. You can email John at whydtp.com. You can call him on his cell phone, 205-305-4008. This is not a commercial, John didn't give me a penny. I didn't give him a penny. This podcast is free. Everybody on this show is free. I just want you to be healthy and happy, and dammit, if you're stressed out financially you're not healthy and happy, so get happy. Call John, and John, thank you so much for spending an hour with me today. Thank you so much.
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John:
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Howard, it's quite a pleasure. I would suggest everybody keep coming out to your website because it is unbelievable. There's nothing like it. There are a lot of folks that are trying to duplicate what you do but it's unbelievable, and if you don't have this book, Uncomplicate Business, you got to get it.
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Howard:
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Thanks buddy.
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