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VIDEO - DUwHF #702 - Joe Whitehouse
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AUDIO - DUwHF #702 - Joe Whitehouse
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Dr. Whitehouse graduated from the University of Iowa Dental School in 1970. He was an Air Force dentist in Okinawa for two years, practiced in his home town of Peoria, Illinois for one year and moved into a practice in California as an associate in 1973. He opened his own practice by buying out a large practice for the patients, and subsequently, two other practices bringing the patients into his practice. Dr Whitehouse obtained a Masters In Counseling from the University of California to enable him to help fearful/apprehensive patients.
He became a co-founder of the World Congress of Minimally Invasive Dentistry and had one of twelve Experdent learning centers in the US/Canada. He then entered into the high tech portion of his practice around 2000 with Cerec, digital x-ray, four lasers, had an intra-oral camera from 1990.
Dr Whitehouse has authored approximately twenty articles for Dentistry Today, Compendium, and the Profitable Dentist.
In 2005 he set up a dental clinic at a Mayan village in Guatemala and recently at a Salvation Army facility in Oakland. He sold his practice January 2015 and now volunteers his services.
Howard Farran: It is just a huge honor today to be podcasting interviewing a buddy of mine for probably three decades, Dr. Joe Whitehouse. He graduated from the University of Iowa Dental School in 1970. He was an Air Force Dentist in Okinawa for two years, practiced in his hometown in Peoria, Illinois for one year, and then moved into a practice in California as an associate in '73. He opened his own practice by buying out a large practice for the patients and, subsequently, two other practices, bringing the patients into his practice. Dr. Whitehouse obtained a master's in counseling from the University of California to enable him to help fearful, apprehensive patients.
He became a co-founder of the World Congress of Minimally Invasive Dentistry and had one of twelve expert learning centers in the US and Canada. He then entered into the high tech portion of his practice around 2000 with a CEREC digital x-rays, four lasers, and a [inaudible 00:00:59] camera from 1990. Dr. Whitehouse has authored approximately twenty articles for Dentistry Today, Compendium, and The Profitable Dentist. In 2005, he set up a dental clinic at a Mayan village in Guatemala and recently at a Salvation Army facility in Oakland. He sold his practice in January 2015 and now volunteers his services. Man, that is a walk-through time. Wow, that's a lot of stuff in a bio. How are you doing, Joe?
Dr. Whitehouse: Well, I'm so happy that you have allowed me to share with you and your listeners some of the things that are going on in my life and have gone on in my life. As I was just saying to you when we were just talking, our big passion now is travel. We've been in 134 countries. Just came back from two weeks in Jordan and Oman and a month in Iran and finding that one of the issues that I think is salient to dentists, especially young dentists, is how much time are you gonna take off? Your editor Tom and I talked at one of our meetings that you know about in the past about me writing an article about people taking enough time off. I think that you've read, probably, that people who take time off are refreshed. I know Blatchford had a great concept of every seventh week you take off. That wasn't enough for me to get out in the world the way I wanted to, but the point is that I think a lot of dentists need to recharge themselves. Some work 52 weeks a year, nearly, and killing themselves and then getting burned out. Maybe we can talk about, for a minute or two, just preventing burnout for any of the dentists that are listening.
Howard Farran: What do you think the cause ... I'm sure it's not simple, binomial left-right, up-down, yes-no, I'm sure burnout's a lot of factors, it could even be clinical depression, but there are a lot of threads ... If you go to Dentaltown, and I hope you use that search function because that damned thing cost be $50,000 from Google, if you hit burnout, in fact I'll do it right now, there's so many long threads. So, you've been doing dentistry for how long?
Dr. Whitehouse: 47 years.
Howard Farran: 47 years, and you look great, by the way. You know how you're giving your age away? Because you have an AOL email address.
Dr. Whitehouse: Oh, okay.
Howard Farran: Dude, if you upgraded to gmail ...
Dr. Whitehouse: I've got gmail also.
Howard Farran: If you upgraded to gmail, they'd think you're only 52, because that's how good you look. But look at all the threads, it just goes on forever. Burnout, when to avoid burnout, you know? What do you think is the cause of burnout?
Dr. Whitehouse: I do believe that, initially, over any given period of time, people have anxieties about whether they're going to make enough money, number one, and so I've gotta work longer hours rather than more efficient hours. The efficiency factor in a practice would be the guy that works four days a week, then goes down to three and he's still making the same amount of money. You've seen this for years and years and years. I got down to two days a week, and of course I had five different associates over 25 years, but my income never really fluctuated with the time that I practiced because I believe I got very efficient and I had incredible team members that allowed for that.
I think the second thing is that when dentists go away, they're anxious that their practice isn't going to be there if they go away for a period of time, and yet hardly anybody knows when you're gone because they have appointments already set up. You go away for two weeks. Who knows that you're gone? Only the emergency patient might know that you're not there. Other than that, I've been gone for a month at a time and never lost a patient ever. I think the trust factor on the part of the dentist, that his practice will be there when he gets back, needs to be looked at.
Howard Farran: The whole idea of Dentaltown in 1998 was that no dentist would ever have to practice solo again, and I can tell you that in my 30 years, dentists who are in a group, or have an associate, or there's three of them in there, they just seem so much happier than the guy that's all by themselves. [inaudible 00:05:26] Talk about why this implant system or that with your hygienist or assistant. Do you think it's more fun to go to work every day to have an associate? I hired an associate day one and I was so young and dumb, I hired a guy just as young and dumb as I was just because I thought he'd be so damned fun to work with. Bob Savage. We're two Crayton boys and I just loved having him just because we giggled all the time. Do you think having an associate reduces burnout or having a partner?
Dr. Whitehouse: I think it does. I had five different ones, all of whom I liked, I think that's a key factor. And number two, I want to say how did I happen to be able to have an associate in the first place. I understand where you came from. My approach was that I bought three different practices and brought them into my own. If we take a look at the guy who thinks, "Well, I really don't have enough dentistry to bring somebody in," that's a legitimate issue. But the issue could be solved by how creative the person is with marketing, which you know a lot about, and if in fact you buy another practice, a leveraged buyout, all you're doing is copying industry that are constantly buying up companies.
I mean, Google, how many companies do you think Google has bought? They buy them for a reason, and the first practice that I bought doubled my net income the first year. The practice was twice as big as mine but I took no equipment. All I wanted was the patients. The second practice I bought, I paid $15,000 in a check to the guy, and I made a net income that year of $40,000 on those particular patients. What it also gave me was the number of patients I needed for an associate. So my take on this is young dentists need to know who's the older guy down the street that may be willing to sell his practice to me if I take him to lunch over a period of months, let's say, or years, which I did this one guy. The third practice that I bought was a guy that wanted to go back to law school, which he did. Each time I bought a practice and brought it into my own, financially it made sense, but it gave plenty of work for the associates to work more hours and therefore when I went away, my income never dipped.
Howard Farran: I've been harping on this for a long time. I got a MBA from ASU and all they talk about is M&A activity, mergers and acquisitions, and dentists never do this. Last year, Bayer bought Monsanto, AT&T bought Time Warner. I've seen so many times when it'll be a small market, maybe ten thousand people and there's ten dentists in there and old man Mcgregor puts his office for sale and they're like, "Why do we want to attract some young, high energetic, twenty-five year old kid to crush it for forty years? I'll just buy that practice, move the charts into my office so I eliminated someone on the supply so now instead of ten providers, there's nine, and I just bought these patients." Then if you divide the number of active patients they got by the acquisition price, then you have a head on what your marketing was for new patients. A lot of these practices, they're buying them for $100 a head and it's hard to get a new patient for $100 a head if you're buying Google ads, Facebook ads, 1-800-DENTIST.
Why do you think you were so smart and a pioneer in mergers and acquisitions in dentistry and why do you think it's so overlooked in our industry today?
Dr. Whitehouse: I had a love for business before I ever got into dental school. You may or may not remember, but I remember when credit cards were just starting to come out. In the late 60s, when I was in dental school, I thought, "I'm gonna have every patient have a credit card that they can use in my practice so I don't have any accounts receivable and even if they only use the credit card there, it would work out for me." Of course they used it for other things, but the idea was that I was thinking about these kinds of things and, Howard, just for the listeners so that they understand a little bit about my background, I have an NASD license, so I can sell securities on Wall Street, I had a broker's real estate license and a California insurance license. So I had a gravity toward business and understanding how business actually worked. So making these buyouts only made common sense to me, just as you're talking about the big boys buying up their competitors and the guy that brings in the patients into his practice is doing the very same thing. No difference.
I do believe that a lot of dentists have a particular personality type that sometimes equates to a cottage industry where they want to practice by themselves. If you ask them when they go to the dental meetings, "How's it going?" It's always perfectly okay. Everything's perfectly okay, but the reality is that's not true and it would really be better if they actually talked to each other about what's really going on in your practice because I might learn something from you. Dentists may go to a lot of meetings but they don't often talk to each other enough and they sort of just stay in their office and don't necessarily network like people outside of dentistry.
I think networking is really where it's at. I'm gonna learn more by asking somebody a question than I am by talking myself. I'm always out there trying to learn more and more and more and more. It's a bell-shaped curve, as you know. On the one hand, the 20% of the dentists that do 80% of the learning. We know that 20% of the dentists make 80% of the money. It's just that 80-20 rule, but 20% of the dentists doing 80% of the learning are usually gonna come up with, by listening, some concepts that somebody else at the other end of the curve is just never going to even hear because they don't show an interest in trying to learn more.
I think that the issue that we often face is that we think we're just dentists, but you know this, you're a businessman. For years and years and years, you may remember that we didn't want to use the word sell. We don't sell dentistry, do we? We are there as a clinician to provide healthcare. Well, it's just not true. We do sell dentistry. We sell a crown versus a high definition television and that competitor with us has often killed some of the great potential treatment plans because the person has a wife that says, "No, no, no, no. You can't go get that root canal done. We need to do x, y, or z." So we're always competing and selling. I think the biggest problem that we've had in dentistry, really, are communication skills and the inability for dentists to really communicate on the patient's level what the patient really needs, in the way of support, so they can actually say yes to a treatment plan that makes sense for them.
I think Bill Blatchford really helped me out. I know you know Bill. Bill was a guy that had an ability to understand the communication parts of it and even though I had a counseling degree and I knew how to ask a lot of questions concerning feelings and that kind of thing, when it came to asking questions, Bill really helped me ask the right questions of the patients. So you get back to this, if you've got enough patients coming in from a different practice, who've already got a mindset about how that dentist practiced, I need to build trust as rapidly as possible. The whole trust building thing is based upon how quickly can that patient have trust in me and my team so that they're willing to actually, and I hate to use this word buy in, but actually buy into what's good for them.
I know that you know. You communicate exceedingly well and you've done it from the beginning. I remember seeing you down at Puerto Rico. I don't even know what decade that was, but you were out there as a young guy and, my god, you just really knew how to take a room and make it get exciting and I want to have every patient feel that they're in the right place.
Howard Farran: So much of the noise today ... You know, we've lived through several revolutions. The first revolution was the dental materials revolution and that's why Gordon Christensen started CRA, because everybody had all these $500 bonding hits and no one knew which one worked. That was the foundation to launch adhesive dentistry, cosmetic dentistry, minimally invasive dentistry, bonding, all that. And then we entered into this digital age where everything's radiographs, digital radiographs, digital and CAD/CAM. So much of the noise is that for these young kids to be successful, they gotta go all digital, but when I see the market and I say, "You need dentistry," it seems like half of America says fear, "Oh my god, are you gonna hurt me? You gonna give me a shot? I don't like going to the dentist," and the other half is money, like, "Oh my god, that's gonna be expensive." I just don't hear a bunch of demand saying, "Well I just want all digital laser same-day dentistry."
You've got a degree in counseling. What did you learn from your Master's Degree in Counseling to address half the planet who's afraid of getting a shot even though they have a bone through their nose and a sleeve tattoo and four earrings and their belly button pierced?
Dr. Whitehouse: It's a really good question. My thesis for my master's degree was on treating fearful, apprehensive patients. So I went through the literature and there was a lot of research done by several dentists, especially at the University of Washington, that answered your questions. The majority of people who are not fearful still may not like coming to the dentist. Would you agree?
Howard Farran: Yes.
Dr. Whitehouse: In other worse, all in all, if you asked them if they'd rather be in Hawaii, they would say, "Yes, I would rather be in Hawaii." But they'll come to the dentist. Whether they will actually buy into the treatment plan has to do with what were their past experiences. So let's gie an example. Bill Blatchford used to give a great thing. If I say to you, Howard, "You need a crown," and you go, "No, I don't," where are we? But if I ask the question, which is what I learned how to do, "Howard, how long would you like that tooth to last?" Now, you're in control. You're the patient and I always want the patient in control. So when the patient says, "Well, I'd like to keep that tooth," I said, "I can help you with that. There's one solution and that would be covering that tooth with a crown to protect it so you can keep it indefinitely."
You see the difference there? If I just tell somebody, and if the patient has had an authoritarian dentist and left because of that reason, I obviously have to take a different tact and my tact always was that I would tell people when they sat down in the chair for the very first time, "I need to be trustworthy before you trust me and I am here to help you get what you came for, and that's an outcome." I just simply say this this way. You walk through the door looking for an outcome. You didn't come for a refrigerator. You came for dental care. So when, in fact, they sort of, you know how body language is, they sort of settle back and uncross their leg and let their arms relax. I'm always sitting in a bay window looking at them when I'm talking with them at their level. I want them to experience me as working for them.
If you ask me what did I learn in my counseling degree program, I really learned how to reflect back to the patient what they were saying so they felt understood. I think the problem with a lot of dentists is they want to just go right to the mouth and all they want to do is diagnose, diagnose, diagnose before meeting the patient and, doing what you probably do, make a friend of that patient. I know that when I talked to Ken Koch about this, some time back, and you know Ken, he's one of the greatest inventors in dentistry, one of probably the smartest guys I've ever met, he said, "Joe, you know, this makes a lot of sense." He hadn't thought of it the way I happened to. I remember we were riding in a car, you know he used to put on this program up in Oregon, this crazy program where we were out shooting rifles in the snow and doing all this. He had a program where we, the dentists that were there, were sharing with each other, like I was alluding to earlier. The idea here that we could take a patient and allow them to feel completely differently about their dental experience and lose their apprehension over time is a really great experience for me to see that I have given them more than just a crown, I have given them the ability to come in with less fear and apprehension.
I think the other thing is that when we're talking about treatment plan, I did learn this from Bill Blatchford and I used it every patient all the time, I wanted to know what their dental goals are. Howard, tell me, how do you want your teeth to be in 20 years? Seriously, Howard, how do you want your teeth to be in 20 years?
Howard Farran: I just want to be alive in 10. I'm not even thinking of my teeth in 20.
Dr. Whitehouse: Okay. Well, we could go on and on ...
Howard Farran: Yeah, they want to keep their teeth and they want to do it more for mental health and aesthetic reasons than actually dental health. When women lose their teeth and need dentures, a lot of them are emotionally traumatized. It kills their marriage or sex life. Their kissing, their loving, all that. I bet if you asked your wife Arnette how much money you'd have to give her to pull her front incisor, she wouldn't take a billion dollars for it.
Dr. Whitehouse: You're totally right. So when I ask a person how they want their teeth to be in 20 years, we write everything down that they say and then my next phrase is, "The only treatment that I'm gonna recommend for you is the treatment that'll help you, Howard, meet your goal." So this is not my treatment plan, it's theirs. So when I say it that way and they've never, ever questioned me about that approach because it's all focused on them. So when we write this down, every time they came in we would want to review their goals to see if there's any change. So say if I said, "Well, how do you feel about how you look?" "Oh, I look just fine." But five years later if I said, "How do you feel about how you look?" They go, "You know, I know you do veneers. My wife has been telling me that maybe all these bruxed teeth probably need some treatment in front and she's tired of my smile." Maybe it took five years to get there, but if you raise your fees every year, I didn't lose anything, I just get it when it was time.
In fact, I'm doing my gardener right now. My gardener's been with me probably 25 years and he just became my patient. I'm intruding his lower anteriors so I can cover them with veneers without taking anything off the incisal and he's totally bought into the fact that his wife is tired of looking at his bruxed smile. Feelings aren't good or bad, they just are, and so if the first person that comes in is very apprehensive about dentistry, they only got it in two ways: past experience and other people's stories. So how many times have you heard somebody say, "I don't want a root canal." "Yes, tell me more." "Well, my friend Tommy had a root canal and it was terrible and oh my god." "Oh, you've never had one? Oh, okay, let's talk about do you want to keep the tooth or not?"
So we're gonna go back. We're always going back to their goals and making the treatment plan fit the goals so that I probably, when I would read the dentists were doing 100% of their treatment plans, I never believed that because that couldn't be true or they were just filling amalgams. I'll give you a specific example. I had a lady come in, brought in by her daughter. My marketing was, I thought, pretty good. The daughter brought her in because the daughter thought I could maybe do something for her mother that her own dentist couldn't do. So she had her own dentist. After two years of just calling her once every quarter by my receptionist, she ended up at 72 of letting me put her in braces and then doing a full mouth reconstruction of what, thirty-forty thousand now in today's dollars. This lady had a dentist. How was it that this dentist wasn't able to accomplish what I did? He didn't communicate well enough with her. He kept treating her with the most basic of things like partials that she didn't have to have, and he never really helped her get to where her goals were. Once the daughter was listening to how I was interacting with her mother, she was now her mother's advocate for her mother going ahead and she got the treatment done and I wrote an article for Dentistry Today all about that experience.
Howard Farran: Is that the one on the wall behind you?
Dr. Whitehouse: No, you know what that is? Remember Phil at Dentistry Today?
Howard Farran: Yeah.
Dr. Whitehouse: The editor. Phil put me on the front page.
Howard Farran: Yeah, that is amazing. Congratulations. Who's else on the cover that month. Lorne Levine?
Dr. Whitehouse: Yeah, at the top, yeah.
Howard Farran: Yeah, Lorne Levine? Who's the guy in the lower left?
Dr. Whitehouse: I'd have to look it up. I don't know.
Howard Farran: When they talk about their past experiences, I can't tell you in 30 years how many people have described that in order to get the tooth out of you, he had to put his knee on his chest. I've heard this so many times and you know, there's no dentist in America who ever put their knee on their chest, but you keep hearing this urban legend and it gets worked up in their brain. I was reading an interesting study how the criminal justice department is very concerned because when they get an eyewitness account, the jury just totally believes it because this guy was standing there, he saw it with his own eyes, and yet the research is showing that the eyewitness account is one of the least reliable accounts because these people don't ... All the research on eyewitness accounts is what people think they saw and what they saw, they don't even add up because monkeys are crazy. I want to ask you this: Back to a young kid listening, and you've been doing this for 47 years, almost 5 decades. What do you think is a bigger market? How big of the market is fear and apprehension?
Dr. Whitehouse: Less than people talk about.
Howard Farran: Less than people talk about?
Dr. Whitehouse: Yeah. I'll tell you why.
Howard Farran: Give me a percent.
Dr. Whitehouse: First, Howard, we have to take it in gradations. I love to read the guy that says, "I'm treating phobic patients." Well, phobia ... There's no person that's phobic that goes to a dental office. You can't. It's like John Madden and riding in an airplane. He can't ride in an airplane. He can't do it. Elevators are the same way and the only way that you actually treat a phobic is with approximation. I've had people that are close to phobic that Maslow's hierarchy of needs got them in because the pain overcame the psychological, you know that. Once the pain overcomes the psychological, you have an experience where they're willing to seek some kind of care but if they're in the wrong office it can go badly for them. So I don't like to say we really treat phobic people, but on one extreme there's probably about, that have had bad experiences personally, there's probably 20% that are really in the severely, severely crippled stage of psychologically.
You go up a stage. The person that comes in that's extremely apprehensive. They've come through the front door so that says they're not phobic. But if, in fact, they walk through the front door because they're in such pain, you're either going to give them a treatment that will get them out of pain and they will come back or they have another bad experience, metaphorically, with the foot on the chest and then they don't come back for another ten years until they get enough pain they're driven back.
I think that dentists have a very unique experience level here of treating people who are either going to get a good psychological outcome or not. Clinically it can be a perfect outcome, but psychologically it may or may not be a perfect outcome. The idea here is that I want the patient to want to come back to the practice because of their very first experience. So let's say the first experience is I don't even touch them. What am I doing? Building trust. Listening to them. Hearing their side of the story. And when they feel enough trust that they can come back, and I've had this happen, they can't come back right away but they think about it and they feel like they worked it through and sometimes they'd call me up on the phone. "You know, I just haven't been able to come back but I know you treated me really well and I want to trust you." So I just talk with them on the phone. Now, Howard, that doesn't happen all that often, but the point would be to be prepared to do it.
Howard Farran: In America, they don't really treat anxiety and phobia and being afraid. They just want to knock you out or give you a pill and I've seen some really, really successful people like Michael Gao in Ireland, where he's like, "Well, if I just knock you out, when you wake up you're still gonna be afraid of the dentist for the rest of your life." He wants to just really build a rapport and talk and communicate and just really treat the anxiety. Same thing with pediatric dentists. There's pediatric dentists who use Papoose boards every day, and there's pediatric dentists who don't even believe in them and think they should be against the law. Some want to communicate with the child and talk to the child and treat the anxiety instead of just blanket knocking them out and then the kid wakes up. He still has untreated anxiety. Sounds like you're actually treating the anxiety, not just putting a Band-Aid over it with Valium or something.
Dr. Whitehouse: You're 100% right. When I got to California in '73 I started to practice with a guy that had an amazing, amazing practice, but he IVed everybody. He was a trained oral surgeon in the army but joined general dentistry. His numbers in today's dollars were probably two million a year. I was his associate and I started doing IVs. I wasn't as slick at it as he was, but the people became dependent. You just said it. So let me give you a specific example. After her retired and I moved my practice physically into another suburb nearby, I had a lady call up that had been treated by him that wanted me to give her an IV to do an amalgam. She'd lost a filling. I said, "Well, you know, I don't do that anymore because what I found was people are so dependent on it. Do you feel dependent on being put out?" She goes, "Oh, yeah." I said, "Well, you know, that didn't really help you. I want to try and see if we can work this through so we can do this one filling without that." And we did. But she hadn't been offered that before so she had become dependent.
Don't get me wrong. I did sleep dentistry, Michael Silverman and that whole program, but I often found that when I offered it to patients after I had met them the first time when we were talking, as I mentioned we do talk, they decided they didn't need it. So what they had overcome in their own mind was their inability to actually take a risk with me so that they would actually not be dependent anymore. I watched people go from super anxious to no anxiety at all over time. One particular lady, we used to have to put her out, sleep dentistry-wise, every time. She got to the point where she didn't need anything at all. She just totally trusts us. She didn't have a pain issue, she just had an anxiety issue and there's two kinds of anxiety. There's fleeting anxiety and trait anxiety. And fleeting anxiety is just you're nervous about one thing. Elevators or dentistry. Trait anxiety mean they're anxious all the time and those people are a little bit more difficult to deal with because that's just part of their personality.
Howard Farran: What are the two types? You're saying flaming and trading?
Dr. Whitehouse: Trait.
Howard Farran: Oh, trait.
Dr. Whitehouse: That's just they're naturally anxious.
Howard Farran: About everything all the time.
Dr. Whitehouse: Everything.
Howard Farran: Okay, that's trait anxiety. What's the other one?
Dr. Whitehouse: Fleeting.
Howard Farran: Fleeting.
Dr. Whitehouse: Now and then. Person's never nervous til they get on a plane. Person's never nervous til they go to the dental office. Other than that, you see them on the street, you go, "Hey, they're normal, just like everybody else." But there's one thing, and it could be dentistry, and it could be that experience with Papoose board. I've had a lot of patients, as I'm sure you have, that when we regress them back, or they regress themselves back, when they get in the chair, the first thing that comes to their mind is when the dentist didn't give them enough anesthetic and didn't believe that it hurt and just kept going anyway. Every dentist has probably heard that. I would hear that quite a bit. So the issue was they weren't believed. Well, if somebody tells me it's bothering them and I'm constantly asking that in the very beginning of treatment. "Are you okay? How you doing now?" I constantly am doing that til they wave me off and said, "I'm fine."
I am then focused on them 100% to deal with whatever it is they need to be dealt with. Let me give you another example. Somebody that's claustrophobic. Have you treated a claustrophobic patient?
Howard Farran: Oh, yeah.
Dr. Whitehouse: If they know they can get up any time, all you gotta do is tell me you want up, just saying that to them allows them some freedom in their brain, somehow, to cope better and sometimes they never wave me off. Other times, we let them up for whatever they want. Sometimes we work on them closer to standing up than lying them right back, which brings up another interesting issue. What about the woman that's actually been accosted, not in a dental office, but any place, especially if she's been raped? Putting a woman back in a chair with a man leering over the top of her? Boy, that can be a nervous thing. So, herein I found one way to solve that problem. I always had a female associate after the first female because I found that if there was a balance in the office then any woman that wanted a woman dentist could have one.
So I sold my practice to a lady dentist and she's very soft and very sweet and I think very helpful for certain, especially women who may relate better with her, and that was just a financial decision making sense of who was out there and who could be a good associate.
Howard Farran: I'd love to sell my office to a woman. I long for the day of getting a big check from a woman. Usually, I'm writing them a big check. I just want one woman to write me a huge check. I have a lot of OBGYNs in my practice over the years and we've had conversations that dentistry's a tough gig because they'll tell you that whenever you deliver a newborn baby and you do that little ten thing test. You can touch your feet, hands, arms, look in their eyes, their ears, that baby's fine, but every single baby, the minute you try to look in their mouth, a newborn baby just freaks, arches back, fights. You can go a month without food, you can go one week without water, but you can't even go one minute without oxygen and humans, sapient, just doesn't want anybody in their mouth so we have a hard-wired defense mechanism and how are sapiens when they're killed for the last two million years? How are they usually killed by a carnivore? Someone lays them back and gets on their throat and bites down and they can't breathe and they've been sitting up in trees for two million years watching their cousin Eddy laying on the ground getting throat-choked by a cheetah or a tiger or a lion.
Anxiety's just huge and it doesn't get any of the noise. All the digital stuff gets the noise. Everybody's telling you to get a laser. Buy this that, but I think treating the mental health is one of the biggest markets. That and the financial health. You gotta make your dentistry affordable with finance, you know that anything in America that costs over a thousand dollars, nine times out of ten, it's financed. Between making your financial arrangements and building a relationship with a patient for trust, it's just everything.
Dr. Whitehouse: You're right. In fact, you know the average individual in the country can't write a check for anything over $750. That's true. You brought up the financial part of this. I wondered if we can segue into retirement planning because that's something that I really feel like a lot of your listeners may want to know a little more about.
Howard Farran: Go for it because they're millennials and they're going to live forever so they're actually never gonna have to retire because they're millennials. They got $300,000 student loans so their best idea was to buy a $500,000 house and a $75,000 BMW so knock yourself out, Joe. Explain to this millennial that some day they're not going to work 45 hours a week at dentistry and they have to live off something. In fact, can you start with just the definition of savings? For those who have never heard of the word before.
Dr. Whitehouse: Let me take it a slightly different tact but I'll get there. I think that we could agree that everybody's gonna want to be able to retire at some point in time. That doesn't say they are, because I like doing what I've been doing for 47 years, and I'm gonna keep doing it in my own way. Retirement will allow me to do down at this clinic I'm putting in at a Salvation Army location at Oakland that'll allow me to go down there and do dentistry for free. I don't need the money.
Howard Farran: Why did you pick putting it in Oakland?
Dr. Whitehouse: Well, because I'm actually on the Board of Directors for the Alameda County Salvation Army.
Howard Farran: Yeah, but the Raiders are moving to Vegas so I assume you have your house up for sale and you'll be moving to Las Vegas within 24 months, I assume. Don't tell me you're gonna live in an Oakland without the Raiders.
Dr. Whitehouse: Howard, you gotta come visit me. Howard, I'm looking out over the Golden Gate Bridge to the Farallon Islands on the horizon. I'm looking straight down at the Bay Bridge and the city of San Francisco. Believe me, on the Oakland hills I'm at 1300 ft., I don't want to move. And beside, I don't like hot weather. Let's go back to the issue here. HEre's a statistic that I've known for 45 years. Only 6% of the dentists can retire with the same standard of living they had when they were practicing. 6%. It's never changed, it's always been the same number. Why is that? You read about the Dental Economics, there was one guy that was always a columnist in there that really talked mostly about Wall Street products. If you're going to save your money, you're usually going to put it someplace for it to work for you more than just interest at a bank. Most everybody would agree on that. The real question is, if you're gonna retire, what do you need at retirement that you don't necessarily need when you're working. Income because you're giving up your practice and you've gotta have income from your investments.
So the real deal is the only investment that makes any sense when retiring is one that generates very good income. The reason only 6% of the dentists can retire with the same standard of living is, on a bell-shaped curve, those at the far right have enough outside income so that they can retire at the same standard of living and at the other end, they may have to, as Don [inaudible 00:39:47] used to say, "Belly up to the chair til they drop." They have to keep working because they really don't have money that they have 'saved.' So one of the concerns I have is that all of the dentists, especially you young dentists listening, if you're gonna rely 100% on Wall Street products, which I used to sell, you're at risk. In the year 2000 the market dropped an average of 30%. I know a dentist that sold three practices, built a house in one of the most expensive areas in the country, and had to go back to work, getting a license in a different state as a specialist. He had to go in and do an amalgam he hadn't done for 40 years. That's because of the dot bomb loss on the Wall Street and then you go eight years later, 40% average loss in the recession.
So what I'd like people to do is look at alternative forms of investing and, actually I'm gonna hold this up. This is an article that was in the Profitable Dentist in summer of 2013 and it's called The Crossover Effect. The issue that I'd like to bring up is that every dentist is not limited to Wall Street products. For instance, I'm in several other businesses, as are you, Howard, and I also do have some Wall Street money invested, but I also have the income coming in from these other investments. In the year 2000, Mercer Global, Mercer Advisors, told me that I didn't have to go back to work that day and I didn't understand what she meant by that until she said, "Well, your outside income equals your dental income." And I titled that the crossover point.
So how is a young dentist ever going to get to the crossover point? Well, during your career, you may have some opportunities to invest not only your own money, but actually your IRA money or your [inaudible 00:41:55] money or your 401K or your defined benefit plan actually in real estate products. There's a company here in San Carlos, California called IRA Services that allow me to put all of my retirement money in four large developments that are now up and rented out in Oakland, the hottest real estate market during the whole recession. That's one source of income.
The other was, the guy that was doing our taxes back in the 1970s ended up being in a business that I got to become a silent partner in and I have gotten 40% on my money year after year after year. Who are these people that we have an opportunity to get involved with? Might be our patient. As simple as, I used to have a Shakey's Pizza franchise back in the '80s. You've got a patient, Howard. You've been seeing the guy for years. He's got a small business, like a pizza restaurant, and he says, "You know, Howard, I'm thinking about starting another location." The first words out of my mouth are, "Do you need a partner?" Now maybe I'm not going to partner with that guy, but maybe there is somebody that I will partner with and that I will end up actually having a source of income other than my dental income. I'm always on the lookout, and have been for years, with alternative Wall Street investments so that I can provide for myself an alternate income source that is gonna pay out over time.
Let me give you the simplest example. You buy the house next to you and rent it out. No cash flow, but you're working so you don't need the cash flow. By the time you retire, 20 years later, now the rent's gone up to the level that you're not only cash flowing, but you may want to refinance and pull some money out and buy another house. I know one dentist that owns 17 houses and all he did was refinance one house every year for his income for the year. He just did fantastically well. So what's the next question? I don't want to have to manage that. I don't manage any of the three businesses I'm in. Somebody else does. My mini storage. I bought a mini storage a few years ago at the end of the recession. I got a hell of a deal. I don't manage that, but it's cash flowing very well. These apartment buildings that my IRA is in, I don't manage any of that. The other two businesses that I'm in with this other guy, athletic clubs, I don't manage those either.
All I'm trying to do is say to the young person start to ask questions about your future retirement related to the financial portion of it so that you get yourself educated enough that when a good investment comes along you know it is and that you then have put enough money aside. So let's get the other point of it. How many dentists, when they get an extra $10,000 a year coming in, the following year have budgeted that for a new car versus investing it all? Or how many decide the CEREC I've got just isn't cutting fast enough. Maybe I ought to throw in another $50,000 for a newer CEREC. I've watched that happen and I question the business aspect of that. You brought it earlier. You get out of school and think you've gotta have all the things that people that can't afford to have four lasers and a CEREC and all those, that you've gotta have them and it's just not true. It's just not true.
I believe that as time goes along, every person that finally gets to 60 years old and says, "You know, I've done well. I think I'm gonna be able to do well in retirement," versus the guy at 60 and says, "You know, I gotta start saving money," because he's got every toy, he's got an airplane, a boat, maybe a Ferrari. Those people often have difficult retirements and it was their own fault for that. You, obviously, are gonna be set.
Howard Farran: You know how you were talking about there's trait anxiety, where you're anxious all the time, and fleeting anxiety, where it's just towards one thing? I have a fleeting anxiety to athletic clubs. That would not be a business I'm in.
Dr. Whitehouse: Okay, that's fine.
Howard Farran: I'm afraid I'd have to get on a treadmill or something. It's just so hard to eat on a treadmill. You're always dropping your food. Back to your three businesses. Mini storage, apartment buildings, athletic clubs. Doesn't today's real estate market smell just like 2007 all over again? It's been ten years, it's 2017. Do you think we're in bubble territory again?
Dr. Whitehouse: Where I live, we are.
Howard Farran: Yeah.
Dr. Whitehouse: The ability for a young couple to buy a house in the San Francisco Bay area is just unbelievable. They will go in thinking they've got a good shot at a property in a neighborhood they don't even want to live in because that's all they can afford, and there's 22 offers on the house.
Howard Farran: It's the same from Miami to Vancouver, Canada. I think it's going to be so ironic that our president, who won the election based on his real estate prowess and his success in real estate, is going to be presiding over another real estate crash. It blows my mind that we don't learn any lessons from ten years ago and they're just making credit too easy again. It's just crazy. I'm in Phoenix and it's like, god, does anybody not remember just ten years ago?
Dr. Whitehouse: And you had one of the worst hits of all.
Howard Farran: Yeah, and 86 dentists went bankrupt in Phoenix in that last 2000 meltdown. 86 dentists lost their business.
Dr. Whitehouse: Let me ask you a question. In the real estate market, who lost no money and, in fact, did better than anybody?
Howard Farran: All the women on alimony.
Dr. Whitehouse: Landlords.
Howard Farran: Oh, landlords.
Dr. Whitehouse: Landlords because there was no tenant that had to move out of where they lived unless they lost their job. So let me be specific about that. During the recession, here in Oakland, and I give the man that I've been investing with for years tremendous credit, we would take an old Sears building, gut it, and make it lofts. We did that. Where I met Arnette, I actually met her at the Sears building in Oakland and we ended up being owners of that, gutted it, Jerry Brown was our biggest tenant. During the recession, we could do things with old buildings. We took an old electric light bulb factory and made 93 lofts, rented them in six weeks. Two reasons. People had to go someplace to live when they lost their house. Number two: People in San Francisco were getting completely locked out of the market because the studio apartment may be $3000 a month. Crazy.
But the landlords never lost a nickel in the recession so why I say if you have a rental property, not for commercial, strip malls get killed, and I know one dentist that probably lost a fortune in strip malls in Las Vegas, the idea is that when we pick our investments, we can choose investments that have less downside. Real estate that's rental real estate for homes generally does not have a downside. It only has a downside if, say, Caterpillar's gonna close a big plant in Joliet, Illinois and now you got 2,000 people in the street that have lost their apartments, they still have to go live somewhere.
Howard Farran: Amazon is what's killing strip centers. Every time Amazon increases their sales by a billion dollars a month, how many square foot of retail that used to sell little shoes and baby stuff ... It seems like the number one tenant in Phoenix is a sign that says vacant.
Dr. Whitehouse: Howard, you and I, if we live long enough, we're gonna see a lot of change. We're living a period of time where we're seeing retailers, even the big guys, K-Mart and Sears are both probably gonna go bankrupt. How is it that that happened? That's just change that goes on over time because at one point in time there were no catalog stores like Montgomery Ward, which is gone, and Sears, which is almost gone, and no more catalogs. It's all on the internet.
Howard Farran: Macy's just closed down a hundred stores.
Dr. Whitehouse: You have to be prepared for change. What's the one constant in life?
Howard Farran: Change.
Dr. Whitehouse: It's change. So when I look at investing and I look at the one thing that there's not gonna be any change, there will be no change about people wanting to retire and needing to have money in a retirement program to provide income for when they are retiring. I'll tell you, here's another trap. A guy in the middle of Nebraska that thinks he's gonna sell his practice and live off that income may have nobody to come buy his practice. Why? Because urbanization that's going on and young people don't want to go in rural areas and live. You know that. You could take a place in Arizona that has had one dentist for a long time and he's gonna retire and there's nobody gonna come in to that practice. So I find that the other trap is if a dentist thinks he's gonna retire based upon the sale of his practice alone, that's a risky bet and I wouldn't want to take that bet.
On the other hand, if you're in a metropolitan area, my broker thought my practice should go for x. I thought I wanted x + y, he agreed, and I sold it for x + y + z because it was three over full-price offers. That's not gonna happen in the middle of Kansas. That's not gonna happen in the middle of Illinois in some rural areas.
Howard Farran: Every single year, I hear of one or two dentists that just closed down their office and walked away from it because they're in a town of 2,500 and it'd been for sale for three, four, five years and that's an illiquid asset because no one will go live in a town of 2,000 where there's no Medicare, no Medicaid, no PPO, no HMO, and they made so much money over the years they just didn't care, but they just literally closed it down and walked away because no one would look at it.
Dr. Whitehouse: They may have been frugal and a good investor, but let me give you what the opportunity is you just brought up. For you young people watching this, what if you're in the next town? You go in and write that guy a check for some number so you'd refer all his patients to your practice and they're gonna have to drive somewhere anyway. Why let those patients just flitter away? Go in there, buy that practice, write him a check, just like the one I did for this guy I paid him $15,000 for all of his patient records. I actually got all the equipment also, which I sold off or kept. The opportunity that we think isn't going to be in our favor may be that we're not looking at it from different directions and that's why talking to other people about things often makes sense because they see it from a different direction.
Howard Farran: You use Mercer. They were very big in dentistry. Wasn't that MTS Mangi and you also had an expert at training center. That was MTS Mangi too. Are you still with Mercer?
Dr. Whitehouse: No, I never was with Mercer. When MTS Mangi, an expert that had got involved with Mercer, it was through somebody else. Actually, the CEO of Mercer became involved with Experdent.
Howard Farran: Who was the CEO of Mercer?
Dr. Whitehouse: I can't remember who the CEOs were. Howard somebody. What happened was I got a free evaluation, I told you, in about year 2000. They just did that gratis for us. Mercer can be a very helpful company to those dentists that don't do it the way I did it on my own. I think that the one thing that dentists can have a problem with is not asking for help or being willing to pay for help for an outside resource. Anybody that can go to a financial planner and not come out learning something is not listening. I think we all could do that. It also has to do with somebody's comfort level. So let me say that I may have made some investments that wouldn't fit in with others' comfort level, but there are other people that have made investments that wouldn't fit in with my comfort level and may have done really, really well. You could have a pistachio farm out in central valley here and have water problems that you never thought you were gonna have. I know an oral surgeon that's got a pistachio farm. Pistachios can be an incredible income source, as can avocados, but any farming, may be a good deal to be involved in. If you owned 160 acres back in Iowa, let's say you bought that, and you're not farming it, you're leasing it out. You may have a nice income stream forever.
Howard Farran: Is 160 acres, is that a quarter section or is that a square mile?
Dr. Whitehouse: Quarter section.
Howard Farran: Quarter section?
Dr. Whitehouse: Yeah. 640 is a full section. Quarter section is 140, I think.
Howard Farran: My gosh. You said you've just recently been to Oman, Jordan, Iran. To me, it's shocking how ... It seems like it's deja vu all over again when everybody started realizing that smoking cigarettes was probably not a good idea and after World War II about half the country did and it faded down to 18%. What did the tobacco companies do? They moved to the other side of the planet and went and started doing their old school stuff in Africa, Asia, Latin America. Now you're seeing it in fast food. McDonald's, same store sales are contracting now in the United States. When you go to the Middle East, there are McDonald's and Pizza Huts and Taco Bells. It's fast food heaven over there. It's everywhere and it's really changing their disease, missing and filled teeth rate, their decay rate, obesity, triglycerides, diabetes, what did you think of American fast food in Oman, Jordan, and Iran?
Dr. Whitehouse: Very interesting question. Very interesting. As we go around the world, let me give you the specific, first of all, about my experience at my dental clinic in Guatemala. The only way that anything could get to this village is by boat across Lake Atitlan, which is very much Lake Tahoe. Same elevation, same size, nearly. I would see, sitting on the dock, cases and cases and cases of Pepsi and the junk food people have gotten to every place in the world. Besides the decayed, missing, and filling issue, you also have the diabetes problem coming along with all this junk food and high salt content. So you're correct. Kentucky Fried Chicken is everywhere. In Oman and Jordan, I saw what you just brought up.
In Iran, because of the sanctions, there are no McDonald's, there are none of our fast food companies. There are their local fast food companies that are much more sophisticated than you would ever believe. In fact, Iran is an extremely sophisticated country. I think the whole congress ought to go over there and really see how nice the people are and see what's going on. But they're developing their own problems because the western concept of fast food has gotten everywhere. I think that if you take a look at the decayed, missing, and filled rate, if you could get there before the fast foods and soda got there and now see what it is, I think you'd see it 's just as bad there as it is anywhere, but they don't know how to take care of their teeth.
Howard Farran: I don't even think they're at the level they're aware yet that it's an issue.
Dr. Whitehouse: Yes.
Howard Farran: I think they're kind of like America was in smoking in 1950. It took til 1970, 1975 before your average educated man was like, "Okay, this is a really bad idea." I think right now they're just having so much fun eating Domino's pizza and crust and drinking all this sugar water. Interesting thing about what you said about Iran, because I noticed it's so interesting how when you go to poor countries, and I love that whenever I'm in a poor country and I see two boys on bicycles in white shirts and a tie and you know they're Mormon missionaries, and I always stop then and we have the most interesting conversations because they're young, they're bright-eyed, they're bushy-tailed. IF you're really lucky, they've already been there half a year and I always ask the question, "So, why do you think this country's poor?" What is the situation of poverty? And it's so amazing because all the people are the same. They're all beautiful, they're all gorgeous, they're all fun, they love their babies, but when you go to cultures like Iran ...
Dr. Whitehouse: Cambodia.
Howard Farran: Scotland. The family dinner conversation, so much is business, business, business. Then when you go to poor countries, the conversation's about family and fun and soccer and sports, and this and that. I've come to realize after 50 laps around the sun that if all you focus on, and it's all good stuff, making dinner, grandma, birthdays, all the fun, and sports, if there truly was an opium for the masses, it'd have to be sports because they don't have a great GDP because they don't have a whole country of everybody trying to grow a business. Do you agree with that or disagree with that?
Dr. Whitehouse: You can't use Iran. Iran is a wealthy country. Very, very, very wealthy so let's set it aside.
Howard Farran: But have you ever had dinner with a Persian one time in your life who didn't talk business half the night?
Dr. Whitehouse: Okay. Yes, I understand that part. They're very good business people. In fact, the country is full ... The retail sector has no big box. It's all small shops lining hundreds of streets in some cities. Amazing small business, and yes they do. Let's go back to your question.
Howard Farran: Back to that point though. You could have ten dinners in Tanzania and Somalia and Ethiopia, and business was never even mentioned one time. Still fun, joyous, cooking, lovely, etc. I still think it's a cultural thing that creates ...
Dr. Whitehouse: The real issue in the places you mentioned is a top-down problem. It's a few, few, few people that control the whole economy. You've heard this many times. If you go to Mexico, Carlos Slim didn't get to be the richest man in the world by not being a smart guy. He is one of the oligarchs and in every one of these countries, for instance, let me give you specifics. I took a National Geographic expedition from Cape Town to Morocco where we hit 18 west coast countries in Africa. We stopped in the port, we went into the capitals, we looked around, we saw it. It's the same thing you mentioned. They're excited about football, or soccer. They're excited about their family, but they as an individual, their ability to start a tiny business is there but not get into a big business because the oligarchs control it in every country.
The second thing is that if you have the, a lot of people call it a curse of minerals, whether you're in Nigeria with an oil industry or you're the Congo with all these minerals that have caused war after war after war, again, it's controlled by so few people that nothing trickles down and remember what we, in our country, used to talk about. Trickle down theory, remember Reagan and the tax cuts, and all that? We still have this problem that's talked about all the time. That's what Sanders was talking about in the election. It's not as easy to start a business here as it is in some of these other countries and it's not as easy to start a business in some of our states as it is in other states. But when you go outside into the third world, they just haven't caught up.
But what's globalization done to hurt our country? We know what that is. We have lost production to Vietnam. We've lost production to China. If you go into China now, you go, "My god, I'm in a first world country," but if you go out in the countryside, no, it's not a first world country. But most of the people are moving to the cities, getting a job, I just talked with a lab owner the other day, out here. He told me that he can't compete with India now on crowns. That he's lost so much of his business that many laboratories in our country are going out of business because of China and India, where they've got young kids, he called it slave labor, making crowns. They've got three story buildings in China that have got 6,000 people turning out crowns for the rest of the world. Now those people all have jobs they didn't have before but they also don't have big incomes and they also don't have the ability to start a business at the level they're at. They don't know what business is other than being employed.
The world is a complicated place, Howard.
Howard Farran: I can't believe, we went over five minutes. This was supposed to be an hour, we did an hour and five minutes. I love your almost five decades of experience. I'm sure if you're a 30 year old dentist driving to work that this was thrilling. You get to listen to a couple old guys that have done this, between the two of us, almost eight decades. That's a pretty cool podcast, wouldn't you say, Ryan? Eight decades of amazing information delivered for free to these podcasters in a couple hundred countries. That's just so cool. I want to tell you Joe, seriously, it's just a huge honor that you came on my show and I hope the next time in San Francisco, I get to come to your house and drink a beer and look at that view.
Dr. Whitehouse: Absolutely. If you don't come, it's your fault.
Howard Farran: Hey, I took a speaking gig on New Years' Eve just because it was in San Francisco and I told three of my four boys, one's married so he doesn't travel with me, but to the other three I said, "Hey, do you want to do New Years' Eve in San Fran?" And they go, "Oh, yeah." I'm telling you, we walked around all night. Every time I'm in that town, I say, "God, I'd much rather live here than in Phoenix." I mean, it is just so, so cool. So next time I'm in San Fran, I am gonna call you up and, here you go, Zack. Next time I'm in San Fran, I'm gonna take you up on that offer, seriously, can I?
Dr. Whitehouse: You betcha!
Howard Farran: Can I bring my boys?
Dr. Whitehouse: Absolutely. I've already been interacting with one of them.
Howard Farran: Yeah, that's Ryan. The other three are much better. Sorry you had to meet Ryan first. You're always supposed to serve the best wine first and then the bad bottle. You started at just the fourth bottle. I'm just kidding. Poor Ryan, I give him shit all day long. But hey, Joe, it was an honor that you were on the show. Thank you so much for spending an hour at my home [inaudible 01:06:18] and you mentioned you were in an article for Dentistry Today. Woody Oakes' Profitable Dentist, some day I hope you write a article for Dentaltown.
Dr. Whitehouse: Well, Tom and I might put one together related to how much dentists are overworking themselves and I've got another one. I actually teach travel planning. Guys that were really wanting to learn how to get out in the world, the most sophisticated using the internet. I can really help them. If that's something you'd be willing to publish, I'll write it.
Howard Farran: Yeah. I'm Howard at Dentaltown and I think he's at ... It's Tom@Dentaltown.com. I'd love to have you.
Dr. Whitehouse: Okay.
Howard Farran: All right. Thanks a lot.
Dr. Whitehouse: Thank you.
Howard Farran: Great seeing you.