Dentistry Uncensored with Howard Farran
Dentistry Uncensored with Howard Farran
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1282 Mastering the Business of Dentistry with Jason Wood, Esq. : Dentistry Uncensored w Howard Farran

1282 Mastering the Business of Dentistry with Jason Wood, Esq. : Dentistry Uncensored w Howard Farran

10/29/2019 6:00:00 AM   |   Comments: 1   |   Views: 806
Jason Patrick Wood is a partner in the Law Firm of Wood & Delgado, a law firm focused on business transactions for dentists and doctors: leases, purchase agreements, partnership agreements, shareholders agreements, corporations, associate agreements and other business-related legal needs.  He has authored many articles relative to the business side of dentistry which have appeared in every major dental publication. His CE podcasts pertaining to the business side of dentistry are some of the most viewed dental podcasts in the country. He is a moderator for Dentaltownon all forums related to the business side of dentistry and enjoys helping and educating doctors throughout the United States. Prior to joining Wood & Delgado, Mr. Wood worked in Washington, D.C. for the Speaker of the House in connection with Presidential and U.S. Congressional campaigns and thereafter he worked for the U.S. House of Representatives, drafting legislation for various House committees. 

VIDEO - DUwHF #1282 - Jason Wood

AUDIO - DUwHF #1282 - Jason Wood

Howard: It is just a huge honor for me to bring back for a second time Jason Patrick Wood Esquire.

Jason: Thank you sir

Howard: The legend from dental town he is the number one attorney in dental transitions nationwide has represented over 7,000 dentists with the law firm wood in Delgado has been specializing in representing dentists for over 35 years in such diverse areas his dental practice Purchase Agreements Dental partnership agreements dental MSOs dental space sharing agreements dental corporations and LLC's real estate employment law dental board defense he state planning and other business transactions which the dentists will face during his or her career. He's authored many articles relative to the business side of Dentistry which have appeared in every major public dental publication his CE podcasts pertaining to the business side of Dentistry are some of the most viewed dental podcasts in the country anybody who does a podcast so they do Jason that's usually their most viewed podcast he is a moderator for dental town on all forms related to the business side of Dentistry has over 7,000 posts on dentaltown helping and educating doctors throughout the United States. Prior to joining woods in Delgado Mr. Woods worked in Washington DC for the Speaker of the House in connection with the president and the u.s. congressional campaigns thereafter he worked for the US House of Representatives drafting legislation for various House committees, his law firm Wood and Delgado's in Mission Viejo California but he lives in Idaho because he's Irish in he wanted be close to those potatoes and serves clients nationally he went to law school at the University of San Diego law school but left when the Chargers left you so you know how many potatoes it takes to kill an Irishman?

Jason: No

Howard: None because they starved to death.

Jason: There you go

Howard: That was a brutal Irish joke I so seriously though you were in San Diego school did San Diego take the Chargers leaving did they take that very easily or?

Jason: Uh you know they can't come back that's for sure

Howard: Oh really, never dated an ex-lover.

Jason: Exactly I mean the San Diegans despise that family now.

Howard: Really?

Jason: Well I mean San Diego believe it or not I mean it is it's one of the biggest cities in the nation but it feels like a small town you have so many little enclaves and it's a wonderful feeling but now granted you're in California so everybody's a fair-weather fan but San Diego prided themselves on the Chargers secondarily the Padres but you know when you feel like you're the redheaded stepchild you know for LA and you go that's it we're done you are done so.

Howard: Well I live in Phoenix and I'm pretty sure that twelve out of every three people in Phoenix wants to live in San Diego they just can't afford it and you go to San Diego and I sometimes you get duped in you're like oh look at that little house and you see the ocean it's for some it's so cute and it's so charming and then you walk in and see how much money they want for like ours you know. So you know a quarter of my viewers when they send me an email Howard at they're still in dental kindergarten right and the other ones I mean I almost never get any emails if they're over 30 so if you if you did reach the big 30 what would they have to be born in 1990 if you were born before 1990 send me an email just so I know what one guy out there exists but they're they're just trying to get through dental school they're trying to do the requirements or trying to get through all this stuff like that I don't even think they've started to realize their legal needs in the futures and I want to hit them off quickly because I've written many articles about stay in your own lane it's like right when I see the dentist do that damnedest dumbest things I'll say well you signed a 10-year release I said who was your real estate attorney oh yeah I learn all in anatomy physiology now when we were learning about eukaryotes and prokaryotes they threw in some business law and so I just I just would have had you guys off the very young when you guys are in don't scale they should say congratulations you're a Doctor of Dental Surgery and you don't know shit about anything else stay in your lane how has the legal how is the marriage of dentistry and law how is it really been going that your three and a half decades in this where's the profession headed dentaly legally?

Jason: Well I think since the first time that we did this it's only gotten worse I think for the young dentists its dentistry unfortunately is this I mean part of it is dentist eat their young part of it is you know this whole global takeover of you know by corporations you know private equity funds things like that and it's also this fear I mean we can talk debt but there's also this fear of risk fear of stepping out on your own and so it's this perfect storm that to be quite frank is quite scary for the profession and 5, 10, 20 years I I don't know but it's quickly and even faster than I thought it was going to be it's quickly becoming like the MDs like the pharmacist and that's that's scary I would be I would be scared out of my mind if I had $400,000 in debt and all I could be was an associate for my entire career that would be scary for me.

Howard: I think people always think you know the great advantage of being an old as you've seen every rodeo twice I mean I remember from 93 94 to 2000 stocks kept doubling and everybody thought it'd go on forever but what goes up comes back down I've seen the you know these natural laws are like business cycles right and so I've lived through four economic downturns were you know 1980 1987 2000 Lehman's brother were due for another one.

Jason: Right

Howard: but during these economic deleveraging I see all these DSOs where the where their debt is public it's already junk and most of them have about 30 offices and ten are great and ten are okay and ten are just dogs and I think in this there's not a question if we're gonna go through a economic deleveraging again I mean hell it's happened a dozen times since World War Two it's it's it's right at our doorstep but I think it's gonna free up a bunch of practices and I think there's gonna be a bunch of great bargains and also on the DSO I'm not know I shouldn't be arguing with my guests I feel like you're a brother from the same mother I mean when I look at the maximum limit of the DOS I mean basically they graduate six thousand a year and they all work for about five years for someone else right before and they nobody can keep their associate for a year I don't care if it's Heartland Aspen or your own right best dental office I mean you can't keep an associate happy so six thousand times five it's thirty thousand I mean they don't they only got about thirty thousand people to play with before they're so sick of I mean they didn't go to school eight years gonna be your little boy.

Jason: Well see that's the problem though that's that's the issue is there's almost like an indoctrination happening and it starts in dental school and the indoctrination is this is the only way out of debt the only way out of debt is to go corporate because you're going to have this higher starting salary you're going to be guaranteed you know patients guaranteed production as a result you're going to be able to you know grow your salary 150-175 200,000 and that's going to be allow you to get out of debt quicker and that's a bunch of crap I mean it just is, they're smart.

Howard: They're trying to pay them just enough money to kill all their dreams.

Jason: Yeah it's golden golden handcuffs right

Howard: Yeah

Jason: So and the problem is is that I mean we're human and we have the same it doesn't matter you know how.

Howard: You're Irish

Jason: I am I know, we come down to spread you know qualities but the issue is that humans we tend to rise to whatever economic level we are in terms of spending very few of us are going to save and as a result we have these golden handcuffs I'm making 150 grand great I'm gonna be spending X amount per month and it's very hard it takes a tremendous amount of discipline to say wait a second I still have $400,000 in debt I need to still live like I'm a student for X amount of years one two three years and and there are there are definitely a few people that can do that but once you get that and once it's five seven years in and you've got these golden handcuffs on well guess what now you're married now you have kids and now you can't take that risk and so that's when they have you and that's the problem and they may jump from associate ship to associate ship but the problem is is they're not jumping into practice ownership if they stay five to seven years and that's the hard part.

Howard: and it's harder on the boys than the girls because in all cultures study girls marry wiser than boys so almost all the girls in dental school will marry a boy in dental school and if it's not a boy dentist it's a lawyer physician something.

Jason: Except me I married a much wiser woman than I am so I just want to throw that out there.

Howard: So many of those boys end up marrying a girl who has visions of never working and having a house full of kids which can be great yeah but the girl but the boys suffer a lot more because the girls almost always marry someone he makes ten thousand dollars a month yeah and the boys except for the ones who married a girl in their class just don't do that they marry the best looking girl at the Waffle House right and that's the most expensive waffle you're ever gonna buy.

Jason: Breakfast is an important meal though.

Howard: and so it is truly a bigger curse for the boys I'd love to how you started with dentist eat their young so okay so you're talking to a bunch of dentists who know every single thing in the world and they even know dental law more than you do because I'm their dentist.

Jason: Right absolutely

Hiward: So I just want to start I'm just gonna throw some trigger words at you and I want you to try to educate them that they don't know everything like leases.

Jason: The most overlooked asset a dentist has less than half of dentists have their leases reviewed by an attorney I would go so far as to say it's a super majority and there are I don't care what the lease is unless it's a lease from 1975 there are 15 to 20 provisions in that lease which can detrimentally impact the saleability transferability of that practice which can significantly derail your career.

Howard: Okay she's a junior in dental school I mean what is the lease?

Jason: Sure a lease, so when you whenever you have a ownership interest whether it's a partnership whether it's a start-up whether it's an acquisition you are going to have a lease if you don't own the real estate but even if you own the real estate you're gonna lease anyway but that lease guarantees you and protects the goodwill that you have in that practice because the landlord has a contract with you for a long-term lease and as long as you pay your rent you have the ability to stay there and the reason why it's so important for a dentist is because your patients won most of the time they're going to be located around that lease but more importantly they become accustomed to where that space is and if you're forced to leave you're going to have patient attrition and depending upon how far you have to move that patient attrition can be substantial so that's what a lease is it's it's the one asset that protects the goodwill that you're acquiring and goodwill is the most besides time goodwill is the most important asset a dentist's has.

Howard: and you say half the dentists don't have a lawyer look at their lease.

Jason: I would be shocked if 30% of them because here's the thing here's the thing you've got you've got a lot of brokers who are dependent on that lease getting signed and they a lot of them not all of them hold themselves out as as most people do being an expert and they don't all of them volunteer you should probably have an attorney look at it now they'll say that somewhere in a document but if I'm telling you face-to-face looking you in the eye saying hey you brought me on to do the business points I don't do all the legal points you really need to get an attorney that's very different than it being in the fifth paragraph of the contract that you sign with me. So there are definitely and I want to be clear there definitely are brokers out there that encourage the use of attorneys but you have so many parties you have equipment reps that are dependent on that startup you have you know you've got contractors you've got architects about all these people who are dependent on that lease being signed they do not want an impediment and who is the impediment the attorney because we're gonna find things and if it's substantial enough for instance the landlord has a right if you go to sell your practice in the future, the landlord has the right to terminate your lease that's kind of a substantial issue that we want to take care of by in the vast majority of leases that have been written since 2000, almost all of them have that language in there and yet...

Howard: That it's not transferable upon the sale?

Jason: No no that I the landlord can say I accept the assignment to your buyer I reject the assignment to your buyer or you asked me for an assignment I'm going to instead terminate your lease meaning you're out now do the landlord's really want to terminate your lease no they don't but we've seen so many landlords use that as what's called legal extortion, well I'm gonna terminate lease but let's you know if you want to give me 50 grand I'll reconsider happens all the time now all the time still very small percentage you know but obviously that can derail a career and it's this small little one sentence in a 35-page document that's eight point font.

Howard: and then think about the reverse about this when you go to sell your practice right and you own the land in building when you sell your practice to a dentist everything he's talking about is why you have such a good tenant because in commercial real estate the biggest variable is do you have a tenant so when you sell your dental office to when you're 65 and sell to some puppy and after they say they rent they sign a ten-year lease or they pay off the dental office at the end of that ten years they don't want to move I mean everybody everything he said that was negative is now good they they erased familiar at this location they all want to go there so I've seen so many dentists sell their practice and carry the paper so now they get a 10% of me and you know what our bonds paying 2% they'll get a 10% you know they'll carry the paper ten percent ten years and then as soon as she's done now you have a captive tenant to now go buy the property again and then you carry that paper now you get another payment for another ten years I know dentists that carried their own paper sold their practice and then their real estate had a 20-year retirement payout.

Jason: and if you really I mean what I love is being able to then utilize that to acquire additional assets because if you've got a tenant that's going to be there 10 15 20 years it's a bankable tenant less than a 1% default rate you're darn right I'm going to be using that equity to buy and acquire additional assets because time value of money, things like that it's going to set you into a completely different Plateau in terms of economics and unfortunately too many dentists don't think that way we need to think globally as it relates to our practice our real estate and really not just completely have one industry ie dentistry captivating all of our wealth we need to spread that out somewhere.

Howard: So you've done 7,000 dental transitions does it begin with a purchase agreement what is a purchase agreement?

Jason: So a purchase agreement is a contract between a buyer and a seller to purchase something I mean it's whatever it is and in this context it's a dental practice and I am the seller I am selling you a dental practice and buyer I'm buying the practice but what exactly am I buying I'm buying used equipment I'm buying patients that I hope are gonna come and see me and that's really it I mean that's how scary it is and that's why goodwill is considered blue sky because it's just an intangible asset where it's very close to religion because it's a faith that those patients are going to come see you again and so that's really what you're acquiring and it may sound scary but the reality is people are creatures of habit and so I'm probably gonna give that buyer one shot.

Howard: and physicians don't really sell their practice anymore do they?

Jason: If they're specialists if they've been able to avoid the I'll call it the hospitalization of the medical industry then yes and and they can be very profitable plastic surgeons chiropractors you know the specialists that maybe are a lot of fee-for-service or PPO based they still can command good money but you're family practitioners you know your OBGYNs all that no.

Howard: Because if you open up a practice as a family physician Phoenix the minute you sign a move Medicare and Medicaid you're booked out into so there's no value of selling a practice if I if I just signed up for Medicaid and I'm...

Jason: Right well this so in that that's also partially true with dental practices you know Medicaid practices are tend to sell for less than a PPO practice an HMO practice will tend to sell for less than a PPO or fee-for-service the difference between the medical industry and the dental industry is it's not just the Medicare Medicaid it's the fact that hospitals have been able to control most of the touch points in the practice of medicine and with those touch points comes that for lack of a better term the siphoning off of the profits into the larger corporations and so those family practitioners that used to make three four five times what they used to make they're they're making less than what doctors made in 1980 and so people don't buy those practices why would you, you're not really profiting a ton from that juxtapose that to dental practices, dental practice is still roughly 40 percent if I'm talking a GP 40 percent profit which is exactly why private equity is basically tripping over themselves to get into this field because I can pay I can satisfy all debts and still have when I've taken into account all of these factors I'm still much higher than manufacturing I'm still much higher than you know most of the other industries that I would otherwise be putting my money into and with low rate environment it's like a no-brainer my return on capital is so big because of the profitability in dentistry and that's what a lot of these a lot of young doctors need to understand is you are in one of the most profitable industries in the United States and you need to understand one there's a tax code issue there where as being a practice owner every dollar you make is worth 10 to 15% more than that same dollar as an employee but also you are receiving these profits and so when you compare dollar apples apples Dr. production as an employee versus Dr. production as an owner you're making about double the income because of the profits associated with owning the practice the tax code that treats and favors business owners and that's what a lot of the young doctors don't understand.

Howard: Go over the tax code more so if you're an employee and you may house the different is that dentists making $1 employee versus a dentist making $1 as an owner?

Jason: Okay great question so as an employee you are taxed at the highest taxable rate that you can be taxed at that's you know welcome to America and so if I'm making a hundred and fifty thousand I am making what I'm going to be taxed at the highest rate I can at the hundred and fifty thousand dollar mark now 150 thousand most DSOs are paying between 25 and 30 percent of collections so if I'm making 150 thousand that means I'll just call it 25 percent cuz it's easier and I'm an attorney not a mathematician so 150 thousand means that my doctor production is six hundred thousand like doctor collections or six hundred thousand so I should have brought a whiteboard so six hundred thousand I make 150 grand as an employee six hundred thousand as a practice owner is also going to generate twenty five to thirty percent of that is supposed to be hygiene so I'm generating what is that another two hundred thousand we'll call it 150 to be fair but 750 so that's six hundred thousand is going to generate a total of 750 thousand now assuming normal ADA profitability we'll call it 40% and hovers right around there you're looking at 750 of total production associated with that practice leaves you with 300 grand now granted there's perks and things like that but so as a business owner what do I get to do well I get to write things off that I otherwise wouldn't as an employee and with the Trump tax cuts as a professional you basically can't write anything off anymore as a business owner though you still have all of these deductions those deductions suppress and reduce your tax burden and so that 300,000 is probably conservatively worth an additional 20 or 30,000 given the tax code add in retirement plans add in all these other factors I mean you know when you extrapolate over 20 25 years we're not talking a difference between one hundred and fifty thousand we're talking the difference of five to ten million dollars yeah when you fo can you factor in compound interest when you factor in time value money when you factor in investment rate returns all that stuff let me know if you guys have fallen asleep yet.

Howard: but so you're a guy ten thousand a month yep from 25 to 65 versus a girl stays home and spends 10,000 a month that that's a ten million dollar difference.

Jason: There you go

Howard: That's plus five minus fine and when you look at a dentist's as an associate versus a dentist as an employee on the dentist's who owns your own practices average two hundred and forty five thousand a year and the dentist's our employees are 145 so it's a hundred thousand dollars a year more net income for a general dentist who owns as opposed to employee just like specialists they average 320 where a general practitioners 197 so dental specialist 320 it's us 200 so if you're a senior in dental school you'll net an extra one hundred and twenty thousand dollars a year if you go on and specialize than anything and when you get out of school if you just open up your own damn practice she'll make a hundred more than being an employee and follow the blood oral surgeons make the most at 450 periodontist next 330 endo 307 pediatric dentists 304 and then now we're leaving blood orthodontist 289 prosthodontist crown and bridge219 there's I mean you're a doctor and doctors work on humans and humans are filled with blood so when you come out of school and you say I don't like bloody stuff I don't like extractions and root canals and implants um well you should have been an engineer I mean how the hell did you want to be a doctor with no blood and then so that's a purchase agreement and there's lots of things they can go right or wrong with that. I always wonder you know marriages fall apart and they're costly when you're looking at partnerships agreements is that kind of a marriage too and do they fall apart and you know you tell them when they get married you say dude you got to have a prenuptial agreement but they never will and it's hard to get a girl to sign a prenup when you're in the backseat of the car and she's upside down and you can't you know the pen and but a partnership agreement it seems like III can understand the no prenup on the emotional of thing but on a partnership agreement how could you not have that and does this spell out a clear exit strategy and do you see divorce rates and partnership breakups the same way are they different are they as common?

Jason: So the three and I was just having this conversation earlier today the three main reasons why partnerships fall apart from lack of money, divorce and no written agreement I mean that those are the three top things you know this...

Howard: Lack of money, divorce

Jason: and no written agreement.

Howard: Really they get married with no written agreement?

Jason: Yep well you know sometimes partners are in the backseat of a car too so.

Howard: Wow

Jason: but yeah that I mean I look I love partnerships I also hate them and I believe it was you said partnerships are basically like marriage without the sex so.

Howard: Yeah marriage is a lot of glue between sex and children and vacations and extended family it's a lot of glue yeah but when there's no glue and the other thing is you know your wife and kids aren't in your face all day long but if you're a partner and you're doing something say say you're doing crappy dentist and eight hours a day I'm looking at your composites with no contact you know so it's just it's in your face all day long if you're at the office it's in the face it just it's brutal.

Jason: Yeah I think that so many people rush into partnerships they don't think about things they don't you know uh you know my friend from dental school or it's my father it's my sister or whatever and they don't spend the time to really analyze it and that that's the problem with partnerships you need if you're gonna I mean let's stay on the marriage ankle do you would you really marry someone if you didn't know everything about that well maybe some of us would but you need to know everything about this person what's their patient philosophy what's their what's their outlook on life here we go are they happy in their marriage is this their first marriage or is it their third marriage that they're on I'll just tell you right now and never get into a partnership with someone who's been divorced more than once it just it's not gonna work now in my hundred percent accurate on that no but I'm probably like ninety eight point seven percent so there's there's just a lot that goes into a partnership and the problem is, is everyone rushes past all those issues and they literally get into bed with the partner and then lo and behold this doesn't work or they do everything right they talk about all these things and then they go and buy a practice that's only doing five or six hundred thousand oh now we're in a lack of money oh well we both have associate jobs okay well what happens when and that associate loses their job oh you didn't talk about that and now that associate is working at the practice all the time and now you're upset because they've taken all of your patience okay well we should have thought about that so there's just a lot of things that go into it really quick my framework for partnerships if you're trying to buy a practice you should be looking at a practices doing again GP specialists there's different numbers but GP practices should be doing about 1.5 million

Howard: For two people?

Jason: For two people partnership.

Howard: So 750

Jason: 750 or we're on track to get to 1/5 maybe if you're one three but hey we're on track to do one five then yes you can buy in to that practice but if they're only doing seven or 800 that's that's not enough to adequately support two doctors and so I use 11.5 million because that's 750 thousand of production per doctor which which transfers to about 600 thousand of doctor production per doctor divide that by 12 year at 50 grand a month 50 grand a month is doable for almost every dentist out there but when I start to I start to reduce that number and we break it down to a million wellnow million we're at $750,000 of doctor production divided that's 375 divided by 12 that's 31,000 and change that's not enough to support and so that's the problem with so again lack of money, divorce, you didn't properly you know evaluate your partner you didn't analyze the the non dental aspects of the partnership are they happy in their life are they happy in their marriage you know how are their kids I mean is all of that comes into the partnership whether you like it or not and then last but not least yeah we didn't really feel like we needed to do a written agreement because we talked you know we just understand each other well good luck because I guarantee you there's going to be things that fall apart because of miscommunication.

Howard: So what type of person have you noticed that really loves partnerships the most and they work what's going on?

Jason; My most successful clients are female female partnerships females get shared sacrifice shared reward I mean I might even said this last time they live with us so they totally understand sacrifice.

Howard: by living with us?

Jason: By living with us so but when I and when I talk about when I talk about success I'm talking about not money I'm talking about quality of life everything it allows them to have lives outside of dentistry one of the biggest things the sole practitioners say is I I can never just leave I can never just go I'm I'm chained to this practice and that's understandable I totally get where that's coming from partnerships allow for that freedom and it also allows and this is why I love female female partnerships because if you look at the ADA I think it's called an industry in transition female dentists who now are a majority of dentists are one 1/2 or 50% as likely as their male counterparts to acquire practice and so there's a huge divide between females and males.

Howard: Their one half as likely to buy a practice?

Jason: Yes I think it's 63 percent males will acquire 38% of females I could be off on my percentages it's it's a little bit old now but it's I believe it's called an industry in transition and this and one of the biggest issues that that females are faced or to be quite frank are indoctrinated with in dental school is you can't be a mom and be a practice owner and that I can't tell you how much that frustrates me and angers me because there is no better profession to be a mom and to be an owner than dentistry and so my female female partnerships what you know one of them will take their kids to school and the other one will pick their kids up meaning that we've got a slightly shifted schedule so that our personal lives are being handled so one's going in to work a little bit earlier one's going in to work a little bit later and they love it and I think it's great I think it's a great work-life balance so I just it's one of my pet peeves that we have to do something to decrease that differential between males and females it has to it has to become more on par.

Howard: Yeah I am and I if I was gonna be a supermom I would rather just I don't when make it as a play tomorrow school I don't know I am into work and ask the office manager if I can get tomorrow off right III I think the most super moms I see that are women dentists they own their own practice and they want to go to Muffy's play tomorrow they go and if they wake up and two kids are sick and puke and they call in sick.

Jason: Absolutely

Howard: So I'm shareholder agreements what are those?

Jason: Shareholder agreements are okay so I am not a fan of single entity partnerships that is the cheap way of doing things it's the lazy way of doing things and

Howard: You're not a fan of what?

Jason: What we're talking about right now so shareholder agreement is when two partners are entering into a single entity partnership so that's where the shareholder agreement comes in and so it's two individuals that are let's call 50/50 partners in a single entity that is a cheaper way of doing a partnership. Partnerships in my opinion should be multi entity so each doctor should have their own entity and then upon what state you're in you're in you're either doing a general partnership agreement or you have a parent company that sits on top the reason for that again taxes protection of liability. When you have a single entity is it is it slightly cheaper to set up absolutely but you run into problems with taxes because now you have to agree on taxes every year if you want to be aggressive and write everything off Costco Hawaii you know whatever and I don't we're gonna fight about it and it happens all the time and so it becomes issues as it relates to how we deal with salaries versus dividends and all these other aspects which can fray and cause a partnership to kind of start to crumble a little bit and over time that tends to build up there's also there's also more liability associated with a single entity shareholder agreement because now we're part of the same entity so things that you do impact me so things like things like sexual harassment things like wrongful termination if one partner did that by themselves and I have my own entity and this person he or she have their own entity I can have liability protection there versus being a part of the same entity now everything's up for grabs now are we still protected from all of our other personal aspects yes but this whole entity now that I'm a part of is now in play because of the liability associated with what that other partner did so it's we do them I don't love them but that is basically a shareholder agreement is when you're doing a partnership.

Howard: This is probably the most common question that you get tired of asking I'm that's always one of those should I be a corporation?

Jason: You should have an entity now obviously as an employee you can't but as as a practice owner absolutely there's there's protection there's liability protection again and there's great CPAs out there that you might want to talk to but you have I guess I should be careful since the IRS may be listening but you have the ability to write things off more they're not red flags when you are an entity whether it's an LLC a professional corporation a PA whatever you have the ability to write things off that will not necessarily trigger audits as they would as a sole proprietor.

Howard: but back to what you just said corporation LLC PA right how do they determine that?

Jason: It depends on the state so there's only a few states that only allow doctors to be a PC which is a professional corporation in most states they'll allow an LLC and typically you're going to want if an LLC or a P LLC is available you're typically going to want that instead it provides a slight bit more of the ability to play around with taxes based upon certain thresholds and so again talk to your CPA about that because there are some because as an LLC you don't have to make an S election you can be a sole proprietor you can you can do other aspects and then when it makes sense to jump to an S and s election then you can jump to the S election so you can you're basically shifting things around until you get to a certain point so but again talk to your CPA hopefully it's a dental CPA and hopefully it's not just a dental CPA who calls themselves a dental CPA but one that actually knows what they're talking about.

Howard: There's next one's a long question I got a throw a bunch of mud on the wall we're gonna talk about associate agreements but if you're the young kid out of school the the big boys the heartland Aspen's the the Pacific dental like they tell you hey this is our contract we don't change it for anybody when they go to my friends and homies it could be anything from written on a bar napkin to a handshake should my friends be hiring Associates at a brewery at a microbrewery over a cheeseburger.

Jason: If it's after five I mean sure.

Howard: If it's after 5?

Jason: If it's 11:30 maybe not.

Howard: So what can you tell us about associate contract? Let's start and start with is when she goes and applies at Aspen is that a boilerplate contract where they cannot change it's time showing it?

Jason: No attorney so there you have to be very selective with what you go after I tend to limit and I spend time I basically do it for ridiculously expensive bottle of wine rather than charge them the two grand that would cost but basically you have to be selective at how you approach so some of the things that we talk about are what do you want to do after this what do you want to do do you want to stay in the area is this just a job like tell me about what your short and long term plans are because what you tell me is going to dictate how I approach the restrictive covenants that they're going to be pushing now if you're not going to be in that area then I'm going to give on restrictive covenants to maybe get a bump and compensation or to get you a set schedule now why is a set schedule so important well a lot of these corporations a lot of basically a lot of these owners I'll call them owners whether it's private practice or corporate dentistry they're only going to give you three or four days now if I can establish a schedule from Monday through Thursday rather than you being at the beck and whim of whoever your employer is I've now established a schedule so that you can go to another owner and say hey I've got Friday and Saturday available so now you're again if we're trying to get out of debt now I have the ability work five or six days than what they're offering me but if I don't protect myself when I'm agreeing to the contract they can put me on Mondays and Saturdays and Fridays and now I'm not a marketable asset so we tend to focus on establishing a schedule restrictive covenants compensation and by the way I don't care if it's private practice or if it's corporate practice you need to know what that practice is producing because if you are not ridiculously busy your hand speed isn't going to increase if your hand speed doesn't increase guess what you make less money if you make less money you can't qualify for higher loans which means you can't go after those bigger practices which have more cash flow or cash flow allows you to satisfy debt over a quicker period of time which means that you can then get out of debt quicker. So it really matters about that first associate ship and I don't mind going into corporate trust me they are going to use and abuse you you might as well use and abuse them back so go to every single CE that they have about case acceptance about patient doctor interactions about you know mannerisms and how to sell and they do it all because I want you to learn as much as possible I want that hand speed to be as fast as possible so that we are ready after a year or two to go and own our own practice.

Howard: and what I can't believe is just how bottom-feeding your attitude is like you'll go work for like say Hartland has the the largest you know they almost have a thousand location right and and I'll say well gosh yeah they ran a thousand locations and what how do they do it what was their accounting software don't know you know I mean you ask them like well what's what's the code for a filling they don't know any business and then the geniuses you know what the geniuses do they go work in these some DSO with they say I yeah I don't like referring to DSO because the lion's share of DSOs are usually like four or five offices.

Jason: We have a ton remember I'm in both worlds right so i we have dsos at our clients and you know I obviously I took a we took a big hit because I've been a very strong proponent ownership private practice ownership and we took a pretty big hit when I came out all over dentaltown and in other places that hey look you have to do this but you have to do you have that you have to own like if you don't and in this generation if this generation doesn't it's always like millennial bashing and things like that but it's not I mean you have to take the risk because if you don't take the risk you you're going to be in debt you are not going to get ahead.

Howard: Did you get a lot of pushback from that stance?

Jason: Oh heck yeah he lost a lot of a lot of money and but obviously I gained a gained.

Howard: but talk about what exactly was it was it a post on dentaltown or was it?

Jason: Oh yeah I mean basically it was a call to action to there was a law in Texas that was happening and basically it was whether or not DSOs would continue to be legal in Texas and so you know started a thread obviously cuz I just want full information I mean if you want to be a numskull and not do anything with the information then so be it but I like people that full information I love educating so anyways so we came out against that law and yeah...

Howard: Do you remember what the thread was called?

Jason: I don't know but anyways it was...

Howard: You have some threads that have 5600 I mean you are the man on that this is your space on dentaltown always has been but anyway

Jason: So I don't know where we were going with that?

Howard: Associates

Jason: Oh associates

Howard: but some people are very concerned about the assassin I mean III again I just I just like to see evidence I see them again I'll just go back to the math there are 6000 graduates they take some five years think about this yourself if what you're saying makes so much sense then prove me wrong you should go five years back in dental school get to list of graduates and show me how they're all happily practicing as an associate somewhere else okay well I've lived through this for 32 years and when I go find dentists five years out of school they've had five different associate jobs private high scale high fee low volume private low fee high volume associate everything I mean dentist you make horrible employees after you go to college eight years you're not a good employee and you're not happy so you have to go around sticking your tongue in a light socket probably once a year for five years and then finally the only reason you set out you buy your own practices because the fear of that unknown is less than the pain that you've been living for five years and I don't care what dsos have done the last ten years I've seen the linear thinking up every mountain I've scaled the mountain up four times and I've watched everybody come back down four times and we're getting ready to deleverage again so I don't buy it but if they were in them I mean but back to you the ones that worked at Heartland here's the geniuses they'll go work for some big DSO or you know like say most DSOs I would say the range for me a DSO is like somewhere between five and thirty practices but everybody talks about these outliers have several hundred and so the sharp kid will go work for this DSO and be some town in North Dakota and they got four offices north south east and west what'd he do he buddied up to the sharpest front office girl and that whole organization and she and you know we got to do we got to go to the next town over in Grand Rapids we kill it there so it's people time and money they go work at Heartland and they sit there and they say either they learn the business systems or they find the person that they have chemistry with that for some reason they want to break out on their own would you rather be the smallest goldfish and in the ocean or would you rather be the biggest goldfish so they'll go find someone who's um maybe three management tiers down and that'll be the new office manager and they open up and they just crush it but would you would you recommend it there in dental school they're looking for associate what's the pros and cons of going to a DSO versus a private practice?

Jason: Okay so no matter where you're gonna go I you should have the thought process of nine hundred to a million dollars in revenue okay that should be in the background of your mind okay what is the practice doing because remember you're going into a practice that already has a provider so if you're going into say private practice where there's only six hundred thousand revenue guess what you're not you're not needed even nine hundred to a million you're going to be working on overflow you're going to be working on on basically growing the practice but there's still nine hundred million you're still going to be getting patients you're still going to be getting some of those better cases rather than just filling filling filling filling filling. Same thing with DSOs though same thing with small DSOs medium/large you need to know what that practice is doing so for every provider there should be 900 to a million dollars of revenue so that when you come in you're going to be busy so that's my and by the way if you're too afraid to ask that it's probably a little too late but you pick the wrong profession to get into because you're going to have to be having these conversations eight twelve sixteen thirty times a day with your patients if you can't respect yourself enough to be asking these questions then that's a concern that there and by the way any owner that doesn't want to offer that to you that should be a red flag for you because you have to be busy as an associate otherwise you're never gonna get out of this debt.

Howard: and success is directly related to how many uncomfortable conversations you're gonna have.

Jason: Absolutely

Howard: When you when you go join a team they always want to start with how's the wife how's the dog how's the kid not why did we lose the ball game last night by 25 points and why ain't you know why you know what you know why am i work walking into a no show's cancellation just persons hasn't been hasn't made their last three points so your social animal stuff wants you to get along with everybody but really successful people for some reason they can talk about all the unsuccessful stuff and also remember another thing so much of those who do do and those who can't teach and you're always believing your dental school instructors who could never have a million-dollar practice said about me I mean my god well who told you that oh doctor never did it has been an employee at a dental school for 25 years I am a my god the only saving grace of dental school are like my friends who crush it Monday through Thursday yeah but had a boredom and fun they love to teach Friday for like 200 bucks a day which they could go to their office and do that from like 8:00 to 8:30 but they love to teach they love the kids they don't listen to the politics I mean maybe that one guy who comes in one day a week talked to that guy but career long dental school instructors and you're quoting them them like the Bible I mean you if you want to quote them that should be on your not ever do list well all my instructors said be sure to do this and this would happen so now you know that's exactly never gonna happen so they're gonna bracket it just blows my mind to know listen to your professors about things they've never done if your professor teaches endo and he's done 10,000 root canals yeah that that's totally different than his views on private practice and marketing and DSOs and all that kind of stuff um this is dentistry uncensored so I'm going to talk about some really crazy stuff have you noticed anything dentist's advantage of say young versus old men versus women or can ethnicity affect a business dental offices?

Jason: Yes absolutely oh yeah absolutely and it's funny because I obviously I deal with this all the time but it's amazing the amount as a society we've been indoctrinated that we're all equal all the people...

Howard: This is going to be good, can I get some popcorn I'm ready to hear this.

Jason: We've been indoctrinated that we're all equal okay and that we and by the way if you're all equal you're not exceptional in anything either and so we're precondition not to talk about things that are that are taboo to not talk about the fact that I'm a first generation Korean doctor and I'm looking at a first generation Japanese doctors practice and I go in there and the staff speaks Japanese but I really like the cash flow I mean it's a great practice it's doing like 1.2 million and everybody's told me I should buy this okay and by the way this is this is something that has happened I mean I can I will extrapolate after but so the doctor was taken aback when I said do you speak Japanese well no why does that matter okay so you're first generation Korean you want to buy a first generation Japanese practice where the patient base is first generation Japanese they speak Japanese do you by any chance know any history regarding the Japanese and the Korean people yeah you guys have hated each other for a long time now that is different than second or third generation same korean-japanese where English is spoken or if they or we have a multi-ethnic practice then ethnicity is not an issue by the way it's not just ethnicity it can be it can be religion if you are a non LDS person who's trying to buy an LDS person's practice that is a big issue.

Howard: Yeah like in a small town.

Jason: Absolutely small town in Idaho yeah I mean you just you follow the Mormon road and it should be a question especially this is kind of a joke but especially if the last name of Smith so so but it's it's just it's these questions that you have to know because again I hate to break it to you but humans are prejudicial whether or not your doctrineated and or not you are prejudicial the closer you are to whatever it is what I mean by that is if you are first-generation whatever you're gonna be closer to that first generation that you come from then your children who are second generation are going to be and if you are in if you are a small or smaller religion where it is not the dominant religion then you're gonna be gravitating towards the same like-minded people in a smaller town smaller area or even in a large metropolitan area and so to not ask those questions I think is malpractice it's not obviously dental malpractice it's just life malpractice and so but you need to understand the difference between all these factors so I don't care again if I have a patient base that is I'll just say multi ethnic or multi religious or whatever if the doctor themselves have not cultivated that type of environment it's not an issue so you really rather than analyzing the doctors ethnicity or sometimes doctors sexuality which is an issue as well sometimes you have to analyze a patient base and so and and that's what so few people do and again if it's second generation third generation not an issue if I'm in San Francisco just because it is a gay male that is the seller doesn't mean that if I'm a heterosexual female or a heterosexual male I can't buy that practice it matters on the practice patients what have they done how they marketed how have they extrapolated out I always tell all my clients never cater to your strengths if you are in a if you have some benefit you speak Spanish you speak Russian you speak whatever never cater to it because those individuals are going to find you anyway but you don't want to alienate others by having that be the presence in the practice that's just my personal...

Howard: That is so well said because one violation I will see especially in Phoenix yeah Indian doctor has a practice and before you know it every single employees Indian so is the decor the music the whole thing and so then it starts to become foreign in their own zip code and you said don't cater to that look if you're an Indian dentists and used to be Hindi all the Indian friends are gonna know it but always make sure the people answering your phone are a reflection of your economy and I always could get the low-hanging fruit because I'm when I opened up and on what Suki I mean it looked like it was downtown England right and I it was a cross through from the Guadalupe Indian Reservation and so I mean I always had at least a quarter of my staff could speak Spanish as a primary language I'm right next to South Phoenix which is the most african-american community I've always had the most african-americans in my answering my phone no one else seems to have looked at a map the demographics of my area.

Jason: and then when I say don't cater to your strengths that that's exactly what I'm talking about your you've analyzed where you're at and you have you have just like America we're supposed to be the great melting pot right so your practice is a melting pot of your area it isn't all white it isn't all Spanish it isn't all you know whatever so

Howard: but is in the dental law most all the dental office across the street from mine you would that you would think you were and yeah right you know some small town in northern London that's the...

Jason: Pass me the tea please yeah.

Howard: Yeah so that is so neat I've never heard anyone say would used to call it don't cater to your strengths?

Jason: Yeah

Howard: because your strengths are obviously gonna find out your strengths but cater to reality it's so important when should they hire a CPA a dental consultant a broker and then and then how do you I mean how do they know if they're any good I mean do you go to Google reviews as a yelp reviews how how do you find a dental CPA a dental consultant a dental broker and and know that they're good as opposed to they mark it well or they were endorsed by my local Dental Society which is problem right which is money yeah right I mean how do you get the ADA endorsement for your toothpaste?

Jason: You spend 1.5 million, yeah.

Howard: Yeah I mean I remember my very good friend who owned Denmat Bob Ibsen and he used to tell me in great stories about how to get any of his Denmat products ADA approved it was just a it was like a mafia shakedown never money and they had to decide you dentists even care how much is this shakedown but he said it but it was zero merit based decision it was money the answer what's the question. So how does my young homie she's a senior in dental school and she needs a dental CPA she needs a dentist broker she's a dental consultant.

Jason: So I'm probably gonna get killed for most of this but that's fine it's uncensored so I don't think that you need a dental CPA when you're an associate I think you can get away with QuickBooks I think you can get away with you know what it whatever software program you want I do believe that you needed dental CPA when you are looking at any type of ownership whether that startup partnerships acquisitions when you're moving into that phase I think you need to get a dental CPA to be quite frank I think you need in this just this applies to all your advisors this is a small industry and there are many advisers that are beholden to the people that they are being referred by and as a result oftentimes you don't get impartial advice for better for worse I tend to put my feet in my mouth quite often and I have a lot of people mad at me all the time because it I believe that it is our job whether it's an attorney a CPA a consultant whatever to provide our clients with full knowledge and then allow them to make the decision that doesn't always happen in this industry because people pull their punches because they're worried about the next referral so you really and the problem is is you're really as a dentist you're really not going to know until it's too late if you've got a good advisor or not that's the reality of the situation there are 50 people 60 people in the United States that know 80 to 85 percent of what our firm does most the time you're probably going to be fine but if you need that 15 to 20 percent there's probably only 10 to maybe 15 attorneys in the entire United States that have done this enough understand it enough the nuances and how to do this and how to do that and that's the problem.

Howard: and I'm gonna get you in trouble because I mean it's about one of your competitors one of your competitors likes to says you know when Jason's representing selling the practice and you got a lawyer buying the practice that they're just gonna go to war we duel represent we're gonna represent both of you we're gonna get this deal done if that name is Allan F Thornburg Affco dual representation.

Jason: Well I think I don't get Christmas presents from the Thornburg's yeah so.

Howard: He's so adorable he when his first son was a daughter right Halle named her Elana I love that guy but do you love the dual representation?

Jason: It's an impossibility I mean it's by the way it's an impossibility today it's been an impossibility since biblical times when Solomon you know came forth and said hey you can't serve two masters so the reality is if I'm representing both sides my advice is going to harm one side or the other it just it is if I say the Covenant should be three years and I put that in my contract that is making a statement whether I like it or not now if I come back with an allocation that is 85% goodwill that is making a statement one way or the other that is benefiting the seller more than it's benefiting the buyer there are I'll just use I'll say dual agent broke rather than a specific company those contracts are usually some of the worst for buyers in terms of representation protection.

Howard: They're biased towards the seller?

Jason: Yes well again like you said before with the ADA follow the money who's paying the vast majority of the Commission the seller so you have allocations that are tailored towards the seller you have purchase prices that are tailored towards the seller you have restrictive covenants that are tailored towards the seller so though and understand I work on AFFCO deals and to be you know to be fair to AFFCO you know there's I I know what to expect and I know you know I know what I can ask for and to a large part I will get as opposed to other dual agent brokers who are worse much worse I still don't like dual agent brokers because it's an issue for me just like it would be an issue for me as an attorney to be representing both sides or a CPA to be representing the seller in the buyer it's just it shouldn't be done.

Howard: There's a lot of people that believe and not just consultants who make a living off consulting that if you were gonna buy let's say the average price is it fair to say would you say the average practice sold is 750 or would you say it's now a million?

Jason: I really I think it really depends on the locality and the state for me I think those practices that are producing less than 500 are very very hard to sell given debt thresholds and things like that so I think 750 is a good number.

Howard: Yeah and I'm sorry the the term I hate to use the most as the United States of America because I mean you would never do that with Europe you would never compare Germany to Greece Denmark to Portugal.

Jason: Right

Howard: How do you compare Anchorage Alaska to Manhattan our Houston to Wichita Kansas even the Federal Reserve says that this is nine economies flying under one flight exception it's a gross is it you might as well just say earthling.

Jason: By the way by the practice in Anchorage versus the practice of Manhattan just saying.

Howard: So a lot of people are saying well if you buy a practice for 750 why don't you finance in other thirty forty thousand dollars and have a consultant in there for twelve to eighteen months for this transition and if you're you're gonna buy a $750,000 or as it's kind of like if you were gonna buy a oh what's the big car from a Jaguar okay from Britain you know you should pay the extra thirty thousand and and have a mechanic live in the trunk so that whenever it broke down every five miles either pop them out of the trunk should you should you buy I mean we know you should buy a Jaguar with the full-time mechanic should you buy a dental practice and a consultant for a year to hedge your safety of your investment or do you even see that?

Jason: Oh yeah I see it.

Howard: Okay

Jason: I am a proponent of consultants when the buyer needs it when they need systems in place when they need understanding of politics of the office systems of the office how things work in terms of employees and there's a lot of great consultants out there a lot of them on dentaltown I admire tremendously however there are more consultants that I have concerns with than ones that I think really provide a return on investment and some of these consultants are costing forty to fifty thousand dollars and I find it ridiculous and we're now getting banks to basically for some some banks will force these consultants onto buyers and it's just it in my mind it's atrocious but I believe consultants can have huge return on investments for buyers that need them and I think that a consultant in analyzing the practice transition process can be amazing when you when they're looking at the practice from an outsider's perspective here's what i think you can do to this practice based upon who you are buyer versus this what this seller is doing awesome love it love those programs not all consultants will do that though but i love that and yes I definitely think consultants are worth it but do I think everyone needs a consultant no I don't.

Howard: Dentists are smart people I mean they I mean when you know the difference in you carry out a prokaryote geometry you can configure this stuff out you can figure it out on dentaltown.

Jason: Well yeah and that is so dentaltown I think has been one of the greatest things to protecting so a lot of people could get away with a lot before dentaltown and in my opinion there was misinformation everywhere there was no way of connecting dots there was no way of being able to monitor and analyze and really just figure out who was saying what and so you had a lot of these I'll just say bad actors that were out there that were extremely successful through misinformation and everything else and dentaltown has brought that I mean I love it because it really creates more of a power playing field of no these people really helped me.

Howard: and on Facebook if you say something that that nefarious person doesn't like you look on the group

Jason: Your gone

Howard: yeah but you can't do that on dentaltown.

Jason: No

Howard: Dentaltown it's a place where you might have to hear something you I have all...

Jason: I have people who don't like me and I'm a moderator and I can't do one I can't delete it but two one of the beauties of dentaltown is that it's there's there's no there's suppression from there's definitely suppression if you're gonna come on to dental town and just try to be a troll or something else yes there's suppression but there's not a suppression of ideas.

Howard: and that's that's what I really love about it and if you and when everybody agrees with you you're in the commentary.

Jason: That or you're in the wrong room one of the two.

Howard: Yeah so here's okay so I don't even know why we're discussing this because I don't see a lot of the advice taken but there's two dental schools right here in town and there's one in Gilbert there's one in Mesa and they come out of school and they got $400,000 of debt and they say look your dad's a dentist and you got married and had a little grandbaby trust me they want you to live in their house for free so you can search save it up pay no no no not only that...

Jason: I'm gonna go get a Mercedes.

Howard: They go buy a house and they haven't bought a practice yet and they say oh they won't matter that I have four of those our student loans and about a four hundred thousand our student loans when I go to buy a practice because the practice if it's a great practice it'll it'll be its own equity for a town loan so is it okay if I go buy a house before I go buy a practice?

Jason: So I'm gonna tell you no and I'm very very strongly about that because it is much easier to find a practice and then buy the house than it is to buy the house and then find a practice in the immediate area and so and that's the issue because now all of a sudden great the house becomes a ball and chain I only want to look in an area which is you know within 20 miles because I don't want a commute I want to do this whatever and now of a sudden I'm within a very small locality geographic area and I have to find a practice that works just right it's really bad and and by the way just economics 101 you typically want to buy income producing assets first rather than income suppression.

Howard: Now you go down into the poorest neighborhoods in town you go down to Guadalupe yep you know see $45,000 lowrider parked in front of a house that doesn't have electricity right and he's and I've had my for 32 years I walked out to the car because they always want to show me to see their and I always put my arm around him I said I know well you got that cuz you know when you drive I'll see Marie is just gonna jump in the car but I said if you would have spent that at DeVry you'd have had a job with dental benefits I know no I understand I understand how hot Marie is but you got to get dental benefits first and so and so then everyone knows that and then you go into dentistry and they live in a 4,000 square foot home they own but they rent a shitty thousand square foot office for 10 20 years and now they're they I mean it's like what why do you why is your house consumption three times bigger than your office why do you own your consumption and you leash your deal and then and then I ask you to do certain things and every time I tell you something to do to your office my landlord won't let me, that only happen one time to Sam Walton and him and Helen said sleep or yep lease again and that happening good old Bentonville Arkansas where everybody went to the same church and he still got screwed over by his landlord and he said I'll never do it again so yeah when you own consumption and you lease your investment that's crazy. So last but not least what God we went way over thanks so much for staying over so um last question is she's smarter than you I mean my god she's a dentist and and and by the way you're not only just old you're old and senile.

Jason: That's true

Howard: You remind her of her dad

Jason: Good point

Howard: So she came out of school she's been working associate two years and she finally realizes I want to buy that office right so she's gonna call that guy and say I want to buy it is that should she call that guy first or should she call representation should she call you first?

Jason: So I don't mind people talking but what what bugs me I guess is it might be a little strong what concerns me is when people come to me after the letter of intent has been signed because now my hands are at least partially tied and then I start asking questions...

Howard: Where the hell did you get a letter of intent who is it a boilerplate download.

Jason: Yeah or boilerplate download or they got it from the broker or whatever I so and I can't speak for everyone but when people bring me practices I'm not charging them because I want to make sure that they're buying the right practice if you're an $800,000 producer and you're looking at this practice that's only doing four hundred thousand I want to tell you you're making a big mistake oh and you know what the number one thing is its but I don't want to go into a lot of debt okay well there's and I hate saying this but there is good debt and there's bad dad good debt is going into debt basically what we were talking about before to acquire a practice that has significant cash flow that allow you to satisfy all your debt obligations pay them down blah blah blah bad debt is going out and buying that Mercedes Benz because you're a doctor not good debt. So but there's also that's there's a subsequent issue and that is you have to maximize revenue to maximize your income potential so if you're doing $800,000 as a doctor the practice minimum that you should be looking at is doing eight hundred thousand but really you should be looking at practice doing about a million because again what are you not getting as an associate you're not getting the hygiene and so that's what you have to start doing and please understand that going into debt for a practice that has cash flow is good for you not bad for you buying a practice because it's cheap is a really bad economic decision. What I would I tell my the the most successful buyers are ones that find a practice where they do at least 95% of the procedures that have hygiene I like I mean at least 25% but I like it to be more than 30 percent of revenues where they will also be able to add procedures just based upon who they are so that the existing doctors referring out endo and oral surgery because they just don't like to do it I the buyer I like doing endo and I like doing oral surgery and I want to be adding Invisalign or maybe implants in the future that's the practice that you buy because you will be insanely successful.

Howard: So warren buffett's always had industry you never he'll never go into the industry if under two conditions if someone else sets the fee or if its capital intensive so we already chose an industry where someone else any fee it's very capital intensive so we're already in the space Warren told me in business class 1980 you don't go in there and I didn't listen to him then I should have dropped out of Creighton taking my tuition money but Berkshire Hathaway and they just wouldn't hung out and they talkers on the beach for 30 years and I'd be worth a gazillion dollars I've done the math on ones I mean if I the day I listen to him I just thought one semester of Creighton how much it was tens of millions of dollars but anyway so so that is why when you go around the earth the two procedures where government insurance doesn't set the fee is clear aligners and implants they've taken over like you go to Tokyo Paris in London three of the greatest cities in the world they're socialized medicine only gives you $100 u.s. for a molar root canal so no one does a molar root canal I just pull out the tooth and place a $1,500 strawman implant or Nobel biocare and and that's why I fear socialized medicine because the only thing I understand which is this wide under every socialized is a disaster. So what are they doing in cardiology and cancer that I'm he's far enough to know and and and second all you already decided you whined that your three hundred thousand two hundred eighty four thousand dollar student loans okay I want to remind you that there's only twenty countries where you can borrow two hundred eighty thousand dollars being a kid from other people most countries you have no access to other people's money but the catches with other people's money once you go down the road where you borrowed two three four hundred thousand dollars of other people's money you're gonna have to keep borrowing all the way to 1 million because once you get that much in debt you can't pay it back working at Taco Bell. So once you I think once you've passed a quarter million dollars you're gonna have to go all the way to a million now I mean there's just a point of no return and then I'll tell you another thing is one of the greatest joys of being a dentist is you know it's politically incorrect to in taboo to love totalitarian dictators but man when you own your own business there's no there's no judge there's no jury there's no Congress I think one of the greatest benefits of owning a dental offices if you can't stand your hygienist you can fire her if you don't like that patient you can tell them to go to hell I put a door on each side of my wall because I knew my favorite one-liner said you know this building's got four doors just pick one and let it hit the back of your ass on the way out and I've only said it probably maybe I don't know maybe once every six months for 32 years but so and then I know your number one stress is gonna be when you get married to another dentist with no sex no kids no glue and one doesn't like the other ones composites and the other one wants to go into sleep medicine or by a laser CADCAM or I mean I see it where the one dentist spent $150,000 on CAD cam and then the other partner is sending to a lab and he can get an explorer under every margin of every CAD it's just so messy yes so stay in your lane work for yourself and when you have your eye on a practice and you need a broker this the man he's done seven thousand of these.

Jason: I don't broker though I don't broker so not just the legal but I mean so yes we're attorneys but because we do this all the time I mean we really take a global approach I mean I want to know overhead and my now I'm an attorney you said stay in your lane absolutely but I want to know because it benefits my client I should if I'm catering to dentists I should know as much of their practices as they do so I we talk about overhead we talk about all of these aspects you know procedures insurances all that stuff because hopefully I'm providing more to my client as a result and as a result they're going to be better off so I you know it would be much easier if I was just an attorney.

Howard: So if I'm buying this guys practice through a broker that

Jason: and I'm coming in...

Howard: Okay I'm sending you to do the the legal from 30,000 feet but not with the actual transaction of the buy sale agreement?

Jason: By sale no I'm doing all of it.

Howard: So why are you not a broker?

Jason: because I'm not representing I'm not taking a commission I'm not the seller hasn't come to me saying sell my practice for me sellers come to me saying can you can you help me with all the legal aspects or hey I'm thinking about selling what do I need to do or I mean we basically take a doctor from the time they're in dental school to when they've retired like that's what we try to do we try to we try to carry them through their career.

Howard: and if they got a question what's the best way to contact you?

Jason: Either through dentaltown Jason Patrick Wood is the moniker or whatever it's called emails you can also call it 800-499-1474 do also want to point out that there's so much misinformation about we've talked a lot about debt but there's understand as a young doctor there are banks that are tripping over themselves to give you money to acquire a practice and they don't care that you have three to four hundred thousand dollars in debt they what they care is can you produce and does this practice have enough revenue to adequately support that type of debt so that's what you need please please please know that banks will give you money.

Howard: Yeah in America getting a loan is not the hard part.

Jason: No

Howard: It's paying it back is the bitch.

Jason: Right

Howard: When I has a loan I mean I'm watching when I had four kids they were sending them credit card applications while they were under ten. Also a lot of the young kids why ours just say why are you an Esquire esq instead of a JD after your name?

Jason: It's really preference I could put well actually a JD is someone who graduated from law school an Esquire someone who's passed the bar so an actual attorney just because I go to law school doesn't mean that I'm an attorney I have a juris doctorate but I'm not an attorney unless I pass an exam an additional exam.

Howard: So it seems like more people are doing esq these days instead of JD?

Jason: Yeah I do whatever's custom I don't care.

Howard: and it's bizarre because when you're on the internet I mean there's Australia London barristers and

Jason: Solicitors

Howard: Solicitors and awe like I said but it's just the legal world.

Jason: I prefer dr. Esquire actually.

Howard: Dr. Esquire

Jason: I'm kidding

Howard: but seriously thank you so much for all your time.

Jason: Thank you, I've had a great time.

Howard: You're just the legend the man.

Jason: Oh whatever thank you I appreciate it.


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