Dentistry Uncensored with Howard Farran
Dentistry Uncensored with Howard Farran
How to perform dentistry faster, easier, higher in quality and lower in cost. Subscribe to the podcast: https://podcasts.apple.com/us/podcast/dentistry-uncensored-with-howard-farran/id916907356
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1459 Morgan Hamon, CPA, of HDA Accounting Group on Maximizing Practice Profitability : Dentistry Uncensored with Howard Farran

1459 Morgan Hamon, CPA, of HDA Accounting Group on Maximizing Practice Profitability : Dentistry Uncensored with Howard Farran

9/14/2020 3:00:00 AM   |   Comments: 0   |   Views: 74
Morgan is a graduate of the University of Arizona school of business. Following graduation, he was commissioned as an officer in the United States Navy and served for over ten years as a Naval Aviator flying carrier-based F/A-18 Hornets. After leaving the Navy, Morgan co-founded HDA Accounting Group with the specific objective of creating a niche accounting firm that specialized in providing high value and high touch service to small business owners.  Morgan holds a master’s degree in Accounting and is a Certified Public Accountant (CPA).  He continues to serve as the President of HDA Accounting Group leading a large staff of professional accountants delivering dental-specific financial accounting and tax services exclusively to private dental practice owners.


VIDEO - DUwHF #1459 - Morgan Hamon


AUDIO - DUwHF #1459 - Morgan Hamon


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It's just a huge honor for me today to be podcast interviewing Morgan Hammond CPA a graduate of the University of Arizona school of business I’m not going to say anything because I went to ASU the real accredited University of Arizona got my MBA but we'll just assume uh that he studied online afterwards following graduation he was commissioned as an officer in the united states navy thank you for serving Morgan that's amazing and served for over 10 years as a naval aviator flying carrier-based f-18 hornets during that time he deployed to Persian Gulf and flew combat missions over Iraq in support of operation southern watch he also served as a flight instructor  and landing signal officer for newly winged naval aviators transitioning to the hornet training pilots into air-to-air combat and landing on aircraft carriers after leaving the navy Morgan co-founded hda accounting group with a specific objective of creating a niche accounting firm that specializes in providing high value and high-touch service to small business owner Morgan holds a master's degree in accounting and is a certified public accountant he continues to serve as the president of hda accounting group leading a large staff of professional accountants delivering dental specific financial accounting and tax services exclusively to private dental practice owners in addition to his duties as company President Morgan regularly provides business advising for over 400 dentists in nearly every state helping them analyze the financial performance of their practice and identifying specific strategies for profit improvement he's a regular presenter and educational speaker with the Colorado dental association and has been featured on several national podcasts as an expert in dental specific accounting advice i have so many questions for you Morgan but i got to start um with this an rip to dry Eugene j Jordan DDS who died august 28 2020 he was 83 years old a beloved dentist known for giving back to the community and championing social and cultural changes has died Dr Eugene Jordan passed away his dental practice made it a mission to serve children and others in Cleveland and east cleveland who couldn't afford care visitation is pearl jones uh Cleveland center but um my gosh the doctor was heavily involved with the NAACP and once served as the president of the national dental association Jordan was also instrumental in helping to establish the black history celebration in cleveland city hall and bringing Juneteenth celebrations to northeast Ohio you will be sorely missed uh Eugene which is my middle name so my middle name means more to me now after the passing of Eugene so Morgan um which was scarier to you uh serving uh in wartime or serving dentist accounting during a pandemic i mean once you're at war with a homo sapien one year at war with a virus and uh not all humans are um lethal in fact most bacteria and fungi are not lethal but damn near every virus is up to no good and uh how is this playing out on um sapien home homo sapiens homos covid was uh very very stressful march april uh pretty intense time um you know unlike so my prior job it was stressful because every day like death was on the table well now that's not on the table but it's it was still scary stuff i mean nobody when it whenever we got shut down kind of mid to late march uh it was very stressful you know we there were times where i was getting 40 to 50 emails an hour from clients you know wondering what to do holy so it was a lot of long hours and i and there's a lot of industries a lot of businesses where they they made me shut down and did home projects and had time off but we that whole time that two month period is probably we put in some of the longest hours we ever did and in the end i viewed it as an opportunity because it was it was a circumstance where we just had so much meaningful contact with our clients where we could help them in such a tangible way it was it was hard work it was very rewarding uh but i was happy when the uh um just the volume as things sort of settled down and everybody started getting their ppp loans and the idle and the economy started open back up um when that when the volume of that communication went down it was uh welcome because it was very busy time yeah i noticed during that period of time traffic on dental town doubled and it was all non-clinical and what was so romantic for me to see is that you know after you know we had to close down from um st patrick's day to cinco de mayo i mean we had a donut zero and everybody was talking about all things your specialty you know what the hell we gonna do and i was so excited to see now that it's gone back to mostly clinical um but i'm um i don't think anybody on earth can predict the future or we'd all be in stocks and at the casino and um we're into september now and i remember that this came out you know march april may june they kept telling us about the the fall surge and there's so many theories out there nobody knows but um i'm nervous about a couple of things i'm nervous that dentists think the worst is behind them and i i hope so i mean i'm a dentist i got today's tunnel um right here um in all watuki and um but you know you look at how many of them are playing these stocks and uh nasdaq and tesla and amazon and i i mean i have an mba from asu now just for the just for the record um if you leave phoenix and you drive down to tucson if you just drive past u of a with the windows down they'll throw a diploma in the back window but um i'm i'm i from what they taught me at mba school i don't see any legs in that market i mean it looks like it's uh just a hot air balloon it's like the fundamentals are gone and then an old dog like me when you start hearing these experts trash warren buffett's moves i'm like dude he's 91 and munger's 95 if you're if they're the new idiots i already know what's going on but what would you say is cash still king do these markets worry you yeah so and just to just to clarify like what's in what's in my lane and what what gets out of my lane you know we we want to have our doctors basically do two things make make the most money they can given that the revenue that the practice is bringing in and then i'll of course hang on to as much of that through tax planning now once they have that residual cash what they do with that in the market it gets a little out of my lane because we don't delve into the financial planning so we don't necessarily help our doctors with that amount of money after we've hopefully helped them amass a huge pile of cash and hang on to as much as they can from an operational point of view when you say cash is king absolutely what we're my on all my recent calls with our clients lately you know we're talking about a couple things uh one of which is uh cash reserve and i would say what we're seeing across the board most clients are keeping about two to three times what they would normally have kept in terms of cash reserve in the practice um because we to your to your point we really don't know what's going to happen i mean it's been a good summer overall post shutdown but i don't know i don't know what's in store for us for the next couple months well what's really cool about social media when i started downtown in uh 99 st patrick's day four years for facebook is that everybody knows what they're doing but they're they're all solo and with dental town no one would have to practice solo again so when you say numbers you know my guy listen to this is all alone on you know hopefully he's not on the treadmill hopefully he's drinking at the bar but um when you say saving two to three times as much like like what amounts are we talking about so under like pre-covered normal what used to be normal circumstance like we would advise our clients they need to have at least one month's worth of break even expenses on hand and there's there's different ways to compute a break-even point how we compute it is all operating expenses plus debt service requirements you know so it's a true measure of the cash requirement each month before there's money for the owner so if a practice had you know 50 55k break even i would say you know let's let's keep that account at least 55 or 60k at any given time uh the reason being to just uh peace of mind you know if uh if the supply bill comes due the same week as a rent the same as payroll you just pay it you want to juggle cash so that one-to-one ratio in my opinion is a ratio being one month's cash on hand for all operating expenses plus money for dead service perfect you got it and now we're seeing two to three times that uh which i think is good some of that is clients just being very judicious with the cash flow obviously during this pandemic and the other side of that is of course uh ppp uh eidl hhs you know the government cash injections help help with a bit of that but we're seeing a lot of a lot more cash in the practices than we would typically and do you think um do you think the government i mean if you were the the king of the world um do you think um going into the fall you know and until this behind us do you think the government should inject more cash because the argument is of course that since they've been keeping records uh you know nobody except america last quarter and printed three trillion dollars and um that was unprecedented but it like again if you go back to world war ii at the end of world war ii um um england the united kingdom was like um you know something like 176 percent of their gdp in debt and and um a lot of countries have gotten that debt against fighting humans but now we're fighting a virus um do you think that um there's a um would you spend more and raise the percentage of uh debt to gdp even higher i mean would you take america to 200 uh debt to gdp level like japan is now uh to ride through or do you think uh austerity is better you know i i don't it's hard to say i worry about inflation if we keep printing money we've gotten used to low low interest rates i worry about if we keep printing this type of money and injecting it into the economy what will happen with the interest rates um i don't know if i and i'm very curious you hear about these talks of second second rounds of stimulus going through i don't know if politically washington has the willpower to see that through you know for our specific industry uh which is uh i'm looking through this overstruck because the world i know is private dental practice owners and across the board our clientele had a pretty good summer i think now whether that falls off this fall with uh because everyone missed you know their their recall in march and april and so if that's six months down the road there's a hole in the schedule that's kind of what i worry about but but overall like i think my gut feel is i think our our clients would be okay without that cash injection just based on what i've seen in the last three months um and i i hope i hope that is the case but the trend lines they look pretty promising right now yeah the thing that concerns me and my uh insurance executive friends is that you know um um 40 million americans have lost their job and 30 million of those had dental benefits and a lot of those jobs are not coming back nobody knows how many but if you want more of something subsidize it and if you want less of something tax it and regulate it and when um you take um the employer subsidizing dentistry and you take away the government subsidizing dentistry because a lot of dentists say i'm gonna get out of the insurance business great there's 208 countries i've lectured in 50 of them i guarantee you the countries where employers don't subsidize dentistry and the government doesn't subsidize dentistry you are in a third world banana republic and um the uh so you know good luck with that um so that uh kind of concerns me um you you see so many offices at 30 000 feet and my guy she only sees you know the numbers on on her sheet um why are some um offices so much more profitable than others um you know we read stats from uh that the average uh overhead is 64 but you um hear people on dental town talking their overheads from 50 all the way to 80 percent right what what what is the what is the cost drivers that my homies can control i think so the profit margin that's 64 i would concur with that i think as a cpa i i think in terms of margin we're dynastic in terms of overhead of course we're talking about the same thing 35 margin 65 overhead um i would concur with that number uh 35 to 40 percent margin for a practice with no associates in my opinion is normal a 30 to what uh 35 profit margin 35 to 40. so 35 to 40 profit margin is normal for what you see in dentistry with a practice with no associates um what contributes to that and so i we see a lot of practices do better than that of course to where you get to the 50 50 mark like you just mentioned in my opinion if overhead drops below 50 then i think that's a pretty small club and and we you know we have the data to look at that it's not to say that we don't have practices that look like that but i think that's a pretty small club i would say the lion's share of most successful practices have a profit margin i would say 40 to 45 profit margin so 55 overhead ish and that's sort of the bandwidth i think for like the the very successful really well-run practices where the doctor has a nice uh nice quality of life and also very comfortable income um now to answer your question like what contributes to that i think it's two things cost management certainly uh but anytime i look at a client's numbers you know for example sam preparing i have a call coming up and so i'll look at those numbers ahead of time if i see the profit margins low so sub is less than 35 margin or to put it another way the overhead is greater than 65 if i see that like i want to have an answer why i'll of course look at expenses but i think in my opinion more often than not the problem is not necessarily an overspending problem it's an under collection problem in other words they're doing the production they're paying the bills uh but if that production does not turn into a collection that will that will reduce the profit margin i think faster than just about anything and of course that restricts cash flow and that's when i start hearing comments like you know i feel like i'm just working working working but but it doesn't feel like the money is there so i think of course you have to manage expenses but you really have to run your collection process needs to be airtight uh so i i think those two things have the biggest impact on achieving the the appropriate margin um i just wanna yeah i got a lot of kids watching this program a quarter of my audience is still in dental kindergarten so i just want to point out some of the brilliant things you said that might have flow in their head um when a dentist with no associates in his own business and he's talking about is the um with no associates um average profit margin is 35 that the overhead is 65 percent now a lot of young kids and young dentists think that um that 35 is their profit margin well it's not a profit margin because you're a laborer you're a human working with your hands in a surgical operatory that had an eight-year barrier to entry which eliminates most competition then you got the state board who acts as a mafios a judge jury an executioner over who can have a dental school who can have a license who can be open for business um which which is why we make so much money without those government regulations you wouldn't be making any of that if they got rid of all the state boards and all the foreign trained dentists came to america um you'd probably be lucky to be making 50 bucks an hour i guarantee you that but um you so you have to separate what is the profit that's my salary from the cost of doing business as a highly trained dentist in a highly regulated first world market like america versus profit dollars from having capital employed in a dental office like say a dso might and so what um most people so what i've always done is well what is the what is my market value for what i do well i can hire associates all day long for 25 of um production and so i um pay myself as a dentist like any other dentist for 25 production and then what's left over about 14 15 is actually true profit from me having capital employed in my dental office and over the years you know i've explained to myself that you know that that's you know a nice return for a lot of work um if if my office wants to drive that overhead down to five percent then i'll just sell the damn thing and put the money in a risk-free bond or a savings i'm not going to do what i do uh when i could make the same money holding a damn piece of paper so um so always separate the cost of a dentist doing dentistry versus the profit from having capital employed in a dental office which begs the question you know you say um the dsos you know that all their dentists are employees and uh um do you um are you privy to any numbers on dsos do you work with any of those to know how they're doing in the pandemic no i don't have visibility on the dsos our clientele are all private privately owned and operated dental practices so they're communist right so so now so then we go back to the overhead here's the other problem you might get out of dental school and go work with your mom or dad but their cpa um doesn't specialize in dentistry what percent of your business is dentistry a hundred a hundred and you have um how many approximately how many clients you said four hundred well 475 practices that equates to about 400 doctors because we have some multiple so so this guy is looking at 400 dentists and right now you're looking um in in your iphone um i mean this is just an amazing opportunity uh to see what's going on but your parents don't use a dentist cpa like you do a medical specialist if you had a eye problem you wouldn't go to an oral surgeon you go to a specialist and you really need to see someone who focus on this but so your parents they only their cpa services are only um you know you get a statement of income that's a profit and loss statement that's totally designed just for third-party tax collectors the irs a balance sheet um what balances equals your assets and liabilities um that's for getting a loan or divorce but what you need is a statement of cash flow and i don't think most kids understand what a statement cash flows i'll just explain it to you like you're five let's say you're a dentist and i'm treating um morgan as a patient and um it costs one dollar my overhead is a dollar a month and i do dentistry this month on morgan and he says well i can't give you that dollar this month i gotta wait um the next month i gotta wait three months well i i need to have three dollars in my savings accounts to pay all my staff my rent mortgage equipment build that computer insurance and everything for three months until it gets me a dollar in fact when you deep dive into the 40 to 60 000 us bankruptcies a year most of them were profitable and good businesses they just ran out of cash and that's the that's the the variance between i am doing the cost of dentistry now and i pay my bills monthly so morgan will you please give me that dollar right now or i better have three i'm in the savings account so cash flow is king and i've never even met a dentist who even gets a statement of cash flow from their accountant you know they just get this irs reporter if they're publicly traded it's the same firm for an sec filing it's like i don't care about wall street and the irs i i want to know if you understand managerial economics based on the statement of cash flow do you agree with that or not yeah i agree with that you know the the statement of cash flows as cpa and of course i love it is i concur it's one of my favorite statements it's not a very intuitive financial statement to read so what i found is that if a doctor is just getting your your basic vanilla like p l and balance sheet from their accountant they tend to gravitate towards the income statement also called the profit and loss because it's easy to read it's revenue less expenses and then there's a net income at the bottom and so they'll gravitate towards that net income say this is what i made and then they'll log into the bank and say holy cow why why is my bank so much lower than what my p l says and the difference is it's the balance sheet items which are shown on the statement of cash flows what i'm talking about here and this is almost always the case if there's a big delta there's a big difference between net income on the p l and what a doctor is seeing when they log into their their online bank account it's all it's the debt service is a very common culprit because when you borrow money um that is not taxable when you receive it when you pay it back it's non-deductible so every time you write that one check even though it's the same amount every month back to the bank a huge part of that is principle you'll never see that on the profit and loss because repayment of amounts borrowed that that's that's a relief of a long-term liability on the balance sheet so the statement of cash flows that sticks out like a sore thumb it's never on the p l i think that's why there's so much confusion when a doctor only gets a p l only goes down to net income and then one and then sees the lower amount in the bank account so there's i totally concur with you that a better understanding of cash helps the doctor see what what what is their real tangible reward for owning that business and taking all that risk and all the work that goes into it i mean there has to be there has to be that substantial reward and a p l doesn't really tell the whole story at all and i know you're not supposed to talk about religion sex politics violence and i don't do that but i i want to say that is still why if i ever met bill clinton i swear to god i'd punch him in the face because when mike microsoft bill gates the richest guy in america he knew the financial illiteracy so he had microsoft so he had word and excel and powerpoint and he wanted to buy quicken because these uh you know they own all the accounting they own turbo tax charge and just automate this whole thing on one platform and and clinton uh blocked it and actually put him into a depression and so he started he started pulling out his fingers and everything and it wasn't long after we saw the y2k bubble pop and that was so unnecessary because the government here that was 20 years ago the government's still all paper everything every transaction i do with the government's all paper forms i literally had to go down there in person for one last year and the uh the idiot my dad has the same name i do he's howard eugene ferran and he named me howard eugene fran the second which is just asinine if you're thinking about doing that to your kid please steer the car into a tree right now because it's insane and i'm down there and in fact even when i by the time i was 10 my dad quit going by howard and he went by his middle name eugene and so everybody called him gene and they called me a mistake and uh and uh i told the lady i said do you she thought i was my dad she in the records i go do i look like i was born in 1938 but if they but if the bill clinton and the the mobsters at rural washington um should have said after the business all that because the business got all done for the y2k and then when they were done the spending just stopped the markets after about 90 days of scene they're all done everyone cashed out as a fall they should have said well now let's do the next 10 years and make the government paperless and make it all seamless and uh there but that was uh but they'd rather have the the big egos and the big fights so clinton sodom 22 states pseudom the eu pseudum and you still have quicken and turbocharged not hooked up to a single dentrix eaglesoft oh and that's why everyone's going to open dental and everyone's still in denial it's like well the dentist they don't need to have all their numbers in one platform they can have kind of a bipolar schizophrenic multiple personality accounting and i i think i think the tools that dentists have to run their practice they're not even as good as when i was 10 years old and my dad had a ncr cash register national cash register that got swelled up by ibm my dad had better total cost picture of running a sonic and and then later you know i met friends that had um um dan and beverly carney a pizza hut and and all these other franchisees man if you owned a dairy queen which is owned by warren buffett you wouldn't need i mean you're a doctor who got a's in calculus physics geometry trig you're the smart i mean you know the difference between a sine and a cosine yet they don't know their uh numbers and they think it's them and it's not them it's the it's the antiquated tools they work with are you or many of your clients um are most of them on ventrix which has the market leader or is it um patterson's eagle soft or is open in my opinion uh open dental is the the one i hear about most i would say maybe it's a toss-up between open dental and dendrix those are the two we hear most often i'd say eagle soft is maybe third and then and then you hear your kind of one-off smaller softwares after that but those are the top three in my opinion at least for the window i have visibility in on open demo hands down is i think the most popular yeah because you know if your son is in college and is taking programming courses and he can go into open dental and he can he can add code i mean you can't do that with anyone else's i mean it's just open and i wish them the best of luck because i know everybody i talk to that's doing a fintech and dentistry is programming to open dental um so um you know and it'd be um and i can't tell you what percent of the time does the average dentist when he tells when the cpa tells them how much they owe for the government for taxes is just like completely shocked like what what what where what are you saying yeah that is so a very very common dissatisfier and we you know being being a niche firm dealing with a very like narrow segment of the the taxpaying population dental practice owner we put a lot of work into looking at our clients taxes every quarter because to your point no nobody wants to find out april 1st like what their tax bill is um and so but i think that is the case in a lot of firms across the country that's a lot a lot of cpa firms are very tax oriented they don't necessarily are uh immersed themselves in with their clients out every month with accurate like up-to-date bookkeeping which is uh honestly the cornerstone of our model so we use that data all year but i think that's unfortunately how i think that's the standard for a lot of cpa firms across the country is they'll they'll maybe look at the tax at the end of the year and then crank a tax bill out in the spring um our approach our objectives look at it every quarter so we can do two things make sure we're checking all the boxes on the appropriate tax saving strategies trying to hang on to as much of that cash but then we also have to proactive plan in place to get it paid in right so there's no big checks to write in the spring so and it's tax planning for a dental practice it's it's probably the hard i can safely that's probably the hardest thing we do because as you know revenue changes every month expenses levels can change every month sometimes in opposite directions and it's a very equipment heavy industry so if we have a tax plan totally dialed in come november and the doctor finally pulls a trigger on that brand new e4d now they're it's like totally changed overnight so the only way to do it in the dow industry you just you have to look at it every quarter you know waiting to the spring will result in that that one situation that nobody wants that you just mentioned where you just find out last minute you know you have to write a check that you might not be ready for so we just said if you want more or something um subsidize it if you want less of something um tax and regulated so it's these capital subsidies that the government does to drive industry um what percent of the of the dental heavy equipment sales are do you think tax driven this certainly when when we're getting into that time of year september october you know when no the dentist will be approached about the equipment um because it does result in a substantial tax deduction and for the for your listeners that's section 179 which i'm sure everybody has heard of and what that allows us cpas to do is instead of depreciate that medical equipment and write that off over five years we can write the whole thing off this year and a substantial tax benefit and and to your point howard yeah that that is written into the internal revenue code just for investment now my advice is anytime i'm visiting with doctors is that look make make that capital investment if it will benefit your practice either operationally or clinically you know whether it's better care higher profitability makes your life easier and prioritize that and then we'll capture the tax benefits later um whether whether it makes sense to write it all off this year maybe spread it for a growing practice maybe you want to spread that out in a couple more years where you may have a higher higher tax bracket but i don't know the exact percentage howard but i know there there's lots of external pressures this time of year to make those those investments so you don't you know miss out on the end of your tax write-off just realize you're never going to miss out on anything but in my opinion you make those you make those investment decisions for for clinical or operational reasons not necessarily tax that's just my opinion investment decisions for better care and and more what do you say more profitable more profitable or maybe just operationally it just makes your practice better and what capital um what items are you seeing now i mean this is uh september 9th uh so we're in the the um last four months of the year what types of capital uh equipment are you seeing um oh labor investments you know a lot a lot of cone beam people getting into implants of course you know the syracuse the milling machines are big uh panoramic x-ray i would say those round out the the most the other other than just upgrades here we have we have many clients either doing a second location or remodel we'll see that that's not necessarily driven so much by the calendar but a remodel um normally that would be amortized over five years but section 179 you could expense the whole thing a year for the equipment if you lease your space any like if you if you move the walls around uh do like a substantial remodel where you alter the lease improvements those get deducted over 15 years it's not as generous but certainly any equipment uh is can be taken uh this year as opposed to spread over five years again if you were the king of everything would you put all government taxes on just the books now instead of all this deferred taxes and depreciation and amortization schedules and all this i to me it always looked like uh something to create an accounting industry um yeah make accountants like you necessary instead of uh it's almost like the government is creating chaos so that you have a job it's kind of like the pharmacist i mean um you know they're going to count 28 tabs of penicillin why can't i get this at walmart i think i think two things happened however like when they redid the tax code in 2018 the per on the personal side that did get streamlined you know because they basically eliminated a lot of deductions that w-2 earners can take so they did simplify it on the personal side for business owners however i mean they made it harder they made it more complex and of course and for the for the younger listeners out there um that may maybe haven't had a business how the business tax return works okay whether you're a sole proprietor an s corp or a partnership if there's more than one doctor that went in on a practice those are all called flow through entities so the business tax return is just an information return it's where where we tabulate the profit so take all the revenue less all the deductible expenses you're going to left with with this amount of profit that's going to flow through to the personal tax return and then you pay income tax at whatever your personal rate is you know one time so the the business tax return the personal tax return very closely related well in 2018 just the personal return got a little easier the business return it got a lot harder they made some changes in there and there is however there's all kinds of layers multiple layers from different rewrites that add up and it just it makes it hard um my personal opinion not to not to delve into those those topics the you know religion politics personal finance but you know in my opinion there's just er there's so many hands in the cookie jar in congress you know there's all these little special rules and i think once they get layered and built in and institutionalized into that tax code it's really hard to strip them out so i agree you know the business the business returns are complicated um so yeah it's a it's a tall order that must be that must be hard for you to intellectually handle because on the one hand you risked your life in the navy for years during war for truth liberty and justice but the truth the matter is the uh the government is um money's the answer what's the question mob mentality just they're just trying to shake you down for money or something it's uh that must be amazing and by the way when when you were saying um when we were talking about you know knowing these numbers um if you're in dental kindergarten school you know what you need to do is um or if you're listening to me and you have some kids um that are of any age they're still at home what you do is you um look at their favorite uh things like say they have an iphone buy them one share of apple stock say they like nike shoes buying one share of nike when my boys um were i don't know uh two four six and eight or whatever the hell they want they love disney world i bought him a share of disney because then by the by the law they have to mill you every three months at 10 q and then a end-of-year 10k and they have the balance sheet the statement income the statement of cash flow it's all something you you understand and they would start to learn the the numbers uh from disneyland and nike and and things like that and then for dentists i mean my gosh how could you not want to read uh the 10ks from publicly traded align technology biolase dense fly international x-ray henry shine patterson smiles direct club i see so many people um stating their theories and conspiracies of why these companies are doing that i'm like dude they filed these report now and the 10q quarterly you can be salesy and optimistic and shoot for the moon but in that 10k man you're going to put your hand over a bible in front of the irs court and there is no jury in the irs court and those 10 k statements they're talking to the government and wall street and they even tell you what they buy these cad cam machines for and when their lease exclusivity lines up and the margin they're selling it on and i i just can't imagine giving one of those companies a hundred grand without at least reading their hand i mean uh we're negotiating the price of cbct well i'm reading what you told the irs and i assume what you're telling me is but if you're lying to the irs you're gonna go sit in a cage so buy your kids their favorite company publicly traded stock and if you're a baby dentist buy at least in fact you can even find all these letters online but if you own the stock the the it's going to be reminded it's going to be mailed to you it's going to be sent to you or emailed to you but uh learn your numbers uh that's that that's the carryaway message i say there's so many dentists just working their butt off but they have like 12 different ppos i'm looking at the ppo fee for a filling it's like it's anywhere from 100 to 200 for the same thing and i'm like well if you're making profit at a hundred uh then you'd have to be making i i mean i mean you're you're you're overhead at 200 is 65 so when you're doing it for half the price unless i um have a head injury um how could you be doing this for money how how um crazy is it um doing the selling the same thing for 10 different prices i mean i couldn't even imagine walmart or costco being able to figure out if they're making money or on something if they're selling it at 10 different prices in 10 different stores how confusing is the uh the fee schedule with insurance you know that gets a little a little out of what i have visibility on as a cpa because we keep we keep the books on what we call a tax basis so we're we're tabulating our results on money well once they've actually collected it so i don't always know what what hit they took on which insurance when they're making that happen um so i don't i don't often have visibility in their fee structures i i know their clients struggle with what you just mentioned and i i do recommend not only need to look at those those um all those different plans and i i really i like that i hadn't thought about that before you're selling the same product 10 10 different people 10 different prices it's nuts but i i'm surprised how often when i visit uh you know with a client and again if we're usually like from my end where it comes about it's like the profit margin's low and the feeling is i'm working really hard and i'm just not seeing the financial rewards i'd hope to get and of course we'll go through the common you know the common culprits we've talked about a few of them but the other one we haven't talked about well have you have you raised prices um realizing that if you're on all these ppos you're not still in control of that but you can you can't bump up the fee schedule you can purchase or have somebody analyze the fee structure for for prices in your zip code but i i've had the conversations before where the doctor tells me now i haven't i haven't changed my prices in five years i said well i my opinion you got to look at that every year at least get that fee schedule up and and hopefully some of that will trickle down to the reimbursement rates well it's so confusing once again could you you know you you bring in a receptionist and you know yeah i always like to bring in i always like to over the years the best ones i ever got i sold from the bank the bank teller because she knows numbers or a bookkeeper um i just um that you know if you just get an employee that knows their numbers i mean i can work on everything else but i mean gosh darn those are the best ones and um you know if she got a job at the hyatt regency and she was checking you in when she opened up her screen it'd only have like eight things that she does and she could learn it in checking in three people she'd master it and then you open up dentrix there's like 40 000 buttons and screens and you know that they even tell you that eighty-five percent of shit's never even used so it's all this huge negative so she's overwhelmed and has no idea what's going on and so morgan calls up and he says um um i would love to have a root canal that's what i do for fun i work hard to just have a root canal on my front tooth and if she scheduled it for two hours and it turned red and said you know because it's tied up to your accounting and say well if you do a root canal on morgan for one dollar and you schedule two hours you're going to lose money and then she'd have to sort in the appointment shorten the employment so then the doctor walks in schedule and says why do i only have 30 minutes for two mod fillings i don't know genius you're the one that signed up for texas medicaid and knock yourself out and i could do them like that fast in a minute with amalgam but you're going to put on a rubber dam and do composites and all this extra stuff for 100 so you know most people when they want to lose money they just go to the mall and buy something but my dentist they like to do mod composites for a loss my god that's just that's brutally hard work and it's fun and exciting the first thousand fillings you do but the last 1 000 you did on 10 000 is it's just hard work so again they they do not they do not know their price that's how it would work on all other uh major industries in fact most industries have the whole supply chain hooked up on the same platform so they even know that when japan had that earthquake and they lost some reactors from the tsunami which which pieces they would be missing which would shut down the assembly line the repair i mean um they're so sophisticated but but my industry healthcare it's the uh it's the most wasteful and efficient that was my only problem with obamacare it's like i understand he had a big heart and wanted to subsidize a bunch of poor kids in all the states to do it and all that kind of i get that but they didn't address that 30 of the cost is all this paperwork i mean you could have reduced cost a third but again you know they fought with bill gates going back to clinton and then you know and so uh it's just so uh i guess things just take so much longer um so right now what what are what are your problems i mean you're hearing from 400 dentists what's going on right now in september what decisions are they asking for advice on to give just a little snapshot some perspective like we on our report we'll do a trailing six-month we call it trend analysis where we'll lay a line you know for revenue compared to operating expenses just you know numbers are great i like numbers you like numbers sometimes it helps just to see a picture when you look at that trailing six-month graph i i could take our clients in realizing that the numbers the the scale might be a little different you know between like your three million dollar office and your 800 000 solo practice but what was surprising to me and i totally did not expect this back in april was that the the the trajectory of covid where everybody bottomed out in like may and or april the recovery line if you look at the performance a line on a graph it's like a 45 to 50 degree angle sort of straight up through june july and august and we've seen that across the board so the recovery had really exceeded expectations and i'm so surprised by two things i was surprised at the the speed which with practices bounced back and i was also surprised across the board now we have clients in almost every state so like the sample we have it's a really good sample and i was surprised at the consistency of how well like virtually every practice recovered the other thing that's happening right now howard is that i think when the practices were shut down like there was some down time um and a lot of clients that they took that as an opportunity to do a couple things to take a hard look at their practice where now they have time to to do those things that sometimes get put on on the back burners business owners slash operators because we have so many other other things going on but they took a look at their costs and they also they took a look at personnel and they use that that downtime as an opportunity to make some changes there and so what we've seen is the revenue just shot back up across the board but the operating expenses by and large came up to a lower level so we're seeing some profit margins over the summer that are really high by really high i mean i'm seeing 45 50 profit margins where six months ago i would have expected to see maybe 35 to 40. that's what's happening right now whether how far that goes we'll see but that's i'm very very you know my expectations i called my seminar my podcast dentistry uncensored and when i started my lecture business 30 years ago i called it dental mania and i told i always told the audience like i'm not here to be your friend i'm here to be your brother okay i'm gonna call you on your own i'm not gonna tell you how wonderful you are and all that kind of stuff but when i go um i've seen a thousand dental offices all around the world when you walk into a dental office where is the dentist at least 80 percent of the time when you walk in that office well i don't know i don't see you there they're at their desk they're at their desk and the hygienist is doing the cleaning and the assistant's making a temporary and the next one's and you look at their time just like 90 minutes to do a single unit crown they're lazy and when i see 45 overhead and someone taking home 250 to 400 they are only in the operatory all day long like like when you like the dentist i mean look at these two dentists examples doing a crown one's 30 minutes with higher quality goes in numbs up the two sets a timer for four minutes fills out the uh prescription card timer goes ding packs the zero core to one cord to push the gums back and away so he didn't nick in the bleed does his prep when it's all done he makes a temporary because then he can check and make sure he's got margins and occlusion he doesn't need a reduction coping no one on earth should ever get a second reduction coping ever the first one means you're doing your process backwards and then when he's got the temporary made he takes a them used to be an impression or scans then he's done cement's on temporary 30 minutes no reduction coping all good here's the other numbs up and then goes back to his office for 10 minutes and drinks coffee and calls his spouse and gets on you know the computer and then she has to bake him three times to come back to the room and then he'll just prep it and leave a bloody mass then he'll leave and then she's got to pack the cord in the blood and get all that stopped and all over then she's got to beg him again to come back and and and then when it's all done he says okay now you make the temporary and she'll take half an hour um you you pull a a million trillion hygienist and say how long do you actually wait for each exam from your dentist 10 minutes is the norm and if you just get it i mean labor um is your number um well technically it's your number two cost because the number one cost you charge a thousand dollars for a crown but you subscribe to a ppo they give you 650 so you have a 350 price adjustment on insurance so insurance adjustments um i've seen numbers that are for nationally is about 42 percent the next would be labor which you can see you know 25 to 28 and so what you're saying is the reason there's so much more profitability is because a lot of that labor it wasn't their genius good idea to cut back they had scared staff not wanting to come back i mean dental town's filled with deals where um she's like i take care of two kids my my mother lives with us my gran i'm taking care of grandma and i i'm not i'm not doing this so about this increased profitability is about the percent of the market that didn't come back and uh my gosh i the i mean i could go on and on and on but um in fact dentists don't even tell their hygiene by the way if someone's really trying to get in for a cleaning day i i don't have to take a lunch or if i get a cancellation i'll do the cleaning i'll stay at the end of the day if the receptionist did that he would he would cry pout and go home and boohoo i mean it's like really you can't do a cleaning um so i i just think that it just comes down to um those dentists who hustle hard always make the most money um on the um on the um uh dental town finance accounting bookkeeping uh this guy says today um i know this is a dumb question my understanding is ebitda includes all wages and operating expenses for a business is this not the norm ebitda being earnings before interest taxes depreciation amortization uh how would you answer his question or do you say go to school so it is so keep in mind that when we do when we prepare books you know it is tax tax basis so we do not include the owner we calculate ebitda on every monthly financial report and we don't include the owner compensation so i would say yes it does include all the staff and wages but we do not include the owner um now you mentioned earlier you know the the owner and i've heard this question before well i own the practice i should pay myself as an associate so i can understand you know what is that that residual profit that you mentioned or what would it look like to step out and replace myself and certainly we can certainly do that but on the the formal financial statements keep in mind the the owner compensation that shows up as part of ebitda we're talking you know kind of p l items here expenses owner expense is for s corporations and the salary that we take as an owner of nest corporation is intended to be small it's not intended to be indicative of what a doctor's worth or what their production is as your tax advisor we're trying to minimize and avoid as many taxes as possible including your owner self-employment payroll tax so because of that when we calculate ebitda like we do not include owner anywhere in there because the number for owner's salary is it's irrelevant that's a tax calculation so we do the operating expense and of course then we add back in the interest standardization depreciation and realize when when the t per tax ebitda you know you can do that for a c corp that pays income taxes but for our for our clientele with these flow through entities like i talked about before the entity itself does not pay income tax so there really isn't the tax for privately owned practice but to answer to answer the question ebitda i've said before sort of a fancy way of saying hey if if heartland came in to buy the practice they want to know how much and they want that they pay cash they want to know what's the cash flow coming off this practice kind of regardless of the owner so hopefully that answers the question and provides me some insight there for you and here's another one i mean some problems just don't go away and i'm not talking about your kids and grandkids and lover i'm talking about uh um that you mentioned dso's everybody's trying to hire a dentist as an independent contractor and it's only because they don't want to do the fica matching they just want to give you the money and you be your response for your taxes and for since 1987 i've been seeing dentists get in the butt with this um the the first case i saw this dentist had an associate of like 15 years and he just fell apart i mean he just he just fell off the deep end well it turned out he didn't pay any of his taxes for 15 years the irs caught wind of it and this guy had to go from being debt-free to getting a big old mortgage on his house and paying 15 years back taxes on this associate and he he just felt like he was just such a victim and it's third it's now 32 years later and um i just saw this um the other day um the independent contractor versus employee uh governor newson signed assembly bill a b5 into law the new law addresses the employment status of workers when they are claimed to be an independent contractor not employee occupations where the borreloa test applies instead of the abc test and the labor code includes dentists i mean guys um i mean are they working in your office did you set the hours is it your equipment is it your staff is it the electricity in your name i mean and independent contractors i'm building a house and i need to put on a roof and i don't know about roofing so i get a roofing company and he brings all his boys equipment tools and he builds me a roof then i have an electrician do it then i have a plumber do it that's not what's going on here dude you're the roofer and you're hiring these people to roof your own house and their employees and so so what do you what do you think is um are they independent contractors and you don't pay fica matching are they employees and you better pay them now unless someone finds out they're almost always employees and this question comes up often um you know the if anybody has trouble sleeping at night there's an irs form called ss8 and it lists the rules and they list a lot of uh factors that go into consideration on how much control you observe over their their schedule in their life like and you mentioned a couple points and you said it's at what if i go to where ss8 it's an irs form detailed instructions on the independent contractor versus employee classification now here's and we get this question often and you know unless it's like an oral surgeon uh coming in you know once a week and there they go to like eight different offices they have their own entity set up and you write checks to their entity not to them person they truly are in person in business for themselves they're buying their own insurance taking care of their own ce bringing their own tools that that is an independent contract that's an example if if a dentist is only working for you as an associate on your schedule on your patients in your operatories they're an employee and it's very important um that you don't i don't think you should push the boundaries here because there's there's a lot of risk now that risk comes in the form of a couple different ways you could states will do unemployment insurance audits and i would say those those may be depending on the state you're in those may be more common than like an irs audit and so they could find out that way and if they see independent contractor you can expect an extraordinary amount of scrutiny on that worker classification because the states want the unemployment insurance they're motivated to go get it if say you had somebody as inappropriately classified as an independent contractor for for a period of time say a few years and somebody somebody else like and for whatever reason your employment with them terminated maybe you got mad got crossed even though you told them their independent contractor they may have held up their hand and said yes i understand i'm an independent contractor nothing prevents them from going and filing unemployment if they go file unemployment the state's going to ask for their social security they're going to look up the quarterly wage reports and when they see there's nothing there you can guarantee the state's going to come looking and saying where's our unemployment insurance premium so that's five years for this employee if they reclassify that first that worker from an independent contractor to an employee the employer us as the business owner not only get to pick up the tab for half of the fico tax we normally would have paid we get to pick up the tab for the other half and in some states they could even come after you for the missing withholding so as not to create an undue hardship so it can be extraordinarily expensive if you were to have a worker reclassified from an independent contractor to employee so you know unless unless they truly are in business for themselves like you said however they're they're building roofs for lots of different people not just you they're an employee and you just pay the payroll tax and unfortunately that that's reality okay so um you know there's 12 specialties and there's a lot of advantages to bring in a specialist in your office it includes what we've learned from retail for 300 years one-stop shopping um it increases treatment plan acceptance rate i mean the list goes on and on so when is a specialist um how many of your 400 doctors bring in a specialist and how many of them are independent contractor versus employee um well i don't i don't know the exact exact statistic on top of my head although we do so but i can't tell you the the majority of our clients when they have an associate the majority are paid by as an employee um the clients when i when i get asked and we see that uh you know what what's the appropriate classification what i tell our clients is you know you pay them as an independent contractor there's a few we're just going to boil this down to a couple things to make it make a little more simple always always always make the check out they need to have an entity form so every state other than california that entity can be an llc or polc if it's in california it needs to be incorporated you write the check to their entity do not pay them personally so that when you issue a 1099 which is for those of you that may not know like employees get w-2s at the end of the year contractors get a form 1099 just says what they are so so a um so your associate dentist is most likely would you would you describe it most likely a w-2 employee yeah as you say almost always i would say almost always is almost always that's a w-2 employee uh whereas um whereas bringing in um one of the 12 specialists um is what i would say maybe five ten percent of the time that that's the case is what's the case that their employees didn't know that they'd be like a specialist coming in periodically um so bringing in a specialist um is only about five percent of the time is a is an independent contractor that's what i see yes i think if an associate is working for you full time which is which is and again my sample size i'm seeing like 475 practices so within my sample what i have visibility on the vast majority of the associates when we book an associate expense is employee because they're only working for that owner they're not working in any other office if they bring in a specialist and maybe they're having an oral surgeon come in once a week or a couple times a month we'll see contract payments to them and so my advice to practice owners is if you're going to pay an associate as a contractor which means you just you're cutting a direct check there's no payroll there's no fica make just simple rules couple things make sure you're paying their entity not themselves so they truly have a business they're in business for themselves and make sure they're working at multiple other offices and not just you it those are just two if we're going to boil this down kind of two simple criteria if you hit those two criteria it's likely that that contractor treatment of that worker is okay so if they bring in a specialist um um what percent of the time would you say um so they bring in an oral surgeon once a month to pull their wisdom teeth and place implants what percent of the time would that with the irs consider that an independent contractor uh versus um a w-2 employee i would i don't know what the irs i can tell you with our client it's almost almost 100 so if it's an oral surgeon or a specialist coming in uh a few times a month and they're working other offices it is it would be very unusual for that specialist to be a w-2 of that practice they are almost always truly in business for themselves and their paid contractors and you call those a 10.99 at 10.99 what was it what came after 109 it was just called 1099 yeah it's just a form 1099 it which is it's like a w-2 for contractors it's just like what what the deadline and make sure and make sure um you are paying a business entity and not making um out a personal check that's so yeah that's certainly my advice to um an individual yeah um i i think that's the uh i mean that's obviously the business model that's taking off i mean when um um you know if a hundred moms take their kid to a pediatric dentist about 112 of them will ask if my kid will need braces someday so now the pediatric pediatric dentists who add that orthodontist one plus one equals three we saw a clear choice where they added the oral surgeon plus the restoring prosthodontist plus the lab man that was one plus one plus one equals five i mean hell that's a five is the number of times that company has been sold i mean it's the hot potato where no matter who buys it someone will buy it for more money later and um um but um yeah so that's a uh um so what what else are you saying i can't believe we went over an hour and uh my gosh i could talk to you for 40 days and 40 nights um so maximizing practice probability you've seen the highest amounts on net income and i'm gonna tell my homies that probably wasn't them it's probably their staff not coming back but labor always having the next to cl the insurance adjusted production which by the way when when you talk about fee raising i i i have to know where that's coming from like you serve the navy truth liberty and justice but it was owned by the mob um um the dentist um you always say that dennis um he says well i'd like to build my you know my cash bracket i'd like to have an all-cash practice and i'd say really well um gosh the winner in all markets southwest airlines had the lowest cost in airlines they got 27 of the market price club sam's club walmart the lowest price is always the most indefensible moat around your business not some pattern or copyright or or whatever and um so then i say okay so i just looked at the last 100 crowns you did and 90 of them were 650 to ppos you give you a volume discount but this cash guy that you really want you penalize him make him pay 1 000 bucks if you really just wanted to get rid of insurance why don't you make your cash price the price you're giving delta and connecticut and blue cross and give everyone your cash price and then you won't have the 30 overhead of dealing with all their paperwork and forms which which i the fact that delta doesn't have an app and i have to hire a human being to make a phone call to and stay on the phone 20 minutes i mean is just i mean they're they're it's just beyond stupidity and so it's so stupid and they have so many smart people it's obviously an intentional strategy uh so so why so if you want to get rid of that why do you penalize all your cash patients and then the shoppers the shoppers if they have insurance they're they're googling a dentist near me that takes blue cross blue shield and united healthcare or whatever but if if they're looking at price well dennis don't have any other prices on the talk about a lucrative industry to say it's competitive when nobody shows their price every restaurant in america you go to their website you see their prices not dentists it's like now this is a game and so the cash hoppers are calling around and you're giving 90 of your folks 650 for a crown but when that cash shopper calls you without any volume discount you say oh it's a thousand bucks well that i mean that just doesn't make any sense to me am i completely insane or just partially crazy no i think that it makes total sense i think like when we look at like a bit like just as a cpa every year your costs are going to go up whether it's rent escalators employees that have been with you for a while uh that maybe get cost of living adjustments like all costs will creep up in one way or another and this is in my opinion regardless of industry accounting uh dentistry legal whatever um [Music] that revenue needs to scale with with that inflation otherwise over the long term it will erode your margin and then i i would not want to see a business owner where if they didn't if they didn't somehow keep pace with that with that the increased cost of business that's gradual like in in denver uh cost of inflation was two percent last year so that happens over a number of years if if we don't keep pace as a business owner some way at some point that's going to erode margins until then there's going to have to be something drastic or you just voted yourself a systemic built-in pay cut in your practice so that that's ultimately what i'm looking to avoid for for well in my humble opinion i think the dentist um what was that um greek mythology of the snake that was swallowing its tail and the circle just kept getting smaller and smaller he was the snake was eating himself so the dentist you know usually the highest paying ones would be like your delta but the average dentist signs up for a half dozen to six to 12 of these plans and he and he doesn't realize that a lot of these plans they have the right to sell your membership and the line and all that to other insurance plans that need one year notice get out but regardless of that as they do all these lower cost ones then when the high premium ones go to sell to the dental market they're like well i'm not going to buy the expensive one i'm going to buy a lower cost one so they have to lower their fees so then the dentists get mad and they sign it so it's the snake you know if you wanted if you wanted them to say hi fee then you wouldn't be signing up and showing them so just mythical numbers say delta is going to give you a hundred dollars for a filling well if you go out and sign six different plans that'll do it for 50. well delta's like why the hell should i give you 100 because it makes it harder for me to sell i'll get more market share so the prices have been going down the dentist of course they're going to blame it on the ada and the insurance companies they could never just look at the man in the mirror and say what the hell are you doing and then the second thing with the staff is you're um besides the insurance production your highest cost is labor obviously and um you just give them a raise every time the earth goes clear around the sun and passes the planet uranus it's based on astrology and you never satisfaction equals perception minus expectations you never show them the range and the range is okay my labor is going to say it's going to be 25 that's based on collecting a whole dollar every month and you as an assistant your pay range you know this starts at 15 but the ceiling you could ever make is like 20. but if you're a hygienist it's 40 but the ceiling she could ever make is you know whatever the ceiling you have ceilings so that's why in 32 years i've had two assistants uh go become dentists i've had half dozen assistants go become hygienist but your assistant just makes you feel guilty and pouty that you didn't give her a raise because she just saw the the earth past uranus and and you just keep adding it up so a lot of times those legacy staff members to a dentist who didn't set expectations with an hr policy says this is the range and once you're making uh 25 an hour as an assistant if you if you want to make more money then you need to go back to school get another job or adjust your spending nobody on earth needs more money they just don't need 90 of the crap they're spending which is another frightening thing for me to think about on macroeconomics because people are learning how to cook every one of that i know my boys i mean i never would have thought i got four boys 30 28 20 and they're they're in this show off texturing daily of this dinner they made i mean it looks like they're chef boyardee and now they love cooking and and it's and people are just uh they're changing their spending habits they don't want to go back to work now that was a trend that was already going up and all kova did is just shove that thing 10 years into the future working from home i mean who the hell wants to get traffic and drive to work and and then telehealth i loved it when my 82 year old mother didn't have to drive across wichita kansas to go to a doctor and he he said how he he caught on my on my ipad that you bought me and and you know that's just a great thing but it's going to be really interesting to see how when this pandemic passes what behaviors are here to stay and people are learning how to cook i mean my god i was married for 20 years if you wanted to hide anything from her you just put in the oven and she would have never found it yeah but so things are things are really really changing um any anything else any parting words no we've covered we've covered a lot a lot of good stuff i would say i guess parting words for practice for practice owner right now be judicious with the cash keep adequate cash reserves certainly what we're advising profitability is is always important um but right now with the pandemic what we've been through and the uncertainty that that's still before us i would say just make sure everybody's watching their spending right now make sure your collection process is airtight make sure the claims are getting filed the collection process is happening and i said it earlier anytime i see a suppressed profit margin in other words it's just like the profit margin should just be higher for this practice than what it looks like i think the common cause is the practice isn't collecting money well and you're gonna know that if you're if you're monitoring your accounts receivable aging all the time and that's one thing we ask the cpa we ask to see that accounts receivable aging and what we're looking for is growth in your 61 to 90 and your 91 ar if that's getting bigger and your practice if that if the growth and those old receivables is outpacing your growth in your revenue you're you're having money slipped through the cracks and i guess that's ultimately what i'm after make sure there's no money slipping through the cracks the collection process is working it's always important under any circumstance but i don't think that could ever is ever been more important than right now we don't want any of those miss out on any of those dollars so um my teacher when i was at umkc and denise castenbaum in radiology is now the dean of your dental school right there in denver i wish you would um go contact her and start teaching these kids in dental kindergarten school because they need to know their numbers and uh greg hill the executive director of the colorado dental association he's a lawyer um i love his uh he has the most funny uh mask uh he he has a mask and all his profiles he's wearing the mask but uh i i just wish dennis would uh know their numbers better it would just make their life so much easier and it gets frustrating sitting here uh you know your mom doesn't want to nag you for 30 years to not leave your towels on the floor i know i don't enjoy nagging dentists about their numbers but i mean um and that's why i love them i love the fact that they're most passionate about using their hands to and to work in a surgery and operating and and repair i love that form but i just wish they would uh do is smarter because it would help the whole industry but uh my oh one final question i'm sorry to ask um dennis always think when they're working hard and they're not making a lot of money that they're getting embezzled from you have 400 people is that how big of an issue is that i my personal feeling is it's certainly out there i i don't think it's as prevalent or as scary as some of the horror stories are you certainly have to pay attention to that but it's not something like we run across all the time uh and we thought we could all we could almost do another another topic just on internal control and that's the question uh that can come up is well i have an accountant you know looking at my note if anything's amiss they'll catch it and the answer is no you you reduce your risk of embezzlement by having adequate internal control at the practice and whether that's a segregation of duties or an effective daily closeout that i think every practice owner should be doing every day where they are matching up what was posted as collected cash and check you know make sure that matches the deposits that do you have a protocol for this or is that something you want to come back and do another deal do you already have a online ce course for you know dental town we have 400 one-hour online ce courses they've been viewed a million times uh is that something you know how how what you know i always what is the fastest easiest highest quality lowest cost most efficient way to transfer this knowledge to my homie yeah it's so we we certainly consult with this with our clients um and that's something that we i'd be happy to visit with you about there there are some some very uncomplicated end end-to-date procedures i think every dentist could do that would significantly reduce the risk of investment you're never going to eliminate it you can significantly reduce it with about a five to ten minute project every day and that is how we avoid uh do our best to avoid embezzlement so we do have a protocol for it and that's something i'd be very happy to share because we talk with our doctors about it frequently and um what is your um website um i i got hda groupdental.com that's us that's you well you also have an hga slash dental.com you have two websites yeah we have a couple a couple different urls hd group dental is the main one that's the same well i would i mean i i would redirect the other websites if they go to that website um i i would redirect it um um have you thought about that um no i'll have to have to look at that um just like i did with uh dentalporn.com i had all these dentists telling me that that dental town was like reading dental porn so i actually bought dentalporn.com but if you click it it opens up dental town um but it but um so it's just less it's just easier so your main site is hda group dental what does the hda stand for i assume howard dentistry and accounting it was hammond davis and associates kevin davis and associates yeah and are those the two founders so my dad and i founded it and um these ham and hammond so hammond and um hammond and davis hammond davis and associates and it's the french spelling of hammond h j m o n like you said earlier we don't have the d in there yeah and uh is he um so is he the ceo or your dad or what's his name so my dad's name is ken um he's still an active partner uh and he he does a lot of our like tax and m a uh consulting he's been um very very experienced our in-house expert on that and then so he we have a third partner that's courtney all our clients know real well she was our longtime tax manager and just due to growth we made her a partner two years ago which has been phenomenal courtney courtney courtney cooperthwaite courtney's from tucson so we kind of share that connection and she's been a tax expert for a long time so yeah we have we have three partners and um again courtney and i are probably the most actively engaged with the clients and my dad can uh he's 72 and he is really a tremendous resource when we have like the mergers acquisition sales or just those particularly complicated uh tax matters that can come up because he's seen and done it all and and how um what would be the best way to get that information to prevent embezzlement um you said you have a um you know you have a protocol for that what would be uh the best way to learn that um so the protocol we have is it's mainly like internal facing so if a client has a concern over embezzlement we'll schedule a phone call one of uh one of my staff is a former auditor uh lauren and she'll visit with them we'll inquire about their internal controls on our website under resources i actually have a survey our clients can take actually anybody can take it uh it's available and it asks questions on how they handle certain elements of their practice management for example you know how where when the mail comes to the practice where does it go do you check off that your cash and checks post that as collected during the day match the deposit slip that's written out are you are you matching up your credit card back slip with what was posted in open dental as collected via credit card for the day so we ask questions that survey comes to us and then we prepare an analysis we'll actually score it and that that tells us the things that the client is doing well so we can reinforce that but it also points out if there's any action items we think the client should do for example if they answer no like at the end of the day i don't look at any reports out of dentures like we'll have a conversation that you you really do need to print a day sheet or daily deposit summary and match up some totals that's going to do two things it's going to tie out the day give you peace of mind but more importantly from a leadership perspective you want that culture like and this is getting into accounting some granular terms called we call the control environment for for internal control you want that staff thinking look you know dr smith looks at this stuff every day the anything goes on they're going to see it like that's the attitude you want in the practice you don't want the attitude that well dr smith's in the operator all day they never look at anything boy i could i could take money and they would never know so you want that you want the the la that prior uh culture in your office so uh but that that's how we do it howard we and there's there we have an audit style test we do on our reports every month so we will ask the clients for what was the total posted collections in your open dental dentrix eaglesoft whatever you're using we're going to compare that against what was the reconciled cash deposits okay the money we quite literally count what cleared the bank and how close is that they'll never match exactly there's a banking timing difference on the last business day so if we're within a day's worth of collection that's normal if that starts to grow that's what clues us in as the accountants then we can reach out and say would you like us to look into this um and this question originally started with like how how often does this happen it's not as often as i think the horror stories would indicate that i know we're out there but it's certainly something everybody should be should be cognizant of and aware of all right so how do my homies uh get a hold of you if they're like uh because i uh from lecturing a thousand times you say is there any questions that no one raised a hand okay well everybody take 15 minutes go to the bathroom and then 20 people come up with this special question so i know that you've heard the question eight million times but it's special for my homie how does my homie ask you a personal special question that he thinks you've never seen before no i'm very happy they can contact me directly uh my email is morgan hdagroupdental.com morgan http group dental and hda is um for morgan hammond ken hammond and courtney copperweight or make up the hda accounting group so just go to m hammond or no just morgan or morgan hdagroupdental.com and what's the uh phone for the firm uh they can call us at 303-799-0476 so if you're a circle k right now going to the bathroom just right on the bathroom wall for a great time call morgan at 303-7990 zero four seven six three zero three seven nine nine zero four seven six uh morgan thank you so much for coming on the show uh you didn't have to do that and to share your wisdom and expertise during these challenging times i really appreciate you coming on the show it was really my pleasure howard i really appreciate you having me i enjoyed it very much 

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