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AUDIO - HSP #174 - Scott Leune
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VIDEO - HSP #174 - Scott Leune
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Scott Leune is bringing insane value to the industry. Listen in to see how powerful outsourcing can be for your practice (and learn an inherent corporate dentistry weakness).
Dr. Scott Leune has owned 11 startup practices, has helped build over 60 other startups for dentists across the country, helps manage over 130 practices through his powerful outsourcing services, has built a lucrative exit path for dentists selling their practices, and provides intense dental business training seminars to dentists and staff throughout the year. He is one of the most subscribed-to people on Dentaltown.
www.BreakawayPractice.com
8000 Interstate 10 Frontage Rd, suite 300
San Antonio, TX 78230
210-899-4500
Info@breakawaypractice.com
Howard Farran: It is a huge honor for me to bring back … I don't think I've ever brought anyone back. Have I brought anyone back? I don't think I have. By the way, if I've never brought you back, this is 1 … number 171? Yeah, you were 171. It took 171 podcast interviews before I begged someone to come back. If you were one of the first 170 and you want to come back or you're a listener and you're just out there committing to work and you say, "I want to rant for an hour with Howard," e-mail me howard@dentaltown.com.
The reason I want to bring Scott Leune back who's a legend in my mind and a legend in so many minds is because we … during the course of the interview we never got to the topic of outsourcing in dentistry and also, Socrates said that the two major emotions were fear and greed. Greed is I want to listen to Scott Leune and have a better successful practice but fear is corporate dentistry. A lot of dentists … This is my opening question to you. When I was little, every pharmacist manage their own shop and I'm 53 and I don't even know of a single solo practicing pharmacist outside of a hospital doing special pharmacy needs in a hospital setting. I mean, they all got swallowed up by Walgreens and CVC. Is it CVC or CVS?
Scott Leune: CVS.
Howard Farran: CVS. Is corporate dentistry … Are we all going to be working at Walgreens and CVS in 25 years?
Scott Leune: I don't think so, but I think that a whole lot of us will. I don't believe that the corporate dentistry has got owned 95% of dentistry. I don't think that's what's going to happen. I think corporate dentistry is going to hit a tipping point. They own enough in any given market to therefore control a lot of that market, have a lot of market share and they're not going to keep building and building and building practices where they're competing with their own practices.
I don't know what the number is. Like today, maybe 14 or 15% of all practices are involved with corporate dentistry. I don't know if that has to get to 40 until everything's changed or if it's 30 or 50, I don't know what it is. I don't think it's going to be 95. I think we're always going to have a spot in dentistry for the small guy with lots of goodwill. The dentist is doing some unique things. The community loves this dentist so I think that practice will always have a spot. It's going to be difficult to sell that practice but I think that practice will always have a spot.
I think there's always going to be a spot for some of the regional guys that are really trying to get more efficient and do things better than the corporate shops. They're running higher efficiency or maybe they have found a way to do to better marketing or better, but I think there's always going to be that entrepreneurial dentist that's competing. I think the middle of the market, the PPO, fee-for-service practice gets on a dental school a couple of years, buys and starts a practice and he's just going to do everything the regular way. That middle is going to be what's hurting over time and it's that middle that I think a lot of dentists will turn into a corporate dentistry at some point.
Howard Farran: My son [Greg 00:03:16] thinks that we'll follow the lawyers because they got into corporate dentistry back in the … I mean corporate law back in the '70s, these huge firms, but they kind of plateaued at the set margin. There's a million attorneys and half of them work for a big firm and the other half work individually. He thinks that's a better predictor than a pharmacist because I've been in countries where the nationalized healthcare system load your prescription on your card, you go stick it in an ATM machine and a bottle comes down, the pills come down, throws label on, you open it up and get it out just like with your cash and that machine, by the way, was … that I saw myself was made in Scottsdale, Arizona where it's not even legal to sell. Do you want to start with outsourcing or surviving corporate dentistry?
Scott Leune: I think let's start with outsourcing because that will lead to surviving corporate dentistry, I think, so we could start there. A lot of dentists have never heard of outsourcing or they've got some misconceptions. They don't understand when they should use it, when they shouldn't, how pricing works, what's possible. I think we could talk a lot about outsourcing.
Howard Farran: Well, take it away, buddy.
Scott Leune: Okay. Let's start with the problem that we have. Let's start with the problem. Dentists, we have a staffing problem because … just because we get six phone calls at once doesn't mean we need to go hire six receptionists, right? We've got these peaks, these highs and lows of the day that hurt us. We're only staffed up maybe to answer two phone calls and so we miss the four. Or we have a really busy hour and then a dead hour and a really busy hour and a dead hour, but we're always missing opportunity because we can't have an army of people working our practice. We can't have an army of people to make sure that every single person has paid the money they owe us today. We can't have an army of people to make sure that every insurance problem was resolved as efficiently as it needed to be. We can't have every single phone call answered. We can't just go call a thousand patients and fill the hygiene schedule. We're only staffed up so much. After that, it's not worth hiring more staff.
We got this problem where we got two front office staff. We can only answer so many calls. We can only fill a schedule so much. What do we do with the rest, all the other phone calls we don't answer? And that can be outsourced. In other words, our team on site is awesome, they're doing great, they're busy, but what … the pieces they drop, the missed calls, or not filling the schedule or not making the collection calls, all those things can be outsourced where if a dental office gets 10 phone calls at once, they can have all 10 answered, but they're not paying 10 people. They're only paying their two full-timers plus they're renting eight more for four minutes. It's very powerful financially.
A great example of that is on one extreme the startup practice. A startup practice can afford to hire two or three schedulers to work Monday through Friday, 7 to 7, but what they can do is afford to hire their one for an office person and outsource all the phone calls they miss so that they have phone coverage, Monday through Friday, 7 to 7. They have phone coverage on Saturdays and they might have … they could outsource phones, they could outsource insurance, billing, collection calls, auditing, marketing, they can outsource almost everything in the practice and they may have the payroll cost of their one for an office person and they might have equivalent payroll cost of like a third of a person to an outsourcing firm, yet they get the power and predictability and quality of an army of highly trained specialists doing that job. There's no way they'd be able to afford to have that outside of an outsourcing environment.
Howard Farran: All the SMB 500 does this. I mean when you call Walgreens, sometimes you get your pharmacist right across the street and sometimes it's a call center in Tennessee because they got too many people calling. My cable company Cox cable sometimes you call and it's local, sometimes you call and it's a call center in Tennessee. I know Rick Workman who built the biggest dental chain in the world, Heartland Dental Care, I know he built a call center and he told me that his biggest problem in his call center is that Effingham has only got 10,000 people and he says I think I've hired every single person who didn't have a job at Effingham and I still need more. The big boys are doing this, aren't they? Or the big girls?
Scott Leune: Yeah, they're all doing it but they all have a weakness, a big, big weakness. The big boys do.
Howard Farran: We can't call them big boys anymore because 45% of the graduating class is women and I'll tell you something when you're a dental journalist like me writing a column, if you refer to a dentist as he, you'll get an e-mail or a text or a private message, whatever. If you call them all a she, you'll never ever get a complaint from a man and so you just have to retell your mind, you have to just say she, her and it makes everyone happy. The males don't care and the women like it.
Scott Leune: Yeah. I'm usually politically incorrect on accident, so I apologize if I offend anyone in the next hour by screwing that up.
Howard Farran: I don't think I've ever offended anyone.
Scott Leune: I don't think so either.
Howard Farran: I've offended entire rooms but that was so anyone person. That was the entire auditorium.
Scott Leune: Yup.
Howard Farran: Let's all continue, I'm sorry.
Scott Leune: These large corporate groups have a big weakness. Heartland, use them as example, probably one of the highest, respected DSOs across the country and they have built something huge and tremendous and they're very successful at their game.
Howard Farran: People don't know what DSOs mean.
Scott Leune: DSO, it's the corporate dentistry, dental support organization or dental services organization. Dentists might think of it as a corporate chain. There's a tremendous amount of benefits involved with those corporate entities and Heartland's got to be one of the most respected ones. But even Heartland and all the others have an inherent weakness in their model of outsourcing. A Heartland practice can never fire the Heartland call center, right? A Pacific billing center only has to be as good as whatever internal demands or accountability that company has and that's going to inherently be weaker than a company like mine or other companies like mine that can be fired and that have to be very cost-efficient and that have to be scalable on a much larger scale and deal with lots of different types of systems and models.
I kind of view it like the post office versus UPS. Post office answers to one person and that's no one, the taxpayer, right? And they only have to be as efficient as do not lose as much money. Whereas you look at UPS and they answer to a whole lot of people and can be fired and they have to be competitive.
You have to understand that the outsourcing term and the thought, the model has gotten a bad rap because it was the corporate groups that started outsourcing first and the quality of some of those groups was not good. It was poor. Please know, when I say Heartland, I don't know what their quality is. I'm just using them as an example. Some of the corporate groups, most people would say, had horrible quality with outsourcing. People then assume that's what outsourcing is like or they assume outsourcing is like going to India with a phone call. Neither one of those are true. Neither one of those are what I'm talking about here today.
Howard Farran: When you said the post office, it was funny. I got rid of my landline because every time I came home I had three messages and it was all telemarketers and I thought why am I spending time deleting all these messages I got over my landline. And I try to get rid of my post office box because it's just all junk now to walk into the street every day to throw away all this junk because I pay all my bills digitally and online and all that stuff. I could not get rid of my post office, my box. I can't. I legally can't take away my box and say don't deliver mail. I thought that was crazy.
You have a call center. How many people do you have and what things do they do? Is the value added … I work Monday through Friday, 8 to 5, so you're going to take the calls from 6 am to 5 and after 5 in weekends or is that more value added during the day, chaos theory. Unfortunately phone calls don't come in one every 10 minutes. They come in six at one time and then they don't come in at all for 15 minutes. What are you doing in your call center?
Scott Leune: All right. I'll answer all those questions. First of all, our call center is not a call center. It's a management center. We answer phones, we also make outbound calls, fill hygiene schedules, we audit calls, we return missed calls. If a patient hangs up and doesn't leave a voice mail, we catch that, call them back and schedule them. We confirm appointments, but we also handle all the insurance AR, claims, verification, EOB processing, we handle all the patient AR, collection calls. We also do marketing. We do chart auditing. We do supply procurement management and we got negotiated relationships with lots of vendors for lower pricing for all kinds of things. We do a whole lot in my company.
Howard Farran: For how many offices?
Scott Leune: 140, 150 and we're adding about four, five offices a week. We're hiring …
Howard Farran: Now, are you helping? Are you augmenting the overflow helping? Are you doing the whole damn thing? Or does it depend on the office?
Scott Leune: We do about 50 things and they're all a la carte. Some offices just want us to clean up their insurance AR. Other offices want us to do everything we know how to do and some offices just come to us because we can get them really cheap rates on a bunch of stuff they pay money for.
Every office is different and everything we do is completely custom. I think there's a lot of misconceptions and so I'd like to, if it's okay with you, I'd like to talk to you about the two types of relationships a dental office might have with an outsourcing firm, because if you don't pick one of these two, you get screwed.
Dentists can use outsourcing firms in either in a support role or in a replacement role. A support role means I've got a full practice staff on site and whatever my staff can handle, whatever their bogged down with, whatever calls they miss or whatever it is, whatever pieces are dropped, I'm bringing in support to handle that, to catch those pieces. That's outsourcing everything we can't handle in a practice.
You've got the replacement role. A replacement role says I am changing the model of my practice, I am literally sending all my insurance verification away. I'm sending all my confirmation calls or all of my collection calls. I'm taking an entire group of duties and outsourcing the whole thing. That's replacement.
They both have great benefits for specific practices but what you never want to do is be sentimental. You never want to have a full team on site and a full team off site and then be overstaffed. You don't want to be paying two different teams to do the work of one. You're either paying an outsourcing firm to just pick up all the pieces you drop or you are sending out a ton of work to an outsourcing firm and therefore have less staff. Maybe you don't hire as many staff as quickly as you think or maybe you let go of your worst staff member. Whatever it is, you have to have a smaller payroll in your practice to justify outsourcing all that work to someone else.
Howard Farran: First, let's go to benchmark. What should labor cost be? What is the national average for, let's just go through it, labor, lab, supplies, facility and when people started outsourcing … and they improve those, I mean, what numbers are you seeing?
Scott Leune: Yeah.
Howard Farran: Don't you like the way I asked like rapid burst questions. I mean, I throw out 10 questions just so one of them might be good.
Scott Leune: That's good. I'm going to disagree with just about everyone else out there right now. Everyone else out there, every goer or every consultant would tell you, "You need between 20 and 24% of your collections to beat for staff payroll," for example.
Howard Farran: 24 and what?
Scott Leune: Let's just say between 20 and 24%. The number is bogus, though. I don't agree, but that's what people would tell us. We've got highly successful practices. I've got one right now that we help build that's a 14%. I've also got very successful practices that are 30%. What I care much more about is how much money is the dentist taking home.
Howard Farran: Yeah.
Scott Leune: Sometimes, you got to have a little extra staff to take home more money or some models don't require a lot of staff. You got a low breakeven point and a smaller practice, you're doing highly productive dentistry, you don't need as many staff. Than if you're a Medicaid model with low fees, you got to have a higher facility, bigger facility and you got to have more staff. Your overhead is going to be a different model. I don't like you saying you need 24% and if you're over that, then you're in trouble. I would much rather focus on what do you take home.
On outsourcing, it does affect your payroll. In a support role, you're increasing your payroll but that's an investment in getting higher new patient flow and getting your AR cleaned up. In having all those pieces that you drop, have someone else pick them up and do something with them.
On a replacement role, it many times is dollar for dollar. Instead of paying your own staff person a dollar for the hour's work, you're paying an outsourcing firm that same dollar, but they're doing a lot more work. For example, you could pay for an average size office … if you were to pay an outsourcing firm, the equivalent of your front office person's payroll, they might do double the work and it's probably going to be higher quality. Not because your front office team is bad. The front office team is awesome. The problem is they're doing 20 things at once.
Instead of having one person do 20 things, I have 20 people that just do one thing all day long, every day, verify MetLife, verify MetLife, uninterrupted. They do it so much faster. They do it so much better. And not only that, every single person in my outsourcing section of my company is recorded and audited twice per day and scored and bonused at the end of the week or trained or demoted if needed at the end of the week.
It's impossible to go audit those 20 things every single day in a dental practice to make sure quality is high. That's why when practices come on board and they start outsourcing, usually someone is telling them their insurance AR is completely screwed up or their patient AR is screwed up. Or they've got claims that are more than two years old that can't be resubmitted or the staff has been writing off a bunch of stuff that maybe should have been written off. You're usually getting some bad news when you start outsourcing but that's good though. It's a process of kind of healing and improving the systems in practice that weren't able to be done well by your great team because they're being overworked and having to do 20 things at once.
Howard Farran: Would you also say that there's no training for the typical front office person? I mean, the dentist goes eight years at college, the hygienist goes four years at college, my assistant went to a year-long dental assisting program, but dentists just hired people off the street to be their front office and they're basically … they're never trained. I mean, they're just thrown at the desk and say, "Figure it out." Would you say that's pretty much what you see in the real world?
Scott Leune: That's what happens. You hire someone, you say, "Hey, sit next to [Susie 00:19:35]. Good luck," and that's the training program. And then you got to deal with hiring, you got to deal with firing them, you got to deal with managing them and sick leave and drama and you're not … they're not being trained, they're not being audited, you don't know if they're doing a good job or not and dentists don't even listen to their phone calls or audit their insurance claims or any of that.
A lot of that gets solved with outsourcing, in the new outsourcing model. Again, it's not outsourcing to India. It's not some corporate chain that doesn't have the quality control measures they need in place. This is a new age of outsourcing and managing a practice.
Howard Farran: But you said in the beginning that when I said how big this corporate dentistry is going to take off, you said corporate dentistry is going to get bigger and you said the middle is going to get squeezed. Define again the other end someone is doing … You defined the middle but what was the end … the other end of the corporate?
Scott Leune: Yeah, on one end, you'll have the local dentists, lots of goodwill, highly productive, great relationships with the patient, they might have some sort of special thing they do but it's that goodwill dentist that everyone wants to go see because of that dentist. That's on one end of the spectrum. That's like in your example, the lawyers. That's like a great tax lawyer, right, who has his own shop.
Then on the other end of the spectrum are the entrepreneurial dentists that are truly competing on a volume model just like maybe some of the corporate groups are. They're doing corporate type setup but they're doing it successfully themselves on a local level. That might be some of the smaller legal groups for, like I live in San Antonio, it might be a San Antonio legal group. It's not necessarily a big national chain.
I think those two will find their place in dentistry. The middle, I think, will have squeezed profit margins, only much harder to compete and at the end of the day their practice are going to be worth very little money when they try to sell it.
Howard Farran: Scott, that setup I was asking about is what I see when you get a little bit bigger, you have some skills of economy. You can bring in someone who just specialize in marketing and HR. You can build up a management team. To me, I think that sweet spot is like maybe 10 offices, 12. I see a lot of regional place like, say, in South Dakota or North Dakota or this group's got like 12 offices spread out over a hundred miles and so they got a centralized location and they bring in a layer of management and it's really efficiencies.
I don't really know if the sweet spot in … when you start adding another layer of management for all these different states, because I don't know if the corporate headquarters is masterminding enough efficiencies to make the second layer. I do see multiple group practices, even within a single group practice, they've got three doctors in one office, you can bring in a high-dollar office manager who's just rocking it, carrying a lot of these functions out. I think that the middle, too small, doesn't really have any skills of economy and so you're saying that those people would benefit the most from an outsource model like what you've got.
Scott Leune: Now, yes that you're exactly right on some instances, but let me be a little more concise. As practices grow, they start breaking their own systems. The volume starts making them crumble at the edges. Sometimes it's just growing from one dentist to two dentists. Sometimes it's growing from one location to three locations. Wherever that happen, it happens in different spot for everyone, depending on how naturally successful their practices are and how talented they are at managing their growth and building the infrastructure.
At some point, to go to the next level costs a lot of money, takes a lot of time, takes a lot of expertise. Growing from one practice to three, you add a layer. Growing from 3 to 10, you add a layer. Growing from 10 to 20, you add a layer. Every time you add a layer, it's so expensive and so difficult you almost have to grow up to that very quickly after you've added that layer.
That's why you'll see companies like all the large corporate groups, they started small, they grew bigger then they started breaking down and they build a center then they grew bigger and then they ran out of money, they brought in investors and they built another layer of infrastructures. It just keeps going up more and more and more.
What we're trying to do is give the private dentist the depth and power of a huge infrastructure without having to actually build those layers themselves. It's not just a private dentist, it's groups as well, groups of 12 that can't afford to go build out a $3 million management center and bring in the talent they need because they'd have to have 30 to justify it. They can now just tap in to a company like mine where they've got … we're nationwide, we got a huge infrastructure and they don't have to go build it themselves.
For the group practice all the way down to the solo practice, outsourcing now gives you the ability to keep growing and maintain control of your quality, maintain control of your success without having to actually pay for and recreate all these layers of infrastructure that you have to have to keep growing.
Howard Farran: What I used to call this when I started my monthly column at '94, the Howard Speaks column is that when you're a small practice, your problem is a little barking Doberman in the corner, but somewhere between 1 million and 3 million, that Doberman turns into a Tyrannosaurus rex and you bankrupt.
I mean, it's so counterintuitive when people would say, "I can't believe that that practice in Vegas went bankrupt. They did 3.5 million last year." I said yeah because a Doberman pinscher of your weak spots in your systems is manageable at under a million. But at 1 to 3 million, it's the fastest weak spot to bankruptcy because these problems grew so big, they're insurmountable. Would you agree with that?
Scott Leune: Absolutely. You have a bad month and you have a little practice, that's pretty easy to handle. You got a bad month and a big organization, a lot of zeroes on the end of that bad month. A lot of organizations over-expand, so their costs go way up but then they can't pay for those added costs. It's a tough deal and those practices that you mentioned, 1 to 3 million, when they're failing they sell and they sell to corporate dentistry. That's how they get out of it. Corporate dentistry, massive infrastructure, they could buy those practices pennies on the dollar and transition them pretty easily to their systems.
Howard Farran: Back in my day when I started, like I say, I used to have a … I started my column '94 before there were Stephen Thorne of Pacific Dental Services and Rick Workman at Heartland, I mean they just … would fold, I mean, and there was a regular occurrence, I mean every two or three months, I was hearing about million dollar practice, 2 million dollar practice absolutely going under.
What is your sweet spot for … I'm always trying to think of my viewer, so these dentists are driving to work. What's the low-hanging fruit on outsourcing to Scott at breakawaypractice.com? Let me rephrase this different way. I believe … I know my homies. I'm no dentist. I mean, I was going … starting at sixth grade I was going to work with [Dr. Kenny Anderson 00:27:21], the dentist next door to me. I believe there had, and I did this to myself Monday, your heads looking at a root canal and you have no idea what's going on in the rest of the world and you're just … and they don't see their problems, they don't know what's going at the front desk or their front desk could be surfing on Facebook for an hour and they wouldn't even know it.
You're just, what, this dentist is driving to work and he's saying, I want you to tell him, what are red flags in his office that while your head is buried and placing an implant with your surgical guide and you're trying to read the CBCT and you're … you just absorbed and implants and root canals that you're dropping a lot of balls up front. Because I don't think a lot believe it, I mean it's not so much denial so Scott I just believe that you know what you know, you just don't know what you don't know. I mean you would never get mad at your dog or your cat for not going to the grocery and buy a new canned food. You just know what you don't … you don't know what you don't know. Can you paint any pictures for my listeners who's committing to work, who's worried about if this implant is going to go in successfully today or the one he's going to uncover he helps it … it took. What red flags might there be that you see that they need to be … that they're dropping balls up front?
Scott Leune: I tell you, dentists aren't even looking for flags. That's the problem. If I ask a dentist, "What's your missed call rate," he has no idea. If I say, "What's your days of sales outstanding on insurance," meaning how long does it take you to collect the average insurance dollar, "Oh, no idea." They don't know what type of write-ups are being done and how frequently. They don't know what their reappointment rate is or what percent of their patients have consent forms signed. They're just not even looking at the flags.
It's tough for me to come up with the red flags because the dentists don't even see flags. They don't even open their eyes for it because they're so busy. I'll tell you that the areas that are … that we see the biggest problems in practices. For sure, insurance in building is a massive one. You mentioned this 2 to 3 million dollar practice going out of business. We see these practices come in. They typically have two, two and a half months of collections worth of AR, meaning money owed to them. Consultants would tell you, "You should have one month, maybe up to a month and a half." Our clients, once we're done cleaning everything up, there are less than half of a month of collections.
We got a client in Atlanta who came to us with 330-something thousand dollars' worth of money owed to them and they're under 50 now. Within three months, we've freed up almost $300,000 for this client in cash that was just sitting in his practice, stuck in these claims that weren't being resubmitted.
Insurance and billing is a big one. It's a huge mess. It's a pain to deal with. Staffs don't like to make any collection calls. They don't like cleaning up the list and resubmitting the claims.
Another big one is phones …
Howard Farran: Wait, you used the word AR. Someone might not know what AR means.
Scott Leune: Yeah, accounts receivables, money that's owed to a practice either from insurance or from a patient.
There are very specific systems and processes and we have at our disposal a bunch of technology that we can afford in our size to help us sift through the software and look at all the problems and one by one patient at a time go clean it up.
Howard Farran: Okay. My listeners are driving to work. When he pulls up to his office, he should walk up to his front office and say I want to know how many months my AR is and what should it be at and what should it be … what should be [inaudible 00:31:10]. I got to e-mail Scott at breakawaypractice.com or info@breakawaypractice.com.
Scott Leune: If they collect $100,000 a month, then they're total AR should be less than 100,000.
Howard Farran: One month, one month's production, one month's collection should be your AR?
Scott Leune: That should be the worst it should be.
Howard Farran: That worst it should be. What would be an A, B, C and F for a dollar? So you're producing collected dollar a month, what would be an AR for …
Scott Leune: An A would be 50%. Let's just say a C is 100%. And over that, we got an F, we got a problem. I'll tell you it's a lie though because most staff when they pull an AR report, the write-ups they make make the AR look healthier than it really is. When you look at the money that's owed to your practice and also consider all the money that was written off because for whatever reason it was uncollectable, that's how you get that true number. It's the write-ups that make the dentists blind to what's really happening.
It's not uncommon for a claim to not get paid or patients do not pay and the staff are writing it off. That's very, very common to see. Even if you pull that AR report, it's probably not the whole truth.
Howard Farran: When you're a young dentist listening to this and you're graduating and go looking for a job, a lot of … if you read the contract fine, they don't pay you a percent of production, they pay you a percent of adjusted production.
Scott Leune: That's right.
Howard Farran: You're not going to be getting a percent of what you earned. You're going to be getting a percent of what you produce minus what the front office adjusted off. What are common things they adjust off and what are common reasons to adjust off that should not be adjusted off?
Scott Leune: The most common thing we see is that a claim came back denied. They may have resubmitted it but not with all the necessary paperwork and the narratives and everything they should have. Claim comes back night again or they may never hear back from the insurance company. They didn't follow up, there's no record of them calling following up on that claim. At some point, they either write that claim off or they turn it into a statement for a patient. When they turn it into a statement for the patient, patient may not pay. Patient might get mad. They may post bad online review and may leave the practice and at some point they write that balance off. When you backtrack at all, it's commonly caused by either improper insurance verification or by not resubmitting that failed claim properly.
Howard Farran: Okay. When you say proper insurance verification, if you came into my office, you're Scott Leune and you say here's my insurance, should I be … should I verify every single patient? Should I call the insurance company, go online? Does every new patient's insurance need to be verified?
Scott Leune: Yes. Because we believe that the insurance verification process, if that's screwed up, we will have continuous work and screw ups after that. We've used all the technologies out there to try to verify insurance automatically without having to call insurance companies, but the reality is today, as of today, so 2015, we still have to call insurance companies. We do get some information from technology but we still have to call them because we are going to go create the employer group, put all the downgrades in there, put all the classes, waiting periods, age limits, all that in there ahead of time, find out the deductibles, find out what they've already spent for the year and make a completely clean in the software with notes that even a clinical team member could understand before the patient is seated for their work.
Howard Farran: I know and I know I'm going to piss off probably 100% of yours with this comment, but that's one of the arguments for a single payer health system just because you get rid of all that bullshit. I mean, I have to pay [Colony 00:35:03] a full … That's her full-time job, humanly verifying to another human. I mean, you already signed up for a PPO for a reduced fee, why isn't that … why don't the insurance companies make that automatic? Is it our dental office software? Is it Delta Dental? Is it Prudential and Connecticut General? I mean, it's crazy. Then you look at the savings from a national health insurance in Scandinavia by just not having all of those people doing all this noise. You just can move so much more money over to just getting out vaccinations and emergency rooms and health, I mean. Why do we have to humanly verify? Is it the insurance companies or is it our management information software systems?
Scott Leune: It's insurance companies. There are companies out there right now trying to get all the dental insurance companies on a common system or at least tap into their databases so that a lot of this can be automated.
The vision 5, 10 years from now is that you don't verify insurance anymore. Patient shows up. Before you prep the crown, you submit a pre-estimate that in a split of second comes back and the insurance immediately tells you what's paid. You prep the crown, you're done, you submit the claim and within a split of second the money is in your account. That's the vision. To get there, all the insurance companies have to open up their databases and allow third party software companies to tap into it to make that a possibility. And it's happening. It's just very slow.
At the end of the day, insurance companies on one hand are going to try to do things that make our life a little harder to collect from them. Whenever we deal with insurance I always tell people there's no best scenario, it's always the least worst option that we got to pick. We got to pick the least option and we got to do it as effectively and efficiently as possible.
Again, here's a great example with outsourcing. If you have eight patients that your front office has to verify insurance for, that's eight phone calls. They're on hold eight times. When my company has to verify insurance on eight patients, we call MetLife one time. We verify eight patients from five different offices on one phone call and we're only on hold once, so a lot more efficient and it's been done by a person who only deals with MetLife and creates the employer groups and Eaglesoft or Dentrix, whatever program they're assigned to, so it's very accurate. It's very efficient. It's very accurate. It's just part of the power that outsourcing gets to a private dentist.
Howard Farran: Okay. When I was in MBA school at Arizona State University, they said focus groups were just a complete waste because you'd sat people down and say, "Would you pay extra if this product was made in your country, America, and providing jobs to Americans instead of a communist country like China?" They say, "Absolutely." "Would you pay more if it's all biodegradable and all natural?" "Absolutely." Then you go watch the consumer and they walk into Walmart and they buy on price.
I know all my listeners, every single one of them is saying, "Scott, get to the point. What is this cost? What is the price? I see the theory. I see this, but what would this cost me to do this with you?"
Scott Leune: Yeah. Every outsourcing firm charges differently. I don't know what the cost is for other companies, but in our company, the outsourcing part of our company, we charge based on a cost plus model. In other words, if a dentist uses one-half of 1% of my insurance verification department that month, they pay one-half of 1% of that department's cost. In other words they're only paying for the amount of the department that they happen to use that month.
We know based on how big they are how much that would typically be. When a dental practice calls us up and say, "Hey, I'm interested in saving money on supplies, I need better marketing and I want insurance verification services," we'd look at the size of their practice and we'd say, "Okay, all the other practices of your size pay this much for insurance verification on average."
The great news is as we get bigger, our prices keep getting lower because we only pass on … our pricing is based purely on our cost and dentists don't have to commit to some sort of cost every month. They only pay for whatever they need, whatever they use on any given month.
Howard Farran: I think my viewers should realize that because not everybody gets a Dentaltown magazine on Dentaltown. I mean we mail every month 125,000 dentists. We have 202,000 members, a lot of this around the world, but this is a small community and Scott is a big time county with 2,000 posts. It's a very small world and all my friends that know you, they all hear fantastic thing. I've never heard a single thing other than Scott is crushing it. I mean, really, that's all I hear is that you're doing good.
My more specific question to my listeners, Scott, are you … because you help with 60 startups so is everything you're talking about best for someone who's starting up? Is it best for someone who's plateaued and been out there 10, 20, 30 years? Or is it best for someone who's like dying? I'm going to … My practice is 20%, collects 20% less than it did 10 years ago. Or is that best for a group practice of five locations? I mean, what is your sweet spot? Who are you targeting?
Scott Leune: We've got a nine …
Howard Farran: Was that enough questions?
Scott Leune: Yeah, yeah. No, I got it. I got it. We got a nine waiting list. We're not targeting anyone. We're just trying to get enough desks built in time to handle everyone. Here are the types of dentists that it just makes no-brainer sense for and I'll tell you why for each one.
Startup, we already talked about that. You can open a practice with minimal staff, with minimal history expertise but have the power of an army of people doing everything perfectly, or I mean, doing everything very well for 60, 70 hours a week of coverage and it costs much less than hiring your own people, okay? Startup price, no-brainer. If someone is opening a startup practice today and is not outsourcing, they have completely missed the boat. That means they just don't understand the model. That's startup practice.
Then you've got the growing practice, a practice that is hiring more people. They may choose instead to not hire but to just keep their awesome team, their core team intact and instead of introducing more people they got to manage and audit and train, they start outsourcing all the things their awesome team doesn't want to do or can't do well, so they may outsource missed calls, they may outsource collection calls or insurance verification instead of hiring the next person, okay? That's the growing practice.
Then we have practices in California or New York where just to pay someone to answer the phone costs them 22 bucks an hour. They might outsource purely because it's cheaper. You do have some areas of the country where it's just cheaper to outsource to San Antonio, Texas.
Then you've got large practices. Large practices have a hard time controlling quality. They have a hard time seeing what's going on. They're very successful but any slight improvement in their practice adds a lot more profit, a lot more zeroes and as they keep growing bigger, maybe adding a dentist, things start falling through the cracks. For them, outsourcing is about controlling quality and making them hit a higher level of profit.
Then you got two more offices. You got the office that's going bankrupt. That office, they're on fire. They don't need to hire a consultant and then train them for a year to hopefully put out the fire. They need to hire the fire department. They need to outsource everything that's on fire so it's fixed as quickly as possible so that they don't go bankrupt. It's sad when this happens but it's the way they can save their practice.
The last kind is the group …
Howard Farran: Before you're go to group, have you ever had a phone call where someone told you what's going on and you just said, "Dude, you should call Rick Workman. You just need to walk away."
Scott Leune: I have had a couple times in the last two years where I've told a dentist their practice is basically burnt down. There's no salvaging what has happened. They're better off walking away. I've had to say that a few times.
Howard Farran: Did that dentist … Did he just shoot a lion?
Scott Leune: They declared bankruptcy, okay. It's sad that sometimes people are not [pickled 00:43:51]. I've had a lot of practices, dentists talked to me about failing and we've been able to save them.
The last group though … The last group of dentists is the group. Whether it's small groups, medium-sized groups or even some of the larger regional groups, as they grew on multiple locations, the quality … everything starts crumbling around the edges and at some point they're going to have to build their own call center, their own billing center and it's just better. The quality is better. The capital investment is cheaper and they're growth is faster if they tap into an infrastructure that's already built. They can focus on more new practices, managing the clinical side and the dentist and not spend all their money and time trying to build the infrastructure.
In my own practices which I recently sold by the way, they just closed but my …
Howard Farran: Who did you sell to?
Scott Leune: A local dentist that wanted to own a group.
My own practices are in the complete replacement role of outsourcing, so I'd have a practice with two dentists, two or three hygienists, and one for an office person and that's it. That front office person only check people in, check people out, occasionally answered an overflowed phone call and presented finances. That's the extreme of the model where the practice is focused completely on the patients there. They're not being slammed with phone calls. They're not having to confirm appointments or fill a schedule or deal with collection calls or verification or any of that stuff. It's all done elsewhere for a lower cost, more efficiency and a lot more fire power in case you have 10 calls coming at once.
Howard Farran: I want to say, since I'm old enough to be your father, since I'm 17 years older than you …
Scott Leune: Yeah.
Howard Farran: I want to say one thing to you guys because when you walk around half a century, you figure some things, I personally think my dentist homies, it's a pride issue. I mean, the dentists are used to always getting As. They're always used to getting the Eagle Scout. They're always used to being success in everything and it's just their ego. They're crushing it in molar endo. They're crushing it in bone grafting. They just expect. I should be crushing in all these things and I believe that the neural anatomy, that's for saying, we don't see any difference in brains in humans, ants and dolphins. We've all got the same brain.
The reason this person is an expert in violin is because she played four hours a day. The reason this girl got a gold medal in gymnastics is because she started at 5, she did it six hours a day and she did it for 20 years. I don't want to play the violin. And I think the clinical dentist, dude, you got to be honest with yourself. It's okay to not give a shit about insurance verification. It's okay to want to take a bone grafting course and not look at your ARs and all the stuff. It's just okay. You're not a failure. You're not a loser because you don't care about all the front office yet. Quite frankly, it doesn't even interest me that much. I would rather listen to 21 hours of nonstop bone grafting information than go sit there and look at all these damn reports.
Now I got an MBA, I trained myself, I forced myself, but I developed a team and I have 50 employees. I developed a team to do everything I don't like. I believe you, your assistant and receptionist all have the exact same brain and you're only good at what you're interested in. Dude, if you're not interested, it's okay. You're not dumb, you're not a loser. You just would rather do awesome dentistry than sit there trying to figure out your Dentrix and accounting reports. You agree with that or disagree with that?
Scott Leune: I do think that if we're going to stereotype dentists that would be the way to do it. You do have those odd balls that are all into all the reports and you have the other odd balls that just don't even care. They're almost proud that they don't have to market well or they don't have to track numbers. They're just busy anyways.
I think when you look at the business processes, when they're improved, quality goes up, profit goes up, stress goes down. It's just that way. If patients didn't get bad collection calls and if your receptionists were able to answer the phone properly and if you had proper insurance verification, all that kind of crappy stuff that we have to deal within a dental office, if it's done well, people are happier, the day is not a roller coaster anymore, the money comes in, the patient flows where it should be. Life is just a lot better. It's a lot easier when things are done as well.
Howard Farran: Let's get a hard measurement. Let's get a hard measurement. If you walked up to a dentist and ask him 10 scientific questions about adhesive dentistry, bonding, megapascals, dentine, enamel, and then you ask him 10 questions. What's your overhead? What's your AR? Ten economic numbers. What percent of the clinical dentistry's questions would they get right and what percent of the business managerial financing, managerial economics questions would they get right?
Scott Leune: Yeah. They get most of the dental stuff right and most of the business stuff they wouldn't get right and the things they might think they had right are misinformation.
I asked a dentist in my seminar, "What are three numbers you track?" For the last five years, I've always said the same three numbers, production, collections and new patients. None of those tell you if you're making any money. None of them. I've collected millions and lost money. They don't know what to look at. It's just …
Howard Farran: Then when you go into that office from your friend that you met at your seminar and you go into his office, the three numbers they gave you, what percent of the time are they not even right?
Scott Leune: Yeah. There's a bunch of assumptions made.
Howard Farran: I mean, what percent would you say? When they tell you any economic number and then you go into their office and you look up the number, what percent of the time is the number they gave you not even right?
Scott Leune: It's so rare that it's right, that we will not ask the question. We run our own analytic software through their practices and we come up with the 15 or 20 things that are broken and need to be fixed. We can't trust any number they give us.
Howard Farran: Yeah.
Scott Leune: Because it's very rarely correct.
Howard Farran: Yeah. Then you ask them what bonding agent they use and why and they just don't shut up for almost four hours. They'll talk about bonding. The other thing that's bizarre is they're always talking about cosmetic dentistry and veneers and bleaching and cosmetic … and then you go into their office, there's not even 1% of their revenue. It's like why are you obsessed with … It's like [inaudible 00:50:29] somebody, I've gone to six three-day weekends on TMJ. What percent of your practice is TMJ, one-half or 1%? You just got six three-day weekends of 5,000 bucks a weekend developing one-half or 1% of your practice? I mean, sometimes I don't know whether to laugh or cry.
Scott Leune: Yeah. If I'm a patient, I want a dentist that knows everything about bonding agents. If I'm a dentist I want to have a practice that's not breaking down around me. I for sure … If I was going to run a business, I wouldn't hire a dentist to do it.
Patients hire us dentists because we're good at dentistry. Dentists need to hire business people to run their practice. The problem is in the model that the country has had for the last 10 years, the only way to get your business people running your practice is to sell to corporate dentistry and lose all autonomy and control.
What we're trying to do here at Breakaway is build a model where the dentist truly does control their practice. They keep all their profits and they have someone better than a corporate chain helping them fix the things that are broken. They can be the person they actually want to be, the dentist that does great work and takes courses on TMJ.
Howard Farran: If a dentist who listen to this just says "Can you train my staff to do all the stuff?" Is your two and a half day seminar could … If they said okay, Scott, I hear you but I'm one of those dogs you let out in the backyard and pees on all four corners and I have to own my … I mean, Scott, I can't even count the number of associates that were working in office making 240, 250 a year for 10 years but they just had to own their own practice. Ever since then, they've never made 150.
Scott Leune: Yeah.
Howard Farran: Because the territorial instincts of a mammal over weighed any economic gravity and math and additions and fractions, geometry. I mean, I just see that all the time. Again, it's that pride. They felt like you're a loser. I'm a loser because I'm living at home with my mom and dad. That's all free. I mean, why did you just want to go get an apartment? You're making 225 as an employee but you just have to make 150 to own your own place. A lot of emotion like I said, but … if a dentist is territorial and he says, "Scott, I'm not giving it up. I'm doing it all myself," would your two and a half day seminar teach the front office all that stuff? I mean, is it theoretically possible?
Scott Leune: Yeah. That's basically what we do. We take 500 pages of content on how to systems, step by step whatever practice should be doing to be healthy and we give it to them in a format where they can go home, they can take it and they can implement it with their own staff. They don't need years of consulting. They have all the answers there at the seminar.
What ends up happening is that most dentists will look at that and say, "Holy hell, I want this but I'm so busy being a dentist that I can't do it all." At that point, they have to either just be okay not being more successful and do nothing, or they have to hope that their staff just implements it without oversight which won't happen. Or they got to hire a high-dollar consultant to provide a band aid of implementing a few things and hope they stick and hope no staff quit and have to be retrained. Or they can outsource and never have to think about it again.
Howard Farran: The consultants are going to be 50 grand and I say it's going to take a year and then hopefully it does stick. Here's the one that I think is sad. I know and I don't … I've never seen this with a female dentist and her male husband office manager. I think the males are assertive enough to … if they don't want to do it they just stand up to their wives, "I ain't going to do it." But so many males force their wife to be the office manager and she never wanted to do it. She hates her job. She hates everything about it. She's not good at it and she's miserable and Scott, it oftentimes leads to a divorce.
She wanted to stay home with their children or she wanted to do her own career, you forced her to do this and now you're visiting your kids every other weekend. You won't outsource but you'll make your lover, your wife miserable. Have you seen that example where the office manager is the wife by default? When you proposed to your wife, did you ever say "I take you to be my lawfully wedded office manager. Till death do us part?" I mean have you seen what I'm talking … what I just described, have you seen that?
Scott Leune: We see it all the time and it's usually the wife that calls us because she knows things are breaking down and she cares. She wants what's best. See, sometimes a front office person that's not a wife may not really care as much.
We have wife office managers and some husband office managers call us because they know things are broken down and they're not going to work 70 hours a week to try to fix it and so they call us.
Howard Farran: They see the stress in their lover?
Scott Leune: Yeah. Dentists, all we want is to good dentistry and have the support behind us to have the patient flow and a profit we need to have a great practice. The problem is we're so … we're getting slapped around by that infrastructure that doesn't really exist the way it should be. We don't have the support we need. We're not getting the patient flow we need. I get asked all the time, how do you have 200 new patients in a month? What marketing are you doing? It's not about marketing. I mean, that's part of it but it's about running the phones correctly. It's about high conversion rates. It's about not having bad online reviews from poor billing processes. It's about systems that are done most of which are outsourced that promote patient flow.
We dentists, we just want to do good dentistry. We want to have a healthy AR, a healthy set of systems in our practice. We want to have the support that we need to do great dentistry and make a buck.
Throwing our spouse in there as office manager is a band aid that may or may not work. You could actually have terrible consequences. Not looking, not auditing, not listening to the calls, not knowing about AR is a recipe for disaster. At some point, you either going to be making a lot less money or you're going to be failing because you don't look at it.
If you're the dentist that won't look at it, if you're the dentist that won't go clean up all this crap, then you've got to either hope your staff does it. You got to hope a consultant will try to teach your staff how to do it and they'll keep on doing it. Or you got to go bring in the fire department fix it all and that's outsourcing.
Howard Farran: Well said. Truly from the bottom of my heart, I'm going to do everything I can to help my homies. I really do. What I've noticed with the continued education, it's just markets. I mean, you write a book on implantology and these great implantologists like Carl Misch will tell you this many thousands about the book. There's a lot of people like … and I can pan over. I mean, I've got all these books. There's a whole another market and all these guys will tell you that they're never going to read a dental textbook. They wanted to go sit in a lecture.
The podcast is brand new because the iPhone or the smartphone is a multi-tasking behavior. These guys were all 85 to 90% of all my listeners already have seen your gorgeous self in your blue shirt and tie and all that stuff. They're multitasking on an hour-long commute to work. There's a whole another huge segment on the online CE, I swear to God, dentists won't listen to anything unless they got an hour credit for their AGD because they're trying to get their $500 for their fellowship or the state or whatever. This is so rocking hot. I wish you would create an online CE course and I'll tell you another reason.
The biggest investment the average Americans ever going to have is their house. Some of the smartest things grandma could do is sell it to reverse annuity and you're just not going to explain this person on a 60-second ad. The television had deconstructed sales process and just try to sell them to just call and no one's going to come visit you or call you back, whatever. You just call us. Then when you call them, they're going to say, "Look, I can't tell you anything until you just give me your address." They deconstruct it. Then when you give the address, "Hey [Margaret 00:58:57], why leave all your money to your grandchildren? Give us your house. You can live there till you die and you'll get another $1,200 a month," which is more than your [inaudible 00:59:06] check.
I think you should deconstruct this two and a half day seminar and put an hour online CE course and a lot of these dentists are using an online CE. We put up 325 courses. They got 550,000 views and a lot of these courses are staff meetings. The dentists will go get burgers, pizza, fries, whatever and they'll sit there and have lunch and listen to [Lunchinar 00:59:28].
I hope someday you deconstruct that two and a half day hands on and put a digital online CE course because I really think if they would listen for two and a half days, they have a lot of stress because we got 18% of dentists will spend in-house addiction and 85% of that is alcohol, 15% is about hydrocodone. Divorce, a third is finance, a third is about sex, and a third is about substance abuse. Basically, everything I'm believing in this industry is that when the business is falling apart, they're more likely to develop an addiction and they're more likely to get divorce.
I think your information is so rocking on. Scott, thank you so much because there was guys like you that made Dentaltown what it is for today.
Scott Leune: Thank you so much for having me and of course you have changed dentistry with Dentaltown and the big idea and the big picture. I'm just so happy with how everything has gone with Dentaltown and for dentistry. All of us dentists would be completely different without Dentaltown. I know you hear it all the time, but I can't help it. I got to say it's you. It's just amazing. Thank you for what you've done for dentistry.
Howard Farran: We should start a mutual admiration club, and we'd be the only two members. All right buddy, rock and roll and good luck with everything you do and I will see you in San Antonio.
Scott Leune: Awesome. Thanks a lot.
Howard Farran: All right buddy.