Helping Healthcare Scale
Imagine you're friends with multiple CEO's of billion dollar organizations. You can call them anytime you like and ask them all that they've learned about real estate and investing, including some of their biggest mistakes.
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Helping Healthcare Scale
Ken Kaufman: Harmonizing Financial Success and People-Centric Culture in Dental Support Organizations through Strategic Growth and Real Estate Partnerships
Curious about how financial priorities can harmonize with a people-centric culture in healthcare? Join us for a compelling conversation with Ken Kaufman, a visionary leader in the dental support organization sector, as he reveals the delicate balance between fostering a thriving organizational culture and achieving financial goals. With his impressive journey from BYU to CFO, Ken offers invaluable insights into strategies for sustainable growth, emphasizing the importance of caring for employees and patients alike. Discover how Ken's passion for startups and the dental industry has shaped his approach to building a culture where financial and cultural priorities are not at odds but work in tandem to drive success.
Unlock the secrets of maximizing healthcare revenue as Ken shares his expert advice on creating robust systems and automating processes within practice management. From merging Revenue Cycle Management systems to conducting annual fee schedule reviews, Ken provides actionable steps to optimize collections and streamline operations. Learn how transitioning to accrual accounting and implementing effective analytics can paint an accurate picture of business health while maintaining ethical practices. This episode promises a deep dive into the complexities of financial operations, offering practical guidance to navigate these challenges without losing sight of what truly matters—your organization's cultural core.
As we explore the intricacies of compensating healthcare providers and the exciting realm of real estate partnerships, Ken sheds light on incentivizing growth and creating strategic collaborations. Gain insights into salary ranges, compensation structures, and the ever-evolving landscape of commercial real estate ventures. Whether you're a dental practice manager or a healthcare executive, Ken's experience and wisdom will equip you with the knowledge to make informed, strategic decisions that align financial success with a vibrant, people-focused organizational culture.
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This is not a manufacturing company, this is a people business and you have to every day wake up and you have to win hearts and minds every single day, over and over again. And I'm not saying like in some manufactured way, this is like just you care about people and you care about the patients and you care about what's happening inside the organization and you build a culture that has like deep meaning to the employees and the result is engaged employees, engaged doctors, engaged vendors and so on and so forth.
Speaker 2:The goal of this show is to help healthcare organizations scale by leveraging real estate strategies and interviewing high-level healthcare executives in order to pull out lessons learned along the way. If you'd like a free site selection analysis from our team, visit us at wwwreuniversityorg and drop us a line.
Speaker 3:Hello, welcome back to Helping Healthcare Scale, and I'm your host, austin Hare, and we have a repeat guest, ken Kaufman. He's been on the pod several times and it's always a pleasure, and so he's starting a new venture which deals with a lot of the problems that a lot of DSOs face when it comes to financial metrics and planning, which we're going to dive into. But first, ken, thanks for attending. Again, thanks for coming on. I would love to just connect the dots. How did you get here? Where did you start?
Speaker 1:I know you've been doing this a long time, but I'll let you tell your story. Yeah, you bet I knew when I went to college that I wanted to be in business and learn about business and try to develop something there, and so I went to undergrad at BYU and got a business degree. I then worked for a startup company for four years and, oh man, I was hooked. I just loved startups and everything that it took and all the craziness that goes on and iterating that happens. And then I took an opportunity to go and get an MBA at the University of Georgia and that was a phenomenal experience. My focus there was in entrepreneurship and I just loved it.
Speaker 1:Coming out of school, I ended up a year later in my first CFO role. I was way too young, austin, to have that responsibility, but I landed in that role and learned a lot. We were growing fast and cash was depleting and I couldn't figure out. And then I started to learn about the working capital cycle and how to actually run a business, do it the right way financially. And then I left that organization and I started doing consulting work, where I was doing fractional CFO work back in like the mid 2000s and in 2006, I landed with a group that was a DSO.
Speaker 1:They weren't called that back then, I don't know that the DSO term even existed back then, but it was a dental group and they had two fixed like brick and mortar stores and they had three mobile clinics and they were going to Las Vegas and I got involved with that and I was hooked. I loved everything about the dental industry. I've been here ever since I graduated on to other opportunities. I was the president of the nomad business that we sold to Dan or her corporation back a decade ago, I don't know. Austin, all this is probably dating you. My first DSO was in 2006.
Speaker 3:Tell me were you born then that was the year that I graduated high school.
Speaker 1:I'm very mature, I'm getting old. That's what's really happening. Thoughts just extra experience. I love it, yeah. Then I had some other amazing opportunities. I was at Community Dental Partners for quite a while and enjoyed the run there.
Speaker 3:You guys grew from what I think 50, 70 locations.
Speaker 1:Just shy of 80 locations, yeah. And when I got there we had just done an acquisition of 11. And so we were and had a couple of other like a handful of other things going on practices. So, yeah, we grew that one quite, quite a bit. That was a great ride. And then most recently I was at Nuvia and just recently left to jump back into the entrepreneurial route and start building something again. Yep.
Speaker 3:All right. So what kind of I'd be curious the commonalities that you've seen being involved with three different DSOs over the past 18 years. What is it that you're seeing in terms of mistakes that they're making or bottlenecks that they're facing? You just see over and over again.
Speaker 1:Yeah, I would say this more than anything else. It's the tension that occurs between building the right culture so that employees are engaged and performing at their peak level. It's that always rubbing up against the people who are trying to financially engineer the organization in a way that often challenges or even hurts the culture, and getting those two things aligned. It seems to be where the biggest rub always ends up, because you have your financial engineers that are saying we'll do this and EBITDA this and multiple that, and here we let's do all these things, and they forget that this is not a manufacturing company, this is a people business and you have to every day wake up and you have to win hearts and minds every single day, over and over again. And I'm not saying like in some manufactured way, this is like just you care about people and you care about the patients and you care about what's happening inside the organization, what's happening inside the organization, and you build a culture that has like deep meaning to the employees and the result is engaged employees, engaged doctors, engaged vendors and so on and so forth.
Speaker 1:Does that make sense? There's just this ongoing rub, and the guys who really crush it are the ones who figure out how to bring those two things together and make them work together so that, financially, the business is sound and it's growing and it has an opportunity to exit when and if that ever is going to be something in the future, and it's going to be meaningful and helpful for everybody, but it doesn't destroy the culture and the people and all of the hard work to build up the organization that can stay intact. It's just like each side sometimes has their blinders on Right hey, why do we need to worry about money? And the people that are on the money side say, hey, why do we need to worry about culture?
Speaker 3:And we've actually talked about it several times on this podcast. But yeah, it's like the consolidators versus the operators, and consolidators are just like in and out right, because the quicker you're out of a deal, you as a finance guy, the higher your IRR and a lot of times, especially if you have private equity like IRR, you live and die by your IRR and IRR is time-based intrinsically, and so the quicker that you can do some sort of value add and sell that, package it up, sell it, the better your IRR, the happier your investors. Well, a lot of times that comes at the cost of the staff and the morale and the culture like you're talking about. But I think it's also interesting that it's like they do serve a point, they serve a purpose which is like you have to make. It's a business, you have to make money in order to survive and if you're not growing, you're dying. Unfortunately, it's very hard to maintain being stagnant and so I think that's the coming together of the two.
Speaker 1:Yeah, that's the apex, that's the ultimate objective where I think, in my experience, the most value creation comes, because now you're getting the benefit of winning the hearts and minds of the people every day and you're creating financial outcomes that are meaningful as well for those that have a stake in the business.
Speaker 3:Let's talk brass tacks then. How do you do that? How do you marry those two? What have you seen that maybe will go both ends of the spectrum? How have you seen it done?
Speaker 1:wrong. And then how have you seen it done the best in your experience? So, in my mind, the challenge for the people on the finance side is always understanding the business enough so that you know how the culture works and you're respectful of that and you don't railroad through the middle of the culture while you're trying to create the financial outcome that you're hoping for or that you want to achieve. And so there's I've seen private equity come into the space over and over again and the ones who come in and who understand healthcare and healthcare services not healthcare software, healthcare services and that providers and assistants and all of these people are the healthcare services, and that providers and assistants and all of these people are the cogs in the wheel that make the business run and grow. The more that they are willing to understand that and have empathy for that, the better their side is.
Speaker 1:On the other side, everything can't just be rainbows and happy and Pink pong tables and free lattes, yeah.
Speaker 1:And so build on the other side, building a culture that is not focused on foo-foo stuff but actually meaningful stuff, because a great culture that the sign of a great culture is.
Speaker 1:The leaders can have very direct conversations with the employees and with the team and take on the direct, hard conversations and get everybody aligned and keep everybody moving forward, because otherwise, if you don't have both of these parties that are engaged in doing this, what happens is you have some people on the boat rowing forward and you have some people on the boat that are rowing backward, and so you have all this effort going on but literally no momentum, because everybody's rowing against each other, and so there has to be. The places where I've seen it function and work is where the equity sponsors or founders of the business, whoever, wherever that all started and founded, when they have a mind for the culture and when those who are running the culture and organizing it are understand the needs and the way they can help educate the equity sponsor or debt sponsor for that matter that that's where the magic really starts to happen, where you can get massive traction in an organization starts to happen where you can get massive traction in an organization.
Speaker 3:That's cool and I'm guessing over the past 18 years you've had your fair share of dealing with both a number of both sides of those.
Speaker 1:Yeah, and some have been not as favorable as I hoped that they would turn out to be, and others have done it flourished and done amazingly well. So it's unfortunately. I've seen both angles maybe fortunately, I guess it gives me a different perspective.
Speaker 3:On the finance side. I know there's a couple different commonalities that you and I were talking about that a lot of groups are facing right now, and we got some things RCM, conversion to our cash base to accrual finance or accounting data warehousing, analytics, doctor pay, financial planning and analysis. I don't know if we're going to have time to get through all these, but let's start with RCM. What are you seeing with RCM? What's the biggest trouble?
Speaker 1:And the key thing is right is I've done this now for the better part of a decade two decades, I should say and as I've looked around and seen what's going on, I see that these five things, everybody is struggling with this. There's nobody that has all five of these things dialed in yet. They're very critical to both sides the culture side and the equity sponsor side, the equity sponsor side. So RCM is one that is constantly moving. I don't know anybody in the entire industry, including the really large groups like PDS and Heartland and all of those groups. Everybody's still iterating with this and working with this because software is catching up. There's AI things that are happening.
Speaker 1:Payers are continuing to be very stubborn and archaic in some ways and in other ways they're actually moving the needle on getting more toward being easier to work with from a technology standpoint. And because of all of that, rcm is just something that everybody is continually trying to figure out and crack the code. There's no one software off the shelf that can do all of it flawlessly for every single group, because the payers are different and there's just there are so many nuances and details. The networks have become so complex, the renegotiation of fees has become so complex Just all of it together is. It takes a lot of work to get it aligned and get it working correctly.
Speaker 3:Yeah, so I guess, on that note, what do you do? Is there any frameworks that you think about? What can people start doing? What's maybe a small step or a couple of steps people can start doing right away that they might not have thought about?
Speaker 1:Yeah. So here's the first thing, and this might be a little counterintuitive at first. The first thing is, if you know that you're not dialed in here, stop proliferating the mess. Don't try to go and centralize billing or your RCM function if you don't have the right systems and processes in place. I see groups do this all the time of hey, we're going to centralize, we're going to centralize, and all they do is proliferate a mess and spread it out to more practices that ultimately you're going to have to unravel and undo. So the first thing I would say is resist the temptation. Really spend all of your time up front focused on how to organize, how you want to organize it and how you're going to track it. What are the metrics you're going to use to track whether you're successful or not, and so you can communicate to the team as well. How are you going to train? How are you going to maintain that training as turnover happens with employees, Setting up that whole system is way, way more important than what software you're using, Because getting your process and system functioning because I've always said this, when you buy technology, it doesn't solve problems.
Speaker 1:Really smart people solve problems by creating systems. Then they go buy technology to automate that system so they don't have to put all the manual effort and work into it, and so that's at a very high level. Austin, that's how I would describe it. I'm happy to jump like deeper down. We can talk about specifics, but that's at a high level. That's got to be the framework that you start with.
Speaker 1:Is the problem the fact that when people are doing acquisitions, they're trying to merge to RCMs, or is it the fact that they don't even have their first one, their first location down or their original system down, and then they start trying to add package on stores locations in addition to that the RCM function is a very narrow-niched job, it's very highly focused, and so if you're trying to merge groups together and in these 10 practices the practice manager does the billing and all the RCM, and then in these five practices you have some hired gun that's over there that knows RCM and does it all day long and has other clients that they work with really quickly, right, it just becomes very unequal, and so the objective with centralization should always be we can do it better and we can do it faster.
Speaker 1:And here's the thing it's not just dentistry. All of healthcare is still fighting with and dealing with this problem and all of the moving pieces and all the moving parts. I wish there was a silver bullet here, but I can tell you you have to start by creating the system and then layer the automation so that you can try the right result.
Speaker 3:So, step one, create the system. Step two, try and bring it to a centralized location, like cleaning it, essentially clean up your processes.
Speaker 1:Then, lastly, is when you bring on the automation and the software yep, and then roll it out to everybody, because there's a process there too and you've got to ramp up and make all those things happen okay, do you like maybe even getting more granular?
Speaker 3:Is there anything that you've noticed that increases collections? Is that along the same vein?
Speaker 1:Yes, here's one tip I would give that always makes a huge difference.
Speaker 1:If you will commit to, once a year, looking at your fee schedule with each insurance company that you are credentialed with or your doctors are credentialed with, and you do an analysis to see how much you're getting paid for each of the decodes or each of the specific procedures that you're doing, that analysis will enlighten you as to what insurance companies are more favorable for the types of procedures and things you're doing versus not.
Speaker 1:And once you get to that point and you can see, you might even start to say maybe I want to decredential from one of these groups where their fees are just so much lower than these other ones and they only make up a small part of our business, or maybe I want to go a different direction. Information is power, and so the ability to just take a look at that and, once a year, do that process as well as work on and go and try to renegotiate the fee schedule with each of those insurance companies. If all you did was that, you'd be 90% of the way of making sure that you're collecting as much as you possibly can from all of the efforts that you're putting into serve patients.
Speaker 3:Yeah, it's interesting, I believe it's Dan Kennedy co-authored. A book 10X is Easier Than 2X and one of the things they talk about Dan Sullivan. Dan Sullivan, thank you.
Speaker 3:Yeah, dan Sullivan, and I think you and I actually talked about this earlier, but it's like the 80% of your time goes to the bottom the clients that pay 20% of your revenue and 20% of your time goes to the clients that pay 80% of your revenue revenue, and it should be in.
Speaker 3:20% of your time goes to the clients that pay 80% of your revenue. So, essentially, I think what we're hinting at here is who are the clients that are actually paying right, and so if you find out I'm spending 80% of my time on this insurance, they're actually the way that they're reimbursing me are paying. The collections is only 20% as much as these other groups. So if I just got rid of them and I didn't even fill up every single patient that I lost, I just filled up half I'd still actually be making the same amount of money, but I'd have to service half as many patients, let alone if I got. Now I have time for more patients. So, yeah, I think that it's a great idea to do this analysis, because you cannot make good decisions without good data and then, as a result, yeah, you cut your bottom performance, your worst clients, or at least you stop focusing energy on it.
Speaker 1:Yeah, that's right. And in healthcare we never liked the idea of saying, hey, we're going to cut certain clients, but there's this business side of it, too Right, which is you can't have. I always say this because in healthcare there's always a question of should healthcare companies be profitable or not? And I would say I think we are. We should have a mandate to be profitable, because when we're profitable now, we can reinvest in equipment. Now we can refinish the floor that has holes in it in the dental practice. Now we can take care of all of these important things that help the patients feel comfortable, have a clean, safe, sterile environment where they can be treated. There's so many pieces of this and I could go on down that rabbit hole for I agree.
Speaker 3:There's absolutely nothing wrong with profitability. I think the moral question comes into, like, how are you coding things? Because I know some people in some industries you could overbill, and that's what gives it a really bad name. So I think that'd be the caveat Don't be profitable at the extent of overbilling, but I think as long as you're acting morally, absolutely 100% you have to be profitable if you're going to grow and provide excellent service and get people healthy.
Speaker 3:So yeah, great point. The other thing was the conversion of cash to accrual, and so I know from a high level I'm not people listening aren't familiar with two different terms. Cash base just essentially means like how much money went into my bank account this month, how much money left this month. But accrual base is a little bit more complicated because you could be collecting from previous months, so your efforts aren't necessarily tied to what you did this month. They were tied to what you did six months ago and so it's a little bit more sophisticated way to you can actually see which levers to pull. But on that note, I'll let you explain maybe the problems and how people go about tactically doing the conversion.
Speaker 1:Yeah, you did a great job explaining that. Austin, I think you've got a future in finance. Oh yeah, you're already there. But that was really well said. The parts that I would add to it are as you get bigger, you've got five locations, 10 locations, 20 locations. I mean as a doctor, as leaders in the business or executives or whoever's running the business, regional managers, whatever. You can't be there all day, every day, at every single practice accounting. You do not know what's going on in those practices period. Top line revenue is the number one place everybody goes to judge and determine did I have a good day or not?
Speaker 1:Because it's an easy number to go to, and it's an easy number to find. And if your top line revenue is not being codified in an accrual accounting format, you're flying blind. There's no other way for me to describe it than that. And the way that you move forward with getting into an accrual accounting system is first of all, it is dependent to some degree on your RCM, so you've got to be putting things in the right place in your practice management software so that data can be extracted and pulled out. And then what we do is we literally take all that data and we figure out instead of what you got paid for. We focus on what service was provided this month, what services were provided this month, and we determine based on your fee schedules with insurance companies and other estimates that need to be made. We make a very clear estimate as to what will the net collection be on all this production after three or four months, once all the denials are handled and all the claims filed and that entire process happens and goes through.
Speaker 3:Yeah, I know it can be just overwhelming even thinking about it. So I guess like, maybe, how would you coach somebody to start that process If they're saying, okay, cool, that makes sense. We like cash base, I see, is not sophisticated enough. We're growing, we need to go to accrual. What are a couple of steps that they could start to take?
Speaker 1:Yeah. So the first step is is you have a good, clean RCM process so that all that's all that data is there somewhere. The second challenge will be now how do we extract that data and get it into the right format? So step one would be a good, clean process on RCM. Step two would be creating a data warehouse, or however. You're accessing your data and spending time to go through the MDM process, which is where you define what all the different tables and all the things mean within the database, and then you start to extract out the data that you need so that you can ultimately see again it's not what you got paid for, it's what services were provided during this month, and then the estimates based on the fee schedules from insurance companies, as well as your UCR if you have some patients that are paying that much, and ultimately we can come into a nice clean package. So every month we've got every single practice very clear on an accrual basis.
Speaker 3:So then that kind of leads us into our next topic about data warehousing and analytics, and maybe explain that from a high level.
Speaker 1:These are challenges that everybody's facing in dental. I just nobody has any of this perfectly solved. Everybody's still working on these things. Again, even the really big groups are fighting their way through some of these things.
Speaker 1:The data warehouse process is the process of extracting data from the practice management software, your Google Sheets, wherever it is that you're storing data, and it's bringing it into one warehouse that allows you to tap into and pull down the information that you need when you need it.
Speaker 1:And this is hard because Austin Dental is an industry that generally doesn't have open APIs. You can't just go and take and grab data. There's a lot of challenge to it. And then, once you get it out, you've got to have somewhere to store it. You've got to have your MDM processor, which is where you basically give a definition for what all of that data, all the data pieces, mean, and so it can ultimately kick out into a nice analytics platform that allows you to look and see okay, what was our production today? What was, how many new patients did we see last month? And you can start to pull all that information and see at a somewhat global level or consolidated level is really the right way to say it and you can see what's actually happening inside the organization, sometimes daily, like you can almost get to real time in some instances. But there's a lot of investment and it takes a lot of work to figure this out, is there?
Speaker 3:a certain size, where, if you're smaller, it doesn't really make sense to worry about this just yet, and where, if you reach this milestone, then it makes sense to start focusing on it. Where would you draw the line in the sand?
Speaker 1:Yeah, I tend to think that when you get to 10 locations, it's a scary place to be, and the reason why is because it's not like you've got lots of money coming in, Because running 10 practices costs a lot of money coming in, because you know, running 10 practices costs a lot of money and takes a lot of effort, and so it's not like you have the ability to go and hire executives and hire vendors to come in that can necessarily do all of this. I think 10 practices is the bottom layer for me. I don't. You can. You got to fight your way through 10.
Speaker 1:Maybe you can put a few of these things in place, but once you break through 10 and toward 20, that's where you start to really have some capability and you have a little bit better cashflow that allows you to make some of these critical investments in the business that, again, it will. It's not just going to consume cashflow. This is going to help you generate more cash moving forward. It's not just hey, I have to spend this money and now it's not going to do me any good. All of these things should be making your business better and helping you make better decisions so that you can drive financial success and culture success.
Speaker 3:That's good, and so, as we come towards the end, I want to focus on maybe one more topic, which would be doctor pay, and so paying an employee is just always difficult, and especially when it comes down to doctors, that is always the question of giving them equity, or do you keep them as an associate, and each one has pros and cons. So how do you think about this topic in terms of what do you pay your doctor, whether or not to give them equity, et cetera?
Speaker 1:Yeah, so I have my opinions on this and there are certainly people out there that will disagree. I think we're in a very interesting point in dentistry where Austin I would go out on a so far on a limb is to say this I think that those who figure out how to get associate doctors equity in a meaningful way, in a way that they can actually understand what it is and the value of it and why it's important and how it's going to help them potentially financially in the future, those who figure that out are going to win the game, because at the end of the day, if you don't have a doctor in a dental practice that day, you don't get to do anything. It's just turn the lights off, guys. Everybody's got to go home. And so if you really think that the biggest constraint in all of dentistry is the provider, and if you can do things to incent providers to come and be part of your organization and then do things to make them sticky in your organization Like hey, if you hang around here and you're here for so many years, you have an opportunity to earn an equity payout of X or of Y, and we'll walk you through this on a regular basis so you know how much it is and you have an idea of, like where the company's going and how these different things work. I think that there's a ton of opportunity there.
Speaker 1:Now, jumping back over to the Dr Pay piece, the reason why this is such a mess is because everything else is such a mess when it comes to data, and doctors are given special deals and contracts have to be reviewed. Every organization I've ever talked to and every organization I've ever been in, doctor pay is this nightmare that happens once a month and everybody hates it. It takes forever. And then doctors start to dispute and say well, that wasn't my patient, that was this patient. And wait a minute, I'm supposed to get credit for the x-ray. Why is the hygienist getting credit for the x-ray? So on and so on. And so this is it's something that gets again as you're small and growing. You're just throwing contracts out there with terms to get doctors to come on.
Speaker 1:But once you start to get bigger, you have to start to simplify these things, and doctor pay is one of the one of the places where it's just it's the most painful, because you want to get it right, you want to pay your providers. They're doing you know, they went to school, they have debt, they are trying to live their lives and so you got to get them paid and you want to get them paid right. But sometimes some of these data challenges, as well as the complexity of the contracts that are written and everything makes it just very difficult. I've just I've never been in an organization where I say Dr Pay, and everybody stands up and cheers and says, yay, we're so awesome at that. Everybody says, oh, we hate Dr Pay, it's so hard. It takes so long.
Speaker 1:It takes us a week to get it done, and so on and so forth.
Speaker 3:Because there's three elements to it. There's the base salary, which is the easiest. There's the percentage of collections which is complicated, and then there's the piece of equity which would be the most complicated, and so obviously you're not going to have to deal with the equity every single month. But knowing that ahead of time is going to be the difficult part, because 1% of equity today, if you grow to $100 million, that's obviously becomes a lot more significant.
Speaker 1:Or 2% or 5%, whatever it is, you did over, oversimplify it, because there are a lot of dental groups right now that have doctors. Some of them are on collections that paid, based on connect collections, some are based on adjusted production, and so that creates a ton of complexity right there, and then, anyways, it just all starts to backfill. What about?
Speaker 3:maybe it'd be helpful to identify for the groups getting started, if you have no idea what to do. Do you have a range of salaries and then a percent, a range in terms of percentage of production versus collection, because obviously you're going to have to do a smaller percentage of production because you might not collect it all. But what are some of the actual numbers that you're seeing or that you'd even recommend?
Speaker 1:Yeah, and just to tie one thing together here a really clean RCM process gives you the confidence to be able to pay, based on adjusted production.
Speaker 3:Oh, yeah, does that make sense. Yeah, Because otherwise you're just. You might be guessing or you might be paying on the wrong thing.
Speaker 1:And there's one other part too, when you're paying on adjusted production. Guess what? Accrual just got very easy, because now it's based on what treatment was done, not what was collected during the period, and so it actually allows you to present much cleaner and more accurate financial statements when you get to that. So from my perspective, I think ultimately that's the you've got to get there for accrual and then a lot of times you stay there for doctor pay and on the adjusted production basis.
Speaker 3:Yeah, that makes sense. Do you have what are some of the base salaries that you're seeing? And then, like, how do those relate to the percentage of collection or production that they receive?
Speaker 1:Yeah, great question. This ranges. I've been in and around a lot of different types of groups specialty groups, general dentistry groups, ortho and all those sorts of things. So if we just stick with a general dentistry mindset, we generally are seeing a base, some type of a base pay or a greater of type of a contract where, based on their production, they can hit certain metrics or numbers, but they're guaranteed a base of, let's say, $500 a day or $600 a day, and then they have a hundred 100 grand a year approximately.
Speaker 1:Yeah, and that would be that base. And then they have the ability to earn more based on their production numbers and how it's structured, because if it's a greater of contract, it's either you get the base or you get the adjusted production number Some of them have hey, you get the base, no matter what plus we'll layer on the greater of, or all of your production, or some percentage of it.
Speaker 3:Do you know what percentage range is normal to expect versus, like collections, versus production? Would it be, I don't know, 15%, 25%, 30%? I think I'd imagine 30 would be on the high side if you're already getting a base salary.
Speaker 1:but yeah, I think for general dentistry 20 to 25% is probably about the right place for that to land. You'll see specialty creep up into the thirties. Often I've seen oral surgery jump up into the 45 to 50 in some circumstances.
Speaker 3:In addition to a base salary, they'll get 50% of collections.
Speaker 1:Oh no, this is like those specialty is just a straight yeah, just collections, a straight percentage. Yeah, ortho is an interesting one because there are a lot of ways to do it, but you have this like extended relationship with that patient for that one treatment and so on. On that one, what we often see is some type of a day rate plus a bonus, type of a structure that allows the orthodontist to be rewarded when they help start a new patient and also when they help debond a patient. Those are some of the tricks of the trade and some of the different specialties.
Speaker 3:And then let's just call it 25% of collections in addition to the base salary. Is that usually going to be the majority of their income? Are you at 25?
Speaker 1:you're making significantly more than like 100, so it could be several hundred thousand dollars of just the collections yep, and it depends on how much work you're doing and there's a lot of pieces of the puzzle there. But yeah, I've seen so with general dentistry. I see it's usually 25, 26, 27 and that's total between the any base they have plus the OK A production, adjusted production or collection.
Speaker 3:And that might be 250, 300, 500, like anywhere yeah.
Speaker 1:And so you have to step back and look and say this has to be profitable for the dental practice as well. And so if you've got one dentist and that dentist is generating a million dollars of production a year, you're probably not going to pay them more than 50% of all of that production. And so there are definitely some guardrails around this. It's just depending on a myriad of factors. Yeah, yeah.
Speaker 3:Okay, I know this is just scraping the surface of everything, because each topic, the more questions you answer, the more questions that pop up. And if people I know that you guys have your, you have your mastermind accruedent that kind of delves into all of this stuff in detail, just tell us a little bit about that and where people can go to find out more about that.
Speaker 1:Yeah for sure, thank you. So there's really two projects we're working on. The first one is the mastermind group for dental finance leaders and we're collecting all of them that we can find. We've got a total of 17 in the group and I've got some meetings set up, with five more over the next couple of days and it's really fascinating to bring all of these minds together. And in the mastermind groups we help each other solve some of these problems, because some have done it one way, some have done it another way and there's just the opportunity to share the ideas and all those sorts of things.
Speaker 1:So that's the first thing coming out the gate. And then, secondarily, we are launching a consultancy to help dental groups that are struggling in any of these areas, or maybe they just want to tune up. We'd like to come in and do a comprehensive analysis, take a look at what's going on under the hood. I already know these five things that we've talked about here. I already know that those ones are going to be hot topics, but then we can dive into. There's a total of eight practice areas from a non-clinical perspective that we do a deep dive on and take a look and see if what's working, what's not and make some recommendations.
Speaker 3:What's a good resource to reach out and get in touch with you guys.
Speaker 1:Yeah, you can reach out to my email. So it's ken at accrudentcom. That's A-C-R-U-D-E-N-T, and if you can't remember the name, just remember that I love talking about accrual accounting and you're AccruDent. That's one of the two reasons actually why we named our company that. So for there you can come to our website and if you want to chat, we can set something up from there and that's just accrudentcom.
Speaker 3:Great Ken, thanks for coming on. This was insightful and I enjoyed it, man.
Speaker 1:Yeah, it's always great to hang out with you, austin. Thanks so much for the opportunity.
Speaker 3:Anything that you want to add that we didn't get a chance to talk about before we close.
Speaker 1:Yeah, there was one of the five that we skipped over, not on purpose, we just got so wrapped up and it is. I find that in dentistry, specifically introducing what's called the FP&A function, which, if you have accounting on one side that looks at what happened historically, fp&a is financial planning and analysis. That's the hey. Let's look forward, let's do planning, let's forecast cash. Let's do planning, let's forecast cash. Let's do a five-year model to see where we're headed and how we can create the best outcomes for everybody. I find that most DSOs or group practices they are way too late introducing the FP&A function into their organization and they miss out on opportunities as a result. So financial planning and analysis is the other place that is very common and it can be a real game changer in terms of how you think about your organization and how you lead.
Speaker 3:Yeah, that's cool. Thanks for adding that in there. Yeah, I appreciate that, ken. Always a pleasure and I look forward to the next one.
Speaker 1:All right, Talk to you soon. Thanks, Austin.
Speaker 4:If you need help finding the perfect location for your practice or you're ready to invest in commercial real estate, email us podcast at leadersreecom R-E, as in realestatecom, or go to leadersreecom and fill out our form. See you next time.