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.
That's the mission of this podcast, to teach the insider strategies used by the big guys to everyday healthcare operators in order to get access to the best strategies and real estate at the best prices.
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Helping Healthcare Scale
Real Estate Bites Back: Why Dental Offices Can't Afford $50 Per Square Foot
Dalton Albertson, Marketing & Business Development at LAD Dental Group, and Brad Lenos, the company’s COO, take you behind the scenes of an 11-location Indiana network that began as a single Kokomo practice in 1978 and grew into a dental powerhouse—almost derailed by one bad lease. In Wabash they under-priced a brand-new build by $200,000, a cautionary tale for anyone who thinks location costs are just another line item.
They confront the brutal truth of today’s “dollar milkshake” economy, where owning real estate feels like a hedge against global liquidity—but inflated rents can turn thriving offices into cash hemorrhages. Their battle over whether to buy or lease has become the most controversial debate in multi-site healthcare real estate, and their lessons apply equally to med-spa operators, veterinary networks, and wellness chains.
You’ll hear how converting from cash-based to accrual accounting ripped away hidden write-offs, exposed distorted KPIs, and forced every hire to carry new financial accountability. In a 4 % unemployment market where staff wages have doubled while insurance reimbursements stayed flat, they reimagined benefit packages, reconsidered seven-day schedules, and doubled down on airtight 30/60/90-day reviews.
At the heart of their success lies ruthless execution and radical candor. Free snacks did nothing to stop turnover, but a culture built on unyielding follow-through and consistent training transformed every department into a margin-savvy machine.
If you’re scaling any service-based business, this episode hands you the real-estate playbook and leadership blueprint to dodge nine-figure mistakes and build teams that last. Stream now on YouTube or LinkedIn, and visit LADDental.com to see how a single square foot can make or break your next expansion.
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But then it shifted too far the other way for a while there, because you had the Twitter and the different offices in San Francisco where it's play ping pong all day and free lunch and it's all about having a cool, relaxed company culture, all the different amenities that Google provided, and then it turns out they were totally draining the company, as we saw when Elon cut everybody successfully, and now it's almost like balancing. We've got to go back to some of those principles from execution and apply them with the people's principles. There is a almost I don't know if a reluctance is too strong of a word to hold people accountable for what we say we're going to do, because the ideal situation is put the right people in the right seats on the bus and let it go, and it's you have to be able to care about people while holding authentic conversations. I don't know if you ever read the book Radical Candor.
Speaker 2:Oh, yeah, good one.
Speaker 1:Yeah, so you have to really care about these people, but you hold them accountable too. They're here to do a job right, and so you have to be able to talk to them directly about their performance.
Speaker 3: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 1:Hello everybody, Welcome back to Helping Healthcare Scale. I'm Austin Hare. I'd like to welcome our guest today. I'm here with Dalton Alberton. He's the Marketing and Business Development at Ladd Dental, and we're with Brad Linos. He's the COO of Ladd Dental. It's a dental group which is an Indiana-based DSO. They've got 11 locations that they've acquired via a combination of acquisitions and DeNovos and I'm excited to dive in and let them tell their story. So thanks, guys.
Speaker 2:Thanks for having us on.
Speaker 1:Okay, so yeah, for anybody who doesn't know what Ladd Dental is Dalton, do you want to just give us, like the origin story?
Speaker 2:Yeah, I'll give you the 30,000 foot view. So Dr John and Tisa Ladd formed Ladd Dental Group in Kokomo Indiana back in 1978. From there he really was early on to the DSO movement created a company called Signet Leadership that helped the practices that he wanted to bring on. So it was one of the first in the state to really set up a management company and kind of see that potential future With that. We were a historically only de novo-based model for the first eight offices. The last three we've done through an acquisition model but still find viability in both.
Speaker 2:One of the things Dr Ladd was very bullish on is our operational density is making sure when we grow we grow in condensed areas so we can synergize our operational team. We can synergize some of the staff, some of the equipment, some of the referrals. We vertically integrated a denture and partial lab. We have a specialty center. So really viewing how do we service North and Central Indiana patients as good as we can? The motto that Dr Ladd has really instilled in the company is treat the patient first and the money will follow and that's something that we've just been very that's been a guiding principle for us for the last almost 50 years.
Speaker 1:Go ahead. You said, yeah, 50 years is insane. When did you guys? Because it was obviously a private practice back then. When did you switch? Or when did they switch into the group practice, like multiple practice, acquisitions or de novos or ownership Great question.
Speaker 2:So Lab Dental Group of Greentown we then started in 1990. So 78 all the way up to 90, just operating out of one practice, brought in some associates first and then, once he filled up the Kokomo office which has 20 ops, once he got that building full, then he started looking to okay, how can we grow outside of this facility?
Speaker 1:Okay, and how long have you been with the company?
Speaker 2:I'm celebrating my eighth year of the company this year.
Speaker 1:Maybe tell yeah, how did you get associated with them?
Speaker 2:Yeah, so started with a more medical background. I sold spinal implants for a company called LDR Spine for about six years. Ultimately, zimmer Biomet liked the motion preservation device that we had. We had the two level approval so they ended up buying out the company. Zimmer Biomet had their own sales force and at the time my wife was in her third year of running Lab Dental Group.
Speaker 2:So Mary Ladd is my wife. Her parents are John and Tisa, so she's an attorney by background but has pretty much spent her professional career here at Lab Dental Group. She was looking for some help at the time, thought my background in medical would parlay over to dental, had a little bit of sales and marketing. That's what I graduated Ball State with, brought that resume over to the LADD team and on that one of the things I think that again it goes back to our operational density.
Speaker 2:Human capital is probably the most important thing in the industry having the right people in the right seats and that's where we've been unbelievably grateful to bring Brad on about two years ago. At this point he has a wealth of dental background, working at some of the large DSOs, growing through and accelerating a DSO called a media dent and has really been able to put a lot of actions in place, and to me that's where the magic happens. Everybody has good ideas. Everybody is able to talk a lot. Consistent action and consistent follow-up are the name of the game, and Brad is a maestro at that.
Speaker 1:Yeah, and like we were talking off camera. That's true across any business. It doesn't matter if you're dental or healthcare or selling shakes. There's so many parallels about running a good business. Operational density, I think, expands everything and it comes down to, yeah, like you said, execution. Brad, how did they rope you in? I'd love to hear your story. And maybe also on that, some of the things that they weren't doing at Ladd Dental that you've introduced to enhance this concept called operational density.
Speaker 5:Yeah, absolutely so.
Speaker 5:I've been in this industry for about 12 years now and I've been with Ladd Dental Group for two years.
Speaker 5:In July and Mary Ladd actually reached out to me I think it's a large, growing industry, but small enough where connections come full circle at any given point in time and so she reached out to me and actually pulled me on as a revenue cycle within the company and there was a need to clean up fee schedules, work through insurance carriers, partnering with training and a vast majority of those things, and I think I was able to do that. We were able to do that. Well, great company that was already set up, but, just like any company, sometimes there's a need for systems and processes, and so that's a lot of what we did right, identify the systems that were out and the systems and processes that needed to be put into play. We were able to organize different departments to help create a check and balance to do that, and so one of the big things that we did was curb insurance adjustments, and that's huge too, because we go off of, like most DSOs, like accrual-based accounting and so having the fee schedule set up correctly.
Speaker 1:You were already accrual-based accounting when you joined. They were yes, okay, yeah, I know that's a big Ken Coffin's been in the show. Transitioning from cash-based to accrual-based is totally necessary and totally a nightmare, but probably something you've dealt with. Were you spearheading that when you guys transitioned?
Speaker 2:Thankfully, I've always been able to stay out of finance. That's best for everybody, but I'm always at the Monday meetings. And yes, I'm always at the Monday meetings. And yes, I know that was not fun for the finance team to go from cash to accrual and there's trade-offs with everything. I know sometimes it's easier to go off of cash because you can't get over levered as easy that way, but it also then throws off a lot of different other metrics. Yeah, thankfully I'm out of finance, but I do know that was not a fun process.
Speaker 5:Yeah, yeah. So I think definitely things were going well, but there was an opportunity to implement systems and processes, and knowing what levers to pull to make that happen I think, just on past experiences has helped out really well, and at the core of it we talked about this it's about people, and so knowing how to get people in place, get the right people trained up so that they're equipped to do the job that they need to do, is extremely important, and so I think, along with operations and the experience, we were able to bring in a whole training platform and program to put in place to get these things rolled out.
Speaker 1:Okay, all right, let's back up a little bit. Maybe what DSOs were you involved with before coming into LAD?
Speaker 5:So I've worked with a DSO called Immediadent and Samson Dental Partners. I've worked with Heartland and a couple other small DSOs in the urgent care sector, which is what Immediadent was. I've also worked with a multi-specialty group here in Indianapolis and so a lot of the experience that I have has been in urgent care, urgent dental type care.
Speaker 1:So Immediadent that was, I know off camera we were talking. You helped grow that to 40 locations via DeNovo, right, yeah, we had.
Speaker 5:I think when I had left we were just at about 42, 43, 44 locations. We were in three different states Indiana, kentucky and Ohio and these offices they operated seven days a week, 12 hours a day and we saw walk-in patients had a comprehensive model that we focused on.
Speaker 1:Okay, what do you think was the biggest takeaway that you learned from there that you're able to apply coming over to LA? I'd like to ask that question about immediate and Samson.
Speaker 5:Yeah, samson was the dental practice or the management company or the parent to immediate dance. So they're intertwined for both of them with the media dense. Specifically, you have to get the right people in the right seats and you've got to get them trained so that everybody is aligned and rowing in the right direction. And, like I think Dalton had said earlier, the magic is really in the follow up to being persistent and consistent with the operations of any business. And so I think, when you look at that, it's being able to pinpoint the certain areas of need and take those and use those as you move forward.
Speaker 2:Yeah, I think through Brad and I's conversations too, one of the things that I've really appreciated because more of the urgent dental care is coming online because, as the fixed margins continue to compress, people are trying to figure out ways to get in front of that. If I open more days or more hours, maybe I cover my fixed expenses quicker and I think there's absolutely logic to that. However, you're also then doubling your amount of operating time, so you got to staff up more. There's more staff wages that go into that, go ahead, beautiful. So I think you're able to cover some of your fixed expenses quicker your rent payments, some of that, those things but your wages do go up and it's, in my opinion, hard enough to manage these things, sometimes 40 hours a week. Doing it 80 hours a week is a whole nother headache. Hearing some of Brad's experience on that because that is a little bit of a buzz model right now, at least in central Indiana, is getting into the kind of seven day a week emergency style setting.
Speaker 1:Yeah, brad, you mentioned get the right people on the right seats on the bus, and I hear that a lot, but it also is what's the right words? What does that mean exactly, like how do you know if they're what metrics to use to decide if they're the right person? And then, what metrics do you use to hold them accountable or drive the most kind of productivity out of them?
Speaker 5:Yeah, I think and that is a great question, right, I think, one that everybody wants. Just hire the best people right off the bat, life would be super easy, I think, one you look for someone to be personable. We talked about it. This is a people business and they're working with patients and teams every day. So you look for somebody to be personable and knowledgeable in this industry and what we're doing. So experience, I think, is good, but you can also hire people without experience.
Speaker 5:But I think, when you hire that person, having a training program that's set up to be able to help them learn the business and learn what we need to do and that's a big thing, that is an area of opportunity for any industry.
Speaker 5:But specifically this, just because we're dealing with insurance, we're dealing with patients, presenting treatment plans, collecting balances from patients, and so having a training program that's set up and can continue to foster the training for that team member is important, and I think that's a big thing that we focus on here. And so, as far as finding, like the KPIs or the metrics to tell if they're doing the job that we need, I think one would be can they take care of the patient when they come in? From an insurance standpoint. Are we getting the correct insurance plans attached? Are we getting the plans updated when they need to be updated, those type of things. There are so many different metrics that we can use to track that, but I think that the biggest one is can they acclimate with the team and support the doctor to help take care of patients?
Speaker 2:And to piggyback on that, Brad too, and something that Brad's helping us implement is, I think sometimes the better your processes can be, the less you rely on that individual, that certain individual. So that's been something that's a big push for us. We're far from perfect, but we are. 2025 is a big year for training for us, of making sure 30, 60, 90 day reviews are happening every time.
Speaker 1:And that's a traction thing.
Speaker 2:Oh, a hundred percent.
Speaker 1:Yeah, so many groups, I think. Anytime I've asked about a specific system on this podcast, I think everybody has said traction. You know what One person said something about? Kpi, like oh, okay, I like it was a KPI thing, like everybody. Do you guys have an integrator from traction?
Speaker 5:We yeah, so I've had experience with EOS in the past, so I've been implementing with the company and it's gone so far. I think it's a great operating system. I think it works really well up to about 150, 200 people, and then you might have to be creative with it, but it's done really well, just from streamlining certain processes that we want to in an accountability standpoint as well streamlining certain processes that we want to in an accountability standpoint as well.
Speaker 2:Yeah, agreed. Dr Ladd also loves the book Scaling Up, so that is what he really started the Ladd Dental Group based on the principles from Scaling Up. So that's another one. We've pivoted this past year to traction, but that was a guiding principle and guiding book.
Speaker 1:When was Scaling Up?
Speaker 2:written oh, it was a while ago. And Vern, I want to say the author's Vern something, but it's been too many moons at this point. But that, yeah, scaling up, I know Dr Ladd highly recommends.
Speaker 1:Okay, cool, so we'll ask each of you guys.
Speaker 5:But what do you think it takes to make a good leader? Maybe be able to openly communicate with people while holding people accountable at the same time and it's not an easy task. I think you wear many hats every single day and I think, at the core of it, you just have to treat people well, and you've got to be accountable yourself and be able to follow up on the things that need to be followed up on.
Speaker 2:Totally and just to me. I think there is no form of perfect leadership, but I think leadership by example, leadership without a title, I think those principles just are incredibly important. I think the more that you're going to be ego or title driven, the worse leadership characteristics you're going to have. I think when you put your office or your team first, you're naturally going to be a good leader.
Speaker 1:Yeah, it's interesting to see too how the culture swings a bit like. A couple of examples the it's Simon Sinek, right, like the NBA game. He talks a little bit. I just I read that book. I should say I listened to it, but very much about, yes, putting people first and like prioritizing the people in the mission above profits, because then profits actually follow like long-term, and so there's been instances in culture. It was a guy's, ge Jack Welch, right. The book like execution I think, and he fired 10% of the lowest performers every year.
Speaker 2:Yeah, yeah.
Speaker 1:But the interesting part was like that book got a lot of praise but it didn't really stand the test of time because it was all about just constantly aggressive, optimizing at the sake of the bottom dollar over everything else, and and so it's. It comes to being a good leader. It's hard. If you were a leader coming up during that time, you would have thought that was the best thing to do because that was where the culture was, and now it's shifted the other and then. But then it shifted too far the other way for a while there, because you had the twitter and you know the different offices in san francisco where it's yeah, play ping pong all day and free lunch and like you can come and it's like all about yeah just having a cool, relaxed company culture, like all the different amenities that google provided.
Speaker 1:and then it was just like it turns out, like they were totally draining the company, as we saw when elon cut everybody successfully. And then now it's almost like balancing. It's like we got to go back to take some of those principles from execution and apply them with the people's principles, so it's like there was a almost over. I don't know if a reluctant is too strong of a word to hold people accountable for what we say we're going to do, because the ideal situation is, yeah, put the right seats, put the right people in the right seats on the bus and let it go. I've done that a couple of times in my different businesses and I was way too much of a macro manager and it never went anywhere near according to expectations. So then I have to dive back in and then I became a micromanager because it didn't work out very well and it's you have to be able to hold, have care about people while holding authentic conversations. I don't know if you ever read the book Radical Candor.
Speaker 2:Oh, yeah, good one.
Speaker 1:Yeah, so you know it's you have to like you really care about these people, but you hold them accountable too. They're here to do a job Right and so, like you have to be able to talk to them directly about their performance.
Speaker 2:You have to find that balance and one of the things that I think is one of the scarier things in our industry are the Facebook groups, where it really gets into just a lot of negativity about the industry and it's always just and it's not just a job posting board, but it's hey, I want $30 an hour, where do I work?
Speaker 2:Or I'm tired of, or starting the job post out of, tired of working in a bad environment, just everything has an undertone negativity and I just think that's a really scary prism to look through, in particular, where commercial insurance hasn't risen their fee schedules for us since the 90s, so everybody thinks they're feeling inflation. Most businesses control their own pricing, so we're trying to really get buy-in when we're naturally going through a compression. So trying to find that balance that you're talking about Austin has been an incredibly difficult thing to do and we've had 4% unemployment as a country for the last 15 years. That's never happened in our history. So it's absolutely power to the labor right now. So finding said balance and accountability is the name of the game.
Speaker 1:Yeah, yeah, a hundred percent. Let's pivot a little bit, talking about the real estate. I know you guys like to buy the real estate when possible, so what's your reasoning for buying versus leasing?
Speaker 2:Yeah, like to control, like the long-term asset. I do think we're going to continue to experience inflation as we go forward. I love the dollar milkshake theory and I do think that's going to keep Explain that Brett Johnson and I'm going to botch this, but throw him on YouTube after this he has some really good presentations 20, 30 minutes but really just talks about global liquidity. There's way too much and at the end of the day, the US's straw is going to suck up all the global liquidity. Do we have too much debt? Yes, we do, but globally there's way too much debt and net. What's going to happen is all that liquidity is going to find itself here until we have a real kind of currency crisis.
Speaker 1:Okay, so then let me explain, or let me summarize, saying that, yes, we have a lot of debt, we're screwed, but everywhere else is screwed more. Therefore, investors with cash are actually going to be deploying it into the US, which is going to drive up asset prices, like real estate.
Speaker 2:Yes, because we're the safe haven. So when conflict continues to happen, we have more and more global wars Again. How the S&P 500 is still doing what it's doing blows my mind. But yeah, well not today. What's today, february 3rd oh my gosh.
Speaker 1:It's been a painful week really, but in general yeah, s&p is at $596,000. Spy is at $596,000. So, yeah, it's amazing To me.
Speaker 2:it scares me when Warren Buffett doesn't even feel comfortable buying something. When he's sitting on $400 billion of cash, I get a little concerned.
Speaker 1:Not enough to live off of, but it'll get you started.
Speaker 2:Yeah, exactly, exactly so, I think. To me, finding places to put our money that are going to ride the inflation up. To me, dentistry is always going to be here. You can't do dentistry from home.
Speaker 1:Can't get a tooth pulled virtually Exactly Until dentistry won't work.
Speaker 1:We need imaging, we need x-rays, we need cone beams Nobody's going to ever have one of those in their house, so I think dental offices Well the other issue is during COVID they've stopped developing retail at the same extent, and so you know now, yeah, there's a lack of it, and so the result is a lot of people are not able to open up new spaces that they wanted to. No-transcript. There's a lot of competition that we'll be getting online if the real estate was a lot cheaper. So when you look at it in a vacuum, the real estate it really sucks. But if you think about it macro term, for sure it's hard to know that we never know how many dogs that don't bark right Like they're not making noise. But there's for sure a positive impact on the amount of competition. So I guess that's kind of the silver lining of the whole thing.
Speaker 2:Agreed and same, with us going back to the labor discussion and the margin contraction. That is why the DSO movement is going to continue to accelerate. Now it makes managing the offices harder, but it's not a good thing, as hygienists now make $60 an hour on the same reimbursement from the nineties. Now that again, in my eight years I have almost seen every single role in our company double in terms of wages on the same reimbursement. I just to me that's going to drive. Brian Kalea, mark Costas, a lot of the DSO kind of gurus predict by 2030, 80% of the dental market will be DSOs because just these factors aren't changing. We're having more hygienists retire than graduate. I think it's projected 50% of dental assistants this year or next year are going to leave their office for another office. Turnover is crazy expensive. So it's just all of these factors I think are just driving said consolidation and then we'll see from a real estate standpoint. Yeah, the thing. This example really blew my mind. I'm curious to get your perspective on this.
Speaker 2:Austin so we built in Wabash. We had an office there in a strip center. We decided to build a brand new space for it. So we did a brand new build out, great office. We put ourself in there, thought we did a fair lease for ourselves, but we didn't charge ourselves quite enough rent. If we were to actually go around and sell that building that we built with a good what we thought lease was in there, we were going to lose $200,000.
Speaker 2:So that underwriting right there again to me is just crazy, and I think there's You'd have. You're going to adjust for that by increasing the rent you pay, but exactly now that cuts in your EBITDA. Yeah, amen, amen. So that's got to come from somewhere and that's where I think it's. The conversation's going to be really interesting, because our offices can't support more than $25 a square foot. We just don't have. We just we're not profitable enough for it. So then that really determines what you can do for the build out of your office. You better be really astute to make sure you build something in today's cost basis that's going to be able to underwrite at $22 a square foot.
Speaker 1:And in dentistry, with this many utilities I mean, yeah, we're looking at, we're building some new places, multi-tenant, to spread out the cost, to lower them. We're looking at rents in the fifties in some areas mid fifties.
Speaker 2:But our margins can't justify that Literally. If we were paying $50 a square foot, we would lose money in almost every practice we have.
Speaker 1:Yeah, yeah, it's tough, it's tough. So what's the strategy? Buying second generation spaces or what?
Speaker 2:Try and go in. What has been best for us is the dentist that's selling the practice, that doesn't really know how to sell the real estate. That's where it still makes sense for us.
Speaker 1:So, like the, problem we run into. It seems like the less sophisticated you are, the more you want for your real estate. That happens, yes.
Speaker 2:And those people we have to just stay away from. But the ones that really understand. Hey, I haven't put any money into this building for the last 10 years. I'm only paying $15 a square foot. I can only get this much for my building. And I think when you just try and be honest with them, some will get it, some won't. The ones that don't get it again to your point, they're not really sellers. So we then just have to look at the people that are willing to. But what I would do 10 out of 10 times. We bought a practice in Huntington last year, really wanted to be in that area, fits our operational density, had a dentist that was ready to go there and work in that. We really liked the practice the building was for sale also and got a really attractively priced building because the dentist was more so willing and wanted to get rid of the practice and didn't want to be the landlord. So it worked. That one really worked out for us.
Speaker 1:Great Brad. Anything that you want to talk about in closing before we get to our time here?
Speaker 5:No, I just I think that it's been great talking with you. I think mixing the real estate and the dental together is always fun to talk about. That, I think. Again, at the end of the day, I think there are a lot of different ways to work, whether it's in a private practice or a larger group or DSO, but I think it always comes back to the people and finding out how to build relationships with everybody so you can have honest conversations with them when you need to and also praise them when you need to, as well as important.
Speaker 1:Great. What's a good resource for people to reach out and learn more about what you guys are doing?
Speaker 3:Good question.
Speaker 2:You can reach out, I'll put my marketing hat on, so we push our YouTube.
Speaker 5:You can reach out to me on LinkedIn if you want to, or Dalton's got a few areas that you can reach out to him.
Speaker 2:Happy to answer any questions. Yeah, no, amen, we push the YouTube channel hard, so that's one of the ways. And for organic SEO, google owns most of the web, so our blog's through Google, our YouTube's through Google. We're on LinkedIn, so, yeah, any of those sites, we're pretty responsive.
Speaker 1:All right guys. That's great Thanks. So much Beautiful Thanks, Austin.