Navigating Financial Challenges and Opportunities in Dentistry with Dr Michael Miyasaki and Garrett Caldwell

Can you imagine a life where you conquer the financial challenges that plague your dental practice and instead enjoy a thriving, profitable business? Join us with dental industry stalwarts Dr Michael Miyasaki and Garrett Caldwell as we unravel the intricacies of managing the financial health of a dental practice, and how to pivot in the face of growing practice expenses and dwindling net incomes. We promise you an enlightening conversation as we navigate through the evolving landscape of dentistry, offering practical advice on expenses management and strategies to improve your bottom line. 

We're taking a deep dive into the real-world challenges that senior doctors face in running a successful dental practice. With our experts, we explore the necessity of understanding an income statement, and how it can be the lifeline of your practice's financial health. The need for postgraduate education, the trials of finding associates and the reality of paying them - all these are part of the dental practice landscape that we dissect in our conversation. But fret not as we also discuss potential solutions, laying the path for a successful dental business.

And what if your confidence in performing procedures could directly impact the profitability of your practice? Imagine the possibilities as we explore the world of hands-on learning programs in the dental industry - the advantages, the challenges, and the immense opportunities that await. With Dr Miyasaki and Caldwell, we delve into the hows and whys of gaining essential skills, the advantages of hands-on programs, and the link between your confidence in performing dental procedures and the profitability of your practice. Get ready for a game-changing conversation!

Transcript

Speaker 1: 0:17

I'm Dr Michael Miyasaki and I'm joined here by Garrett Caldwell Garrett, thank you for making the time to join us as a group and what we're doing is for those that are either watching or listening to this or maybe even reading a transcript, is we want to create content. Garrett's got a wealth of business information. He understands the industry he's been involved in the Dell industry for decades and I've been a dentist, so I've been on the clinical side for decades and we've both been involved with dental education for decades and so what we wanted to do is we wanted to bring kind of the wisdom If you'll call it wisdom maybe it's just experience from hard knocks but kind of kind of bring this information to our colleagues at our clinicians. And dentistry today has changed. So I've been a dentist now for 36 years and Garrett's been in the dental field for the same amount, just not kind of on the opposite side and from a laboratory aside.

Speaker 1: 1:19

But we wanted to bring things together for you because we understand that dentistry in the last three decades has changed probably more than it ever did in the century before, and there's been some good things that have happened and maybe some not so good things. Dentistry is really changing. We're going corporate because of that. The competition between practices has changed, so we want to give you some insight. So, anyway, not to not to make this too long as an introduction, what I'd like to do is maybe, garrett, start off with just your experience really quick, and then we can talk about how, how long we've known each other and how we kind of came together, and then we can break out into kind of the more formal part of this interview. So a little bit of your background.

Speaker 2: 2:06

Yeah, sure, mike. Thanks so well Mike and I have known each other for, believe it or not, it's been over 30 years. I was nine. I was involved with founding frontier dental laboratory back in the early 90s when what we used to turn the aesthetic revolution pre-aesthetic of revolution was just starting to happen and there was a big paradigm shift in dentistry.

Speaker 2: 2:33

From 1992 until currently, I've been fortunate to be involved in postgraduate education, first working with LVI and Mike as the director and one of the instructors at LVI back in the 90s, and then with David Hornbrook at PAC Live at the University of the Pacific, and then with Larry Rosenthal at aesthetic advantage in New York and then teaching around the country with Larry, eventually for Larry and David for close to 10 years, close to a decade, and then over in Europe and London I used to be a dental hospital with aesthetic advantage and then, of course, managing and growing a dental laboratory and learning how to do that and how to position the dental laboratory as something rather than doing just restorations.

Speaker 2: 3:19

So my background is business development and I spent a lot of my time trying to work more closely with the doctors and their practices, as opposed to just doing restorative dentistry and working on pricing and just doing a better, cheaper crown. I've been fortunate and blessed to have worked with some of the key influencers in the country which are currently doctors I'm currently working with now. In 2006, we sold our company to another group and I worked for four or five years there and broke off and we started a new laboratory group, the Pacific aesthetic laboratory group, our own hands-on programs, the Pacific aesthetic continuum, and we're currently doing postgraduate education along with several of the key influencers around the country, including Dr Nisaki. So that's my background.

Speaker 1: 4:11

And I think one of the things just to clarify that I capped you for this as far as your business insights is that not only have you been involved on the business side of a dental lab where, again, I think we all appreciate how difficult that can be because the margins are thin and you've really got to create an efficient business there but you also help and consult with dentists and you help them. You're looking at their numbers and you gave them the advice and showing them how to improve their practices. So, as we go through this, I want anybody that could be reading, listening or watching this program to understand that, yeah, you've got a very diverse background, but you do work with dentists and you understand their pains, their financial pains, and that involves family and spouses and everything that goes along with that. So you kind of are a therapist, a consultant and a client.

Speaker 2: 4:59

We do, we do.

Speaker 1: 5:00

Yeah.

Speaker 2: 5:01

Yeah, thanks, mike. Yeah, we spend a lot of our time working with our client. Our doctors are our clients and they're not just clients that we make T4, that we find that the biggest help we can really be for them is to help them grow their practice, and so business analytics is something that we have a deep background in and we spend a lot of our time. We offer those services to our doctors and we spend a lot of time intimately with our doctors making sure that their practices are stable and working with them and consulting.

Speaker 1: 5:28

That's great. We're starting to see a greater segmentation of the dental market and there was a report that came out in August that the ADA put out. It was an HPI report and just to kind of kind of set the stage for where this series of interviews is going to go. They just said the ADA published this in August and it said after an increase in 2021, as dentistry recovered from the COVID-19 pandemic, the average annual net income of general dentists in private practice declined 7% in 2022, due in part to the increasing practice expenses, according to the data from the ADA survey of dental practices. So over the past decade, practice revenues have increased by 2.2% Again, that's over the last past decade. Well, practice expenses increased by 7.7% and basically it says taking together the latest data shows that the general practitioner dentists are busier than ever and are working longer hours post-pandemic. But at the same time, the data suggests the continued margin compression that's between profitability and expenses, or revenues and expenses, so decreasing profitability post-pandemic that we're working longer hours post-pandemic and because that compression and the dental sector, revenues are stagnating and expenses keep rising. So I look at this and I go, and that's one of the reasons that I really wanted to do something like this is because you've got the background and hopefully we'll do interviews with other clinicians that are, I want to say, struggling, because I think there's a lot of dentists that are struggling out there. So I don't want to like had it, make it sound nicer than it is, but maybe we can bring some information to those that are involved with this to make their lives better, because I've also seen reports have come out in the last six months saying that depression among dentists has gone up and depression among dental students has gone up.

Speaker 1: 7:39

And you and I were involved with some dental students and with some dentists and as we went around and asked the dental students, what are you most concerned about? They weren't talking about I'm concerned about being able to extract a third molar or do a perfect root canal. 99% of the statements that gave us was I'm concerned about paying off my debt, and so, again, the focus is financial and these are dental students. And then when you go around the room talking to the dentist, as we talked about, a lot of them are a little burned out because they're working harder and making less and they're trying to figure out how do they get out of dentistry. So I look at it.

Speaker 1: 8:21

I come from a different perspective. I think I've been practicing out for 36 years and I hope to go. I tell people I hope to go another 24 to make it to an even 60. I enjoy going to work, have fun going to work, and I think that's what's going to keep me young, not age me. So I don't think it'll kill me. So I think what we hope to do is we really hope to focus on some positive aspects and make some suggestions that will help help the doctor succeed. So now, in saying that, let's start off with you, what do you think is from what you see, because you deal with a lot of different docs as far as interacting with them from a lab perspective. You interact with hundreds of docs when it comes to the postgraduate education that you offer and then those that you consult with to help out with the practices. What are your words, what are you seeing and what are the words of advice?

Speaker 2: 9:32

Well, yeah, the solutions are what's interesting, but what we're seeing is dental students that clearly are nervous about what they're going to do after they graduate. They're carrying large debt load. Starting from from that group. First, they're carrying large debt load, they're facing private practice that is clearly different than it was even a decade ago, and we'll talk a little bit about that, which is part of the answer to your question, which is how do you make money in a dental practice and there's not enough hours in the day to do restorative dentistry? If you're doing capitation, there's not enough revenue to cover your expenses. So the answers are here. The answers are pretty clear to me and they're pretty predictable to me, but clearly the dental students are, I think. I think they should be afraid. I think they should be afraid because they're asking legitimate questions.

Speaker 2: 10:32

The senior docs can have a very successful practice plus 1.5 million or above and what we're seeing is the majority of them are still not as profitable as they think they need to be. They're working four days a week. The majority, and some now are introducing a fifth day to try something new and new right now seems to be sleep-oriented, and we'll take our day off and we'll just add more, we'll add more overhead and we'll add more time to learn that discipline and hopefully, three or four years down the road, it'll pay off. So there's also a clear misunderstanding from a lot of our doctors, honestly, about what we call cash on cash return, investing time and investing money to create a solution. But how long is that going to take and is that a real solution? So yeah, mike, there's a lot of questions that need to be answered for our doctors and clearly I think there's four elements to this, which is going into the practice and making sure that every procedure that you're doing is profitable, and that's challenging. If you're not a fee for service or independent of insurance, you're going to be limited in that. So that's one discussion point.

Speaker 2: 11:54

The second is for our doctors that are senior docs. They're doctors who've been practicing for seven years or more in an independent practice, understanding their numbers, understanding an income statement, how to apply the income statement to their practice so that they understand the business aspects and how to apply those to their practice. But to kind of push it all back, really what we see is the practices. I guess, statistically, the practices that I see that are successful are those practices that have multi-disciplinary approach to their practice. So they're doing aesthetics, they're doing restorative, they're doing ortho, they're doing endo. They're doing all of that within their practice and they're doing it in a way that is applied with the business blueprint so they understand what they're doing and why they're doing it. And for those doctors to get to that point they have to do postgraduate education. They have to somehow get education. So the docs that we see that are successful are clearly doctors that have spent a significant amount of time. Our doctors, for example, our laboratories, spend a lot of time at the PAC. Or the doctors that work with us that haven't been in our program have been with me in programs like with David Hornbrook's program at PAC Live or Larry's program with aesthetic advantage. Those doctors that we still maintain in our lab, in our clientele, in our labs, about 90% of those doctors have done through postgraduate education and are able to apply that and have successful practices.

Speaker 2: 13:28

The interesting fact is of those doctors they're not all on necessarily happy. A lot of those doctors are still struggling with not making the money they want to make, working too hard and not seeing the revenues that they want to see because they're not understanding the operations of their practice. So it's a challenge. It's definitely a challenge out there and I think you sort of identified all of them. I think the solutions are being able to A understand what an income statement is and how to manage your business using an income statement, understanding your numbers and what those mean. And it's very simple, it's not very difficult. We're not talking about taking a master's program in business. We're just talking about the fundamentals of understanding an income statement and understanding your expenses and your revenues. What's making money, what's not making money, where are you spending time or you shouldn't be spending time understanding the revenues that are coming in and how you're being paid for those and whether you should still be pushing those for marketing something different. And then, clearly, how do you get the experience to apply those multidisciplinary practice to your practice? Well, those are very services to your practice and that's challenging. And so how do you do that? Where do you go for that? How much time does it take to do that For our senior doctors? Finally, because a lot of that is challenging, we're making good money, we're doing high over it, we're doing high gross volumes, but we're not making as much money as we were before.

Speaker 2: 15:05

I want to exit the. How do I find an associate? 100%. The docs out there, the associates out there right now, they want a salary, they don't want to buy into a practice. And probably the biggest, one of the biggest challenges I hear every single day is Derek, help me find an associate. How do I find an associate? What do I pay them? How do you pay an associate 30% when you're only making 33% and you're collecting 97% or you're discounting 30%? So those questions there's a lot of buttons to push, but really those are the questions that really need to be answered. For the senior docs, for the clinicians that are just coming out of school or still in a DDSO environment. Clearly, very simply, this is the sixth show that they need to be in postgraduate education, they need to be doing multi-disciplinary medicine and they need to be able to learn that.

Speaker 1: 16:00

Yeah, absolutely I think. Yeah, I think you made some really great points and if you are a DSO owner and you want to be more profitable, I think you want to have those multi-disciplinary docs working for you so that they could do some of the higher margin services for your business. But I think you're also right going back just real quick and then we'll go back to you, because everything that you brought up I want to learn more about. So, yeah, like I said, this is going to be about a 24 hour course, I think, once I get it all edited down. But we were talking to Dell students about a month ago and I told them I said when I go out and I lecture almost every week yesterday I was talking about endodontics. A week before that I was in Chicago talking about occlusion. The week before that I was talking about implants, because I really do believe in that multi-disciplinary approach, even for myself.

Speaker 1: 16:48

But I have Dell students that come up and they've paid that $500,000 of tuition for, say, while they're in dental school and they'll come up to me and go how come I don't know everything? Like, why am I going to courses now when I should know everything? Because I paid a half a million dollars. And I look at the Dell students and I ask them well, did you get your license? And they go yeah, I got my license. I said that's what the responsibility of the school really was to be sure that you got your license. And now it's a post-graduate education that you're going to attend. That's really going to make you the money, right? So you know, I think in that one of the slides I showed when you and I lectured to the students and the doctors, I said your dental school education will make you a living, but the post-graduate education is going to make you a fortune. You know, that's really what's going to?

Speaker 1: 17:33

differentiate you from everybody else. So if you want to, you know, just make a living and kind of have more of a stressful life because you're barely making it, just take that dental school education and don't go any further. But if you really want to, you know, prosper like you see some docs doing that, then, like you said, the docs that you see are the most successful are the ones that have taken that post-graduate education. And I'm going to jump back to you. But I just want to make one more point as a question is you know, when I was going through all this, it was 30 years ago, 25 years ago, and we were doing a lot of post-graduate education and back then it used to cost a lot of money, we weren't doing all this online education. So I would spend, you know, maybe $100,000 to go through aesthetic training and occlusion training and get through all that, and probably spend at least $100,000 with that.

Speaker 1: 18:23

Today, in today's environment, we find that you don't have to do that and maybe, before we jump into all that great advice that you kind of alluded to today, through what the core, what the dental lab is doing, and what the PAC is doing, the Pacific Set Continuum it's much more affordable Now you know you don't have to travel out of town and take a patient and all that. What we're trying to do right now is try to launch just more of a study club format and try to get as much of this information to our colleagues that we can without them having to spend $100,000, which I think is gonna help them grow, and it'll be mutually beneficial. Do you wanna say anything about that and what the offerings are?

Speaker 2: 19:07

that you see, the PAC and the core offering, maybe in the future, I know you've probably talked about it, but I think yeah, we talked about it, mike, and I think we both agreed that. You know it's difficult now. When we started doing education, our courses were, I think, above $8,000 per segment. I think you needed to do a minimum of three segments to be able to get some confidence, to be able to practice that. A lot of those doctors we taught continue on in the program until you're good enough to teach it. And when you're good enough to teach it you don't have to teach it, but you 100% will apply it. We had a saying that a mind once expanded never goes back, and clearly the only way you can get more knowledge and more confidence is being around people who are doing it. So what we talked about with regards to our hands-on programs was offering two opportunities. One, come in work with us, do the lecture. Our programs are a one day of lecture, one day of hands-on live patient where you work with an instructor and a patient and yourself. So the instructor will work with you in prep a case, temper, a case. We'll come back four weeks later, three weeks later, and we'll remove those temporaries, we'll put in the finals. But, more importantly, you'll be able to watch five or six other cases besides doing your own, and that's critical. How do you get that mileage? How do you see four or five? Some doctors won't see that in two or three years in their practice. So that's one element. Or, if you're not comfortable or you're not sure, come in and observe. Come in and watch us prep a case, take the lecture for the day, watch us prep a case, check out four. If I have other cases, get excited. You will get excited about it and then take the course yourself, and I think that's where we're at now.

Speaker 2: 20:52

We're not so concerned with charging the doctors. Now we are very confident that the laboratory is willing to provide a scholarship to the doctors that are willing to commit for the entire program. We're no longer going to accept 20 or 30 patients. We're going to do six to eight docs. That's our max. We're going to keep them intimate and we're going to invite six to eight other docs to observe and I think with that process you'll be able to see more dentistry in one four week period that you might see in three or four years in your practice.

Speaker 2: 21:25

More importantly, at the same time dentistry is a lonely business, so you'll be able to meet colleagues that are doing what you want to do. Colleagues that have the same struggles and challenges that you have. Work directly with a highly qualified laboratory technician who can teach you far more than many of the doctors can ever teach you, because they have to take the cases that we're preparing and make those things look good but also fit. And how do you do that? How do you prep the tooth to get the aesthetic result or even get the clinical result you're looking for? So spending two or three or four days, 30 hours, with a technician, a highly qualified technician, is a huge learning experience in and of itself.

Speaker 2: 22:07

And then you can ask me and talk to me I'm in the program, what are the challenges you're having in your practice, and do a little bit of consulting and then potentially talk later after the program about spending some time together. So those are the advantages of the PAC and the hands-on program and the advantage of working with Core Dental Lab who's willing to put the finances out there available for these scholarships to do the program. So again, we have many senior docs, mike. I would say 50, 50. 50% of our docs have been practicing for five years or less and 50 for 20 years or more. And it's amazing how the light bulb turns back on when you get back around people that are doing it and doing it the way you answering the questions you've been asking yourself. So that's the advantage to the program, I think, for the doctors that are interested.

Speaker 1: 22:58

Yeah, no, that's great, okay. So now what we've done is we've kind of set the foundation for where we're going. So we've got the background, we've got the educational offering. We really wanna be able to help our colleagues. So let's go back to some of the things that you mentioned. I've got all my ideas that are running through my head right now. There too, you wanna hit the first one. You said we should know that the procedures that we're doing in our office are actually gonna be, I guess, profitable. And what do you mean by that? How do we know? As a clinician, we have our fee schedules. We kind of feel like they're set. We don't have a lot of control because the insurance companies have set that. And I'll tell you, in one of the programs that we do, or a segment that we do, we'll talk about dropping insurance. Because what our office has done is we've dropped insurance. And just to set that. Because one of the things that frustrates me is when I go out, then I talk to my colleagues and I go. I can't drop insurance and I go. Well, you can't really afford to be with insurance either.

Speaker 1: 24:04

When we dropped insurance, it's been in the last five years. I've done it twice. We did it once about 15 years ago when I was practicing Sacramento. Then I left to teach and when I came back we were bought back into a Delta practice. We had to go back through the pain of dropping Delta. But when we dropped it this last time, we ran the stats and over 65% of our revenue was from Delta. That being, in Sacramento, california, we have all the state federal workers. It's highly Delta-weight and so more than 65% of our revenue was from Delta.

Speaker 1: 24:35

And yet we chose to drop Delta. And one of the things I explained to my team, because we had done it before, is that there's a difference between activity and profitability. Meaning I told them I said our schedule was booked and we were seven columns across every hour. Every 10 minutes set unit was booked. And I said but we're paying our patients to show up in our office because I think what you're saying, it wasn't profitable. And so when we dropped Delta and I tell patients we accept Delta, it's just we're not contracted with Delta what I did is I told my team I go, you're not gonna, do not panic, you're gonna see that our activity will drop, but the profitability will either stay the same or go up. And it's just a. It's just a business thing that you have to understand. I mean the codec studies, always the one that people reference. But from a business perspective, what do you say to that?

Speaker 2: 25:33

Well, I think the first thing a doc needs to do is have a vision of what he or she wants their practice to be. It starts with that, and that's something that I see. Pretty much every single doctor I consult with has to take a big step back and say this is what I want to do, these are the powers I want to work, this is how I want to live my life, this is the time I want to spend in my practice, this is the time I want to spend with my family, or I want to ski for the winter time in Aspen. I want to take three months off. What is the vision for the practice? So it starts with that. Okay, of, certainly it starts with a blueprint, a financial blueprint. So the fundamentals. The second thing is we would blueprint out the practice, the fixed expenses for the practice, and the current revenues and the profitability of the current revenues. So we have a good understanding of where we're at today. So we know where we want to go and we know where we're at today. Changing the way a practice runs starts with the doctor and is carried with the team, so clearly, the team has to be on the same page as the doctor and those changes can come incrementally, just like a full mouth case doesn't have to be done at one time, it can be done over three or four years.

Speaker 2: 27:00

Changing a practice starts with understanding what you're doing, understanding what you have to work with, understanding where you're going, where you want to go, and then to cut to the chase it's gonna be clearly to introduce or to understand the restorative processes that you're doing, what you should be spending time on. That makes you actually more money for a share time hour. So if we do an aesthetic case, it takes us an hour to prep and temporize. So we block two hours for that and we do a $22,000 10-unit anterior case as an example. I don't wanna just focus on interior aesthetics, but if we do that and we have a lab bill of $4,000, clearly you're gonna see that that's $16,000 or $17,000 in that two hour time period is a much greater profitability than doing a crown or two and checking three hygiene cases. So understanding to put that down on paper allows us to create targets. So we wanna do to start off slowly. We might wanna try to do one aesthetic case a month and then that'll drive a blueprint on how are we gonna get that aesthetic case. So we take a step back.

Speaker 2: 28:19

Do you have the skills to do an aesthetic case? Do you have the confidence to talk about it with the patient? And I think I wanna stop there, because the biggest thing you need to be able to do today is to be confident in yourself and without having the skill set to deliver what you're talking about, the doctors will never talk about it and never introduce it into their practice. So, talking to patients about what you can do with them and Mike, you mentioned, you mentioned what kind of work do we need to do? We need to be able to look into a patient's mouth and see the entire mouth, not just see a single tooth. And probably the biggest thing that I see happen to doctors that come into the hands-on programs is, instead of opening them up and seeing a broken tooth or a fractured tooth or a cavity, they look in there and go, wow, there's a word that we wanna start here right being able to exude that confidence and that professional with your patient that you're not just there to fix a tooth. But do you know what I can do here? Are you aware, are you happy with your smile? What would you change? Here's what I can do for you. If you can begin that communication with your patient, you'll open a huge door for profitability within the practice. So having the confidence, knowing in yourself that you're able to do that work, seeing the work clearly, is gonna be the first step. So if you're not confident in seeing the work, if you're not seeing all that work in there, you probably don't have the skillset to be able to do the work, and then you're certainly never going to what we call prep and pray.

Speaker 2: 30:08

Docs will not begin a procedure that they're not confident in finishing. So understanding profitability is one thing. Sure, we know doing your own endo and doing your own canal or doing your own ortho or doing those are much more profitable than just doing daily dentistry. But you have to be confident talking about it and prescribing it. And then you have to fulfill that goal that the patient has set, that you've set for the patient. You have to be able to fulfill that.

Speaker 2: 30:37

And so the first step is does the doctor have the skills to be able to clearly talk to the patients about the potential, how that doctor can help the patient? And if they don't, they need to get those skills. We can go in and we can identify what needs to be fixed and what we should be doing and how we can change. But if the doctor's not comfortable applying those changes, those different procedures, then we need to go back to school. Okay, so we can clean the practice up, we can keep it profitable, we can set a strategy and set a goal. We can apply the most fundamental postgraduate education that'll give them quick results, leading all the way up to the point where they can get rid of, at a certain point in time, insurance because, really what's fantastic is the freedom that having that multidisciplinary confidence will give you in your practice.

Speaker 2: 31:36

You don't need to be seeing seven or 10 patients a day. You can see three or four patients a day. Do the kind of dentistry you wanna do. Bring an associate in, develop an associate under you with your skills, to see your regular patients and have the kind of practice that gives you the enjoyment and the profitability that you're looking for.