How Private Practice Owners Are Fighting Inflation With Group-Level Leverage with Jeff Cellucci

Rising costs don’t have to automatically mean less profit. If your supply spend is sitting around 7–8%, this episode will show you how your practice can get group-level pricing and support without selling or partnering with a DSO.

Jeff Cellucci of MB2 Dental introduces Carabelli Club as an option for people who want all the benefits of a group without the commitment. That means group-level pricing, vetted vendors, and a simpler way to order everything your practice needs!

Topics discussed:

• How dentistry and the DSO space has changed
• Why MB2 Dental’s partnership model differs from traditional groups
• The benefits of joining a DPO like MB2 Dental
• What Carabelli Club offers practice owners
• How you can reach 5% supply spend or less
• “Same-store” growth and why it matters

Sign up for Carabelli Club today with code HEROES26 to get 4 FREE MONTHS with your membership! https://www.carabelliclub.com/

This episode was produced by Podcast Boutique https://www.podcastboutique.com

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Transcript

Rising Costs Hit Private Practices

Paul Etchison 1:55

If you're a private practice owner right now, it might feel like every expense is creeping up at the same time. Supplies, labs, equipment, all the subscriptions that you have, and then you stack staffing challenges on top of that, and it can get hard. And even when the production is solid, it can still feel like profit is getting squeezed for reasons that are completely outside of your control. So today, we're going to talk about something you can control, getting better deals on most of the expenses that you experience as a practice. And this is how private practice owners can fight inflation, get group level pricing, and make smarter vendor decisions. The podcast for practice owners who want to work fewer clinical days, increase profits, and build a team-driven practice that runs without you being the bottleneck. I'm your host, Dr. Paul Edison. I'm the author of two books on dental practice management, a dental coach, and the owner of a nearly $6 million practice in the south suburbs of Chicago. And today I am sitting down with Jeff Salucci from MB2 Dental, and we're going to break down what's changing in dentistry right now, especially on the supply and lab side and how their new GPO, Carabelli Club, is helping private practice owners get the benefits of group level pricing without joining a group. And if you want to get the dental practice heroes deal, use the code in the show notes or use the code HEROS26. When you sign up for Carabelli Club, it'll get you a great deal and you'll be getting all the same benefits and discounts. All right, are you ready? Let's jump in. All right, Jeff, so happy to have you on the podcast today. I always love we got to hang out in Chicago recently. And before we get into the weeds, I'd love if we could just zoom out a little bit and love to hear from your perspective. What are you seeing that are the biggest challenges that private practice owners are facing right now in dentistry?

Jeff Cellucci 3:49

Yeah, Scottish, and great, great to see you as well. Always enjoy uh Gibson's my favorite steakhouse there in Chicago. Yeah, it's great. Now, in terms of challenges, there's no shortage of them. Um I think we all recognize the staffing challenge that everyone's up against. But I would say the area where I probably spend more of my time is is the well on the supply and lab side of things, that whole procurement world. I think it's continuing to get more and more challenging at the private practice level. Uh we've seen, gosh, just in the last several months, the tariff increase that's really disrupted a lot of that supply space. But just in general, I think the inflationary pressures that that we see, a lot of that's getting passed on to the private practice in the way of the supply and lab front. And so that's definitely an area that we are staying very close to. Um we've seen changes in that space with uh different technology to help address that. But it's a constant battle for sure.

Paul Etchison 4:38

Yeah, it's been a ton of changes in just everything in the past two years, I guess. It's been a very turbulent time, at least in my career being 16 years now. I mean, I started practicing right coming out of like the 2007 housing crisis. And, you know, I was right on the butt end of that. You know, I think I was coming out of that in 2009 when I graduated, but this is the most disruptive period of my career, you know, COVID followed by all this stuff. Now, as far as like MB2 being part of the DSO space, and I know we don't like to say DSO, the MB2 likes to say DPO, like a dental partnership organization, because it's a little bit different. I'd love to get into that. But like what has changed as far as like the DSO space? Because that's been a really a lot of things happening there as well in the past two years.

Speaker 5:22

Yeah, absolutely. There's been certainly a surge of new groups forming over the last several years. There was certainly a rush there of private equity funding and so forth coming into the space. I think one thing that we've seen in a positive way is that a lot of the newer groups that have formed have been more uh that partnership model, uh, similar to the MB2 model, right? We were the first ones to create that JV structure, that dental partnership organization. And so I think it's been great that we've seen more people adopting that approach than some of the traditional models. Because again, we have this belief, Dr. V created this, right, with this belief that it's about preserving private practice, but also getting the benefits that come with scale. We've seen it's challenging to have corporately run models. There can be benefits there, right? But at the end of the day, it's it's all about doctor alignment. And so those groups that are able to align with their doctors and then ultimately provide value so they can achieve that same store growth. I mean, those are the two key components to the groups that are going to be successful.

MB2’s Partnership Model And Culture

Paul Etchison 6:20

I think it's interesting because I partnered up with MB2 right at the end of 2020. And I remember just being on Facebook and everybody saying, the villains that are groups. They're so so villainous. And I was always on there defending, and I'm like, not all groups, not all groups. But the longer that I spent making that conversation, because I really felt like MB2 was different, the more I realized that MB2 was very different in its way of running, and that I started to understand where this like DSOs are the villains talk came from from looking at all these different groups. And now you mentioned that there's this different structure that a lot of people are following MB2's lead. And I think it's because MB2 has been so successful versus a lot of the other groups, and it's the foundational things that sets it up. That would be like for listeners, if you're ever shopping around to partner with groups, they're all different. There's a lot of differences, and there are some that are just not in the best interest of the doctors. But I partnered with MB2 because it felt right for me. It felt like the guys were like normal guys. I felt like I talked to you, very honest conversations, and it just felt like the right move for me. But what makes that structure so different from the other groups when I think a lot of time we were just saying we could just package all these DS, these groups together and it makes creates value out of thin air.

Speaker 7:28

Yeah, absolutely. They're not not all groups are created equally, that that's for sure. And sometimes, yes, you know, we follow the message boards as well. And sometimes we're brought down with some of those comments. But the reality is a lot of times we actually agree with a lot of the sentiments that are out there in terms of this idea of kind of a dock in a box or taking away that autonomy. And so we're we kind of laugh because we're like, we actually agree. And that's why we've created, and Dr. V created this model to basically oppose that and allow you to keep the autonomy, allow you to keep preserving what makes a private practice so great. And so I think when you talk about the differences, I mean, I mentioned groups following that model, the JV structure, the, you know, the core of equity at the practice level as well as the parent company. And it's you can envision what that might look like. But how do you actually make that work? How do you operationalize that? How do you build that into the culture and the DNA? And I think most people look at MB2 and they've they've seen we've had a lot of growth in recent years, right? The last what, five years or so? We've we're now over 800 practices. But what most people don't realize is the first 10 years was Dr. V and his partners just essentially forming a co-op to say, hey, why don't we band together and you can run your practice and I'll run mine and we'll share in these services and we can go compete with the insurance companies and the big suppliers of the world. And so it was never designed for private equity or designed to be where it is today. And I think that's fundamentally different, right, than groups that have been formed in more recent years with an investment thesis in mind, right? The investment thesis was simply let's go band together because we can do better together. And we know that, you know, there's power and scale, but we know that the ownership is what makes the dentistry great. And we know that care is better when doctors have ownership and stake in that practice and that success of that practice. You care more, you deliver better care to your patients. And so I think when you talk about what is the difference, it's all that history, right? It's building a culture over 10 years and building infrastructure of what our doctors needed, right? We didn't go and build first, right, and then try to go find doctors or partners. We built as we went based on the needs of our practices.

Paul Etchison 9:39

You know, what would you say to like say a doctor is like saying, I don't understand why I would partner or why I wouldn't partner. And I'd love if you could talk about how a lot of people will join a group to exit. But I mean, as far as I've been part of MB2, I don't see, I don't think I've seen anyone exit. I mean, all the partners are still there. Talk about that difference.

Why Doctors Join Or Don’t

Speaker 9:59

Yeah. I mean, and again, I think what makes it great is all of our partners all join for different reasons. And yes, someone who's calling, right, who's looking at an exit strategy, uh, which naturally everyone needs to think about at some point. We're not the best fit for a doctor who says, look, I'm ready to hand over the keys, I'm ready to retire. There's other groups that will come in and buy those practices and put a new owner in place. And that's great. There's a place for those, right? In our model, it's built around having an owner there. So generally, I'd say that exit is not a reason to join us. Granted, we do have we have had doctors that have retired. Gosh, almost a quarter of our owners are actually started as associates. And so they became owners, you know, through their existing practices. So we have had doctors retire, which is natural. But the reasons vary, though, right? Some are more administrative in nature, right? I was talking to a doctor just today who's just getting burned out on going home and dealing with payroll and things like that in their evening and time away from the family, wanted to be able to go run her practice, take care of her patients and her team, but be able to also have the balance when she got home to not have to think about some of the business functions around it. Sometimes it's growth-oriented, right? I've been wanting to open that second, third location. I've been wanting to add more specialty in-house, and I just haven't had the bandwidth to do it. You know, I can't take my eye off of my existing practice and go and and focus on the business as well. Sometimes it's the, like I said, those headwinds you face from the payers and just looking for that extra support, you know, areas where we can find efficiencies, right? Of, you know, the thing, simple things like reducing that supply and lab spend or the benefits costs, just looking for opportunities there. So it there's really a ton of different reasons, even the community aspect, right? Dentistry can be isolating. And oftentimes, if you're especially if you're a solo practitioner there, you don't have that community aspect. And so we always say that's one of the, I don't know, probably the most undervalued pieces that doctors realize when they join is wow, I'm part of a community of over 800 owners. I can actually share ideas. You know, maybe I'm on a dental forum or something or a study club. But now I actually have 800 doctors that are invested in each other. And so we really are going to focus on how do we help each other out. But yeah, I mean, there's there's a lot of different reasons. And and sometimes when we talk to doctors, again, it's just the timing isn't right for them, which is fine. We always say the best partners that that join us are the ones that aren't backed up against a wall, right? They don't need to retire. They don't need to do something. It's because they've made a decision that this is the right move for them in their career personally and professionally or financially for their long-term financial security, maybe as well.

Paul Etchison 13:54

So I think it's a great uh segue into if it's not the right timing for a doctor. How can I mean you've had now have a product that you're offering to private practice owners that give them a lot of the benefits of being part of a group without actually being part of a group. Talk about that.

Speaker 14:10

Yeah, that's you know, one of the things we're most excited about right now is uh Carabelli Club. That's our, like I said, our newest program for private practice owners. And this whole concept was born out of the realization that we're talking to two to three thousand dentists a year, right? Inbound calls that we receive from traffic to our website to a broker or to a referral from an existing partner. And what we found in going through the data was that we only partner with about 3% of those doctors, right? And so we realized that there's still a lot we can do to help these practices, right? Just the same reason MB2 was created of helping private practice get the benefits that come with a group, we realized we have the resources, the relationships with vendors, the knowledge base of what our doctors need and want and what makes them successful. And we said, how can we extend that to the private practice? And so that was where Carabelli was was born. You know, it's a program where we tap into over, gosh, I think over 80 vendors that we have now, same vendors that MB2 is working with, but we're able to leverage those that we already know are quality vendors, quality products, and then go out and secure competitive pricing with that to allow these docs to get pricing that they would never achieve on their own, uh, or technology vetting that technology, right? There's so many different vendors doing the same things right now, and there's tons of options, which is great, but it's it's hard oftentimes to figure out who is doing the right thing. Which one of these should I actually work with? They're all offering this, you know, AI is it was talked about all the time now. Well, who's the best one? Right. And so we're able to use our knowledge base from our 800 partners to say, look, here's what we know that seems to be the best options out there. You couple that with education and training, right? We already offer tons in the way of CE, both virtually, in person, you know, free or certainly discounted. And we said, why couldn't we just extend that to these private practices? We're already doing this. So it's a great opportunity to really open up our doors and say, here, you know, if it's going to benefit your practice, that's great. Let's do it. It's a very modest monthly membership fee. But the savings and the growth that our partners are achieving or our members are achieving has been tremendous. I mean, we're seeing, gosh, on average, maybe $20,000 a year of potential savings or growth opportunities on a couple thousand dollars of a membership fee.

Paul Etchison 16:29

Yeah. I mean, it's amazing. And if somebody's not part of one of these groups, it's like it's instant savings by sign making a signature, essentially. If somebody's like looking at their supply costs, you know, they're looking at their profit and loss. I know like a Caraballi Club offers a lot of different things. Like, what are you seeing as far as like supplies relative to total collections? Like if someone's looking at their profit and loss, what is the number where they're like, dude, this is a no-brainer?

Introducing Carabelli Club GPO

Speaker 16:51

Yeah. I mean, we probably see 7, 8% private practices. That's probably a typical range. I mean, gosh, there's plenty that are far more than that. And certainly others that are doing a great job. But I mean, we feel like practices should be a private practice can easily get to 5% and below with a little bit of help. And again, so some of that comes in the way of just pricing that you can't get. And others are about finding efficiencies and how you order, right? Not just trimming the selection, but you know, are we ordering five times a week or are we ordering twice a month? Right. You're gonna see different levels of inventory controls. You know, can we avoid the shipping fees that come along with those things? There's a lot of great house-branded products out there. And so are we trying these alternatives, trying these free samples? And so again, we're able to put those things in front of them. Get it's obviously they have the choice, but we've seen practices pay for their membership in one month of supply orders, right? So unfortunately, I think you know, I love a lot of our supplier partners and those, you know, technology vendors, but there's definitely a different level of pricing often between the private practice and and the group level.

Paul Etchison 17:54

So yeah, it's it's interesting. Like with me being part of MB2, I have somebody, you know, in Texas with you guys that's looking at the things I'm ordering and she's saying, Hey, what do you think about trying this? It's priced different, it's a different brand. I think you like it. And then we try it and we like it. And then eventually I told her, I said, stop asking my team if you can just switch it. Just do it. Like, don't don't don't tell them because when you tell them, there's like so like they'll never notice. But it's like we're saving so much money on these, like the house brands and stuff like that. And it's like my supply costs, I mean, we're well under 5%, and there's no reason not to be.

Speaker 18:29

And it was funny as I mean, with the MB2 world, I mean, we know we could drop our supply price even more with our MB2 partners, but because we are core to that model, we're not going to dictate that. We know if everyone moved the same gloves or wipes or see fold paper towel, we could easily do it. But it's just fundamentally, we don't want to do that. We don't want you to ever feel like that we're taking taking the reins there because you are in control. And so it's our job, though, to put all that data and information in front of you to help you as the owner make the right decision, right, for your practice. Obviously, like you, most people adopt.

Paul Etchison 19:00

So if somebody joined Carabelli Club, what does this look like when they're going to sit down to order? How might this be different from just going onto a vendor site like Shine or Darby and just putting in your order?

Speaker 19:11

Yeah, great question. And when we go through the onboarding process, we will do an onboarding call and understand really what your needs are as a practice. So we get the right vendors in front of you, right? We don't want to waste your time. We're not going to solicit vendors or have them soliciting your business. And so we will understand why you're interested in this. But once you get enrolled and we link those vendors, we use this tool called Dentira. And it's, I think of it as like an Amazon marketplace for dental supplies. But we're able to link all these vendors into one place. And it's these are vendors that Carabelli has relationships with, but you can also link other vendors that aren't part of Carabelli, but they just happen to be a vendor that you order from. And now I have one website to log into, right? I don't have to call three different reps, go to four other, you know, e-commerce sites. It's one place I get to log into. I can create my shopping lists. I know on the first of the month, oh, this is my typical order, or here's my hygiene order. And so we're able to make that very easy for them. So not only saves time, but it saves money as well, right? If you're buying a particular product, well, there might be a number of different vendors that sell the exact same product. And you can see full transparency in terms of what each vendor is selling that same product for. We can also try to star certain items or highlight particular products, like we talked about some of those house-branded products. We can make that very easy for your team member to see what those preferred items are and what others are buying and realizing those savings. So Dentira has definitely been a game changer for us at MB2, and certainly on the Carabelli side has been a huge win because we think it's so important. We just made that part of the membership. There's a lot of groups that are starting to use purchasing platforms, and private practices are just starting to adopt it a little bit more, certainly less than the group level. But we felt like that was so fundamental to seeing the value of all of these vendors that we just made it part of the membership. So that's included in that cost, which isn't cheap if you were to go secure that on your own either.

Cutting Supply Spend To 5 Percent

Paul Etchison 21:05

So, Jeff, other than the supply pricing, like what comes to mind is I was just at our mastermind weekend that we did last weekend in Destin. And one of the mastermind members was talking about how he was leasing an ITero. And we also said, we just got our new ITero as well. He's like, Why didn't you lease it? You bought it. And I said, Yeah, I don't understand what the value in leasing it is. And then I showed him what I paid for it, and he said, Oh my God, like can I get that pricing too? And I said, I think you can. Like, do you guys also do pricing with vendors like Invisalign or like other equipment stuff?

Speaker 21:34

Yeah, absolutely. Um, Align Technologies is one of our largest vendors that we work with, both MB2 and Carabelli. And so, yeah, that was also critical when we were starting this to make sure that they were going to be a partner in all of this. So uh yes, I taros, we we have pricing, preferred pricing with with the ITEROS. For Invisalign, we have some preferred rates there as well, the monthly subscription fees you pay, and again, and all the education that comes along with that as well. And so, yes, they are a core partner of ours, and we're continuing to expand discounts in other areas of the equipment space as well.

Paul Etchison 22:06

So we've got supplies, we've got equipment, we've got labs, we've got the education component. Is there anything else?

Speaker 22:13

Yes, and and labs, we we didn't go into as deep. I mean, to me, the labs are tough, right? Because there's a lot of preference around those labs, and we get that. That's a little more of a sensitive area. And so folks aren't as likely to switch there. But I will say that is probably our fastest growing adoption that we've seen in terms of the utilization of the docs. Um we have a couple of preferred labs that, again, we've already vetted these folks through M MB2. And I mean, a full zarconia crown is gosh, less, I don't know, in the 50s, about $58. And so, I mean, practices are saving thousands even a month just on their lab fees alone. And so, and we get it. It's not maybe it's not for everything, but that's a a big area that that practices are seeing wins on in the lab side. Technology, like we touched on clinical AI. We're continuing to see more practices asking and signing up for some of the clinical AI tools, like Overjet, marketing vendors, right? All the patient recall communication systems have been an area of focus that we've got. A lot of questions on, and we have offerings there. And we're not quite there yet, but I think where we're also headed next is around understanding benchmarking and KPIs in the practice, right? With 800 partners and a very healthy organization that's continued to drive same store growth. We tend to have a good sense of what some of those key metrics and benchmarks are. And so I think that's a future state where we believe we can be really impactful for the private practice owners to really understand their business better, right? Just like you might do a monthly business review with your operations team member. We think there's a way that we can do that, at least more through data and reporting. Maybe it's not as hands-on, right, or as supportive like an MB2 partner might get, but we think there's more that we can do to just give you benchmarks and data to understand am I doing well? Is my supply spend where it should be for a practice of my size? Is my productivity what it should be in hygiene? That's an area that really excites me that I think starts to go beyond just being a normal buying club.

Paul Etchison 24:17

I think it's worth touching on is you mentioned same store growth now twice. And people listening that might be like, what does that even mean? What do you mean a store? But talk about why that's important and why that's like something that you know makes MB2 special versus other groups.

Ordering Platform Dentira Explained

Speaker 24:31

Aaron Powell It's another way we also call it organic growth. And it just means within your practice, right, within your four walls, how much are you growing from one year to the next, right? And so, because a lot of organizations will, right, you are building new practices, right? We call that the inorganic growth, the de novos or acquiring, emerging, right? There's other ways that you can grow. But at the end of the day, that's not a way to achieve a long-term growth is by acquiring and opening new practices or expanding walls. The health of your organization is about how are your existing partners, right? That within the same four walls that you're in, how are you growing year in and year out? On both right, the top line and the bottom line, EBITA, hear that term more and more now, right? Just a fancy uh finance term for your profits. Are your profits and is your production growing year in and year out? And ultimately, when you talk about private equity groups or investors and how they evaluate businesses, if you are not doing that and doing that on a consistent basis, that's worrisome.

Paul Etchison 25:33

Aaron Powell So if I'm a practice owner and I'm looking at Carabelli and I'm like, this sounds like something I might want to do, is there any reason why a private practice owner may not be the best thing for them?

Speaker 25:43

Personally, I don't think so. I don't think there's any good reason to other than the unknown. You know, I think people, oh, we'll say, is it, you know, it's too good to be true, or I'm not, I don't believe it. And I think people are naturally just skeptical. I think, but we've tried to give more of a guarantee to say, look, if we don't prove this thing out in the next 90 days, we'll refund you back. There's no catch here. If we're not doing our job and delivering, we're happy to refund that membership. So I think skepticism is probably the biggest reason why folks wouldn't join. There are some that are already part of other similar style groups, which is great too. But but even in those cases, we've had practices or end up joining because they realize maybe we have a different set of vendors. Maybe Dentira wasn't included with that other group they were getting. They didn't get all the CE offerings as well. So we finally started to see groups realize, okay, maybe, maybe I could be a part of both. But I think it's the fear of the unknown. And so we're, you know, we're trying to do our best to help folks realize what it is and what it isn't.

Paul Etchison 26:40

So if someone's interested in Carabelli Club, where can they find out more? And I think you have a special for the listeners of the podcast.

Speaker 26:47

Yeah, absolutely. So we we have a website, carabelliclub.com. You can check it out. We have all of our vendors on there. There's different links. You can schedule a call to learn more. You know, again, we encourage you to do a discovery call, ask questions. Yes, for all of your followers, we have a promo that we'll run here and offer four free months off that membership. It's $199 a month. But if you pay in in full uh for the year, we'll give we'll knock four months off of that. So we'll set you up with a link that anyone can click on to access that. And like I said, it's I can't think of any real good reason that a private practice wouldn't want to at least take a hard look at it. I think there's there's a lot of upside here, no strings attached.

Paul Etchison 27:26

Yeah, we will put the link in the show notes for any listeners that want to take advantage of that deal. So before we go, Jeff, is there anything else that I mean, you get to see a whole mess of practices, a big pool of practices where you can pull a bunch of data. If looking at what you know with all the MB2 offices, if you had like one piece of advice for this time in dentistry for private practice owners, what would that be?

Speaker 27:50

Yeah, I mean, I would say do your research and ask the right questions. There's like we talked about before, not all groups are created equal, whether it's in the dental group space or in the GPOs and buying clubs. And so I think it's worth it to go explore and have these types of conversations and really see who the different providers are out there. And don't make the assumptions. There are a lot of folks doing great things, I think, like MB2 and Carabelli. And so, yeah, do your homework.

Paul Etchison 28:15

Jeff, thank you so much for coming on the podcast. MB2, I mean, I can't say enough good things about MB2. They have been my group for over five years now, and I'm still sticking around. Everyone's like, You're sticking around. Why? And it's because I like it. It's a good group. It's a good group to be part of, and I feel that with all the other partners too. So thank you for coming on the show. Thank you for sharing all your stuff on MB2 and Carabelli Club. I really hope the listeners will take advantage of that deal. I think it's really a no-brainer. So thanks so much, Jeff.

Speaker 28:42

Well, thank you. Thanks for your partnership and thanks for what you're doing for private practice.

Paul Etchison 28:45

That was a great conversation with Jeff Salucci. Again, if you want to get that deal, it's in the show notes. It is Heroes26 Plural. Heroes26 is the code. So here are my big takeaways is that private practice, we are not just facing challenges in staffing. We're also facing challenges with all of our expenses creeping up. So joining a GPO can really help with that. Now, not all groups are created equal. So if you're looking to partner with somebody, you need to look at the model and ask some better questions. You need to understand what you're getting yourself into. And if you're going to stay private, but you want some leverage, the tools like the Carabelli Club, groups like that can give you access to the group level pricing, the preferred vendors, uh, education, and all those purchasing systems that can immediately reduce your costs and reduce your overhead. And if you're looking for someone to look through your practice with you and go through these numbers and metrics and costs and your profit and loss and take your practice to the next level, please set up a strategy call with me at dental practiceherous.com slash strategy. I so look forward to talking to you. Have a great day and we'll talk soon.