Like many areas of healthcare, the dental industry has come nearly to a halt for all non-essential or emergent procedures. Against that backdrop, we examine the impact of the epidemic on dental providers and discuss best practices to shore up financial operations and position their organizations for the near-term and long-term.
Like many areas of healthcare, the dental industry has come nearly to a halt for all non-essential or emergent procedures. Against that backdrop, we examine the impact of the epidemic on dental providers and discuss best practices to shore up financial operations and position their organizations for the near-term and long-term.
spk_0: 0:05
welcome to point by point conversations, interviews and legal commentary for today's business professionals. Brought to you by Waller. Like many areas of health care, dental industry has come nearly to a halt for all non a central or emergent procedures. Against that backdrop, we examine the impact of the epidemic on dental providers and discuss best practices to shore up financial operations and position their organizations for the near term. Long term. Welcome
spk_1: 0:37
to point my point. This is your host, Morgan Ribeiro, Today on the podcast were visiting with members of the firm Central Industry Team Don Moody, Eric Scalzo and John Arnold. We're all partners to provide health care and emanate council to gentle clients across the country. And today we're going to talk about the impact of in 19 on dental practices and how dental providers confessed position themselves during these very uncertain times. Don John and Eric thank you for joining us today, and I'm looking forward to this discretion. You all work with dental practices across the country of all shapes and sizes to kick things off. I'm curious, you know, regardless of the size of the practice, were some common questions were concerns you're hearing from your dental clients down, I'll start with you.
spk_2: 1:23
Thanks, Morgan. You know, it's a challenging time for I think, for most companies in this industry, we've heard from some of largest CSOs in the country, down to some of you know, small start ups. And all of them are seeing some similar problems it ranges from. We have providers who have been diagnosed. What do we do about that, too? Where do we don't have any patient flow? We're thinking about furloughing or laying off employees. And then, increasingly what? What about these funding opportunities that are available? Can we take advantage of the paycheck protection program or the ideal emergency loans? Or we're hearing about these Medicare funds that are being issued? How do we take advantage of those people? Sort of scramble to try to keep their companies and practices and hold.
spk_1: 2:14
So Don you mentioned some of the available funds that are happening primarily through the stimulus packages. Patriot Protection Program s B A loans Eric. Any solutions that are available to the dental practices at the moment, And can you speak specifically to any of those available funds, their loans or grants anything that they should be sure they're looking into right now.
spk_0: 2:38
So with the BBP loans in the first round of funding was extremely quickly, about 13 days till the entire amount was claimed in its entirety. Some companies have been giving that money back, and so it may open up a line of funding for traditional companies. The second round of funding was also approved by Congress. Applications have been are being accepted Monday morning, April 27th starting at 10:30 a.m. Eastern. That's anticipated. Those funds will also be utilized and claimed very quickly. But there's already discussions around around three of funding for the TPP loans. So if you are interested and think that you may qualify, you should definitely be speaking with your lender. Now we're looking for lenders that are participating in the SB A program toe the line up your application either for around two or for round three. If and when
spk_1: 3:30
it happens. Great Don, anything you would add to that in terms of funding or, you know, other avenues that dental practices to be looking at you right now.
spk_2: 3:41
Yeah, I would say on the on the main street loans that first of all, those air, not forgivable, unlike the PVP loans of paycheck protection program loans those air not forgivable. So for those companies, groups de esos that have existing debt, you're gonna need to coordinate with your current lenders about that. There's also a leverage ratio test in other words, how much debt you have in comparison to your EBITDA. And so first companies have existing debts, you may exceed that threshold already. So it's something that we would encourage companies to look at our groups to look at. But if you have existing debt, you're gonna need to coordinate with your with your lenders about it.
spk_1: 4:25
So I'm gonna jump Teoh a somewhat related topic here. But I think there's been a lot of questions that you all have received about whether or not, you know, practices qualify or dope all by for certain loans. And just this week, Modern Healthier published an article stating that private equity backs position practices are shut out of small business stimulus funds. Is that true, or is there It seemed very black and white in the article. Are there nuances to this and what should, uh, dental practices being looking at kind of weigh their options here. I'll start with you on that one.
spk_2: 5:00
So you know a couple of things on that one is that it? Really? Focus That article focused on private equity own practices, and you certainly see that a lot in the medical professions dermatology, gastroenterology, vision, things like that. Because a lot of states do not have a corporate practice of medicine. However, there's only a handful of states that don't have a corporate practice of dentistry. So ah, and the vast majority of states you're going to see the more common D S. O P. C structure so that private equity ownership of the practice itself really is inapplicable very much and dental. Um, and I would say that certainly bent de esos that are that are owned by private equity. There are restrictions on affiliate rules under the Small Business Administration has some of its affiliate rules that would aggregate you. The DSL is employees with other private equity sponsored companies that are owned by the private equity fund so that that often for prevents, you know, de esos from applying. But I will say that we've worked with a number of of de esos where their practices have applied for the P P P loans, and we think that there's an avenue for that, depending on your structured fitting in your agreements. So it's, I think there's an opportunity there for those DS those infrastructure with a man separate management company and PNP sees that are managed their PLC's.
spk_1: 6:26
In another episode of our podcast, I interviewed Bet Pittman and Nathan Kottkamp more generally about telemedicine and HIPPA. But, John, can you speak more specifically to tell a dentistry? What should our listeners know about Tele dentistry? And how does that allow them to continue to provide services to their patients during these pretty challenging times? And what regulations around Tele dentistry should they be aware of?
spk_3: 6:52
Thanks for a great question. I would encourage listeners to check out with Beth, and Nathan had to say the government approach to enforcement during the code crisis is unique. The Office of Civil Rights, which is effectively the hip a police that the federal government level has stated its not going to impose penalties if you're not compliant when serving patients in good faith using Zumar FaceTime or similar technologies, of course, you should avoid public facing technologies. You shouldn't be on Facebook live. I'm looking in your patients now in terms of Teledyne mystery outside of orthodontics, dentistry doesn't necessarily wind itself. Do you tell a health? Um, it's been, I think, explored where you've got a hygienist or dental assistants here side with the patient that tell of industry does have its place right now, and it's an effective way to continue to engage with and care for patients. You know, it could be used right now to triage patients. Conduct problem focused evaluations, all kind of in order to limit office visit salutation potentially need urgent or emergency dental care that could also be used for follow up console to check with patients after central procedures have been performed. Um, And then there's the potential to do some limited council to patients. Perhaps it's for clear liners, dentures, implants. Now the good opportunity to kind of keep them engaged and interested in those products and services states like Georgia, South Carolina, North Carolina. They really embraced the use of telecommunications to engage with patients during the covert crisis. Other states like Texas, unfortunately, have not. So Dennis really need to evaluate what is or is not permitted in their state and, more specifically, the state in which the patients located when they're consulting with home. Because that's the state law that governs of your in Texas. Talking to a patient in Oklahoma, you need to be licensed in Oklahoma and kind of Oklahoma's wall. They're gonna govern that. Assuming the virtual exams console you know they are permitted, you still got to be attentive to restrictions or limitations on prescribing. I'm based in a virtual visit, particularly controlled substances, and we still need to think about issues I conform consent recordkeeping, as well as ensuring your malpractice policy covers. Tell of industry services. There could very well be in exclusion for that.
spk_1: 9:19
John, This is really interesting to me. And, you know, if I'm a dental practice, I'm curious. Can I on the reimbursement side of my head and go and get paid for these visits and is it the same as if you know I was in the office and treating patients? How is the government looking at that? Or commercial payers?
spk_3: 9:37
A number of dental insurers are expanding coverage for virtual exam and consoles during the covert crisis that make United Korea, for example. But that's still gonna be a payer. Specific determination and coverage is not universal for these exams. So look, we think it's gonna be a very important part about little cares delivered over the next several months. And I'm is really gonna be a good test around, I think, for the postcode world on, but maybe a situation where it's difficult for dental boards and payers. I'm gonna put the Teledyne Mystery genie back in the bottle. I think that's gonna be interesting to watch over the next several months,
spk_1: 10:14
you won't work with a lot of practices. De esos investors on both the sell side and by side of transactions in the dental industry. Pre covert 19. It was an explosive market, and you and your team have represented hundreds of dental practices across nearly every state. In the US Things were quiet at the moment as everyone waits for the pandemic to play out. But where do you see things heading in the near future? And do you have clients who are proceeding with transactions? What's what's the market look like right now, Don
spk_2: 10:42
certainly agree with you about kind of historical that it was a very active market. We helped clients close over under deals in 2019 and the first quarter of 2020 was shaping up to be sort of equally busy and strong. Um, we've generally seen that the transactions that are underway have generally been paused. Not all of them. We do have transactions that continue, but I think for a number of companies, there's they're looking at it as being opportunistic that perhaps once they put the fire out of their own house, they're looking that they're gonna be other opportunities to acquire practices affiliate with practices that haven't fared as well. Or there may be thinking that would be a good time to align myself with a strong de eso. I've seen how it hard it is. Do this myself. Um, I think a d S O might be a good partner, uh, for me on a go forward basis. So, you know, we're hoping that the second half of the year will be very active of folks who are taking advantage of those opportunities.
spk_1: 11:51
Erica. John, are you hearing the same thing from from your clients? Anything. I think
spk_3: 11:57
we're having a number of conversations with DS and dental groups right now about positioning themselves for growth Post Cove it and then using this time to regroup and tackle projects that are important for their kind of long term success and growth. But I may have been pushed to the backburner for a variety of reasons. Whether it's just been deal flows too much, um, focus too much on kind of establishing a new dinovo officer of the case. Maybe now they have some time to kind of focus on the issues that have been pushed to the backburner.
spk_1: 12:30
So, John, I think beyond that, as we're looking at those de esos and in dental practices that are in growth mode or expect to be in growth mode and in the coming months, is there anything in particular Eric that you would would recommend to those practices
spk_0: 12:45
were getting calls from a lot of folks in terms of and focusing on the deal process. You know, we've been so busy the past couple of years on the transactions for a number of our clients that we're utilizing this this time of the transactions are a bit of applause to focus on the process to work on how to streamline the diligence process and working on the forms with them to make sure that that Post Cove it when hopefully there's a flurry of transactions were in the best position to really hit the ground running and help them take advantage of that time.
spk_1: 13:19
It seems a lot of our health care clients, particularly position practices and dental practices, are in a bit of a fall right now. Um, understandably responding to this initial wave of uncertainty and reviewing the stimulus funding opportunities. But once they've moved past this, say, in the next few weeks or a few months, what can these practices due to best position themselves for the future and use this time to their advantage? John, I'll start with you.
spk_3: 13:43
Yeah, now we get time to dust off your to do list and find those items that they got a bit on there for a long time, but that continually get pushed to the bottom. You know, I have those in my house, and it worked. You now a good time to kind of find those items and use this time to be productive. So some items that were getting phone calls about helping climbs with right now building out their compliance policies, draining. If you're participating in Medicaid, you generally need a written compliance program. You need a hip. A compliance manual needed to be doing OSHA training Now may be a good time to develop. Improved on boarding process. He's for new hires. A Mandel background checks provider. Exclusion screen Need compliance Training Well, kind of clinical training for your doctors are bringing on board. Maybe you haven't gotten around to register in your practice name. Now a good time to file that federal trademark registration Cleanup Patient credit balances Just kind of Get your house in order you have a chance to
spk_0: 14:47
regroup.
spk_2: 14:48
Well, E yes, in the sense that I think it's an opportunity or are perhaps a good time to revisit conversation models to take a look at how you're compensating your associate Dennis Ter says you just employed by your supported practices, you know, Are they on salary and and in this environment, where, where they're not actually working? Is that really the right model? Do you have flexibility and changing that in times like this? For some people, the answer is yes, for others know So I think it's a good time to rethink compensation, rethink your employment agreements. If we faced this kind of crisis in the future, Are you prepared? For what? For the consequences of that,
spk_1: 15:32
Eric, you had mentioned some of your comments about investors and those looking Teoh, you know, potentially acquire practices in the industry and that this might be a good time for that s o. I'd love to hear some commentary about private equity and other investors in the dental space. And then, of course, this doesn't all, you know, happy. This is a really challenging and stressful time for a lot of practices. So what should others be contemplating, whether or not it's foreclosures? Um, you know, there's There's obviously a lot of folks that are stretched for money right now, with practices being close, I'd like to get your perspective on on that as well.
spk_0: 16:09
The folks at a lot of cash sitting on the sidelines going into this and with plans to deploy it, Um, I think the plans were still there. Is done, said things On pause. People are testing the waters and trying to get a feel for when this thing is gonna let up in what? What? Post Cove it life is gonna look like. Uh, we got a couple folks that I've gotten a couple of new allies in hand. A done said some of the transactions were still proceeding there, Certainly not proceeding with the speed that they necessarily were a month and 1/2 ago. Um, but but I think there's still an opportunity there for folks who are looking to take advantage of the market and the interest in the space. I think the interest remains and will remain when things return to normal. Whatever that is,
spk_1: 16:54
you will have been working in the dental space for several decades. Have you ever seen anything like this? What's happening currently in the BSO space? You know, in response toe Kobe 19 pandemic. There any comparable times in the industry? Well,
spk_2: 17:09
this is done. I'll start. Just I've been around the longest. Been doing that working with the ESOS for over 25 years. Um, no, I've never seen the kind of shutdowns that that that we were seeing were just nationally. Every generally area office shut down except for emergency care. It's unprecedented. We did lift. I did live through the 90. So for those who are familiar with the industry, there was a lot of meltdown. At the end of the nineties, a lot of companies ended up in bankruptcy or sold sold off to someone else. And, you know, we were on the buy side of a lot of that's representing buyers. So again, there were opportunities back at the end of the nineties, Teoh to pick up some pretty good assets. And, you know, Smile Brands is an example of company that that was cobbled together from some of those those companies in the 19th that didn't fare very well. And then Steve Built was smart enough to put them together, and it's turned into, ah, very dynamic company. So we're hopeful here that that things will get brighter of once we get past this sort of crisis.
spk_0: 18:20
I'll add to that, you know, as Don. We've never seen it to this extent, but we have seen flavors of these types of troubles in the industry before, right and not every de eso prior to this had stellar balance sheets and never ran into trouble. And so we're able to draw on those experiences. It just happens to be, Um yeah, multiples of them hitting at once as opposed to kind of one z twosies in the past, but never seen it to this extent. But again have seen these flavors of difficulties and troubles in the past and help folks either through them work through them and come on either side or wind up. If that's the ultimate solution or health folks buy into those. As Don said,
spk_1: 19:07
Yeah, I've read and heard Ah, a number of positions, position practices, you know, in another area of health care on that those that are not affiliated with the health system or a large group practice are really struggling. Um, more than those that are part of a system some curious and and the dental space. Are you seeing a similar situation where those that are, you know, one to physician dental practices versus those that are part of a large de eso? Are there issues different, or are they all quite similar?
spk_2: 19:43
This is Donna. I think there are some differences. I think that it really amplifies the benefits of being with a D S O. In the sense that de esos typically have more capital. They've got more expertise. They have an HR department to deal with layoffs and furloughs. And what do you do with with staff and what do you do about conversation? And what is this P P p. Loan? How they would get that? Um, So a lot of the things that they bring to the table would be very beneficial in this current crisis. And if I were a solo practitioner or one or two folks, you know, I personally would be thinking about that of, you know, we're gonna face this again and later in the year. And do I really want to go through this again? I think I'd rather have a strong partner if I'm going to do that
spk_1: 20:32
right. Exactly which I think is comparable to what other areas of health care seeing whether or not they're aligned with the whole system or another large group. I would imagine to, you know, going back to John what you covered earlier in the conversation, just having access to things like telemedicine and that infrastructure and software mean if you're a small practice, I don't really know where you begin to get some of these things off the ground. and running and and quickly enoughto to make a real difference. It's definitely a challenge for sure. Anything else that you all wanted toe cover today, anything at that may not have asked.
spk_3: 21:06
There will be some positive to come out of this at the end of the day. And I think one of those is gonna be around bellowed industry, which we talked about earlier I noticed. I think it's gonna be hard to put the genie back in the bottle, and I actually think that's the case. Once providers and billboards have kind of gotten comfortable with using virtual visits and exams for matters that are conducive to that sort of interaction. It's gonna be really hard to kind of tell doctors after the fact we're no longer reimbursing you for that. You can't do it. It doesn't meet stated to care. So I think this is gonna be a great trial run. I think Teledyne Street's gonna be here for the next summer months. It's gonna be a great way they can eat patients back into the office. You know, I'm not comfortable going to my dentist right now. I think that kind of comfort level is gonna have Teoh change, and it's gonna take folks time to kind of become comfortable with it again and tell a dentistry is gonna be a smooth transition and nice bridge for that.
spk_0: 22:07
Do you think, John This This is a good opportunity for dentists to to advertise to showcase. Why the things they've been doing all along, right? Infection, Infectious disease control is is right up there on the in terms of what's important in a dental practice. And so the practices that have been in place pre coverted that maybe go behind the scenes. And nobody really sees what happens in between the patients and the use of the stairs cycle Onda like. But capitalizing on that might might be something that folks could do to reinstill the faith and the comfort in the dental practice sooner than, say, the restaurant down the street or some other open to the public business.
spk_1: 22:53
Great don, anything from your perspective, opportunities that might come out of this or a result of of the challenges and everyone's face
spk_2: 23:02
well, e yes, in the sense that I think it's an opportunity or perhaps a good time to revisit conversation models to take a look at how you're compensating your associate Dennis ter or the social unionised employed by your supported practices. You know, Are they on salary and and and in this environment, where where they're not actually working? Is that really the right model? Um, do you have flexibility and changing that in times like this? For some people, the answer is yes. For others know. And so I think it's a good time to rethink conversation, rethink your employment agreements and you know it. If we faced this kind of crisis in the future, are you prepared? For what? For the consequences of that
spk_1: 23:57
Don John and Eric, Thank you so much for joining me today. Really enjoyed our conversation on Look forward Toa chatting with you guys and soon
spk_2: 24:05
black wise Morgan, thank you very much.
spk_0: 24:07
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