Carrie and Jess Webber Talk about the Most Commonly Asked Questions

This transcript with our Jameson Files host Carrie Webber has been lightly edited for flow. To enjoy the audio, you can watch on YouTube or listen to our podcast on iTunes, Google Play, or Spotify.

Carrie Webber:

Welcome to the Jameson Files. I’m your host, Carrie Weber, and I am very happy today because I have coerced my partner in crime and all things in life, Jameson CEO, and my partner in business, Jess Webber. Yes. He’s also my husband.

Jess Webber:

That’s how it works.

Carrie Webber:

So this is probably the first time you have joined me on a Jameson Files episode, which is kind of amazing considering how long we’ve been doing the podcast, but we finally have lured him in. Today I’m excited because we’re going to talk about trends we see– the questions we are getting asked the most from doctors across the country when we’re having conversations with them. So thank you for agreeing to join me and being a guest.

Jess Webber:

You’re welcome. Since 2020, we’ve started to see a lot of different questions come up in the industry, and I think it’s great that we’re going to discuss this with you.

Carrie Webber:

Absolutely.

Jess Webber:

Not at the dinner table.

Carrie Webber:

Not at the dinner table, not in the car. Our kids will be so happy we found a different place to have this conversation. 

How to Determine the Profitability of Your Practice

Most of the doctors that reach out wanting to know about Jameson services start the conversation with me. And often once they are clients of Jameson, for one reason or another, they’ll find themselves having a conversation with both of us or with you, when it’s about specific things. So that’s what I really want to tap into. When we’re having conversations with clients, we’re certainly seeing some themes in what those conversations are about. Number one being the pain point of the cost of running the practice. That is something that most of you may have experienced in the big jump in inflation, or costs of salaries and so on, that we’ve experienced over the last 12 to 18 months especially. Let’s talk a little bit about what those conversations are, how we’re exploring ways that we can help them, and what you’re finding as you’re looking at P&L’s and talking through this with doctors.

Jess Webber:

Sure. So that’s right. Since 2020, the team costs have risen with inflation. We have different types of pressures on costs including salaries and supplies and lab and all the things that it takes to run a practice. So we continue to see those, probably not as much this year as we did last year, but it’s still definitely there. And we’re not going to kid ourselves, costs have always been an issue and a question in a dental practice. Just now, people are really hypersensitive to it for all of the reasons that we’re seeing. 

Carrie Webber:

Well, and what I hear a lot is it’s not necessarily that there’s a specific area of cost that they’re struggling with. But sometimes the question is, I want to know if I’m even in the right realm in terms of my benchmarks and what we call the key performance indicators of cash flow, of the overhead of the practice, and so on. That’s a question that we get a lot. I don’t know if those of you that are watching have those questions yourself, but a lot of times doctors just want to know if they’re even in the right range. 

Jess Webber:

Anybody, any specialty, GP, it doesn’t matter. If you want to know those specific ranges, you can just ask us. We’ll tell you it’s a lot easier. 

And if you don’t know how to figure that out, we can obviously do a little lesson in that math too. But you do need a great P&L. It’s easier if you have an accountant do it, because it breaks it down a little bit by percentages and puts it into a normalized type of profit and loss or P&L. So what we do is we obviously gather our clients and we work with a great company called Cain Watters. They are a financial accounting firm out of Dallas that works specifically with dentists, and they work with like 3000. I don’t know the exact number but it’s a lot. So it’s a big enough sample size that we can get some good solid numbers. So like I said, just ask us and we can help you evaluate if that’s something that you’re in need of. 

The absolute top cost in any practice is your team. And that’s what we’ve seen going up over the last year, I would say. The other area is supply and lab. Those two in general are the two top areas.

Carrie Webber:

Well, and I think something that you’re experiencing more and more, especially those that are in network with a large number of PPOs and insurance plans, is that those plans are cutting into your profit because of the write-offs, obviously. So as you start to see this swell in the costs of running the practice, or rather the investment of running the practice. I hate to say team is a cost, but it’s an investment that must be made to keep the practice up and running. As you see these things happen, you need to be very aware of the relationships that you are in, what your write-offs are, how many of your patients are in these different plans, and what’s the cost of participating. I’ve had Lois on the podcast, and she’s done a pathway on our Grow platform about this topic specifically because it’s not a matter of us telling you to be a network or not, it’s really for you to understand what you are a part of.

And that all plays a part in what your bottom line and what your profit is. The way that you are going to become more profitable is by becoming more productive, increasing your fees of the dentistry that you provide, or reducing the cost of running the practice. Those are the ways. When you’re in network with PPOs, that definitely has an impact that’s worth exploring. So are there ways that you can be more productive? Are there opportunities in the practice for growth to help you cover the costs of running the business? And also are you in relationship with the right kinds of plans that benefit your patients, but also are most beneficial for you as a business?

Jess Webber:

Yeah, it’s definitely worth an evaluation. If you’re in network with PPOs, you really need to take some time– work with somebody or do it yourself– but you need to evaluate what those fees are and how many PPOs you’re associated with. Because if you’re involved in one, I bet you don’t know you’re involved with a lot. So it’s definitely worth evaluating what you’re getting reimbursed for, procedure by procedure. Because sometimes you might be losing money every time a patient shows up. So it’s worth that evaluation. I highly recommend it. Like I said, you can do it yourself. It’s not rocket science. You know what it costs and you can see what you get reimbursed for. So it’s the alligator mouth, one of them is greater than the other one. Figure it out.

Carrie Webber:

The alligator mouth?

Jess Webber:

Greater than, less than.

Carrie Webber:

Oh, the Pac-Man. 

Jess Webber:

I’m from Florida. It’s the alligator.

Carrie Webber:

Oh, geez. We’re going off the rails. 

Understanding of the Profitability of Your Practice is Valuable when Transitioning

Something that we find ourselves engaging in perhaps not as much as the topics of the cost and managing your practice appropriately, but some practices are starting to go on the path of considering that they want to sell, or wanting to affiliate or perhaps even wanting to expand themselves into multiple locations or services and so on. So there’s definitely a lot of consideration in terms of what we need to do in our practice to either be ready to sell, or be able to expand, or do things in a different way. 

Jess Webber:

This is actually probably one of the biggest topics right now because we see it at all ages of practicing dentists. We have young people wanting to sell. We’ve got people who are more experienced who are wanting to sell. And it’s interesting because historically how you got out of your practice was you worked a long time, and then you found somebody that wanted to work a long time, and then you brought them in and they associated, and then you eventually sold out to them. So there’s a lot of variations to how you can do that. 

But now we’re in an age of DSO and affiliations and non-captive models that you can get involved with where you maximize your practice right now and continue to work and then maximize it again. So it’s a very, very, very great opportunity. I can’t encourage you enough to start learning about the different ways that you can maximize your practice right now, whether that’s, like I said, a DSO, or a non-captive type model.

Carrie Webber:

And the magnet to your practice – whatever stage or whatever approach you’re wanting to take is going to be– is the profitability of your practice. It’s what we were talking about at the beginning, having a really clear understanding of your overhead, your profit margin, working to streamline systems, and your cash flow so that you become more profitable. It’s getting your overhead in check as best as you possibly can, and then having systems in place so that anybody can see new patient flow is coming in. You are a healthy, growing, thriving practice. You run well. You are up to date; your facility is up to date. All of those pieces of the puzzle are considerations on whether or not you’re the right fit for what somebody’s looking for. And so if affiliating, if being bought out, if any kind of transition of your role is something that you are wanting to look toward in the not so distant future, it’s important to do your work now to make sure your practice is attractive to an outside entity.

How EBIDTA Affects the Value of Your Practice

Jess Webber:

If you’re wanting to get involved in maybe affiliating or moving to a DSO type of a model, your KPI is called EBIDTA, and that is “Earnings Before Interest, Tax, Depreciation, and Amortization.”

So you take all those things out of your P&L and that will give you your net income. And you can normalize it a little bit. So if you’re paying your kids for marketing, that’s not going to be in there if you sell to a DSO. So you remove some of that, but you can’t remove your salary if you’re paying yourself that way. If you’re paying yourself on a K1, you might need to look at putting that back in at some point. So the number that you’re left with is your EBITDA. 

And then people used to pay you 75, 80% of your collections on the year. Now they pay you a multiple of your EBIDTA. So if you hear people talking about multiples, I got seven x or four x or whatever, they’re talking about this, they’re talking about the multiple that they got on their EBIDTA. So you multiply that number by a somewhat arbitrary number that somebody’s going to offer you. So they may have a formula in their head, you don’t know it, but you need to ask them how they arrived at four x or five x or 10 x. Obviously the higher the number the better, and the higher your EBITDA the better because that’s how math works. You want more of it. So if you’re going to try to sell your practice, you really want to affect that specific number. So that is something that you’re going to need to learn, either work with your accountant, or you can do what I just told you by editing all of that out, and you get a rough estimate on your EBIDTA. I would highly recommend that number become very important to you.

Carrie Webber:

You may be listening and thinking, I’m not selling, I’m not going to do these things. But from a business owner standpoint, knowing this information and knowing where you stand in this, is going to help you make decisions on where you need to improve. It’s important for you to know at some point in time in your professional career, you’re going to be ready to transition. And whatever your practice, however your practice is performing, is going to be a determining factor on what that transition experience is gonna be like for you. 

So business owner to business owner, being savvy about where you stand in your practice performance, in your practice numbers, is smart. And it’s being more intentional, and it’s being more proactive, and continuing to improve because all the improvements that you will make for those purposes is going to make your career more enjoyable because financial stress and strain will be reduced. 

Likely the efforts that you put forth to get a positive improvement in these areas we’ve talked about are going to become directly impactful on your day-to-day experiences. Because you’re going to be working on systems, you’re going to be working with your team to improve the process and the experience, you’re going to be working to reduce the costs and increase the productivity, and all of those things are going to be beneficial for you multifold for a lot of reasons. 

Jess Webber:

Absolutely. And, like I said, we have mostly younger people. We have a lot of people in their forties that are exploring this, a lot of young dentists and a lot of more mature dentists are trying to figure out how to maximize their practice. And honestly, this is probably one of the best ways to do that right now. 

Finding an associate’s really hard, and finding an associate that works well with you and works well with your team has always been a real challenge for everyone. It’s not just for you or your team, it’s for the associate as well. It’s hard to walk into a place and be the new guy, and try to get along with everybody, and figure out the new systems, and no one’s really telling you anything. And you just kind of have to make your way through it. And then somebody at a certain point in time goes, Hey, do you want to buy this? And you’re like, what? What am I buying? Not really. 

So this is a great way to get through that. And it allows you more resources to continue to practice the way you want to. It frees you up. It puts you in a network of like-minded people. It increases your education. It can help your team, depending on what structure you go with. There are some great benefits. And I’m not trying to sell you on becoming an affiliate of a DSO. You can do that if you want, but I’ve seen this area improve drastically. We’ve been in dentistry for 24 years, so we’ve seen it evolve from mostly private practice into the evolution of DSO. And initially it wasn’t great. A lot of this affiliation and group practice, it wasn’t really a great option for doctors or team. But I think we’ve seen that change over the last five years.

Carrie Webber:

I think you have a lot of options. You can continue on the path that you’re on. You can explore alternatives to that path while still having a tremendous career in dentistry for many more years. The fact of the matter is if you are a business owner right now, a practice owner, doing your own due diligence, just for the sake of knowing, knowing the performance and temperature of your practice, no matter what direction you go, educating yourself on what opportunities are out there and what you can do to make your practice as healthy for your own sake, but also for the attractiveness of it. When the time should come that you’re ready to make a change, all of this can do nothing but benefit you. So thanks. Thanks for joining me. Lots of trends. Come back and let’s talk about more things. 

Jess Webber: 

I don’t know. It’s a long drive.

Carrie Webber:

I’ll get him back. It may be three more years, but I’ll get him back on. Maybe you guys can convince him to come back. Thanks for being with me. 

Jess Webber:

Sure. 

Carrie Webber:

And lots of trends, lots of questions. Reach out to us. If you want to explore how your practice is performing, let us be a resource to you. We would look forward to the conversation. In the meantime, thanks to all of you in the Jameson Files community for joining us. Once again, be well and we’ll see you next time.

Thank you for joining us on this episode of the Jameson Files. Visit us online. You can subscribe to this podcast on iTunes, Google Play, or Spotify. See you next time.