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Two successful DEO members talk about transitioning from private orthodontic practices into a managed group practice.
DPR speaks to two successful DEO members that are partners transitioning their private orthodontic practices into a managed group practice about what they learned along the way.
Dr. Randy Feldman and Dr. Ernie McDowell didn’t like their prospects for an exit strategy. With practice brokers offering 60 to 70 percent of their gross revenue, selling their practices wasn’t going to provide for a comfortable retirement. Expanding with new doctors was also challenging in a private practice setting. Young dentists take time to develop and it can be difficult to justify paying his or her salary long term.
They wanted a better outcome for their orthodontic practices built over their combined 70 years of experience. They also wanted a new option for recent dental school graduates to gain the experience needed to provide the highest standard of patient care, and also provide this quality care to those less fortunate.
They partnered and started learning about the managed group practice concept from colleagues and mentors in their study group. One name that came up over and over again was Dr. Marc Cooper, founder and president of the Mastery Company. The Mastery Company’s Dental Entrepreneur Organization (DEO) is a peer-to-peer network of dentist entrepreneurs that develops dentist-entrepreneurs into senior executives of dental companies, or group practices. The DEO helps private practice doctors obtain the business skills, managerial insight and network necessary to expand as a managed group practice.
Drs. Feldman and McDowell are now partners in Blue Wave Orthodontics and Kids Smiles Pediatric Dentistry with six locations in the Tampa Bay, Florida area. DPR talked with the two doctors to learn why they decided to take this step and what advice they might have for other doctors considering expanding into a managed group practice.
Next: Drs. Feldman and McDowell share how they got started with managed group practice.
DPR: How did you get started with your managed group practice and why?
Dr. Feldman: After investigating a few other group practices in a study club we belonged to, we were advised to seek out Dr. Cooper. Upon meeting Dr. Cooper and listening to his suggested tapes and books, we decided to attend his annual DSO Summit in Phoenix where we met many of these players in the “DSO game” [Dental Service Organization]. We wanted to try and do things under their leadership.
Dr. McDowell: Dr. Cooper was instrumental in helping us clarify what was our mission, vision and purpose. We’re still learning a lot, but it’s re-invigorated us because it’s a new venture for us. It’s allowing us to put our resources together with the goal of having an alternative for new grads, an alternative for our practices and a way to create more of an impact together in our community than we could apart.
Dr. Feldman: Our hearts were always aligned as far as helping our community. We wanted to give back, so we decided to take Medicaid. Medicaid Ortho is not very popular because the payment isn’t that good. It’s almost like a Robin Hood thing. If we do enough fee-for-service health care, then we could take Medicaid cases and give them the quality and respect that they deserve.
DPR: Excellent. So that’s scary to take on multiple locations. How did you know you were ready for that?
Dr. Feldman: Ernie, are we ready? (laughing)
Dr. McDowell: For one thing, Randy and I already had multiple locations. But we knew what we wanted to do, and so we started exploring the ways to do that by going to the Summit and learning from our colleagues’ experiences. It was a leap of faith. We said, “We have the drive. We have the motivation. Now it’s just all about getting the tools.” Having a partner, you don’t just sit back and dream about it. For me, that’s been very powerful with Randy. We’re both pretty alpha, and it was kind of like “Let’s do it. What are we waiting for?”
Dr. Feldman: It is a little scary. But it was built on what we do and it’s still fun.
DPR: Were there any particular worries you had about taking the leap from how you were doing business as usual to trying this new strategy?
Dr. Feldman: It would be foolish to say there were none, but I don’t know if I can identify any in particular. We didn’t necessarily want to jump ship from what we were doing, but we wanted to do something new. We wanted to figure out something to resolve all three of our concerns [exit/the new grads/giving back]. We belong to a study club. In that study club, we have about 125 members in North America, and at least four or five other folks [in that club] have done something similar. So, by talking to them, they would share their insights, which has been extremely helpful. Many of our concerns were laid to rest after talking to them.
Dr. McDowell: I wouldn’t say we had concerns because Randy and I are both committed. We know we’re going to be successful at it. We also know there are challenges to overcome because it’s something new. One concern is always how your staff is going to handle it, but it’s been completely a positive thing; they’re excited also. So I don’t think we had concerns. We have confidence, and we know there are challenges, so that’s what we’re overcoming.
Dr. Feldman: As far as my staff goes, they were worried about what were they going to do if I retire in a couple of years. Now, to them, it’s also a new game. That is, it’s a new game for those who accept the challenge. Honestly, one person left because she couldn’t meet the challenge after being with me for 25 years. But the rest of the staff accepted the challenges and have new responsibilities, offered new ideas and are very excited about their future. A couple of them have already received increases in salary because we gave them a lot more responsibility and they ran with it.
Next: What Drs. Feldman and McDowell might have done differently.
DPR: That’s an excellent point. Is there anything you might have done differently? If so, what was it and why? Or why would you not do things differently?
Dr. McDowell: As far as what we’ve done and the decisions we’ve made, no I wouldn’t do anything differently. There has been a tremendous amount of change. We’re both adapting. We have two practices. We’re trying to get the economy of scale and where we’re all doing things the same way, so that’s always a challenge. At the same time, we still have very busy practices. The important thing is the chain of communication. How is the chain of command and the communication going so that we can keep things moving smoothly? Sometimes that’s been a breakdown, but that’s normal any time you’re going through significant change. It’s been great, but in hindsight, there could have been some better efficiency and effectiveness, which we’ve got in place now.
Dr. Feldman: There’s certainly at least a modicum of confidence after practicing between the two of us for almost 70 years. But this is a new game. Never before have we experienced what we’re experiencing now. I didn’t know the difference between Jobs.com or Indeed.com or Monster.com until about four or five weeks ago. Before then, if we needed staff, we just asked around. We might ask a sales rep or a local mom, “Hey we need a new assistant or receptionist.” That was it. Now there’s a whole vetting procedure and reviewing protocol. It is the business world, but as a “regular orthodontist,” you are not exposed to that, not in school at all. We are going from the practice of orthodontics to the business of dentistry, but without losing the quality and the caring. I don’t know if that’s an oxymoron. I like to think you can do quality, caring orthodontics and dentistry, as well as pediatric dentistry, and still be efficient, proficient and have a good profit margin-and a good EBITDA.
DPR: You had a lot of mentors that helped guide you when you started. Along those lines, what advice do you have for clinicians that are considering a similar plan today?
Dr. McDowell: Go to Marc Cooper’s Summit. Your eyes are going to be opened up to a new world. You’re going to start meeting and learning from the right people. You have to be exposed to the possibilities and what other people are doing. Then it becomes a learning process. We were fortunate that we have very supportive, close mentors and colleagues that are open to helping us any way they can. The first thing you need to do is see what’s possible. Then you start learning how. So you learn the what first, and then the how.
Dr. Feldman: I can’t agree with Ernie more, especially the part about Marc Cooper, because there may be other people that teach some similar things, but Marc’s technique is a major paradigm shift. Marc is a total business and leadership “guru” AND a Periodontist! He is “one of us!” We want his perspective. He’s the one who over the years started studying this stuff and was on the board of many for-profit companies. He’s read and written lots of articles. When you go to his meetings or undertake his tutoring, he exposes you to all these different people and amazing concepts. But he still also comes from the perspective of a practitioner, which is pretty cool, if you ask me!