A Quick Look Back and a Long Look Forward – Episode 200

A quick celebration (episode 200!) and then a lengthy look into the future of dentistry.

On the 200th episode of the Dentist Money™ Show, Reese and Ryan take a quick look at where we’ve been, and then take a long look forward. And some of their prognostications may startle you.

How will the large number of women entering dentistry change the industry? What’s the future for practice ownership? Will DSO’s continue to grow at their current rate? Get the answers to these questions and much more.

Podcast Transcript

Reese Harper: Hey Dentist Money Show listeners, thanks for joining us today. This is a very exciting and historic episode for us, number 200. It’s our 200th episode of the Dentist Money show. We really appreciate everyone for all the support and listening along the way. If you’re new, just joining us, or if you’ve listened for a long time, really stoked to have you. And super grateful for all the support along the way. Today we cover a little bit of history of what we’ve seen over the last decade or more, of being in business and working with dentists. We talk about where things were in the state of dentistry 10 years ago, where they’re at today, and where we think they’re headed. Thanks again for joining us, we’re really excited to have this 200th episode. Thanks for all the support, and enjoy the show.

Announcer: Consult an advisor or conduct your own due-diligence when making financial decisions. General principles discussed during this program do not constitute personal advice. This program is furnished by Dentist Advisors, a registered investment advisor. This is Dentist Money. Now, here is your host, Reese Harper.

Reese Harper: Welcome to the Dentist Money Show, where we help dentists make smart financial decisions. 200 time in a row.

Ryan Isaac: Yes.

Reese Harper: With my trustee old cohost, Sir Ryan Isaac.

Ryan Isaac: Welcome to a very special episode. We are 200 episodes in to the old Dentist Money Show.

Reese Harper: Silver balloons in the background.

Ryan Isaac: Got balloons, we got two and a zero, and a zero. We got greens and whites, and blues, and …

Reese Harper: It was like a color pallette of balloons. We also, for those of you who have been wondering-

Ryan Isaac: For big fans of the show, long time listeners will know-

Reese Harper: … where he went, it’s chi, is back.

Ryan Isaac: Sir Chi. He’s here.

Reese Harper: Sir Chi.

Ryan Isaac: Sir Chi.

Reese Harper: Yeah. He’s an inanimate object, but he does participate.

Ryan Isaac: He has been knighted. That’s totally fair. Well, congratulations on getting this far.

Reese Harper: Thank you.

Ryan Isaac: Do you still remember the first ones?

Reese Harper: Yeah. I remember sitting at a desk, initially.

Ryan Isaac: No, the first ones were standup, we had … you had music stands, and we attached iPads to music stands. We were standing up facing each other.

Reese Harper: Oh yeah, yeah.

Ryan Isaac: And Justin had a timer on an iPad that he would count us down, and they were scripted word for word.

Reese Harper: We did. The first few episodes were quite entertaining, but they were scripted.

Ryan Isaac: Do you remember how nerveracking that was? To just start talking on a podcast? We’re like, “That guy sounds so stupid.”

Reese Harper: Especially when you follow the script-

Ryan Isaac: I can’t say this.

Reese Harper: … and you’re like, “I didn’t write that. That’s not me.”

Ryan Isaac: That’s not my voice. It was so cool. Do you remember the first episode, still?

Reese Harper: Yeah. It was, I think I was about hot dogs.

Ryan Isaac: Yeah, it was competitive eating. That was the first story we ever told.

Reese Harper: It was [Kobayashi 00:02:45].

Ryan Isaac: Yeah.

Reese Harper: Yeah.

Ryan Isaac: First story. Well, congratulations. I do remember hitting episode 100 and thinking, “How on earth are we going to keep talking about personal finance for dentists?” And it’s cruising along.

Reese Harper: The ratings keep going up, the people are demanding it.

Ryan Isaac: We’re just supplying, we’re just supplying the-

Reese Harper: Tonight we have a packed house. At an event, all based on … Last week we were in Philadelphia, shout out to the crew.

Ryan Isaac: Yeah, awesome.

Reese Harper: Out there at Einstein. All the residents. First year, second year. Paul [Goodman 00:03:17]

Ryan Isaac: Yeah.

Reese Harper: They all showed up because of the podcast episode that you put out in the universe.

Ryan Isaac: It’s just, it’s cool. Thanks to everyone that’s been listening, one episode, all 200. We really, really appreciate it. It’s super cool to see not only just what it’s done for the podcast, but it completely shaped the way our business has been built over the last five years.

Reese Harper: Yeah.

Ryan Isaac: Marketing and growth, and hiring, and it’s super cool. You’re mentioning events, so right off the top here, if you … We’re out and about quite a bit these days. We’re probably doing two to thee local events a month now, and check them out. DentistAdvisors.com/events. We’re doing dinners and presentations, and Q&A, and-

Reese Harper: Starting our monthly webinar series, too. The Element of the Month.

Ryan Isaac: Oh yeah, that begins this month. Spending.

Reese Harper: Sir Ryan Isaac is going to be diving into burn rate-

Ryan Isaac: We’ll be hosting a webinar, where can they find that? Just go to DentistAdvisors.com, you can see the webinar.

Reese Harper: You can go to slash events.

Ryan Isaac: Slash events on there.

Reese Harper: It’s there.

Ryan Isaac: Oh, it is.

Reese Harper: Yeah, it’s just, you’ll just notice there’s a difference from physical events and then there’s webinars [crosstalk 00:04:17]

Ryan Isaac: Go sign up for the webinar. We’re talking about the most important yet least sexy part of personal finance, which is personal spending. We’re blowing too much money.

Reese Harper: Is your mortgage payment … is your house too big?

Ryan Isaac: We all know the answer.

Reese Harper: Your house too small?

Ryan Isaac: Yes. I bought too much.

Reese Harper: No, I feel like right now my house is the perfect size. But I’m about to upgrade.

Ryan Isaac: You’re about to upgrade, and it took a while for the income to match the spending.

Reese Harper: Yeah.

Ryan Isaac: Now it makes sense. 10 years in.

Reese Harper: It’ll make sense a decade in.

Ryan Isaac: All right, well we just love having all the listeners and all the support, and really appreciate it. Also, we haven’t asked for this for quite a long time, but if you wouldn’t mind leaving us a review on iTunes, that helps a lot. That helps new people find the podcast. And if you’ve been a listener, and I think iTunes finally makes it easy. I think that’s the hard thing about reviews is companies have made it so hard to review stuff for so long.

Reese Harper: Yeah.

Ryan Isaac: But we’d love a review or two.

Reese Harper: Yeah, and-

Ryan Isaac: Or three, or 10.

Reese Harper: And a negative review’s fine. If you’re willing to do that-

Ryan Isaac: Like I don’t think Ryan’s funny. It’s fair. I’m not.

Reese Harper: That’s the only negative reviews, like I don’t think they’re funny. Okay. I get that.

Ryan Isaac: Okay. That’s very objective. That’s probably a true statement.

Reese Harper: Their advice is really good and I love the personal finance side, but I don’t like their-

Ryan Isaac: They’re not funny. Shut-up, get to the point.

Reese Harper: Take out the humor.

Ryan Isaac: I have heard that, though. Shut-up, get to the point. Let’s get to it.

Reese Harper: All right.

Ryan Isaac: 200th episode, what we’re going to do today is we’re going to take a little bit of a look back, kind of … we’re going to talk about the state of dentistry. You have some cool new stats. We’re talking about where dentistry is today, little bit of a look back. We’re going to talk about some of the statistics, some of the averages that we’ve seen from the clients we work with. Like what does the average dentist save, and spend? What’s the average dentist worth? That we work with, so we’ll hit that later on. But first, I thought just to take a little nostalgic trip, since this is a historic episode.

Reese Harper: Yeah.

Ryan Isaac: Our company, more or less, officially started in like ’07, that’s fair to say?

Reese Harper: Yeah.

Ryan Isaac: Good year.

Reese Harper: Great year. If you’re looking forward to Lehman Brothers going under, followed by Bear Sterns, followed by Wachovia.

Ryan Isaac: And the value of all of our houses for the next-

Reese Harper: Followed by the entire real estate market …

Ryan Isaac: Was a great year.

Reese Harper: Right after you … And I’m sure a lot of you-

Ryan Isaac: Right after you bought it.

Reese Harper: … were at the point, had just bought the property, you’re loving that. Trying to equity mill it, borrow out that equity.

Ryan Isaac: It was a good year.

Reese Harper: And getting it going.

Ryan Isaac: Neither of us were bearded, I was still bald.

Reese Harper: I get it.

Ryan Isaac: Were you less gray?

Reese Harper: I don’t think I had gray hair at that-

Ryan Isaac: Yeah, okay.

Reese Harper: ’07 gave me my gray hair.

Ryan Isaac: You were non-gray, non-beard. I was still bald. I want to go back to the year 2000. I looked up the stuff that was happening in the year 2000. Like pop culture, tech, music, sports, and it’s kind of funny to look back and be like, “Whoa, that as a long time ago.” We’re talking about ’07, here’s some cool interesting things. That was actually the first year the iPhone was released, did you know that? Did you get one that year? June 29th.

Reese Harper: I don’t think I got one that year, because I think I was still using the handheld PDA device.

Ryan Isaac: Yes.

Reese Harper: I want to say I was kind of committed to the Palm Pilot, PDA, phone, for like a year.

Ryan Isaac: Yeah, so I was curious about this. I remember where I was, the job I was sitting in at the desk when someone walked in with their first iPhone. And I remember thinking, “How stupid is a glass phone?” That’s the worst idea. I was like, “That’s the dumbest thing ever.” And so, I looked up what were the best phones just previous to this. It was kind of funny. We had the … do you remember the LG Chocolate? It was like-

Reese Harper: Oh yeah.

Ryan Isaac: … really thin, LG Chocolate.

Reese Harper: Yeah, okay.

Ryan Isaac: Slider phones. You turn it on and slide it up?

Reese Harper: Yeah, that was-

Ryan Isaac: And you have like a QWERTY keyboard?

Reese Harper: Yep. I remember those.

Ryan Isaac: Blackberry’s were still really big. But the Razr’s were the coolest phones. Just a year before that. And then ’07 hits, and then the iPhone gets released, and then everything’s totally different-

Reese Harper: Yeah, was Blackberry Razr? Is that what it was?

Ryan Isaac: No. That was different. I think Motorola was the Razr. Blackberry was still huge, though.

Reese Harper: Blackberry had a big phone, that was going to change the … to compete with the iPhone. I remember it, the face, you pushed button … it was like a whole glass screen.

Ryan Isaac: Yeah. The whole glass thing depressed as you-

Reese Harper: Yeah.

Ryan Isaac: Anyway. So ’07, we get the mighty iPhone, which is crazy. Let’s see here, top movies. Harry Potter and the Order of the Phoenix. Juno. Guess what the top song was? Crank That, by Soulja Boy.

Reese Harper: Oh yeah. I remember that.

Ryan Isaac: Did you ever know the Soulja Boy dance? Did you ever to the Crank That dance?

Reese Harper: I was never really accepted in those kind of settings.

Ryan Isaac: iPods were still being … the first iPod touch came out, too. iPods were still a thing. Load physical MP3s on your iPod. Those were still top sellers at the time.

Reese Harper: Right. Mm-hmm (affirmative).

Ryan Isaac: Let’s see here. The top 10 baby names of ’07, we got Emily, Isabella, Jacob, Ethan, Daniel … Ethan was born, your son Ethan, was born ’05?

Reese Harper: ’05. I was a little ahead of my time.

Ryan Isaac: Yeah, me too. Isabella was born in ’05. I knew. I knew. I knew it was coming. We were calling the top of the market there. Okay, best, most popular TV shows in ’07. American Idol, Dancing with the Starts, Desperate Housewives, your favorite. House, CSI-

Reese Harper: That’s a lie.

Ryan Isaac: … Gray’s … that is a lie. Survivor. And, yeah. Okay, so let’s-

Reese Harper: Lost. What about Lost? When was Lost?

Ryan Isaac: That was in ’07. That must’ve started earlier.

Reese Harper: Okay.

Ryan Isaac: I was curious about this, too. After the iPhone came out, here were the top downloads. Top paid downloads after ’07 when the iPhone came out. Koi Pond, Texas Hold’em, Moto Chaser, Crash Bandicoot. Weren’t you a Crash fan?

Reese Harper: No.

Ryan Isaac: No? Okay.

Reese Harper: I did know of him.

Ryan Isaac: Super Monkey Ball. Cro-Mag Rally, Enigmo, Pocket Guitar, Recorder, and rounding out the list of top apps after the iPhone was released, iBeer.

Reese Harper: Okay. All right.

Ryan Isaac: ’07, there’s like a recap. That’s what was happening when we started our business, that long ago.

Reese Harper: Yeah.

Ryan Isaac: 12 years ago.

Reese Harper: It’s a long time, man.

Ryan Isaac: Yeah, good memories. I thought we could talk a little bit about where dentistry has evolved to today, like just how the industry’s changing, how its changed over time. We have quite a lot of statistics. I’ll kind of lead this here, but if you want to just jump in with anything that you’ve found kind of interesting. I was just going to start off with the number of dentists that’s grown over the last 10 years since that time.

Reese Harper: Okay.

Ryan Isaac: Well, a little bit more than 10 years. About that time there were 178,000 dentists in the country actively practicing. And now, today, there’s like nearly 200. I was curious though, how the US population grew with that though, during that time. What’s the US population now, do you know? I wrote it down here, let’s see.

Reese Harper: It’s still less than-

Ryan Isaac: Pop quiz.

Reese Harper: … 400 million.

Ryan Isaac: Yeah, quite a bit.

Reese Harper: But I think it’s like 300 and …

Ryan Isaac: 330.

Reese Harper: … 60, I would’ve said. No?

Ryan Isaac: 330.

Reese Harper: 330?

Ryan Isaac: Yeah. 330, and 200,000 dentists, that’s an equivalent of like 1,600 people per dentist, nationwide.

Reese Harper: Mm-hmm (affirmative).

Ryan Isaac: 10 years ago though, or a little bit more than that, the US population was lower. It was like just barely over 300 million. But there were 1,700 people per dentist.

Reese Harper: It’s got a little denser? A little bit denser.

Ryan Isaac: Yeah, mm-hmm (affirmative). Yeah.

Reese Harper: Yeah.

Ryan Isaac: It’s kind of interesting. I don’t know if that’s enough to feel it or not. Probably in certain areas where people have congregated. Graduates, the number of graduates per year, so 10 years ago we’re looking at like 4,800 kids graduating school. Not kids, those are full-grown adults. Dental school takes a long time.

Reese Harper: Yeah.

Ryan Isaac: I’m just old, everything feels like a kid now, maybe.

Reese Harper: I get it.

Ryan Isaac: Pretty old. Now it’s 6,300 graduating students every year.

Reese Harper: Wow.

Ryan Isaac: That’s a lot. Over half, I learned this, shout out to the Mommy Dentist In Business crew. We had a good event out there in New Orleans couple weeks ago, I learned that more than half of dental students now are women.

Reese Harper: Yes. And more than half of women will be in the graduate group out of residency too, next year, which I think is the first time-

Ryan Isaac: First year that’s crossed halfway.

Reese Harper: Uh-huh (affirmative).

Ryan Isaac: Yeah, it’s really fascinating. That’s kind of the change in just the number of dentists and just how it’s evolving. It’s kind of interesting. It seems like its, I don’t know, it’s kind of keeping up with population. It’s probably just really dependent though, like area by area. I’m sure some of the more dense cities feel like they’re getting more and more crowded.

Reese Harper: Yeah.

Ryan Isaac: You kind of hear that.

Reese Harper: Mm-hmm (affirmative).

Ryan Isaac: Do you want to jump in with anything? I was going to talk about percentage of ownership, and DSO. That’s where I was going to go next.

Reese Harper: Yeah, go into that. I’ve got some thoughts on that.

Ryan Isaac: Okay. Well, here. I’m going to open up … here’s some data that I thought was kind of interesting. Percentage of ownership, this is … And by the way, this is all ADA stuff, and most of it’s 2017 and … No, most of it’s 2018 data. Some of it’s 2017 data. The total, if you break down percentage of owners, so 51% of dentists as of 2018 were solo owners. 51% solo owners. That’s kind of interesting. That’s kind of the old business model of dentistry. One person, one location, solo dentist. 27%, so just shy of a third, were owners with a partner.

Reese Harper: And that, according to that ADA research, that partner could be a non-dental partner, or it could be a dentist partner. Almost 30% of practices in 2018 had some sort of partnership ownership.

Ryan Isaac: Yeah. I wonder how those … it’d be interesting to see how those segments are growing. Anecdotally, I think it does feel like that’s a growing segment, that more and more people are growing their businesses with partners.

Reese Harper: Yep. Yeah, definitely.

Ryan Isaac: Dentists and non. And then, as of 2018, 23% of dentists were non-owners.

Reese Harper: Yep.

Ryan Isaac: Here’s what I always find really fascinating is historically men have owned practices at a much higher percentage than women have. But, it’ll be really interesting to see what happens now that so many more women are in dentistry, now that more than half to the students are women. And then like you said, the next graduating class at residency will be at least 50% women.

Reese Harper: Yeah, it’s just over 50. It’s pretty cool to see that, and they’re going to have a big impact because I think in any industry, when women start getting involved and bringing their perspective, there’s just a lot of insight and there’s a lot of business evolution that happens, that doesn’t happen when women are not as involved. Whether it’s on boards, whether it’s in C-Suite positions, the more women that get involved in influencing the development of an industry, like the … it’s statistically much better for the industry.

Ryan Isaac: Yeah.

Reese Harper: You understand a segment of the population better, that you’ll just never really be able to understand as well without their involvement. It’ll be cool to see how that changes dentistry as well.

Ryan Isaac: Historically, yeah. Under represented. I’ve heard different arguments for how it will change things. I’ve heard people say, “Well, since there’s so many more women that will be dentists now, women will own practices at a much higher rate than they used to before.”

Reese Harper: Mm-hmm (affirmative).

Ryan Isaac: And I’ve heard people say that it might not change dramatically, and therefore will just flood the market with more non-owner dentists that will help keep fueling the multi-location DSO, multi-practice model.

Reese Harper: Yeah.

Ryan Isaac: With associates.

Reese Harper: I think it’ll be interesting to see how many women continue to want to own, and how that … I know it’s an increasing market, it’s a growth market, but it’s a very … it’s a minority of practice owners right now, and there’s just upside from here.

Ryan Isaac: Yeah, it’ll be really interesting. Okay. That was what I thought was really interesting about ownership. But then how it breaks down between DSO and solo. And this is data as of … this is 2016, and I would say that 2017 to 2018 probably saw quite a bit of DSO growth. It just hasn’t been reported yet.

Reese Harper: Well, it did see some growth, but I don’t think it’s quite as substantial. We’ve got some data from 2017, it’s not showing a huge [crosstalk 00:16:58]

Ryan Isaac: Huge spike?

Reese Harper: Yeah.

Ryan Isaac: That other graph there.

Reese Harper: Yeah.

Ryan Isaac: As of 2016, only 8.3% were DSO affiliated solo or group practices.

Reese Harper: Yeah. And that’s ADA research that under represents really, what’s going on. Because what the ADA’s representing there is they’re saying, “Okay, of all the dentists in the country, 28% are solo practice. And then 8.3% are officially DSO affiliates-”

Ryan Isaac: Yeah, okay.

Reese Harper: But to be an official DSO affiliate, that means something very different than a large group. Or like a non-DSO affiliated group practice.

Ryan Isaac: Yeah, which is … anecdotally, that feels like that’s a very large growing segment of the population.

Reese Harper: Yeah, there’s a lot of practices that … or a lot of large group, we’ll just call it corporate sponsored dentistry, that isn’t a traditional DSO. And they’re not reporting as a DSO. We’ve got clients that have a 10 to 15 location operation that are functioning in this … where the ADA would call a non-DSO affiliated group practice-

Ryan Isaac: Yeah, because they’re like independent groups.

Reese Harper: Yeah.

Ryan Isaac: Yeah.

Reese Harper: The best representation is probably the owner with partners number that came out in ADA’s 2018 data. It was like okay, we have 51% solo owners, then we have 27% owner with partners. That percentage-

Ryan Isaac: that segment.

Reese Harper: … that segment, there’s something about that, between eight and 27, right? 8% is what officially was reported-

Ryan Isaac: Is DSO.

Reese Harper: … in 2016 as an official sponsored DSO organization, but there’s a bunch of “DSO’s” that are operating as more of a group practice model, big operations.

Ryan Isaac: Oh yeah.

Reese Harper: That wouldn’t probably be reporting as a DSO. And so, it’s somewhere probably between 8% and 20% right now, probably closer to 20, closer … but less than 25, right?

Ryan Isaac: Yeah.

Reese Harper: And it’ll continue to grow, but there’s a lot of pressure … I was taking to our development team this morning about that there’s this contrast in … The industries go through what they call modularization, which is like you want to specialize and everything’s broken up into small component parts. And then sometimes they get together and kind of marry. Like Apple right now is a good example of a kind of a all-in-on solution where Microsoft would be an example of something that was more modularized.

Ryan Isaac: Because they farm out their processors, or their hardware, and they keep software-

Reese Harper: Yeah, where like Apple would say, “We want to own a Silicon plant. And that’ll help us actually improve the-”

Ryan Isaac: Dry production, cut costs.

Reese Harper: And why do we build our own processors? Because … or why do we own our own Silicon factory? Because we want to improve our user experience on the interface so that it computes faster. Because it’s all about this customer experience they’re trying to get to, and I think industries, just because there’s a makeup right now of a growing trend towards consolidation, doesn’t necessarily mean that that trend will continue.

Ryan Isaac: Yeah, like indefinite growth of-

Reese Harper: Yeah, like computing power doesn’t exponentially grow every year at the same rate. There’s periods of time where computing power takes leaps and bounds, and then technology needs to evolve and things change, and I don’t know, I just think there’s this feeling of like wow, this trajectory of …

Ryan Isaac: There’s like a fear of it.

Reese Harper: Yeah. Like everyone … there’s examples of large corporate environments that have been really positive, and some that have been negative. And there’s been advantages in consolidation, and sharing infrastructure, and sharing human resources, and figuring out how to operate with autonomy, but still sharing resources that are really healthy. I don’t really feel like there needs to be a fear around what-

Ryan Isaac: Because there’s like an equilibrium point, right? That’ll hit in the market. A lot of the money that’s come in from private firms, and private investment in venture capital, or private equity, that’s kind of a newer thing over the last five years. And will likely slow down at a certain point.

Reese Harper: Well, if it’s … yeah. If it’s good for the … if the client, if the patient is having a better experience because of a particular business model, that will continue to grow.

Ryan Isaac: Right.

Reese Harper: And that’s what everyone needs to be concerned about, is looking at your own business and saying, “Are my patients having the optimal experience because of how I’m operating my business?” If they are, you’re fine. If there’s some weaknesses in your business model, if you’re neglecting certain things, if there’s things that technology can improve that you’re choosing not to implement-

Ryan Isaac: Or a potential partnership that would bring to the table a different pair of eyes, a different personality, different skillset that would …

Reese Harper: Yeah. Or if you’re charging three times as much as a competitor, or double what your competitor’s charging, or even 50% more, but you’re not adding 50% more value. What value are you adding for what you are charging? Does your value match up with your price? And I think that those kind of things, if you’re wrong about something, like they need to make an adjustment, and if your patients really are getting the best experience and the price is fair, and they’re happy, and they’re content-

Ryan Isaac: That’s a fine business model.

Reese Harper: … then you’re probably not going to see that go away, because the reality is the patient ultimately will dictate the way the industry goes.

Ryan Isaac: Yeah.

Reese Harper: And if patients like a particular type of business model, then … and what’s good for corporate dentistry is in conflict with what’s good for the patient, then corporate dentistry will have to adjust, and change, and shift.

Ryan Isaac: Which I feel like it has. You see some of these DSO offers come through, or large group offers come through to our clients, and it’s not-

Reese Harper: You’re talking about buy-out offers.

Ryan Isaac: Yeah, buy-out offers. Or acquisition offers, and it’s not like the one size fits all that used to be around 10 years ago. It was like one model. There’s some pretty unique and creative, and pretty cool models out there that are letting people keep quite a bit of control, personal branding, a personal touch in a small town. There’s a pretty big variety. That’s why you hear this argument a lot, like oh, it’s indefinitely going to grow and eventually we’ll be swallowed up by the big hospital systems. But there’s a very big difference in my untrained brain between a large hospital buying out a bunch of private physicians, like that happened over the decades, versus some of these new DSO and large group structures that are making acquisition offers.

Reese Harper: Yeah.

Ryan Isaac: It’s not the same as one hospital that owns a whole city, is gobbling up practices versus a 50 group, 50 location group practice that’s saying, “Hey, we’re partners. And you keep your branding, and it’s your personality, and you’re going to keep working. And you love this.”

Reese Harper: Yeah.

Ryan Isaac: We’re just adding something that you don’t have before.

Reese Harper: Yeah.

Ryan Isaac: That feels different to me, and why the trajectory might be not as scary as it possibly seems. Here’s another thing that I thought was interesting. As of 2017, younger dentists now are owning practices at a decreased rate compared to 10, 12 years ago. Before, if you go back more than a decade, 83% of newly graduating dentists were owning practices, and now it’s down to 74%.

Reese Harper: Yeah.

Ryan Isaac: Do you think that’s just the loan thing? Is it just there’s more debt now? Or are people wanting more experience before they own? Or opportunity’s different?

Reese Harper: I think it coincides with the growth in corporate dentistry. Like corporate dental practices are doing a lot more of the production than they’ve ever done before. And so, the opportunities for people to come in and get experience are also more available where before you had to go start a practice.

Ryan Isaac: Yeah. Plus, your opportunities are just different.

Reese Harper: Yeah, the opportunities for associates are increasing. The interesting thing though, it still though, the trend is that people are still going to corporate to gain experience and then leaving to go start their own practice, as time passes. The amount of associates that own … The percentage of associates at the beginning of their career, that are going into private practice is declining, associates going out of school, out of residency to own practices is going down. But what appears to be happening is that as dental … as the opportunities for associates continue to grow, people are more likely to take that associate job out of school, but then they are still turning back to-

Ryan Isaac: To ownership.

Reese Harper: … I guess ownership within about five to six years on average, it’s almost like of all the associates that went in, it’s 60 something to 70 something percentage of them are back into private practice.

Ryan Isaac: Yeah, because I hear this worry from client owners that worry about younger dentist’s ability to either get loans to buy-in, or the desire to buy-in because loans are so much higher than they used to be.

Reese Harper: Yeah. Student loan debt’s obviously gone up a lot more than the average income has increased.

Ryan Isaac: Yeah.

Reese Harper: And that’s true. Student loan balances are somewhere between … it’s close to like four to one, in terms of income. There’s not really another professional occupation that has that much student loan debt.

Ryan Isaac: Yeah. Income ratio.

Reese Harper: To income. It makes it pretty untenable for them right out of school to-

Ryan Isaac: But that’s probably not what’s happening in the data, right? It’s not that younger people are like, “Oh, we have so much more debt than previous generations, so therefore we’re not going to own.”

Reese Harper: No, it’s just there’s more job opportunities, I think that are just ready for them. And people want to … you’ve got to get … People understand that training and specialization’s more important in dentistry than it used to be. A lot of people are probably, I think a little over half are going on to do a GPR right now, or some kind of post-

Ryan Isaac: Yeah, that’s right.

Reese Harper: … graduate specialization. If you take all the dental school graduates total, I think there’s like, what you say, like 6,300. But I think only like 20 … I don’t know. I think there’s like 3,000 or something? I can’t remember, that are going into practice. A little less than half are going right in, but the other half are going on, and that’s also increasing.

Ryan Isaac: Yeah, that’s true.

Reese Harper: The rate at which people are choosing to specialize and improve their hand speed and get more training, that’s going up. People are just choosing to like … It’s like hey, I’ve already borrowed this much to begin with, I might as well give myself the best shot at success-

Ryan Isaac: Get really good at it. And again, it goes back to what you were saying, opportunities are just different than they used to be.

Reese Harper: Mm-hmm (affirmative).

Ryan Isaac: Kind of speaking of that, there was some … I thought it was pretty interesting data, we hear this feedback quite a bit too, when we do Q&A and surveys, and how people feel about repayment on loans. There was this data that kind of polled a bunch of people on how they are treating their debt repayment. And so, 52%, almost 53% of the people that responded says they’re in aggressive repayment, possibly overpaying on their loans where possible. That’s how they categorize themselves is very aggressive, might even be overpaying. That was almost 53% of everyone’s strategies. And then the next closest one was 36% of people said that they minimized their monthly payments to protect incoming cashflow.

Reese Harper: Interesting.

Ryan Isaac: It’s like, pretty polarized. And I mean, you see this too, we see this all the time when we go to Q&A with dinners and everything, like how does everyone feel about debt repayment where you talk to clients. Or people who are calling to have a chat with us, there’s really polarizing views on what you should do with your debt. It’s kind of crazy to hear a student that’s got 600, 700 grand of student loans, that refinances a seven and 10 year repayment.

Reese Harper: Yeah.

Ryan Isaac: Would you do that with a $700,000 mortgage? You would just bury yourself in payments.

Reese Harper: Yeah, totally. I just think that’s definitely something that people need some education on, because as the debt balances go up, it’s got to be more cautious.

Ryan Isaac: You just got to be more strategic, and you can’t … yeah. Another subject for another day. But I was going to actually, there was some cool data here on the average age of retirement, which we’ve talked a lot about in our presentations in podcast. But did you want to jump in with anything else you were looking at there?

Reese Harper: Go ahead and hit that one, I’ll follow up.

Ryan Isaac: Okay. As you’ve listened to our podcast, maybe there’s a question about your finances you’ve wanted to ask. It’s easy to get an answer. All you do is just pick up that phone, give us a call at 833-DDS-PLAN, to set up a consultation. Or if you don’t want to call us, you can just go to the website at DentistAdvisors.com, click the book free consultation button, and set it up. It’s free, do it today.

Ryan Isaac: I thought it was interesting, as an overall trend, so this goes back to ’01 until 2018, average dentist’s age went from 64 years old to 69 years old. As an overall trend. It’s kind of clawed … never seen it like this before, it breaks it up between male and female, so the average male retirement age is just shy of 70 years old. It used to be 65, now it’s 70. The average female retirement age is 62, and it used to be 52. The average female retirement age, it jumped quite a bit over the last 15 years. There’s a 10 year difference now. The average male retirement age jumped five years. It’s kind of … I don’t know what that means. I just never seen it broken out like that before. That’s really kind of fascinating. Women are retiring earlier than men.

Ryan Isaac: If it were purely financial, I would just point to numerous countless studies and data showing that women are smarter with their money, they’re better investors, have higher returns and they’re more conservative by nature in their risk assessments, so maybe they just have more money to shut it down. I don’t know. I don’t know what the data … I don’t know what that means, you know?

Reese Harper: Well, a lot of-

Ryan Isaac: It’s also lifestyle, and differences in responsibilities outside the practice, too.

Reese Harper: Yeah. Well, and in most cases when a woman is retiring from dentistry, the majority of those are part of a dual-income household.

Ryan Isaac: That’s true.

Reese Harper: And when men are retiring, on average, there are less men that are in a dual-income household.

Ryan Isaac: Yeah, that’s true.

Reese Harper: And so, what you typically see is a-

Ryan Isaac: A higher retirement age for men, on average that will always sustainably be higher.

Reese Harper: Yeah. Just because until there is an equal number of women in dentistry working full-time, to men working full-time, you’ll probably see an earlier retirement date for women, just based on that.

Ryan Isaac: It’s an interesting industry though, because there’s just so much longevity in dentistry. The subject of why dentists retire later, you cannot discount financial reasons.

Reese Harper: Yeah.

Ryan Isaac: We see it in practice all the time, but it’s an interesting industry because there is a lot of longevity if you like it. If you’re physically, mentally, emotionally healthy, and you like the job, you can offload the responsibility of ownership whenever you want, in any number of ways, and then just keep doing dentistry for quite a while.

Reese Harper: Yeah.

Ryan Isaac: To me, when I think about retirement planning for clients, the option to make a six-figure income until you’re 70 years old by working a day or two a week, it takes so much pressure off of retirement accounts, and portfolio withdrawals, it’s crazy. Being able to push that longevity in a career like that, it makes a massive amount of difference.

Reese Harper: Yeah. I think it’s a great time to be in the industry, so-

Ryan Isaac: Do you have any controversial predictions about the future of dentistry, as a whole? Anything that would upset people that we might want to throw out a little bit?

Reese Harper: Well, I think a lot … I do think there’s going to be continued consolidation, and I think there will be a stark contrast between the practices that are being run by dentists and have majority ownership by dentists. I think those practices, I think we’re going to see a shift towards … If corporate dentistry wants to continue to grow, it’s going to take a lower percentage of ownership in the dental practice itself because dentists that own the majority of their practice and have the economic upside of doing that are going to be the practices where the patients are getting the best care. When you take dentists ownership out of the dental practice, right? And you don’t give them any economic incentive to want to be an owner, and incomes start flattening, what you’ll see is you’ll see a few dentists, right now still approximately whatever, 70 plus percent of the population, is saying, “No, I want to own. Because I want the economic upside.”

Reese Harper: That’s the reason they’re doing it. Yes, they want to control outcomes and they want to have the best type of practice, and they want patient care to be off the charts, but the primary reason-

Ryan Isaac: It’s money.

Reese Harper: … is money.

Ryan Isaac: Yeah. It’s more income.

Reese Harper: That’s the driver. And you can say, “No, it’s not. I’m not motivated by money.” I know, but objectively, you’re on an island and you’re so altruistic, I totally respect it. I know that hopefully all of us have that tendency to some degree. But you take the money out of dentistry, and you flat-line the income, if there … there’s going to be a mean reversion, where the dentists who are going to be like, “You know what? I don’t care. I’m going to …” There’s going to be a big storm … If the patient is having a worse experience-

Ryan Isaac: Yeah, for sure.

Reese Harper: … then the dentist, there will be dentists that are like, “I got to fix that.”

Ryan Isaac: Yeah.

Reese Harper: If the patient experience is poor, there will be dentists that’ll fix it. And they’ll fix it even if it means making less money. There’ll be people that are like, “You know what? I’m going to fix that problem.” My prediction is, if ownership starts tilting towards non-dental owners too heavily, patient experience will decline. And if it starts to decline, then dentists will go, “I’m not going to do that anymore. I don’t care about …” Right now, the industry, a lot of dentists are just like, “I don’t care …” There are a lot of dentists, I’m just saying, it’s not the majority, but many, they get the evaluation from that …

Ryan Isaac: DSO?

Reese Harper: DSO, and they’re like, “Screw it, I’m out.”

Ryan Isaac: Yeah.

Reese Harper: Peace.

Ryan Isaac: With seven million dollars? Okay.

Reese Harper: Peace. I don’t care.

Ryan Isaac: Yeah.

Reese Harper: And that kind of nonchalant, non-caring kind of point of view, I know I’m oversimplifying it for some of you, because it’s more complicated than that, but the patient in that scenario is being neglected if money’s driving the transaction.

Ryan Isaac: Yeah.

Reese Harper: And eventually, if money’s driving the transaction, you guarantee that it’ll drive it post-transaction, and that’s going to affect care, it’s going to affect outcomes-

Ryan Isaac: Affect patient and relationships, but you’ve probably heard just as many dentists on the opposite side of that. I’ve heard a lot of people say that. Like yeah, it’s a good offer but I just don’t … I’m like, “This is my baby. This is 30 years of my life and these are my people, this is my community. And I just can’t do it that way.”

Reese Harper: Yep.

Ryan Isaac: I got to find another way to go out of this thing, because I can’t do it that way.

Reese Harper: Yeah. But I’m just saying that the economic reality of dentistry though, compared to medicine, they’re very different.

Ryan Isaac: Very different. And so are these major buyers, you know? It’s not a hospital system.

Reese Harper: Well, and it’s because you’re actually selling treatment plans. You’re selling … I’m talking about GP’s, and specialists, you’re selling treatment.

Ryan Isaac: Yeah.

Reese Harper: Some doctors do that-

Ryan Isaac: Multiple options of treatment, yeah.

Reese Harper: But most of the medical community’s not actually selling treatment.

Ryan Isaac: It’s reactive advice giving.

Reese Harper: Not themselves.

Ryan Isaac: Yeah.

Reese Harper: They’re not getting paid from any drug companies anymore. They used to be. But they’re not getting paid to implement treatment. They’re only getting paid to see patient visits.

Ryan Isaac: Yeah.

Reese Harper: And maybe increase the cost of their per-visit consult.

Ryan Isaac: Yeah.

Reese Harper: They’re basically on fixed salaries.

Ryan Isaac: Yeah, it’s like … yeah.

Reese Harper: And that’s what that industry’s doing right now. I’m not saying that’s good, I’m just saying that’s the underlying reason why hospitals could employ them and get to the point where this was standardized. Because it’s like, there really isn’t treatment. These are consultative experts that are getting paid for their advice. They can be-

Ryan Isaac: There’s a different level of scale there, too.

Reese Harper: Yeah.

Ryan Isaac: There’s also a different level of liability and insurance costs.

Reese Harper: Yep. It’s just a different-

Ryan Isaac: It’s a totally different industry.

Reese Harper: What’s the future? Well, I don’t-

Ryan Isaac: That’s pretty bold. You upset a lot of people with that bold prediction.

Reese Harper: That’s not bold.

Ryan Isaac: It’s not that bold. I think it’s very optimistic. I think the same way. I think it’s really optimistic, and I would just go back to what you were saying in the beginning. I think having so many more women come into the industry is just going to change it for the better, and we’re going to just … you’re just going to see different styles of treatment and different ways of running a business, and hiring and firing, and training, and hours of service, and business models. You’re just going to see … there’s just different perspectives coming into an industry that hasn’t had that perspective for a long time, or ever. And it’s going to shape it really cool.

Reese Harper: I think you’re going to continue to see PPO’s shrink. As a percentage of the overall market. I think you’re going to see membership programs and fee-for-service dentistry-

Ryan Isaac: Yeah, I think that’s a good call. Yeah.

Reese Harper: And that’s going to … there’ll be dentists that choose to embrace the ownership of their little venture. And adjust their fee schedules, become less dependent on third-party payers, be innovative with their services, they’re going to continue to scale to a better financial place, and then there will be a lot of people that will struggle. What I’m saying is, the dispersion I think, will continue to beget worse. Dentists that just wanted to get in practice dentistry-

Ryan Isaac: More polarized.

Reese Harper: … it’s going to be harder because most of the job opportunities that they’re going to be faced with are going to be … the majority of people that … the majority of the stock’s going to be owned by non-dentist owners who have a really strong incentive to minimize wages.

Ryan Isaac: Yeah.

Reese Harper: And control cost.

Ryan Isaac: Yep.

Reese Harper: Because their PPO marketing …

Ryan Isaac: Gets driven down, and down, and down. Yep.

Reese Harper: And so, I just think you’ll see diversity of care change a lot. You’ll just see the care get more diverse, you’ll see more options, and they’ll be more clearly defined.

Ryan Isaac: Mm-hmm (affirmative).

Reese Harper: And that’s cool. Because then it’s just like wow, that future is one where consumers have more options-

Ryan Isaac: Yeah, more education, more transparency …

Reese Harper: I’m just saying, if you want to be in dentistry in the next 15 years, and you want to be an owner or you’re an owner now, you got to find a way to move to the … Do more, and charge more, and know your customer, and service them in an excellent way. Don’t do less and charge less thinking that’s good for them. Because you-

Ryan Isaac: That’s true.

Reese Harper: There are ways to charge less, and that is what … that’s-

Ryan Isaac: But isn’t that why there is a dentist clinic in Walmart now?

Reese Harper: Yeah.

Ryan Isaac: So you can do less, charge less?

Reese Harper: If you want to do less, and charge less-

Ryan Isaac: That needs to be an option for consumers in every industry.

Reese Harper: … refer them to someone who-

Ryan Isaac: Does less and charges-

Reese Harper: … wants that life, and wants that kind of delivery. And then when patients …

Ryan Isaac: Want more.

Reese Harper: Want less from you, you can tell them that there are other providers that are less expensive that don’t offer the level of care that you provide.

Ryan Isaac: That’s fair.

Reese Harper: And I think that’s a great solution. But the market’s going to get more diverse. Just figure out where you want to be.

Ryan Isaac: In 10 years from now, what episode will we be on? 1000? Will we hit 1000? Shout out to Mark [Costes 00:41:57], I just saw Mark Costes today hit 700.

Reese Harper: Yeah. He’s doing now every day, shout out to him.

Ryan Isaac: Shout out to Mark, sleeping 30 minutes a day and podcasting his life. I don’t know, maybe 10 years from now it won’t even exist anymore.

Reese Harper: Yeah.

Ryan Isaac: But whatever.

Reese Harper: Podcasts won’t exist in 10 years?

Ryan Isaac: Okay.

Reese Harper: I don’t know.

Ryan Isaac: Will we be like holograms?

Reese Harper: No, dude. It’s going to exist. I don’t know if it’ll be called a podcast, but I think podcasts-

Ryan Isaac: We’ll laugh at this.

Reese Harper: … are the new radio. For sure. Radio’s dying, man. Podcasting’s grown.

Ryan Isaac: It’s so cool.

Reese Harper: It’s cool.

Ryan Isaac: All right, well once again, we just want to thank everyone for listening. If you’re just joining the show recently, or if you’ve been a longtime listener and you know all of the inside jokes, and you know all of the C for Chi noises, and you’ve seen all of the old pictures. Some of my favorites Reese, are when we did have the desks that we were sitting at.

Reese Harper: Yeah.

Ryan Isaac: That was just terrible.

Reese Harper: We used to sit on a desk.

Ryan Isaac: We used to sit, we had the black cloth in front of it, it was so bad. But thanks, thanks for listening. Again, it would be awesome if we could get a couple reviews, if you’ve been listening and you’d like to just give a shout at the show, and rate it in iTunes, it helps more people find the show. And that’s always great. We love to talk to people, we love to jump on the phone and do free consultations, and talk about your situation in more detail. If you’d like to do that, then go to DentistAdvisors.com, click on book free consultation, and find the time. We’ve got handful of advisors standing by. What did they used to stay on the old telethon shows? Like lines are open, we have operators standing by.

Reese Harper: Yeah.

Ryan Isaac: We have operators standing by.

Reese Harper: It’s PBS.

Ryan Isaac: Yeah. And we also have a really cool Facebook group where there’s questions and discussions, and every once in a while a funny meme about a cow. We’d love to have you in there too, and get some of your points of view and your questions. DentistAdvisors.com/group, that’s our Facebook group. And again, thank you so much for listening. Its been so cool and so much fun doing a podcast. I remember you wanting to do this Reese, for a long time, and we finally did. I had no idea where it would go, but it’s cool to see where its ended up. Thanks everyone, thanks [Hoss 00:43:59], thanks for all the people working on the show. There’s a lot of smart brains behind the scenes.

Reese Harper: Thanks to everybody. Carry on.

Practice Management