EisnerAmper Healthcare: Decoding Dental Industry Trends for 2024

Eric Cutler:

You too, you too. Thanks for having me.

Tony Davis:

We're going to talk through some of the dental service offerings of EisnerAmper, as well as some of the trending we're seeing in the dental marketplace. And, Eric, maybe just as a way to get us rolling, you want to give us a quick introduction, your background a little bit, and how you've got your career going within the dental space.

Eric Cutler:

Yeah. So I've been in public accounting for, it's going on about 27, 28 years. A tax guy by trade and by technical training. But within the last 12, 15 years or so, I really honestly took a liking to healthcare and in particular the dental space. And so I found that not only was that particular space lacking in advisement from a tax and accounting standpoint, but really from a practice management standpoint.

And so it's been a love affair for the last 12 to 15 years of just really pouring into the dental community all that I can to really help practices from the inside out become not just successful practices, but successful businesses as well.

Tony Davis:

Great. Thank you for that. I think I just want to mention to the audience that today is going to be just an introduction into some of the things we're seeing in the dental market locally through some of our geographic areas, and also on a national level. And we hope to expand on some of these subject matters in future podcasts down the road here.

When we think about the listening audience and those that are either working with practices, dental practices, or those that are in dental practices, and maybe thinking about where they're sitting in today's economic environment, I think there's about three or four trends that we're seeing, and I think we want to just touch on each one of them and maybe give a few words of commentary around what we're seeing in the marketplaces specifically.

Practice transition, that's a hot topic. We've seen a lot of transactions occur over the last decade or so. A lot of pressure coming from outside sources, such as private equity. We're seeing a bubble now in the retirement of dentists that own their own practices or maybe in a small group. So what are they doing in that setting where there's exiting a dentist. Eric, what are some of the things you've been seeing in that particular segment of the industry?

Eric Cutler:

Well, basically a lot of what you just said, which is there's still a lot of activity, but it's an activity, honestly, at various levels. Just like you said, there's a bubble of retiring dentists. It's time for them to exit. And so it's making way for the ability to new dentists to come in and transition, buy into the practice, either in part or in whole. The transition is also there from dentists wanting to actually start their own practice from the ground up. And so you get into the what's your risk tolerance. That's one of the things that we'll talk a lot about with these doctors who are wanting to do this is, "What's your risk tolerance as far as buy versus build."

But probably the most, if you can say this, the sexiest of all the transitions is in the private equity, the DSO marketplace. That's really where it's very hot. And so we are not seeing that really slow down much at all. And in fact, a lot of it, what we're seeing too is if you are not rolling up into a DSO, you are at least participating in a DSO for them to handle your back office and things like that. Which a lot of that actually, it seems to ... Then it leads to an eventual roll up, is what we expect to see.

Tony Davis:

And I think just for the audience, in case anyone doesn't know, DSO stands for Dental Service Organization. And think of it as in the physician world we have it on what's called a management services organization, which is basically a collaboration or a combination of a lot of the common business resources that you need to run a dental practice, such as accounting or billing or HR, IT, a lot of functionality. And coming together under one structure has a cost efficiency to it as well as a streamlining of operations.

So it has good value without actually merging groups together. I think, is that a fair way to describe it?

Eric Cutler:

Absolutely. I mean, it's localizing those back office and those administrative duties to get economies of scale, both from time efficiency as well as cost efficiency. And then one of the biggest things, one of the biggest appeals, is the fact that it takes that administrative burden off of the dentist/doctor owners and honestly allows them to get back to doing what it is they're passionate about doing, which is practicing dentistry.

Tony Davis:

Absolutely. Good segue into another area I wanted to touch on, which was key practice indicators, benchmarking, dashboarding, financial and analytics, areas that I think a lot of practice owners and those that support the practices often get stuck because running a QuickBooks P&L doesn't always tell the story. Maybe just speak on that a little bit, and some trending maybe in the KPI world that you've seen.

Eric Cutler:

Yeah, absolutely. I mean, so I put that under the heading of measurement and management. That saying, if you can measure it, then you can manage it. And that's what we're talking about here, is the fact that ... And it's not just KPIs, so we don't use too many acronyms, key performance indicators, it's not just those, but it can even be down into just the simple act of budgeting and projections. Setting projections, setting budgets, and knowing where I'm trying to get to and then measure up against that.

Because again, what I said earlier about creating not only a successful practice, which to me means a little bit more on the clinical side, but a successful business. Well, this is the business side, and this is the side that tells me that what I'm doing as a clinician is actually having a positive impact financially on the practice and the business. And so being able to measure things like revenue per patient, revenue per procedure, revenue by different levels, doctor or provider versus the hygiene and things like that. Being able to measure those things, see where it's coming in, and then take action.

And that's probably one of the biggest things. The information then allows you to take action and not just sit back like a boat on the ocean with no rudder, just I'm at the mercy of the sea. No, I can take action because I understand what my information is telling me.

Tony Davis:

I think one of the things that we like to do at EisnerAmper is take market information, market data, whether it be local or national, there's a lot of good surveys out there. We also have a lot of clients in this space too. So there's some internal comparatives we can utilize to help really measure yourself against something else. It's good to measure itself against yourself, but it's also nice to bring in that market data as well.

Eric Cutler:

Absolutely. Because again, and you said it, it's because we've got such a wide marketplace, we've got the ability to have national data that we can pull from internally as well as externally, and then local. So that, again, if you're here in Dallas, Texas, well, overhead percentages might be different here than they are in the New England area. It'd be more meaningful to you as a doctor here and a dentist here in Dallas to understand, "What is this market really doing and how do I compare?"

Tony Davis:

Excellent. Another thought around revenue and growth. You sort of touched on that a little bit already, but some trends we're seeing in the dental space around new opportunity, utilizing technology, maybe artificial intelligence. There's a lot of things coming into the market. What are some of the things you've been seeing more recently?

Eric Cutler:

Yeah. Definitely for sure, technology, AI, augmented intelligence and things like that. I mean, one of the things is, one of the trends that we're actually trying to push is to begin things with the focus a little bit more on growing the top line, so growing the revenue of the practice versus being hyper focused on the bottom line. Not saying bottom line important, but when you really can put some focus on that top line, there's going to be a direct impact to the bottom.

How do we do that, so what are we seeing? New and expanded services like teledentistry. That's not going to take the place of actual in-person dentistry, of course it can't, but it's a nice offering for follow-ups and things like that to make the experience of the patients better and to actually have them participate is going to basically help create a little bit more revenue for the top line. Cosmetics, I mean, it's still big. I mean, it's in addition to standard dentistry, being able to add cosmetics into the mix.

And then of course, implementing AI, or really I should just say technology. The use of digital impressions, more accurate impressions, which then can lead to the use of potentially 3D printing. More efficiency, more accuracy in the creation of the product, which then lessens the time in the chair to seat the crown and things like that. And it's also, again, a better experience for the patient.

Cameras, and then of course, AI. And AI, honestly, not just from the clinical side either, but also front desk and creating treatment plans and creating different ways of communication between the doctor and the patient. So it doesn't all have to be chair-side, this stuff can actually be front desk as well. But when you're talking about treatment plans and increasing your level of acceptance on treatment plans because it was easier, better for the patient, that's a revenue growth opportunity right there.

Tony Davis:

Excellent. No, great tips. Great tips for everyone listening. Finally, just to finish up, I think a couple of areas that you and I ... When we think about transition, we think about retirement, we think about cost increases in practices more recently. I think about employee compensation, I think of what to do with those resources if there was a sale involved, especially if it came directly to the exiting owner. Wealth management, employee compensation. Areas that you've spent some time on more recently and areas of opportunity for clients of the firm and those outside.

Eric Cutler:

Absolutely. Answering your question as a area that I spend a lot of time in and focus on, absolutely. And benefit for the clients, 100%. And the reason why I say that is because we just talked about growing revenue and profitable practices and treating it like a business.

Well, at the same time, that is a lot of times the sole livelihood of the doctors that we're talking about. So now we need to then take this wealth that we're creating and what do we do with it? Because what we're doing today is we're going to need that 15, 20, 25, 30 years from now. So it's structuring that in the right way, and being able to plan and review and analyze and construct retirement plans. And it goes well beyond just throw a 401(k) plan out there and let's call it a day. I mean, there's so much more that can be personalized to who you are and what your practice is.

And who your people are. Because then, to your point, you said compensation. It's not just compensation for, say, the doctors, the doctor-owners, but this is also part of compensation to my staff who I desperately need and I want to make sure they're well taken care of. So being able to add something like this to their compensation package and have it structured where they can actually see and feel the benefits of it, it can be a real differentiator in the market when ... Because again, we all know, everyone's competing for the same resources. So if I can make my practice look more attractive to the people that I want to hire, and this could be one of those things, I want to do that.

Tony Davis:

Yeah, yeah. Excellent points. Well, we said we'd keep it short and sweet, and I think we did a nice job with that. We hope to have future podcasts that will be touching on some of these subjects in a greater level of detail. But I want to thank my good friend Eric Cutler for your time today, and we look forward to chatting further down the road.

Eric Cutler:

Absolutely. Thanks, Tony.

Tony Davis:

Yep. And our information, if anyone wants to get in touch with us, is in the notes of the summary around the podcast today. Feel free to reach out to us at any time. Enjoy your afternoon. Thank you very much.

Transcribed by Rev.com