The Group Dentistry Now Show: The Voice Of The DSO Industry – Episode 58

Dental Care Alliance joins the podcast to discuss what dental practice owners need to know about partnering with a dental support organization (DSO). David Pegg, Chief Development Officer, and Grady Wilson, Vice President of Development, discuss the DSO landscape, practice valuations and what doctors need to know about a DSO when considering affiliation. James Nick, Chief Revenue Officer, talks about the delivery of dental care, the patient experience and what DCA does to support the clinician. If you want to understand the nuts and bolts of a DSO with nearly 100 brands across 325 dental offices, this podcast is for you!

The Group Dentistry Now Show: The Voice of the DSO Industry has listeners across North & South America, Africa, Australia, Europe, and Asia. If you like our show, click here to leave a ⭐⭐⭐⭐⭐ 5-star review.

Choose your favorite listening app below and subscribe today so you don’t miss an episode! Full transcript is also provided below. 

Full Transcript:

Bill Neumann:

I’d like to welcome everyone to the Group Dentistry Now Show. I’m Bill Neumann. Thank you everybody, for listening in today. We always have great guests, and today’s podcast is certainly, we have three of them, all from Dental Care Alliance here, so we’re going to talk to David Pegg, who is the chief development officer, and a lot of you may have seen him at one of the many DSO meetings, when we used to have live meetings. They’re coming back soon, so David, welcome to the Group Dentistry Now Show. Glad to have you here on the podcast today.

David Pegg:

Thanks Bill.

Bill Neumann:

We also have James Nick, and James Nick is the chief revenue officer of Dental Care Alliance. James, thanks for being here.

James Nick:

Thanks Bill. Good to be here.

Bill Neumann:

Last, but least, we have Grady Wilson, who is the vice president of development for Dental Care Alliance. Thanks Grady, for being here today.

Grady Wilson:

Thanks Bill. It’s tough to follow those two guys, but happy to be here.

Bill Neumann:

There you go. Well, let’s talk a little bit about, and you know what? Let’s talk a little bit about what I know about Dental Care Alliance, and then you all can fill in the blanks, and I’d love you to do a brief introduction about your backgrounds, what your role is at Dental Care Alliance, and then also any experience you’ve had, whether it’s in the DSO space or outside the industry, but DCA was founded in 1991. That’s Dental Care Alliance. 330 practices and growing that are supported. Close to 100 brands that are supported under, so there are 330 practices. There are close to 100 brands there, and then you’re in 20 states right now, correct?

David Pegg:

That’s right.

Bill Neumann:

That sounds good, so David, I’ll let you start things off. You’re the chief development officer at Dental Care Alliance. Talk a little bit about what your role is there, and then also a little bit on your background.

David Pegg:

Sure, so again, thanks for having me Bill. As you mentioned, I’m the chief development officer, and really what that translates into succinctly is myself and Grady, and our team more broadly, is responsible for really perpetuating what has been built over the last 30 years, which is a best in class network of doctors and practices and their teams, that are an extension of the mission and vision and values that we look to promulgate every day, so practice first, patient first. Very much oriented on providing great quality clinical care, as well as a first class patient experience.

David Pegg:

Prior to DCA I was a healthcare private equity partner focused on doctor led businesses, so multi site healthcare retail, and what always resonated with me was as it relates to practice management companies was if you can support, clearly articulate your value proposition to the doctor and their teams, you can deliver on that value proposition to the doctors and their teams, and you’re partnering with practices and providers that want to grow. That want to pull those resources into their practice and unlock untapped growth, and they are very much well respected in their community, and they’ve got brand recognition and reputation that are consistent with what I mentioned before, which is quality, clinical care and patient experience.

David Pegg:

Then you’ve got a really good opportunity to be successful over a long period of time, and as I look to make a transition from the investor side into more of an operating role within a multi site healthcare company like DCA, it was really important to me that those things were very much present and part of its historical fabric. As I look to make that transition coming up on four years ago, hard to believe, what I discovered was that DCA scored As across the board in all those things, so this was a company that had been around for close to three decades. Very much understood that it was there to support the doctors and their teams, and the delivery of care, and provide a great patient experience and perpetuate the brand that they had built in their local marketplace.

David Pegg:

While that may sound very natural to all of us, and logical, I will tell you that there is a graveyard that’s littered with tombstones of folks who’ve got that backwards, and so I very much felt as though I was walking towards something that was representative of what I viewed as to have the historical tenets of companies that had really operated and operated well, and had built a destination of choice for doctors that were looking to align themselves with a partner, so it’s been a great experience. Been a lot of work. Very fortunate to work alongside folks likes James and Grady, and we are blessed to have great people inside this organization that really want to be here, believe in our mission, vision and values, and deliver them on a daily basis.

Bill Neumann:

Thanks. Thanks David, and I remember meeting you not too … Certainly, after I think you started down in Villanova, and it’s amazing it’s already been four years, so time flies and certainly DCA has grown since you arrived. James, let’s talk a little bit about your background and your role as the chief revenue officer. Looking at your bio there, it looks like you were at Humana for a while, as well.

James Nick:

Yeah. I stared at Humana as a … I graduated with an actuarial science degree and got credentialed as an actuary while I was working at Humana. Obviously, insurance company, large insurance company, and so I did some work with medical insurance pricing projections, those kind of things, before I got involved on the dental insurance side. Humana has a very large dental insurance in, a top 10 dental insurance for sure, in the country, and in that time did some actuarial work, but also got exposed to pretty much every aspect of the dental insurance product.

James Nick:

Product development, managed the network for a while, network of providers, underwriting, so was involved in a lot of different aspects of dental insurance, and so got a good sense of the industry from that side, and joined Dental Care Alliance over three years ago now, as chief revenue officer, and really what that means is, a lot of it is really focused on growth, to Dave’s point. The areas or the departments that oversee our marketing for our practices and Dental Care Alliance as a whole, as well as our insurance contracts and negotiations with, relationships with insurance companies, and we manage our own in-house membership plan. And then we also have an analytics department that we started, which was pretty natural for me coming onboard as a former actuary.

James Nick:

All those areas are really focused on helping the company grow and helping practices grow, and so as I came over from an insurance side to the provider side, it is more fun on this side, because when we talk about growth as a company we talk about providing more access to more patients for oral healthcare, and ultimately improving their lives, whereas growth meant something different in my prior life, so it’s been great to be on the provider side. The industry is certainly vast and a lot of good work happening out there, but it’s certainly fragmented on our side, where what I’ve seen is every other aspect of the industry is highly consolidated, so whether it’s insurance or supply or the vendors.

James Nick:

They are consolidated, until the providers are really the only ones that aren’t, and so that’s created some advantages for some of them, and so that is starting to change and we can have I think, starting with DCA, we can have an impact on the organization. Not only the organization, but also the industry here, so …

Bill Neumann:

That’s a great point, James. I think we want to definitely get back to that, as far as the industry starts to consolidate what you’re seeing and what are some of the opportunities for maybe some of these emerging groups? Some of the docs said on their practices, how they should position themselves and what the future looks like, and what that might look like with DCA. Grady Wilson, vice president of development, so you actually had a background in the dermatology space, before you came over to the dental, and if you’ll talk a little bit about that.

Grady Wilson:

Yeah, that’s right. Prior to DCA< spent a little over two years in dermatology, so much like you see what’s going on in dentistry, a lot of other spaces in multi site healthcare are consolidating, and as I thought about making the transition from my former company in dermatology to DCA, the thing that got me most excited about it was the vast operating track record of DCA. The infrastructure, the resources that DCA had built up over three decades, as we talked about, and really felt like that position to deliver value to practices that not many in the industry could.

Grady Wilson:

The other thing that really excited me was just the size and scale of DCA, and the strategy to focus on quality, not quantity. We want to partner with not only best in class people, but best in class practices and staff, and so that was certainly a strategy and a mission that I could get behind, and lucky to say that I think Dave’s leadership and others, we’ve been able to do that over the last few years, so it’s certainly been an exciting round since I came onboard. I came on a little bit after James. Have now been at DCA three years ago now, but still a lot to accomplish, and we’re certainly very excited about what the future looks like for us.

Bill Neumann:

That’s great. Grady, I mentioned some things about DCA earlier on, about being founded in 1991, which makes it probably one of the more veteran DSOs out there, right? It’s quite a while from a platform standpoint, and industry experience as well. Talk a little bit about the model at DCA. What does Dental Care Alliance look like? I talked about almost 99 brand, so you’re obviously not branded across all locations. How does that all work? I’ll let you start that conversation.

Grady Wilson:

Great question Bill, so for us, we’ve always had the lens that dentistry is the local business. It’s about the brands, the reputation that our partner doctors have created in their communities, and what we want to do is be there to support them and help grow that brand throughout their existing communities, but potentially new communities as well, and certainly with James and his team, that’s something that we can deliver on, and so I would say the organization has certainly evolved into where we are today.

Grady Wilson:

We are a partnership model where our doctors retain ownership at the local level. That’s important to us, because we want our incentives to be aligned with our partners. We want to know that as we help plug in and unlock growth for our partners, that we both benefit from that, and so that hasn’t always been the case or the model at DCA, but it’s something that we’ve transitioned to over the last handful of years.

Grady Wilson:

I would say the organization, I would characterize as multi specialty, so to speak, so the bulk of the organization is general dentistry, and James can me honest on percentages, but we have evolved to partner with specialty practices as well, so oral surgery practices, orthodontic practices, perio practices, pedo ortho practices, and that just comes back to our philosophy on wanting to partner with best in class practices. It doesn’t matter, whether it’s general dentistry or it’s specialty practice. It’s more so about the people, what they’ve been able to create in their communities, and how we can partner with them to augment what they’ve previously built.

Bill Neumann:

That’s great. Go ahead James.

James Nick:

I just want to add I think everything, so as a marketing person a little bit, I like to talk somewhat in taglines, and ours is everything is centered around the concept of an ally, so with Dental Care Alliance, you get an ally when you partner with Dental Care Alliance. We like to say go further with an ally as our tagline, and I think that rings true for us. We just believe we can support the growth for practices and we do that in a way that’s collaborative, and by listening to them and partnering, so they get an ally, we get an ally, and that’s how we see our partnerships with affiliates.

Bill Neumann:

Thanks James. That leads into one of the first questions that I really wanted to ask, is if you’re a clinician, you’ve got a practice, maybe you’ve got three or four practices, right? You’re considering partnering with a DSO. There’s never been more options, but it also can become pretty difficult to discern what the best opportunity is, because every DSO is different. I think there are some out there that do a better job of explaining what they do. Others don’t, and mostly is clinicians or in the mouth, right?

Bill Neumann:

They’re doing the day to day. They’re not necessarily concerned about the different models, so David, I’ll let you start here. Talk a little bit about DCA’s, Dental Care Alliance’s model. What do you look for in a partner, in an affiliate? And then what should these potential partners be looking for as they start to talk to DSOs and to determine who might be the best to partner with?

David Pegg:

Yeah, sure. Happy to, so I think starts with, if I put myself in the shoes of the owner of four more locations, it’s stop and reflect, and really think about what you want. What are you looking to, what are you driving towards? What do you want out of a partnership with an organization like ours or another? I think that for us is an important thing, when somebody shows up to a discussion, their ability to articulate this is what I want out of a partnership. This is what I am looking for.

David Pegg:

It’s a very strong signal of I would say commitment and sincerity, so that I would say is a jumping off point in terms of what we look for, is some critical thinking behind what are they looking for in an affiliation, in a partnership with us? Alternatively or conversely, what are we looking for? I unpacked a little bit about it in the opening remarks, but it really revolves around somebody who has done their homework, understands what their options are, knows what’s important to them, and very much feels as though, when they’ve made their selection, that they’re walking towards something, and so for us what is that? What are those key components?

David Pegg:

It’s somebody who is representative of historical growth, patient experience, quality clinical care, strong brand in their local community, and really wants to pull somebody into their practice to unlock growth, and wants somebody by their side moving forward. I think those are all key things for us as we sit down and have the first and second conversations with folks.

David Pegg:

You get into I think further discussions that are really born out of a lot of listening from us, which is this is not a prescriptive approach, as Grady mentioned. Practices, right? If you’ve seen one, you’ve seen one. They’re like snowflakes, and so really spending a lot of time on our end listening to what they see as the opportunities. They’ve lived and breathed their practice for years, if not decades, and more often than not they’ve reached a point in time where they know what the opportunities are.

David Pegg:

They know where they can go, but they lack the bandwidth, right? The capital. Perhaps, just the overall operating acumen to really execute, and so for us spending a lot of time to unpack what are the opportunities? ie. listening, and then how do we thoughtfully and carefully plug in as an organization, as a partner to help unlock those growth opportunities?

David Pegg:

I think that for us is really important, and this sense of this is not a moment where they feel as though they’re selling the practice, but they really are gaining a partner, and so this is almost the jumping off point, if you will, for their practice 2.0 for the next five, 10, 15 years, and that resonates or that ultimately manifests itself, rather in the concept of shared ownership, as Grady mentioned, right? Where they continue to remain an owner in the practice.

David Pegg:

They are also an owner in the enterprise wide all 330 plus practices across DCA, and so we’re aligned from a growth standpoint at both the local level as well as the enterprise level. Those are all really important things, because now we’re walking forward from this moment on shoulder to shoulder, thinking both locally as well as at the enterprise wide level about how we can conduct ourselves to the benefit of both, not just their practice, but the organization as a whole.

Bill Neumann:

Great points. Does anybody want to add on to that all?

James Nick:

Yeah. This is James. I’d just add, I think you touched on this, Bill, when you framed up the question, but there are a lot of options, and there are more than ever and growing probably by the day, so there’s probably something out there for everyone. What Dave just described may not be for everyone and that’s perfectly okay. We’re not here to say someone’s doing it wrong. We just believe in the way we’re approaching it, and look for partners that share that viewpoint and want to have an ally by their side, so that’s the way that I see the way we look, what we look for in a partner. We want to have a fit with the way that we approach the market.

Grady Wilson:

I would just add, in this day and age, where the market is hot and people are talking about multiples, and this, that and the other, I always try to guide people that the economics of a transaction matter. You should feel like you’re getting good value for your practice, but you also need to think about what the next three, five years are going to look like, because inevitably you are going to be attached to someone after the money changes hands, so to speak, so making sure that you’re comfortable in terms of the people, the values of the organization, what type of plan that they have in place.

Grady Wilson:

One of the things we spend a lot of time as we’re working to close the transaction is to have those conversation, as Dave was mentioning, about how can we best support your practice? How can we grow your practice? That plan’s going to be specific to the partner that we’re working with on that deal, and we want people to be comfortable and excited about what they’re walking towards. We don’t want to be in a situation where a partnership closes, we’re all high fiving, and then the doctor looks at Dave or I and says, “Well, what now?”

Grady Wilson:

We want them to know what the plan and the strategy is, and so spending a lot of time on that, so that they feel good about the economics of the deal, but also the partnership and what it’s going to look like once we do become partners is important, so I always try to get people to understand that aspect. And then the last piece that we’ve all lived the last I would say year, year and a half or so, is that there are probably going to be bumps in the road at some point in time, so partnering with an organization.

Grady Wilson:

One that you feel like has the resources, the infrastructure, the people to support you in times of need, so to speak, whether that’s a pandemic, a natural disaster, a change in economic climate, whatever it may be. Partners are important when things are going good, but also important to have a partner by your side when there may be bumps on the road, and so we’re going to stand by our partners through good times and bad, and that’s something that I think we’ve clearly shown throughout the last year with the COVID pandemic.

Bill Neumann:

Some good points there, and tend to think about some takeaways. You hear partnership used a lot, you hear ally. It sounds like, again, longterm, right? This isn’t something for a doc that’s looking to leave in a year. You’re a longterm partnership. You’re there for the long haul with them, and to your point, I think a lot of practice owners have been wondering, all right. Made it through the great recession. Maybe made it through a pandemic. What’s next? I really want to be on my own when whatever it is hits next, so all really valid points.

David Pegg:

Bill, the one thing I wanted to add was, we say this to folks virtually in every meeting, literally virtually right now, but also in person when we have the opportunity, but do your homework. Really get to know the organizations that you’re talking to. Understand the who behind what they do. Ask to talk to doctors who had affiliated recently or had been partners for years, so that you’ve got a real sense of conviction that you’re making the right choice.

David Pegg:

I think one of the pitfalls, not just in dentistry, but I think in any type of practice management strategy that’s predicated on continuing to build a network of doctors and teams and practices, is it can turn very transactional, and with that is this speed to execution. Got to get it done. Got to get it across the goal line, and you really want on the other side of it, you want, if I’m an owner of four locations or one location, I want to know that I did my homework and I really understood the organization and the people that I was partnering with, because the reality is they’ve spent so many years building, right?

David Pegg:

What they’re now bringing another organization into, to be a part of, and those are decisions that should not be rushed to. I would unpack and ask. If I’m them, I’d ask a lot of questions. I’d ask for a lot of data. I’d say can you talk about how you make better practices better? Or you do this or you do that, do you have evidence of it? We supply case studies to our prospective affiliates to say, look. Don’t take our word for it. Here’s actually the empirical data behind what we have done for these practices, and this is representative of a much larger dataset, and talk to one, talk to three. Talk to 100 doctors inside of our organization.

David Pegg:

We’re not going to be on the phone. Ask any questions that you want, and don’t be bashful about asking those questions, because we’re not going to be bashful about asking every question that we need to ask towards you, and I think when you get that dynamic present, again, to James’ point, whether it’s us or another organization, then I think that’s really where the conviction and the confidence of having made the right selection and the partner, that you’re going to be joined to for the next five, 10, 15 years, I think that’s where a lot of the power of the partnership gets unlocked.

Bill Neumann:

Let me ask this question, maybe I’ll ask James, so we could start this off, so let’s talk. What does the partnership look like on the other side? To say DCA’s my partner. This is, so what happens after the paperwork’s signed? Can you talk a little bit about that? What changes? What doesn’t change? We might not have enough time for all that, but just a little bit of an overview.

David Pegg:

He gets all the fun stuff, right? It’s after Grady and I do all the hard work, he gets all the fun stuff of talking about how we can unlock revenue, so it’s …

James Nick:

Everyone likes to talk about growth.

David Pegg:

Yes.

James Nick:

I suppose that’s true, and Bill, I would say it starts before the papers are signed. That’s our goal, is to start listening to the prospective affiliate at that point, and understand what they see as opportunities for their practice. Again, we’re going to be focused on growth or creating value for the practice, and so we want to do that with them. This isn’t a prescriptive approach.

James Nick:

Now, certainly things will change for the practice. I think this is not just a sign the papers and we’ll see you once a year, something along those lines. Certainly, things are going to change. We are an organization that tries to leverage our strengths collectively, but we try to do that in a way that’s unique to each affiliation, and so crafting a value creation plan with the prospective affiliate prior to a transaction closing is really important to us.

James Nick:

Generally, those things focus around, again, the opportunity, so is there an opportunity to add another provider to their practice or their group of practices? Is there an opportunity to fill the schedules more? Perhaps that’s one of the opportunities and we can engage a little bit more in depth marketing plans for that affiliation, so those are the …

James Nick:

We could talk a lot about it. I’m sure Dave and Grady could add some to this, but those are the highlights that I would focus on, and we do a lot of that with data, which I can maybe talk about in a little bit. In analytics, we really believe that’s a key to our success, but Dave and Grady, anything you guys want to add before I go there?

Grady Wilson:

Yeah. Sure. Well, first, I’d say you’re never going to hear Dave or I sit across from a doc and tell them nothing’s going to change in an affiliation. There will be some things administratively that are going to change. Now, we try to make those as benign as possible. Things like payroll and benefits, and accounting and finance, and then to James’ point, we really try to get more targeted and specific to the process and the opportunity. The support plan and growth plan we put in place for an oral surgery practice in Georgia is going to be different than a general dentistry practice that we may be partnering within Florida, and so that’s where our motto, and coming back to what we talked about earlier, Bill, where we’re focused on quality. Not quantity, so we can truly deliver to our partners the value proposition that we articulate when we’re meeting with them upfront is important.

Grady Wilson:

Now, the flip side of that is that when we partner with a practice we’re partnering with them, because they’ve been successful, because they’ve built a great culture, because they provide great quality care and have a good patient experience. Those are the sort of things that we’re keenly focused on keeping intact when we do partner with a practice. We want their culture to stay intact. We want them to continue to practice dentistry the way that they have. What we want to do is take the infrastructure and resources that we have, and as we’ve talked about put that in place, and so it’s specific and it’s nuanced, every opportunity that we have. I think it can take a little bit more work than just having a cookie cutter approach, but because that our affiliations perform very, very strongly when they do partner with us, and it lends credence to our tagline of stronger together.

Grady Wilson:

Practices are better with us than without us, and to Dave’s point, that’s not just hollow air. We’ve got the data, we’ve got the case studies to support that, so when we show a practice, an oral surgery practice an opportunity that we partnered with a couple years ago, and they’re up 20% plus in terms of EBITDA growth in the first couple years, people raise their eyes and say wow, that’s pretty impressive. Now, how do you do that? And then we can show them the case study of boom, boom, boom. These are the levers that we pulled that were able to unlock growth for the practice, and people get excited about that and they benefit from that through the retained ownership in the practice, so it’s all about making sure that we’re rowing in the right direction.

Grady Wilson:

That we’re communicating and collaborative throughout these processes, and we’re getting the right people internally at DCA engaged, so that we can unlock value and deliver what we promised. Dave, what else would you add?

David Pegg:

I think you guys hit on it all. Well said.

Bill Neumann:

Before you touch on, James, before you touch on the analytics side of things, I’m curious too. One of the biggest struggles, especially over COVID, is recruiting. Hygiene, clinicians. Talk a little bit about how DCA can help out some of these newer affiliates with recruitment. Got to be one of the key issues today.

James Nick:

Yeah. I can take that, or at least start, and so obviously we have 330 practices. We hire a lot of people. That’s a core competency of our company for sure, and likely a lot of DSOs, but recruiting and talent management just has to be a core competency. It’s something that you don’t … A single practice or a group of practices, much more difficult, because you don’t have that infrastructure, so we’ve got a talent team that has people focusing on specialists, for example.

James Nick:

We’ve got people focused on college programs, people focused on hygienists, and then people focused on doctors, so we really can run the gammon and have gamut and have people specialized in these areas for the specific positions that we’re looking for, and we were able to … I don’t get into too many specifics yet, but we were able to identify opportunities really fast coming out of COVID, and were able to open positions, new positions that we hadn’t had before, for more providers, more dental assistance, to capture some of that demand that we saw out there really early on, and so we’ve been able to get ahead of the curve I think on that, in that regard, and start hiring really, really fast.

James Nick:

Not because we were losing people, because we wanted to add more capacity to the overall system, and so that’s allowed us to grow. We’ve had really nice growth as a company since the third quarter of 2020, and so that has continued and actually accelerated through the first part of 2021 here, so recruiting is a major competency, a core competency of us, and we do a lot of it, so we’ve refined that over time.

Bill Neumann:

Okay, so why don’t we, let’s talk about what you really want to talk about, which is analytics and KPIs?

James Nick:

I can’t get through a meeting without it. I think that’s how we can identify and get insight, generate insights for the practices, and we couple that, obviously, with the experience and the people in the practices, so it’s not a one way direction, but the general goal of the analytics department is to figure out what happened? Why’d it happen? What should we do about it? Those are the three things, and if we don’t get to what should we do about it? Then we really haven’t done our job, so for our offices we’re trying to get these things down to the most critical actions that they can take in the office to improve, and that’s really where I think the art maybe comes into the analytics.

James Nick:

If our teams can’t … They don’t have as much time as the analytics department to do analysis, so if they can’t understand the metric and why it’s the focus, then we really, like I said, we aren’t really doing our job, so we mapped out the patient journey from first contact through scheduling and the visits, and post visits, and next visits, and have built some predictive models to try and get to, what are the key things for each of those steps?

James Nick:

Just a simple example, you want someone to show up for their appointment, the most important thing you can do is confirm with them that they’ll be there, and so we can do that automatically, and if you can’t get that done auto then we will help individually with it … That we use to show how we can focus offices on specific actions that they can take to improve their results, and so we do this as pre visit, what do you do pre visit? What do you during the visit? What do you post visit?

James Nick:

That will drive the results, and so when you bring these models together you get a good sense pretty quickly, and I think maybe ahead of the competition, but a good sense of where future opportunities exist for growth that maybe we haven’t yet unlocked, and that’s where I talked about hiring and adding capacity in terms of providers and other positions to, at a time that was really probably more difficult for a lot of practices. In the future more unknown, I think we were ahead of the curve and have hired a lot of positions in that timeframe.

Bill Neumann:

Great. Let’s, maybe I’ll ask David and Grady to lead in with this one, since we’re talking about KPIs and analytics. Maybe talk a little bit about sophistication level of some of these potential affiliates, so are you seeing some of these practices, these emerging groups? Do they seem to understand what their EBITDA is now? If you go back three or four years, that was something that was relatively new to them, right?

Bill Neumann:

It was all I’ve heard that I should get 70% of production or 80% of my production, and that was it. EBITDA was new, so what do we see? Do we see a sophistication level? Do these emerging groups you’re working with now in some of the single practices that are larger, are they measuring KPIs? Do they understand their analytics? Do they know what their EBITDA is?

Grady Wilson:

Good question, and I would say it varies. Certainly, some of the groups that have grown in size and scale, and have more locations and providers, and may have worked with a practice consultant or something along those lines have a greater understanding of potentially some of the other practices that we come across. I will say that I think dentistry is unique when you look at it, compared to other spaces in multi site healthcare, and that consolidation has been going on for call it 30 plus years.

Grady Wilson:

If you look at DCA starting in 1991, so I think across the board within dentistry, dentists have a good understanding of organizations like DCA and what’s going on. It’s specific to the practice, in terms of their sophistication on their financials, the KPIs, different KPIs within the practice and how well versed they are on those things, but that’s what I’m saying. Dave, what would you add to that?

David Pegg:

Agreed. I think there is definitely more familiarity as relates to what is EBITDA, right? I think people pronounce it eight different ways, but essentially what’s the calculus that goes into it? Why is it important? Why is it important to an organization like us? Because we’re underwriting to a cashflow stream, right? That the practice is generating, and that’s how value is ascribed. Generally, I would say, when you hit it with the tagline of that’s how value is ascribed, everybody gets really focused on making sure they understand what it is.

David Pegg:

In terms of KPIs and analytics, I would say, again, I agree with Grady. There are some that I think have done a good job of trying to leverage tools at their disposal through maybe some increased capabilities in a practice management software program, and they do a good job of trying to at least pay attention, right? To the KPIs that they believe matter.

David Pegg:

Now, where I would segue to is, as a partner, the level of proficiency that we can bring to a practice in terms of data analytics is I would say many rungs on the ladder above that, and it’s pretty powerful when you can sit across or sit at a table with a prospective affiliate, and whether it’s the marketing department that James oversees can run a digital, a website analytics report to say here’s essentially what the capabilities or the proficiency of your website is doing for you.

David Pegg:

A lot of doctors walk into that meeting thinking no, we do this well. We’re really good at this, and we’re able to show them a level of analytics that I think underscores, right? They’re now telling me these people who potentially are going to be my partner, they’re telling me something about my practice that I didn’t otherwise know, and that’s what a partner should do.

David Pegg:

If we’re going to advertise and advocate for ourselves as being a value added partner, then we need to be value added. If we’re simply just duplicating what they do today from an analytics, using analytics as an example, then we’re not really adding value, but I think being able to now provide insight into their practice, being able to increase the level of proficiency in analytics, and then being able to use that, right? As a tool to not just measure, but also manage and make decisions that are going to, to James’ earlier point, unlock growth.

David Pegg:

Now, you’ve really brought it home. Now, you’ve really I think elevated or differentiated yourself from our peer set, because I don’t think, I don’t believe that there are a lot, if any organizations out there, that have that, the level of proficiency that we do today, and I think to Grady’s earlier point, it shows, right?

David Pegg:

Because when we can really start to peel back VR analytics horsepower, and determine where are the opportunities? And be able to start to manage and measure the levers that we’re going to pull to unlock those opportunities that the owner operator didn’t otherwise know, now we are a value added partner, right? Now, are we actually creating value for that doctor and their team in the practice, and I think that’s where the differentiation really comes in.

Bill Neumann:

Right, so I’ve got a couple, go ahead.

James Nick:

Just to wrap that up, one final thing on analytics, I would just say a lot of people will talk about analytics as, and then they’ll just give you the set of KPIs. It’s really not what analytics is. That’s not what we mean by it. Anybody can measure the KPIs, but coupling that with that data, with the insights, and getting to a place where we can unlock growth, that’s a different level. That’s what we strive for.

Bill Neumann:

Yeah, that makes sense, James. It’s not just here are the KPIs, but we’re going to give you the tools to do something with those analytics. To take those numbers and be able to grow, so yeah, that. Great point. Let’s talk a little bit, two final questions here. As far as being able to … What is DCA doing really to help with these affiliates delivery quality patient care? We talk about growth. We talk about all those types of things. Let’s talk about patient care. Let’s talk about being able to deliver that in the best way possible, and then also just, again, if you have any final thoughts on the partnership, what that means. Any examples on longterm partnerships with some of the affiliates would be great.

David Pegg:

I’m happy to kick us off briefly, and then I’ll pass the time to these guys. The commitment to patient clear, that’s got to be part of the fabric of the practice, before there’s ever an affiliation or a partnership. I refer to that as table stakes, and so the responsibility is on us, right? Just as I had mentioned before about a prospective affiliate needs to get to know the organization that they’re going to bring in and partner with.

David Pegg:

The responsibility is on us to really make sure that we are unpacking and understanding the historic evidence of high quality clinical care in the practice, and we get to that a number of different ways. We look at patient reviews, and we look at just the overall sentiment and engagement of the staff inside the practice. We look at chart reviews and things like that, but that’s really you’ve got to be very careful about lines, and our job as a partner is not to dictate clinical care.

David Pegg:

Our responsibility and our role as a partner is to support the delivery of care, and so we spend a lot of time doing a lot of diligence on understanding what’s the historical pattern of care that’s been provided? And make sure that, that’s consistent with certainly our level of commitment to clinical care across all our practices at DCA, but whether it’s making sure that they’ve got the appropriate PPE, they’ve got the appropriate OSHA safety protocols in place at the practice.

David Pegg:

Things that we can do on the periphery to make sure that, that commitment to quality clinical care remains consistent post affiliation, post partnership. That’s our responsibility as a partner. The level of quality of clinical care, and probably even more importantly the patient experience, that’s really something that is either there or it’s not, and I think our experience as an organization is, when it’s not there, that’s okay.

David Pegg:

That’s okay, if that’s the way they want to operate their practice, but that’s not going to be an affiliation for us, because oftentimes tigers don’t really change their stripes, and so trying to come in and start to roll out a different approach to providing care. Not our role. That’s not our place in the value proposition equation, but we certainly spend a lot of time understanding how can we support the delivery of care through various programs and initiatives as a partner? For sure, not trying to dictate care. James, Grady.

James Nick:

I’d just start by saying that, the marketing person liked to make our job easier, the best marketing is a good product, so we certainly want to have the top notch patient experience through our practices, and not make our marketing job any more difficult. I think what we can bring on the patient experience side is consumer insights and we study the consumers, and they are consumers. Before they’re in the dental chair, they’re a consumer. They’ve got some choice on where they want to go these days more, as much as ever, and so we really try to understand and start from who are the consumers and who are we targeting?

James Nick:

Like you said before, we’ve got 330 offices and a little less than 100 brands, and so to manage that we start from the consumer. We understand what this segment of the market looks like, and we’ve actually grouped our practices and our brands into categories. We call them brand categories, and we’ve done that, because we believe that there are differences in what consumers are looking for.

James Nick:

Different types of consumers are looking for different things, and we can’t operate a practice nor can we market a practice the same. It can’t be all things to every consumer, and by the nature of what Dave talked about earlier, we are trying to leverage the brands and build the brands in their local community. That’s what’s really important to us, and we’ve got some brands that have 30 offices and we have some that have one office, and some that are fee for service and some that take all different types of insurance.

James Nick:

We’ve really run the gamut, and the only way for us to manage and to help engage patients in delivering or helping the offices that we deliver a top patient experience is to understand that those practices aren’t the same, and try to segment them into these categories that we believe will be more indicative of the patient experience that those types of patients are looking for.

Grady Wilson:

And then I would just add, Bill, the way I think about it is in terms of supporting the clinical piece of the practice is really about access in my mind, so providing our doctors access to maybe different types of technology that may support the delivery of care. Maybe they need a scanner in the office, providing access to potentially additional providers, as we talked about earlier. That could be a specialist that they may want to bring into the office, to keep those patients in-house.

Grady Wilson:

It’s providing access to various supplies and things like that, that may be difficult for them to procure on their own, and then importantly, and we haven’t touched on it, I think it’s providing access to training and development. That’s something that as an organization that we pride ourselves on, is growing our people. Not only do we want to grow our practices, but we want to grow our people, and so whether that’s assistants that need training and development, hygienists, doctors, giving them access to take a class where they may learn how to do implants, or they may learn how to do clear aligners, those sort of things.

Grady Wilson:

Continuing to evolve as an organization, provide those means, so that our people can grow and develop. Ultimately, will support high quality clinical care and that delivery to patients, and so those are the pieces that I think about, and just providing that access to our doctors and our practices, so they can continue to do that.

Bill Neumann:

Great points from everyone. All right. Final question. I tend to ask this one quite a bit, especially with all the changes with COVID. I’m curious, if you could take out your crystal balls and just give, a two part here, so the future of Dental Care Alliance. What you see as far as maybe your growth goals or whatever that is, and then what do you see for the dental industry? You can just look out maybe to the end of this year, and then maybe a couple years out from there. What are your thoughts on where you see industry and DCA going? I’ll let Grady start there, and then James, and then will let David have a final word.

Grady Wilson:

I think what you’re going to continue to see is you’re going to continue to see the markets and organizations like DCA affiliate with dental practices. As we all know, there’s still a lot of white space, green space ahead in the industry to continue to partner with quality practices and people. I think you’ve seen over the last six to 12 months more call it transformative type partnerships between organizations that add some size and scale. I think you’ll probably continue to see that to an extent, but those are our nuanced transactions that have to make sense from a strategic standpoint, so I know sitting in our shoes we’re still very excited and bullish on the opportunity to continue to partner with best in class practices.

Grady Wilson:

I think you’re starting to see different models in terms of delivery, so mobile type solutions tele dentistry, some of those types of things, direct to consumer, that exist out there. I think you’ll start to see maybe some more adoption on those fronts. Would be curious to get James’ perspective on that. I know he spends a lot of time looking at that, but I think dentistry as a whole, oral healthcare isn’t going anywhere. The industry is still certainly very fragmented, so a lot of opportunities for us to continue to affiliate and partner with great people and great practices, and that’s what we’ll look to continue to do over I think the near term.

Grady Wilson:

How the industry ultimately evolves is exciting and to be determined. I think you could see some more of these larger organizations combining forces over time, but I still think that, that sits out there, at least a few years down the road before that really starts to speed up, but that’s just my perspective.

James Nick:

This is James. I can go next, so I think the consolidation that you made is, I hate to say a lot, but I think as much of agreement in the industry as we’re going to get, is that consolidation is going to continue, and I think what is important about that is it’ll continue in a way where organizations can have more of an impact on the industry, where it won’t be as fragmented as it was in the past. And so the participants in the market who have maybe been able to take advantage aren’t going to have as much of an ability to do that, and the major players will be able to move the market and the industry forward, which I think should be a good thing.

James Nick:

In terms of technology, I think technology, you could say technology adoption as a trend to watch probably for 30 years in a row. I think it now is what types of technology? The one I think that’s caught our attention, I think probably more so than others, is AI. AI for imaging is probably, maybe one of the key ones. I think vendor solicitation I get now says something about AI in either the subject or the first sentence of their email, and so everybody claims to be using AI, but I think when you can do that, when you can layer that on imaging, and when you do it in a way that compliments what the provider is doing, what the doctor is doing.

James Nick:

Then we’re talking about a multiplier, because you can have the ability to have an unbiased, a realtime second opinion, and that will be big for the patient experience. As we’ve understood consumers, trust can be an issue, and so this might help those that are leery, and so, and then you think forward. What could that mean for efficiencies in the way we process with vendors or insurance companies? We may be able to have realtime insurance statements, and similar for the patient, for their portion, and have it not be an estimate.

James Nick:

Now, we’re getting to a point where the industry becomes more consumer friendly, because of this technology, and so as you roll the tape forward more, if that were to get adopted, the consumer benefit I think is immense, and the … If we have a positive consumer change, that will impact the industry in total, because the industry’s been fighting forever the number of people that don’t come in, and so the only way to tackle coming to the dentist and they’re given here. The only way to tackle that is to give them an experience that they’re willing to come in for, so I’ll stop there, but I think we’re excited about that.

Bill Neumann:

That’s great.

David Pegg:

It’s a really good question. It’s one that we spend a lot of time thinking about. It’s, to use the hockey analogy, you don’t skate towards a puck. You skate to where the puck’s going to go, and so how are we positioning ourselves as an organization to skate to where the puck’s going to go, or where it’s going? I think, as I’ve reflected on that, the last 15 months I think for the overall health of the DSO industry, what the ultimate outcome will be in my opinion for the health of the industry is it’s going to separate the players from the pretenders.

David Pegg:

There I think is a lot of money. There has been a lot of money that is flooded into the DSO space with this investment thesis of let’s aggregate practices, let’s pull them together, and then we can push them out to market, and the reality is, is I think the target audience, the doctor, either individually or with the assistance of an advisor, they’ve just become much more educated and smarter about what are their options?

David Pegg:

In particular, what are they going to do for me as a practice owner and for my teams that I otherwise can’t do on my own, and so I think as people have gotten a lot deeper into tell me about your value proposition, tell me about, give me evidence, give me case studies, tell me about the investments that you’ve made in your organization to continue to support practices like mine.

David Pegg:

I think, as people are starting to ask those detailed questions, it’s really starting to separate fact from fiction. A lot of people I think spin a wonderful narrative, but when the rubber meets the road if you will, or you really start to ask for give me the data behind what you’re advertising, they fall short, and so I think where I see this going is the target audience has gotten much more educated and smarter about what their options are, about what questions to ask.

David Pegg:

Feeling I would say more confident about walking towards something, and look, there will be startup groups that I think will ultimately, they will get their value proposition right. They will make the investment in people, and in infrastructure, and in systems, and they’ll understand what their role is in terms of supporting the doctors, and their teams and the delivery of care.

David Pegg:

I think there are others, many of which that will not, because they were far more focused on trying to get big fast, because that was really the goal that they set out with, and size trumps all, right? And so the faster and bigger I can get the better it is, and the reality is, is I think you reach a tipping point where things start to remember, right?

David Pegg:

The people who provide care and generate revenue walk in and out of the door every day, and if you fall short on that delivery of the delivery of the value proposition, they become pretty disenchanted. They become disenchanted quickly, and so I think the organizations who understand that, who’ve taken the time, whether it’s over 30 years or whether it’s over three years to get that right, and to build something for longevity and build it in the right way, they will have staying power.

David Pegg:

I think those that have not or that aren’t going to will not, and so I think there’ll be a little bit of a culling of the heard, if you will, in terms of the number of DSOs, successful DSOs, and I’m intrigued and interested to see that universe, what that population set looks like three years from now, relative to what it looks like today, because this is a tremendous industry. Tremendous, and there’s the opportunity to do well by doing good, and I think, if you build it in the right way, you really have the opportunity to learn from others’ mistakes, right? And to build something that’s got longevity. If you don’t pay attention to that, then I think your lifetime is short lived.

Bill Neumann:

That’s a great way to end things, so good luck. A ton of great information here guys, so like to thank, first of, our audience. Appreciate everybody listening in today on the Group Dentistry Now Show. I’d like to thank David Pegg, James Nick and Grady Wilson for taking time out of their busy schedules to talk to us today. Educate us on not just DCA, but on some different opportunities with DSOs. What should clinicians that own practices be thinking of when they’re looking to partner with a DSO? Until next time guys, I really appreciate it, and again, thanks to the audience, so any final words or should we end it on that?

David Pegg:

Thanks for the opportunity, Bill.

Bill Neumann:

Thanks David, thanks Grady, thank you James.

Grady Wilson:

Thank you Bill.

Bill Neumann:

Until next time, I’m Bill Neumann. Thanks for listening to the Group Dentistry Now Show.