Latest / Becker’s Healthcare Podcast / Building Growth and Partnership Strategies in Modern Dentistry with Ian Mcnickle

Transcript

Building Growth and Partnership Strategies in Modern Dentistry with Ian Mcnickle · Becker’s Healthcare Podcast

• 0:02
  - Oral health is finally being recognized as part
• 0:04
  - of whole person care. And at the same
• 0:06
  - time, digital tools and AI are reshaping how
• 0:09
  - practices prevent disease, engage patients, and grow.
• 0:13
  - DSOs are expanding, independent
• 0:15
  - practices are proving their staying power, and investment
• 0:18
  - is accelerating across the sector.
• 0:20
  - Dental leadership has never been more complicated
• 0:23
  - or more consequential.
• 0:25
  - Ecker's fifth annual future of dentistry roundtable brings
• 0:28
  - together more than 250
• 0:29
  - executive level attendees
• 0:31
  - and 90 plus speakers for two days of
• 0:34
  - sessions in Chicago, all built to help leaders
• 0:36
  - benchmark their priorities,
• 0:38
  - stress test their strategies, and walk away with
• 0:41
  - a clearer picture of where this industry is
• 0:43
  - heading and how to position for it. Join
• 0:45
  - us September fourteenth and fifteenth in Chicago.
• 0:49
  - Register on our events page at wwwbeckersdental.com
• 0:53
  - by clicking on the events tab in the
• 0:55
  - upper right.
• 0:57
  - Hello. This is Arianna Portolatin with the Becker's
• 1:00
  - Dental and DSO Review podcast.
• 1:02
  - I'm thrilled to be joined today by Ian
• 1:03
  - McNichol, the CEO of Icon Dental Partners. Ian,
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  - thank you so much for being here today.
• 1:08
  - It's a pleasure to have you on our
• 1:09
  - podcast today. Yeah. Thanks for having me. Looking
• 1:11
  - forward to it. To start us off, can
• 1:13
  - you introduce yourself for our listeners and tell
• 1:15
  - us a little bit about your background?
• 1:17
  - Yeah. Absolutely. So, Yeah. As you mentioned, I'm
• 1:20
  - the cofounder and CEO of Icon Dental Partners.
• 1:22
  - We're a kind of a partnership organization model
• 1:25
  - somewhat different from the typical DSOs.
• 1:28
  - My background actually, my undergrad is mechanical engineering.
• 1:31
  - And so Mhmm. I started my career working
• 1:34
  - in high-tech for about ten years,
• 1:36
  - in in management positions and engineering positions. And,
• 1:39
  - then I got an MBA,
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  - from University of Washington
• 1:42
  - and really decided that I wanted to go
• 1:44
  - into business. And so
• 1:46
  - about twenty years ago, I quit my my
• 1:47
  - job in high-tech. I worked in high-tech for
• 1:49
  - about ten years. In the last twenty years,
• 1:50
  - I've been an entrepreneur now. Came in the
• 1:52
  - last fifteen, sixteen years exclusively in the dental
• 1:55
  - industry. So it's it's been a been an
• 1:57
  - interesting journey, but I've I've I've very much
• 1:59
  - enjoyed the dental industry.
• 2:01
  - Yeah. Super interesting. Thanks for sharing that.
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  - First question for you here. What are some
• 2:05
  - of the biggest issues that you're following in
• 2:07
  - the dental industry this year?
• 2:09
  - Yeah. The stuff I'm following is is not
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  - necessarily new to this year, but certainly been
• 2:13
  - the last
• 2:14
  - two to three years, I think, have been
• 2:15
  - on a lot of people's minds.
• 2:17
  - Probably three of the top things I would
• 2:19
  - think about. So insurance reimbursements
• 2:21
  - continue to be a challenge.
• 2:23
  - You know, they're they're just low. It was
• 2:25
  - interesting. I I,
• 2:26
  - saw on LinkedIn after the New York Knicks
• 2:29
  - won
• 2:30
  - the NBA title, what, a couple two, three
• 2:32
  - weeks ago. A doctor posted on LinkedIn
• 2:35
  - that, hey, the last time the Knicks won
• 2:36
  - the title was fifty three years ago.
• 2:39
  - And at that point, here's what, you know,
• 2:40
  - Delta was paying for
• 2:42
  - reimbursements, and and it hasn't gone up in
• 2:44
  - fifty three years. Meanwhile, inflation's gone up 625%.
• 2:48
  - And I thought that was a pretty good
• 2:50
  - summary
• 2:51
  - of the challenge that we face in our
• 2:53
  - industry with I'm not just Delta. I'm, I
• 2:56
  - guess, picking on them because they're they're big.
• 2:57
  - But but in general, right, it's just it's
• 3:00
  - continues to be a challenge
• 3:02
  - of,
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  - you know, the these reimbursements are are continue
• 3:06
  - to be problematic. And so that's one issue.
• 3:08
  - Staffing is another obvious issue,
• 3:11
  - particularly with hygienists.
• 3:13
  - And I I know there are different proposals
• 3:15
  - that certain states are working on.
• 3:18
  - Some cases, maybe having dental assistants be able
• 3:20
  - to do some scaling, maybe expanded function dental
• 3:22
  - assistants can do some stuff.
• 3:24
  - So, obviously, if we could just crank up
• 3:26
  - more hygienists, that would be wonderful, but that
• 3:27
  - doesn't happen overnight. So
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  - that is a that is an issue that
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  - we continue to follow and think about at
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  - our company.
• 3:34
  - Then more from a macro sense,
• 3:37
  - interest rates. Right? So
• 3:39
  - in the in the in the group space,
• 3:41
  - DSOs and DPOs, there have not been a
• 3:43
  - ton of, you know,
• 3:45
  - exits, you know, and recaps in in the
• 3:47
  - last few years largely due to interest rates.
• 3:49
  - Right? Interest rates were low prior to COVID.
• 3:50
  - After COVID, they went up dramatically,
• 3:53
  - and that created a pretty big disconnect between
• 3:55
  - buyers and sellers. And so, you know, investors
• 3:58
  - who own
• 3:59
  - platforms that bought them at a higher multiple
• 4:01
  - don't want to sell at a lower multiple
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  - and vice versa. Buyers right now don't want
• 4:05
  - to overpay for something. So I think if
• 4:07
  - the interest rates can drop at some point,
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  - hopefully,
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  - that might free up the logjam and get
• 4:11
  - those valuations a little closer to where, you
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  - know, we can see some nice deal flow,
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  - get some recaps going, and that that should
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  - help, I think, the industry in general if
• 4:19
  - we can have some success stories
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  - as opposed to some of the challenges that
• 4:22
  - we've been hearing about recent groups with with
• 4:24
  - debt struggles and things like that. So Yeah.
• 4:26
  - Yeah. Definitely a lot to go over there.
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  - We could definitely do
• 4:30
  - separate episodes for each of those items you
• 4:32
  - listed.
• 4:33
  - But, yeah, I I find it interesting that
• 4:35
  - you mentioned the macroeconomic
• 4:38
  - factor. I think that's something super interesting that
• 4:41
  - we're seeing right now in the field.
• 4:43
  - I know
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  - when interest rates were on the rise, a
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  - lot of DSOs kind of did a lot
• 4:48
  - of internal work versus,
• 4:51
  - inorganic growth. They focused a lot on
• 4:54
  - provider benefits, investing more in their staffing, adding
• 4:57
  - technology, things like that.
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  - What can you tell me about Icon Dental
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  - Partners' experience and their approach,
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  - to growth during that time and,
• 5:05
  - as of right now even?
• 5:07
  - Yeah.
• 5:08
  - So, you know, our company only launched officially
• 5:11
  - as a platform two years ago, but we
• 5:13
  - did, you know, about three years of research
• 5:15
  - and build and design prior to that. So
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  - the concept has been in development for quite
• 5:19
  - a while,
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  - but we had the benefit of, you know,
• 5:22
  - watching and learning from what was happening in
• 5:24
  - the industry.
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  - You know, I talked with investors and bankers
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  - and attorneys and lots of people in the
• 5:29
  - design of our business model, and so we
• 5:32
  - were able to avoid some of the pitfalls
• 5:34
  - and kind of potholes, you know, that some
• 5:35
  - of the other groups were hitting. In particular,
• 5:37
  - like, with their approach to debt, a lot
• 5:39
  - of groups have too much debt, and that's
• 5:41
  - what really caused them, to to not be
• 5:43
  - able to get more money from their lenders.
• 5:45
  - And so they had no choice but to
• 5:47
  - focus on organic growth because they couldn't do
• 5:49
  - acquisition growth because the lenders wouldn't get more
• 5:50
  - money.
• 5:51
  - And so
• 5:53
  - we kind of learned from that watching this
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  - happen and unfold. And so we, from the
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  - very beginning,
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  - built a pretty significant, I would say, infrastructure
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  - on our support team, much more so than
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  - than a group our size normally
• 6:05
  - would not have nearly the infrastructure and expertise
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  - and sophistication that a group our size and
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  - age has.
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  - I've had people come, you know, a lot
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  - of my executive team have come from much
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  - larger groups who've been around a long time,
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  - and they're pretty impressed that our our small
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  - little company is already more advanced than the
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  - companies they came from. So but that's because
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  - we put a focus on execution operations. Right?
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  - So how can we really help these practices,
• 6:29
  - help the doctors de stress their life, but
• 6:32
  - also help them be more productive, more profitable,
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  - grow, and and deal with a lot of
• 6:35
  - the issues that they're dealing with. So we
• 6:37
  - put up from the very beginning in our
• 6:38
  - design, we put a lot of thought and
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  - emphasis into how do we really help these
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  - practices perform better because we know that ultimately
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  - that's going to be,
• 6:46
  - you know, it's very attractive to investors, but
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  - it's also just best for our existing shareholders.
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  - You know, the more you can grow EBITDA
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  - without increasing debt, that's just better for everyone.
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  - So organic growth is has been one of
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  - our top priorities from the very beginning, but
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  - we're also excited about acquisitions too.
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  - Yeah. Yeah. Definitely. And just for our listeners
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  - who may not already be aware, can you
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  - share a little bit about Icon Dental Partners,
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  - network as far as number of supported practices,
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  - the type of practices, and number of states?
• 7:14
  - Absolutely. Yes. So as of right now so
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  - we're we're talking here in June 2026 for
• 7:19
  - your listeners,
• 7:20
  - depending when this drops.
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  - So, yeah, we are a a multi specialty
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  - platform. We have 27 locations currently, 22 are
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  - general dentistry, three are endo, two are perio,
• 7:30
  - and but we are open to full multi
• 7:33
  - specialty. We're talking currently with, you know, oral
• 7:35
  - surgeons and prosthodontists and other specialties. So our
• 7:38
  - idea was is kind of like this Seattle
• 7:40
  - study club model where you would have in
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  - a in a given market
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  - in a city, right, in a in a
• 7:45
  - in a small region,
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  - you would have, you know, some some referring
• 7:49
  - specialists, you'd have five, ten, 15 general dentists,
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  - and they're all collaborating clinically, but then also
• 7:54
  - having shared ownership at a holding company. That
• 7:56
  - was kind of the idea. And so we
• 7:57
  - wanted to kind of build like it's it's
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  - almost like a bunch of little study clubs,
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  - but they all have shared ownership. That was
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  - kind of the concept.
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  - And so it's at this point, we don't
• 8:06
  - have investors. We're privately held.
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  - We're in eight states.
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  - So we're in Washington and Idaho. It's kind
• 8:12
  - of our Northwest region right now.
• 8:14
  - We're in Albuquerque. Sorry. So so New Mexico,
• 8:17
  - Arizona, and Texas, I guess, would be our
• 8:19
  - Southwest region. And then Missouri, Michigan, and Kansas
• 8:22
  - would be kind of our Upper Midwest. And
• 8:24
  - so we're in those eight states right now.
• 8:26
  - I'm actively talking with, you know, practices in
• 8:28
  - a lot of other states. So probably by
• 8:30
  - the end of the year, next year, we'll
• 8:32
  - probably double in size hopefully by the end
• 8:34
  - of next year, maybe maybe faster than that.
• 8:36
  - It just kinda depends,
• 8:37
  - but we're we're hoping for some pretty significant
• 8:40
  - growth. We're fully funded by, by Fifth Third
• 8:42
  - Bank. They've been really great to work with,
• 8:44
  - and so we've structured our company in a
• 8:46
  - way where we don't need investors to grow,
• 8:48
  - which is awesome.
• 8:50
  - Now eventually, when when our shareholders wanna cash
• 8:52
  - out some chips and get that next round
• 8:54
  - of fuel, we'll wanna bring on investors in
• 8:56
  - a while. But right now, we're we're enjoying
• 8:58
  - our freedom and our autonomy and and it's
• 8:59
  - it's been great. We're really excited about, about
• 9:02
  - where we're going.
• 9:04
  - Nice. Thank you so much for sharing that.
• 9:06
  - And I'd love to hear, just a little
• 9:07
  - bit more. What's your current outlook on where
• 9:10
  - the economy is headed, and how that's gonna
• 9:12
  - affect DSOs?
• 9:14
  - Man, I wish I had that crystal ball.
• 9:17
  - Okay. So,
• 9:18
  - you know, I'm I'm not to be political,
• 9:20
  - but I am not a fan at all
• 9:21
  - of this current White House administration.
• 9:24
  - I think they are volatile, they're unpredictable, and
• 9:26
  - markets hate that.
• 9:29
  - Stock market is not the same as as
• 9:31
  - business.
• 9:32
  - So
• 9:34
  - the the problem that we see with with
• 9:36
  - volatility within you know, when you have a
• 9:38
  - volatile political environment and you don't know what's
• 9:41
  - happening and interest rates are going up, cost
• 9:43
  - of living is going up, inflation is going
• 9:45
  - up,
• 9:46
  - it makes it hard for companies, not just
• 9:48
  - dentistry, but companies in general to make investments
• 9:51
  - and and and large strategic decisions. And so
• 9:53
  - people tend to hunker down and just kinda
• 9:54
  - wait until the storm passes.
• 9:57
  - And
• 9:58
  - the problem with that is, you know, for
• 10:00
  - our industry, you know, to really start seeing
• 10:02
  - some recaps and some deal flow,
• 10:05
  - we need some predictability
• 10:06
  - and and some some, you know, interest rates
• 10:09
  - to drop, and unfortunately, it looks like they're
• 10:10
  - probably gonna start going back up again largely
• 10:13
  - almost entirely because of what this White House
• 10:15
  - is doing. And so it's a lot of
• 10:16
  - self inflicted, you know, shots to the foot,
• 10:19
  - so to speak. So I'm hoping that that
• 10:22
  - will get under control,
• 10:24
  - over the coming months and and hopefully not
• 10:26
  - much more than that, but, we shall see.
• 10:29
  - So I think that if if we can
• 10:31
  - get some predictability in the markets,
• 10:33
  - I think that that could help interest rates
• 10:35
  - hopefully and and contain cost of inflation. And
• 10:37
  - so we'll see. I mean, it's it's something
• 10:40
  - that certainly makes me nervous in terms of
• 10:42
  - when are we going to get some relief
• 10:44
  - on these interest rates. And I I don't
• 10:46
  - see it happening this year, to be honest.
• 10:47
  - I'm hoping next year, but who knows? We've
• 10:49
  - we've all been thinking that for years now
• 10:51
  - that, oh, it's it's gonna be getting better
• 10:52
  - and it and it and it really hasn't.
• 10:53
  - So it's definitely the new normal. I just
• 10:56
  - don't know how long it's going to last.
• 10:58
  - Yeah. And that sounds very similar to what
• 11:00
  - I heard from other executives. I think at
• 11:02
  - the end of last year, when I was
• 11:04
  - trying to get some predictions, a lot of
• 11:05
  - people said,
• 11:07
  - that they were expecting things to get better
• 11:08
  - and, you know, headed into
• 11:11
  - twenty twenty six and a few months ago,
• 11:13
  - speaking to them again, it,
• 11:15
  - you know, those predictions kind of changed. Obviously,
• 11:18
  - we're seeing some struggles. So, yeah, it's definitely
• 11:21
  - an interesting time for the DSO fields. But
• 11:23
  - that does go into my next question. I
• 11:25
  - know you mentioned it making you nervous. So
• 11:27
  - it's also curious,
• 11:28
  - what are you most excited about when it
• 11:30
  - comes to dentistry, and is there anything else
• 11:31
  - that is making you nervous right now about
• 11:33
  - the field?
• 11:34
  - Yeah. I think I'm I'm excited. I mean,
• 11:36
  - I'm still bullish about the industry. You know,
• 11:37
  - I think, you know, people people always need
• 11:40
  - to go to the dentist. Right? We are
• 11:41
  - always gonna have teeth. And so
• 11:43
  - dentistry historically has proven to be, you know,
• 11:45
  - pretty resistant, pretty robust to ups and downs
• 11:48
  - in economy and recessions and things like that.
• 11:51
  - I mean,
• 11:52
  - you know, roughly half the country doesn't doesn't
• 11:54
  - see the dentist on a regular basis, and
• 11:56
  - that hasn't really changed too much over the
• 11:58
  - decades. And so we there's no reason to
• 12:00
  - really expect it's going to change in the
• 12:01
  - future. But I still there's a big there's
• 12:03
  - a big marketplace out there. And I think,
• 12:06
  - to me, as long as as you focus
• 12:08
  - on,
• 12:09
  - you know, supporting your providers, your doctors, and
• 12:11
  - your and your clinical staff, giving them the
• 12:13
  - training and the support that they need, I
• 12:15
  - think you can still have very successful practices
• 12:17
  - that are still profitable in this environment, and
• 12:19
  - and our practices are doing pretty well. So
• 12:22
  - I'm still I think the fundamentals of the
• 12:24
  - dental industry are good.
• 12:26
  - I think it's a great industry to be
• 12:27
  - in. We're we're excited to be a part
• 12:29
  - of it. I just think there's a lot
• 12:31
  - a lot of untapped potential.
• 12:33
  - You know, it's gonna be interesting to see
• 12:34
  - what happens with AI. Everybody's talking about AI.
• 12:36
  - It's obvious buzzword, and it it is starting
• 12:39
  - to have some impact in some areas, I
• 12:41
  - think.
• 12:42
  - But again, we're very early stage in in
• 12:44
  - what AI is going to be able to
• 12:46
  - ultimately do. And so, yeah, I'm very much
• 12:48
  - excited probably like everybody to see what kind
• 12:51
  - of tools emerge over the coming months and
• 12:52
  - years that really make it more efficient, more
• 12:56
  - profitable,
• 12:57
  - to to run a practice because we have
• 12:59
  - a lot of things working against our margins
• 13:01
  - right now. You know, payrolls keeps going up
• 13:03
  - with with staff salaries,
• 13:05
  - labs and supplies are more expensive. Everything's gets
• 13:07
  - gets gets more expensive over time.
• 13:10
  - And to fight that, we need to be
• 13:11
  - smarter. We need to have economies of scale
• 13:13
  - to negotiate.
• 13:14
  - We have to get more efficient and productive
• 13:16
  - within the practice. That's where AI can certainly
• 13:18
  - help.
• 13:19
  - So I think that there's, you know, there's
• 13:21
  - always going to be challenges. That's just they're
• 13:23
  - never it's never gonna be totally smooth sailing.
• 13:25
  - Right? But I think, fundamentally, I feel good
• 13:27
  - about where we're at,
• 13:29
  - especially within ICON. I feel like we've got
• 13:31
  - a really strong kind of a business model
• 13:33
  - and a strong team.
• 13:34
  - So I'm pretty excited about that even though
• 13:36
  - there are a lot of headwinds,
• 13:38
  - you know, like we talked about.
• 13:40
  - Yeah.
• 13:41
  - And last question for you here, what will
• 13:43
  - the most effective health care leaders need to
• 13:45
  - be successful in the next two to three
• 13:46
  - years?
• 13:48
  - Yeah. That's a good question. So,
• 13:50
  - kind of going back to some things I
• 13:51
  - said a little earlier, I think
• 13:54
  - any group, if they can figure out how
• 13:55
  - to leverage their scale with negotiations, be it
• 13:58
  - insurance companies,
• 13:59
  - suppliers, you know, labs, things like that, taking
• 14:02
  - advantage of scale, I think will be helpful.
• 14:04
  - And I think you're starting to see
• 14:06
  - some DSOs, you know, kind of buying each
• 14:08
  - other, merging with each other, and that will
• 14:11
  - help them ultimately.
• 14:12
  - It it may not have a big boon
• 14:14
  - to their stock valuation, but it certainly can
• 14:16
  - help them in other areas,
• 14:18
  - with efficiency, with negotiating power, and so forth.
• 14:21
  - So
• 14:22
  - I think, you know, leveraging scale for groups
• 14:24
  - is going to be important to to be
• 14:26
  - smart about that. Obviously, the staffing issues, you
• 14:28
  - know, the the folks who can figure out
• 14:30
  - how to attract and keep hygienists, you know,
• 14:32
  - they're gonna be ahead of the curve, and
• 14:34
  - that's easier said than done. I don't we
• 14:35
  - don't have any magic bulleted icon. We're struggling
• 14:37
  - like everybody else. We're having our wins. We're
• 14:39
  - having our losses, but we keep,
• 14:42
  - keep trying to work on that that issue.
• 14:44
  - And then the last thing I would probably
• 14:46
  - say
• 14:47
  - is really gonna be important
• 14:48
  - is is managing the debt and the balance
• 14:50
  - sheets.
• 14:52
  - A lot of groups are in trouble, you
• 14:53
  - know, because they're pretty over leveraged.
• 14:56
  - You know, it's it's
• 14:58
  - it's it's interesting, you know, when when interest
• 15:00
  - rates are low and and debt's cheap and
• 15:01
  - people are just buying practices right left. I
• 15:04
  - mean, that was what happened obviously pre COVID
• 15:06
  - and even a little bit during the early
• 15:08
  - stages of it. And those days are kind
• 15:10
  - of I don't know if they're gone, but
• 15:11
  - they're certainly on on hold.
• 15:13
  - And so it's forced, I think, a healthy
• 15:16
  - refocusing
• 15:17
  - on balance sheets to get that debt under
• 15:19
  - control to focus on organic growths and operations.
• 15:22
  - And so I think the most effective health
• 15:24
  - health care leaders, dental leaders are going to
• 15:27
  - have to get really good and dialed in
• 15:29
  - at operating their their practices as as a
• 15:31
  - business.
• 15:32
  - Not not and I don't mean that in
• 15:34
  - a bad way. I I I mean, we
• 15:35
  - are all about clinical autonomy. Our doctors have
• 15:37
  - full control over their their their clinical decisions
• 15:39
  - and all that labs and supplies and whatnot.
• 15:41
  - But there's still you can you can have
• 15:44
  - your cake and eat it too. You can
• 15:45
  - run a very effective
• 15:46
  - and efficient practice
• 15:48
  - while delivering great health care to your to
• 15:50
  - your patients and having a good culture for
• 15:52
  - your team. They're not mutually exclusive.
• 15:54
  - And so to me, that's that's where you're
• 15:57
  - gonna have to be really dialed in is,
• 16:00
  - you know, running efficient, don't have a ton
• 16:02
  - of debt, and figure out how to grow
• 16:03
  - organically. I think if you can do that,
• 16:05
  - you'll be in pretty good shape.
• 16:07
  - Great. Well, that is all I have for
• 16:09
  - you today, Ian. Thank you so much for
• 16:10
  - such the,
• 16:12
  - such an insightful conversation. I'm sure a lot
• 16:14
  - of our listeners are gonna find this really
• 16:15
  - helpful. So thank you so much for your
• 16:17
  - time today. Been a pleasure speaking with you,
• 16:19
  - and I'm looking forward to connecting with you
• 16:20
  - again in the future.
• 16:21
  - Well, thanks for your time today. I appreciate
• 16:23
  - the opportunity.