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The 9% Organic Growth Blueprint: Mike Huffaker on Decoding the New Patient Pipeline · Dental Mentors

• Dental Mentors: the strongest growth correlation with any practice is a healthy new patient pipeline. And I know we all want to keep the patients that we have. I know that hygiene is an engine inside the practice. I know that recall and reappointment rates are really, really important. But the reality is your patients that are existing patients, they're gonna get thrown off their every six month schedule. Many of them you might only see once a year instead of twice. Others just are not gonna come back. They move, they go away. If you're not keeping a new pipeline of patients, you're in trouble. New patients are much more valuable than existing patients. What is the value I provide to my dentist? ⁓ five years ago I had a crown done. I've had nothing other than exams and x-rays for the past five years. That's all you get from me. You get hygiene, exam, x-ray. Nothing. Nothing else. But new patients have issues that need to be treated. They have not seen a dentist in quite some time. Often is the case. They might have gum disease, periodontal ⁓ challenges, they might need SRPs. They there's could be crowns that are needed. Like they they have disease or conditions that require higher value treatments. And so by keeping that new patient pipeline full, you have a much better opportunity at growth. And with over half of US adults not even seeing a dentist, there should be no demand challenge if you're managing your business properly. Hello, welcome to another awesome episode of the Dental Mentors Podcast, Building Wealth in Dentistry. I'm very grateful to have ⁓ a friend of mine, ⁓ Mike Huffaker, on the podcast today. He's the Chief Revenue Officer for Planet DDS. And ⁓ I will be forthright and let you know that our DSO Oak Dental Partners does use Planet DDS. I think they're totally awesome. And we're gonna do some ⁓ really Do some deep dives and have some fun conversations on ⁓ how you can use ⁓ Denticon and other tools and metrics and KPIs that you need to be monitoring to really ⁓ grow your practices or groups organically. And while providing optimal patient care, increase your EBITDA and your collections and revenues and and hopefully ⁓ supercharge the profitability of your practices or groups. So when you exit, You know, hopefully you can put another couple of million dollars in your pocket by doing some things that you're not aware of. So, Mike, welcome to Dental Mentors. Appreciate you being here. Yeah, great to see you as always, Matt. We appreciate the partnership and ⁓ it's a real pleasure. Yeah, thank you. I got to see Mike on stage in Dallas at the Dykoma. It's like a Dykama mini event, ⁓ I think it was probably like two or three months ago. The presentation he did was amazing. ⁓ the data points you have are awesome. I learned a lot of stuff and took that back to our CEO. So I really appreciate everything that you're doing. And Mike's an awesome guy. Like I've known him for I don't know, four or five years. And he's just a wonderful human being, ex exceedingly smart and ⁓ always willing to share his his wealth and wealth of knowledge, ⁓ to any dentists that are are looking to improve their EBITDA and obviously improve the ⁓ exit value of their practices. So Mike, I'd love you just You know, take a little bit of time and tell us how long you've been with Planet DDS, what you do as chief ⁓ revenue officer, and talk about dental OS, Denticon Cloud Nine, in case people don't know about that one. So you can take it from here. Yeah. So I joined Planet DDS in 2019. ⁓ I actually came from outside of dentistry. So I'm now six and a half years fresh into the dental space. ⁓ love it very much actually. Though when I first got the call from the recruiter to join Planet DDS as ⁓ their VP of sales, and they told me like, yeah, it's ⁓ in the dental industry, I was like, Yeah, no, thank you. That sounds kind of weird. That's where everybody's got hands and mouths all the time. ⁓ and I was in restaurant and hospitality at the time, but I had learned pretty quickly that the industry itself was at an inflection point with all of the consolidation that was taking place. That technology adoption was lagging significantly over other industries. And it seemed like there was a real opportunity to come in and make a difference. And so when I joined in 2019, we served about 700 practices total, ⁓ a number of DSOs, such as DCA. and over the past six and a half years, we now have over 14,500 practices using our solutions. ⁓ We serve over four hundred DSOs, including over half of the top fifty DSOs in the country, ⁓ seventeen groups over a hundred locations, and have really become the premier platform ⁓ from a technology perspective for multi-location groups and DSOs. That's awesome. That's some ⁓ I'm trying to do the math in my head, but that's ⁓ like a a little over a twenty time increase. Yeah, we we've Grown to from roughly gosh $10 million a year in revenue to over $120 million a year in revenue in in six years. So it's been pretty significant ⁓ growth, driven predominantly through ⁓ really focusing on the multi-location group market. You know, we don't try to be all things for all people. ⁓ we absolutely are the best business tool in the marketplace. ⁓ to run a dental business on. Of course, practice management spans many things from operations to clinical to RCM. ⁓ but if you can't get the money right, it's really all for naught. And that's where we ensure that we do a better job than anybody else. Yeah, well you've obviously done an amazing job. I mean, how do you even sleep at night only growing from ⁓ 10 million in revenue to 120 million? Yeah, you're beating yourself up constantly for Or not performing. You know, ⁓ for most of my career, to be quite honest, when you're in sales, you know, you feel you have this notion of like you're only as good as your last quarter. And even when there would be perpetual success, there was always perpetual paranoia. And a lot of that still sticks with me to this day. ⁓ there's never a rest on your laurels type of attitude. It's always, well, how do we improve? What do we do differently? ⁓ how do we grow further from where we were before? You know, we're still growing at twenty five, thirty percent year over year, which at scale is a real challenge to do. ⁓ so the the pressure never lets up. ⁓ nor do I want it to, to be honest, because it's what I enjoy is ⁓ building and creating and adapting and trying to find the new ways to continue to improve ⁓ over time. Yeah. I mean, that's incredible growth. Congratulations. That's Elite elite rock star status hall of fame. So thank you so much. Yeah. So as I said, our DSO ⁓ uses Planet D D S. All the other CEOs and owners of DSOs that I know and ⁓ that do that use Planet DDS love it. ⁓ I think it's incredible. So c can you get a little just so the the focus of this ⁓ of the podcast is like how can we help dentists increase their revenue? And increase their collections, you know, because if you're not collecting, then the revenue growth, you know, it's not as impactful. Yeah. And then at the end of the day, how do you increase your EBITDA? So like I've always talked about EBITDA. I love talking about EBITDA, but at the end of the day, in my opinion, could be wrong, but in my opinion, the most important thing is if you're looking to keep your practice for, you know, lifestyle reasons or eventually sell it. You've got to focus on your EBITDA. Everything trickles down and ends up at EBITDA, but there's a lot of factors going in there. So ⁓ I would love you just, you know, if pr just kind of pretend I was a I was, you know, you're talking a bunch of well not pretend, but you're talking a bunch of dentists and ⁓ D small DSO or large DSO owners. What are the things that the ⁓ the dentists and CEOs need to be focused on to make sure that they're growing in a realistic manner? 'Cause a lot of people think, ⁓ we're doing well. We grew three percent last year or four percent last year. And really, in reality, yeah, you're not. You could be doing a lot better. You know, so I'd love you to talk about, you know, any data points that you've been following and tracking, what tools ⁓ Planet DDS has to help ⁓ DSOs and and ⁓ practice owners grow, keep track, and monitor the financial health of their business. Yeah, so there's a lot there. ⁓ I could probably go on some thirty minute rant. I'll try to refrain. ⁓ from doing so, though I'm not always successful at self-editing. ⁓ that's probably the curse of being a lifelong sales guy. ⁓ so a few things. I think first off, it's never too early to start thinking about what your technology platform looks like in whatever your growth trajectory is. Now, for practices that are single provider or one doctor practices where it is ⁓ you know. That want to work four days a week, and that's kind of the goal. And it's it becomes lifestyle. ⁓ we're probably not the right platform for you. That is that's not our our ideal customer profile. We we work with practices that seek to grow. And there's a lot of tools out in the marketplace, a lot of practice management software that will meet your needs if you're happy doing 800 to 1.2 million in production a year, and that's you know, servicing your lifestyle, and there's no desire. Do anything else. But if you have greater ambitions for more practices or larger practices, then you need a real business management tool to support you in those efforts. And what I think typically happens with in the emerging space in particular is you have a dentist owner that's starting to expand their operations. They get to two, three, maybe five practices. Everything feels like a fire. There's perpetual challenges that need to be faced, staffing challenges. ⁓ patient acquisition challenges. And the last thing that's on anybody's mind at that point is what is this the technology foundation that I'm putting in place that will allow me to scale in the future? And then what happens is you're at 15 offices, 18 offices, you find yourself on six different practice management software, you have no ⁓ ability to operationalize anything. You can't create standard operating procedures. There's a reason that people build processes. Processes are designed. To drive consistent and repeatable results. But if you don't have a platform that allows you to build any process, then how can you expect consistent, repeatable results? And so that's really where Planet DDS comes in, is we offer a platform that allows you to run your business and goes beyond just allowing you to run your business, helps you run your business. And then now in the age of AI, actually does some of the work for you, which is really cool. And then also enables you to connect to any best in class solution that you also want to leverage. And so you kind of future proof your technology stack as you move forward. And one of the interesting things that we see in our data is when groups get to that kind of 20 location threshold, their growth slows down. And that's oftentimes when people start to seek investment when they're looking to bring in somebody either to acquire their business or they want to be acquired by another group. ⁓ they have not professionalized their organization from a leadership or support perspective yet, nor have they often ⁓ done the technology investment that was needed, or they choose a platform that's not built for enterprise and scale. Because in the lower end of the market, you can go out to market and you could have 10 different solutions that will likely meet your needs at two, three, four, or five locations. But if you are seeking to grow further, You're going to outgrow those solutions. And then you have to go and do that entire process again. Or if you don't, you become hamstrung because you're no longer able to manage your RCM effectively. You're no longer able to manage your processes effectively, or have really good insight into the data in your practice, which is incredibly important to understand and analyze in order to be able to continue to grow. And those are all things that that Planet DDS, that Denticon, and Cloud9 solve for in the marketplace today. ⁓ that was a great explanation. Well, one I I love to read a lot of books. Like I I probably Me too. I probably crush at least a book every two weeks. And I love books on business. I love books on the best CEOs, business philosophy, scaling, et cetera. But you brought up a great point. Like as dentists start to grow their their practice group, you can easily get caught in the trap of working in your business instead of working on your business. Yep. And if you don't have ⁓ a state of the art practice management system, you can literally just waste hours and hours upon hours. Doing nothing that's helping you scale. Correct. Like you have to you have to have state of the art, best in class technology and practice management systems. So you have access to all the data, all the tools, the dashboards, everything you need to scale. Scaling is not it's not easy. Yep. And if you're behind on the technology stack, it's a really, really difficult problem to solve. We had Pat Bauer on here a while back and ⁓ Every time I talk to Pat, he's an amazing guy. I love that guy. Just so generous with his time and knowledge. But if I there's one quote from Pat Bauer that always sticks in my head is data fixes everything. Yep. And if something's broken, broken, you can't fix it if you don't have the data. Because you need the data to tell you to tell you what's what's going on. ⁓ well, it's a great point. So think about it this way. ⁓ if you're using multiple solutions. Or even if you're using a non-enterprise grade solution in your individual practices, every different practice management software has different data definitions. It you would think it would be really easy to understand what your new patient count is, right? It's new patients that are, you know, brought in that are on the schedule that receive treatment. It's not, it's actually not easy to understand that. across multiple solutions. The way that they define a new patient is different. The process for actually bringing a new patient into your practice is different. So when you try to aggregate data sitting on the top of disparate solutions, and you mentioned Pat, you know, they use a standard solution across all of their practices. And they have the same data dictionary for every single element that they're able to then report on. And it becomes very, very complicated. And so if you're going into diligence with a buyer and they want to understand your business, and you know, there's ⁓ what what quality of the information that you're provided ⁓ are you able to validate? And if they're looking at things and these are sophisticated individuals, they start going, like, well, this doesn't add up. Like this, this doesn't connect with this. This doesn't make sense with this. And it's likely because. You're using different definitions for different things out of different systems. And it becomes incredibly problematic and you lose credibility and you break some of the trust that you would have. And so that is one thing that I think is ⁓ really critical that a lot of people don't think about. And even if you're trying to use a third party, there's a lot of them out there, like an analytics platform that ingests all the information. ⁓ you know, if you talk to anybody that's leveraging those tools across fragmented ecosystems, they will tell you that. Sometimes it's a little bit suspect. And part of the reason is, is it's the source. Like you have to think if you have multiple systems, what are the people in the offices doing in those systems? Are they using every field in the proper way? Are they putting in their own procedure codes? How are you managing your fee schedules? What sort of adjustment process do they have for adjusting off or doing cash refunds or doing you have no control? It's the Wild West. Every single practice is able to do their own things. You have no oversight at the corporate level, which really ⁓ diminishes your ability to run an effective business at scale. I agree. Absolutely. ⁓ I will say this because, you know, ⁓ I'm co-founder of ⁓ dental pitch brokerage. I think everybody knows that. But you know, so we're dealing with buyers all the time. And I will say this. ⁓ if you are a dentist and you're looking to sell your practice or your group, you better have your technology stack, you know, up to snuff because the buyers are very sophisticated now. And, you know, there was a period of time where buyers were overpaying for groups and practices. And th those days are long gone. Buyers are a lot more ⁓ diligent. They spend a lot more time on due diligence. And if you're, you know, if you own five offices, 10 or 20 offices, and they're all disjointed, they've got different practice management systems, the data is not ⁓ collated in a coherent manner, you're literally gonna lose, you could lose one to two turns on your EBITDA when you sell. And what I mean by that is let's say you had 20, 10 or 20 practices, your EBITDA's strong. I'm just gonna pick an easy number here, right? ⁓ let's say that EBITDA you've got EBITDA of two million. And if you had all your ducks in a row, you might get a seven times EBITDA, 14 million. But if you don't have the right practice management system in place, you don't have the right tech stack, or you've got different practice management systems, the data is not coming together clearly and properly, you might you literally might get a a five X. So you know, ten million instead of fourteen million. I think one of the very best investments ⁓ dentists need to make is investing, and I call it investing, not spending money, investing money on a great practice management system. Yeah. Not only will it get more money when you sell, but it's also going to help you earn more money pre sale. And if you you know, if you want to keep your practice another ten or twenty years, you wanna I always say patient care comes first, you know, proper patient care. Yep. ⁓ ethical patient care. But if you're doing all that and you're working X amount of hours per week, why wouldn't you want to maximize your net ⁓ your net income each year? Why wouldn't you? Yeah. Well, you make a great point because it's not simply ⁓ a tool for diligence or for valuation increase, but it is a platform that allows you to grow your business. And so, ⁓ I was talking to somebody recently and, you know, look, if you're a retiring dentist, that's one thing. It's like, look, you've you worked your career, you've had great earnings, and now you're seeking to get this check, and there's really no interest that you have in remaining in the business post-acquisition. But a lot of the investments that take place, you roll in equity into the new investment. There is a desired secondary outcome that will happen a few years later as the business grows. And if you're mid-career, you should be wanting to partner with. ⁓ an investor that seeks to continue to have the business grow so that you can have that positive outcome. And the platform does that as well. It actually sets up organizations to be able to succeed operationally in ways that you can't do otherwise. ⁓ and then going back to your first point, which I think is a great one on the multiples, but there's the other element of it. You're now that ⁓ you know, we've entered kind of this new era of maturation of investment in the dental space. It's no longer ⁓ just a case of, yeah, I'm gonna get this deal done, but it is ⁓ at what multiple? Like you might just not get the deal done. You're gonna have investors that just walk away. Whereas, you know, in the past, there might have been more of an appetite to buy what I'd call a fixer upper. You know, here's this house that I know I'm gonna need to invest a bunch of money in to extract, you know, more value out of it at the future. And then you have to weigh all the things about like, well, Where can I make those investments where I actually get a return on my is it the kitchen? If I do the kitchen, is that gonna do it? Now what you have is folks that they want it to be a little bit more turnkey from like the technology infrastructure perspective, so that they can put the investments in the other areas of the practice that really will maximize EBITDA, you know, operational efficiency, ⁓ the right staffing, the right ⁓ doctors in the practices, ⁓ adding service lines to increase total production. That's where it gets exciting. People don't want to buy a practice and go like, I'm gonna buy this group and I know I'm gonna have to invest all this time and effort in doing a technology overhaul. I wish that they already were at a good place from a technology per perspective so that we can not view them as a fixer upper and view them as something that now we can pour gas on the fire to accelerate their growth. 100%. And I will tell you this there are very few buyers in the marketplace. that are interested in buying a fixer upper dental practicer group. And because it is it's such a drain on resources financially. It's such a drain on resources on the human resources front. It drains time. And even above all above all of that, just the aggravation, emotional turmoil, pain in the butt that it takes to to turn a dysfunctional practice or group around, most buyers don't want to do it. They don't want to do that. They want to buy a a group that's already run and operating very, very smoothly and that can be integrated into the buyer's group as seamlessly and effortless effortlessly as possible. ⁓ I mean, I just hear that all the time from the buyers. I think we've got like a hundred and twenty plus buyers in our network now. And not one of them says, Hey, go find me a a a dental practicer group that that has has a lot of problems so we can go fix it up and turn it around. I think that's more like a dentist that maybe buys a ⁓ flailing or ⁓ struggling office that might be, you know, twenty, thirty minutes from their existing office where they can get in hands on and fix things up, but not at scale. That does not work at scale. No way. In fact, we just hosted an event. We called it the Dental Capital Forum ⁓ last week. And it was twenty-five DSO CEOs representing over 8,000 offices. ⁓ I did not get invited to that, by the way. ⁓ it was But I will say this. You do always invite me to your to your ⁓ your pool party. ⁓ it's even better. I mean, we had to wear suit and tie for this event, you know, so I I think. The the the pool party was ⁓ was ⁓ was ⁓ was more fun for sure. ⁓ but yeah, we had ⁓ twenty private equity deal teams there as well, representing over trillion dollars in investments, ⁓ all of them active in the dental space. And one of the presentations we got was from Boston Consulting Group. We brought him in and they have some incredible data and they were talking about ⁓ the how the dental space is comprised based off of practice size and I think it was somewhere between twelve and fifteen percent of dental practices or two million dollar plus practices, which means it's not that many in the grand scheme of things, which got me going, Well, I'm really curious now what the blend looks like inside the planet DDS ecosystem, because we almost only serve ⁓ multi location groups and DSOs. In fact, eighty five percent of the practices on our platform are associated with a multi location organization. You're talking about re revenue, not even revenue. Yeah, revenue, revenue. And so the premise that Boston Consulting Group was sharing was that ⁓ DSOs seek to invest in larger practices, meaning that the pie actually is smaller than one would expect for consolidation if there's only twelve to fifteen percent of practices that are doing over the two million dollars in revenue. So I looked at our numbers and we actually ⁓ it kind of holds true. I think something like forty to fifty percent of the practices on our platform. are $2 million plus production offices. So we generally have larger offices that are on the platform and that kind of aligns with the fact that groups either want to acquire or investors want to acquire practices that are already healthy, that they can maybe move from that 1.5 to 2 million or from the 1.7 to 3 million ⁓ with additional investments. But they're not seeking a lot of the smaller single provider practices with you know, ⁓ seven hundred thousand dollars in in production. So you need to make some decisions about, you know, what you want for your practice, where it needs to go, how you can grow it, separate and apart from adding additional locations. And institutional investors are absolutely seeking those that are not fixer uppers that have the opportunity to implement new elements into the the the business that are going to spike the EBITDA and grow. the business overall. Yeah. ⁓ you know, my favorite ⁓ dental consulting group in the US is Tower Leadership. And ⁓ their founder, Eric Morin, he could not make this podcast, but I have talked to a bunch of ⁓ dentists that have can that have hired Tower and the growth, if if the dentists do what what tower leadership tells them and shows them what to do and how to do, They have doubled, tripled and one group ten X their revenue in a in a in twelve to twenty-four months. I mean, I've seen seen and talked since some incredible stuff. So I want to get into that next because again, you know, I wrote two books on EBITDA. I EBITDA. I'm kind of a a nerd in that area, but I just I love talking about EBITDA because when you go to sell, that's what matters. Yep. And the higher your EBITDA, the higher the multiple you get, which is which is really cool. Like if you've got You got five hundred thousand dollars of EBITDA, you get a five to six times multiple. So you get two and a half to three million for your practice. If you've got two million of EBITDA, yeah, you likely get a seven X. Yep. Yep. Which is huge. I mean, the there's a huge difference. For every dollar of EBITDA, you went from five or six times ⁓ a dollar, you know, you can go to seven or eight times per dollar. And and that adds up big time, especially if you're if you if you want to retire. Yeah. Well, I love I'd love your perspective on this. ⁓ my my viewpoint is that the reason that that is, is because you're proven at scale. You've essentially proved that the business is sustainable and large enough to grow. You've kind of crossed that, you know, chasm of are we going to shrink over time, or is this a business that is ⁓ durable for the long term? Because the the multiple is basically a bet. on the amount of EBITDA that you'll be able to continue to generate in the future, right? And so it's a more ⁓ it's a more investable trustworthy play if you've got a stronger EBITDA amount, which would ⁓ equal to increasing that multiple. Am I am I thinking about this the right way and in in terms of how how you would think about it? Yeah. So it's for me it's two parts. And and I can s you know, I can speak because you know ⁓ Oak Dental Partners went from 20 practices, we're at over 80 now. Yep. So what you said is is spot on 100%. The other component is this if you're trying to grow through through acquisition, you're a DSO and you're trying to grow and grow and grow and get to the point where you could sell for 12 times Zebida, right? So ⁓ a DSO or you know, private equity, family office, w ⁓ or existing practice group is willing to pay a higher multiple to acquire multiple offices at the same time. And it's bec it it it comes down to as humans, we have a limited amount of time to do dil to do due diligence. And when you're looking to buy a practice, you may do due diligence on five practices and end up only buying one. So you've literally wasted 80% of your of the time on four that didn't work to find one that did. So the the the second part to what you your comment, which was a brilliant comment, is all right, we can buy one office with five hundred thousand dollars of EBITDA and pay five times EBITDA, or we can buy a group. All right. We could buy ⁓ let's just say we could buy five offices with two and a half million of EBITDA. Yeah. And we're happy to pay seven times ZBIT. We'll pay a higher multiple because it's eliminating literally thousands of hours of due diligence. Yep. When eighty percent of that due diligence time ends up with a with a nothing. Yeah. You don't get in the end zone. I think there's more ⁓ more to that too. You you're actually eliminating risk in your ability to grow. And one of one of the data points that we see ⁓ across our network, sixty five percent of practices are growing. And 35% are not. They're shrinking. They have negative year-over-year growth. If you're buying a group, there's always going to be some blend of that. ⁓ every organization that we work with has underperforming practices, they have overperforming practices. That's just the nature of what the business is. ⁓ right now it's a blend of 65-35, but you're ⁓ essentially hedging or protecting your investment by acquiring a group of practices where you're more guaranteed to always have overperforming offices within that blend over the course of time, even if the offices that are the ones performing change. Whereas you're not just investing in a single practice where if it goes downhill, you now are underwater in your investment and it no longer has the same value that it would have before. I agree completely. And and the reason those numbers work is some DSOs or ⁓ groups, they do get to a point where they can sell at a ten to ten or twelve times EBITDA multiple. I'm just gonna use an easy number. Let's say you get to point where they're at a ⁓ a ten they could that group could exit at a ten times EBITDA multiple. Well, they're happy to pay five times EBITDA for an office because as soon as they buy that office, if they paid a million dollars for that office, as soon as it's integrated in, that office is now worth two million dollars to the to the group that bought them. Right. So you You can push the multiples up and and you know, you can get you can get that seven times EBITDA, eight times EBITDA if you have enough EBITDA and enough offices because the acquiring group is still gonna make money and sell, even though they paid you a higher multiple. You brought up a really ⁓ interesting statistic, ⁓ and and you brought it up at the at the I I'm calling like mini Dykama events, but you said sixoma leadership event. Yeah, Dykoma Leadership events. I love those. Brian Caleo's ⁓ amazing. Like, I love that guy. Just brings so much value to the industry. ⁓ sixty-five percent of of practices ha have positive organic growth, and thirty-five percent are at zero or negative. Can you get into what is separating the practices that are growing have positive organic growth from the ones that are stagnant or negative? And then there's a subset to that that you brought up at the Daicomo Leadership event in Dallas is the the ⁓ practices that are growing, you know, I think you said like having really, really good ⁓ positive organic organic EBITDA growth. What are some of the metrics or KPIs that are separating the fastest organically growing practices from the ones that are doing good and the ones that are doing mediocre or negative? Yeah, absolutely. So ⁓ Quite a few things with that that we can we can dive into. First off, on the sixty five thirty-five piece, I just want to also call out like we saw that the industry grew up four percent across our network. ⁓ BCG, they forecasted three percent growth. So our network actually grew on average more the folks that are using Denticon and Cloud Nine than what the industry average ⁓ expectation was. Thirty thirty three percent more. Yeah, thirty exactly. Which is a significant it sounds like not a lot when you think of one percentage point, but it's actually really large. And then when you when you dive in and you kind of pull back the covers a little bit, ⁓ thirty-three percent of the practices on our platform grew over ten percent. It's why averages are so dangerous. You can sit there and go, like, well, the industry's at four percent, my practice grew at two percent. I'm not really all that bad. It's like, no, no, one out of three is growing over ten percent. So there are absolute winners out there in the market today. And then the middle is getting very squeezed. And then there's a a segment, 15% of groups, 13 and a half to be exact, that are growing less than 10%, that are actually shrinking at over 10%. So there's this kind of bifurcation that's taking place between these really successful practices and those that are not. So then let's think about what does it take to become a successful practice? What I found really surprising when we do jump in real quick. Yeah. Yeah. ⁓ yeah, please get into that. But I also want to make I want you to come back to what are the practices that are growing at 10% per year organically? What are they doing differently than the rest of the well, I I that's that's where I'm going. So I'll go, I'll go there right now. So ⁓ everyone talks about case acceptance. That's like the the biggest buzzword in dental from my perspective. Any software vendor that's pitching you something is oftentimes pitching you, you're going to increase your case acceptance. Well surprisingly, what we found is percentage case acceptance percentage doesn't actually have a strong correlation to growth. There's practices that have 80% case acceptance that are shrinking. There's practices that have 40% case acceptance that are growing. The correlation is really weak. And so you get all these data points. And ⁓ one of our competitors put out a an industry report recently, and they were like, hey, the top 10% of practices are have 85% case acceptance. But top 10% of what? There's no correlate, they don't connect it to the top 10% of growing. They're just saying out of all the practices, the ones with the highest percentage, this is the percentage of case acceptance that they get. So if you're not tying back to actually what you're seeing in the practices from a revenue growth perspective, a lot of the stats are not incredibly helpful. ⁓ what we found that the growing practices do really well, whether they're at 70% case acceptance or 55% case acceptance. They keep a very small gap in case acceptance to case completion. And that's a thing that I don't hear a lot of people speaking about. We talk about case acceptance, but there's a lot that can go wrong between when the patient says yes in the chair that day and whether or not they ever come back and they get the treatment that they accepted that looks good on your reports that ends up being this kind of outstanding liability or forecasted revenue that never comes true. So what the Strong practices do is they ensure that they're actually completing the treatment that gets accepted. ⁓ which there's a whole lot that goes into that. And I bet you, Eric and Tower, would have ⁓ a ton of thoughts on how to ensure that that operationally you close that gap. But that's one of the pieces that we saw that I thought was really interesting. It was less about the percentage. And once again, you saw ⁓ locations all over the board from 30% to 80%. I could make an argument that if you're getting 80% case acceptance, you're not presenting enough dentistry. You're not actually you're not ⁓ building a practice that is so busy that you're able to ⁓ treat enough patients with enough procedures because that just seems like such a high, high amount of cases being accepted. And the reality is. There's always gonna be patients that are going to, you know, need a different path in their treatment plan. ⁓ so that was one thing, that gap between acceptance and completion. Another piece is, as you talked about earlier, new patient acquisition. It's very clear that the strongest growth correlation with any practice is a healthy new patient pipeline. And I know we all want to keep the patients that we have. I know that hygiene is an engine inside the practice. I know that recall and reappointment rates are really, really important. But the reality is your patients that are existing patients, they're going to get thrown off their every six-month schedule. Many of them you might only see once a year instead of twice. ⁓ others just are not gonna come back. They move, they go away. If you're not keeping a new pipeline of patients, you're in trouble. The other piece is new patients are much more valuable than existing patients. What is the value I provide to my dentist? ⁓ five years ago, I had a crown done. I've had nothing other than exams and x-rays for the past five years. That's all you get from me. You get hygiene, exam, x-ray. Nothing. Nothing else. But new patients have issues that need to be treated. They have not seen a dentist in quite some time, often is the case. They might have gum disease, periodontal ⁓ challenges. They might need SRPs. They there's could be crowns that are needed. Like they they have. Disease or conditions that require higher value treatments. And so by keeping that new patient pipeline full, you have a much better opportunity at growth. And with over half of US adults not even seeing a dentist, there should be no demand challenge if you're managing your business properly. And the threshold that we see is 35 new patients a month. People grow significantly faster. It's like 4%, 4%. ⁓ Soon as you exceed the 35%, it's six and a half percent, and it continues to go up until we hit nine percent plus at 75 new patients a month. And what we see is the average new patient count across our network is 47 new patients. Now, interestingly enough, I sat down with a group of 34 offices. They fit with all of what we are aligned with and talking about here. 65% of their offices were growing, 35% of them were shrinking. And I said, okay, well, let's look at each of your offices new patient count. The 20-something practices that were growing were all over 35 new patients a month. In fact, they averaged as an organization like 40. They were just below what our what our industry averages. But they had ⁓ 10 practices that were grow that were shrinking, that had negative. year over year growth. Guess what? All 10 of them were below 35 new patients a month. So there's a direct correlation here that is that is really important. Of course, the size of the practice matters, how many providers that you have matters, things that you need to take into account when you're trying to map out what is most meaningful for your business. But if you dive into that, it has ⁓ incredible meaning. Can I jump in for one second? I should keep going. Yeah. Jump in for this is this is goal, dude. So I just want to make sure I got the this this stat right. Practices that have thirty-five new patients a month are averaging six and a half percent organic growth a year. Yep. Seventy-five new patients a month is equating statistically to nine percent organic growth per year. So, like, dude, I read everything Elon Musk I love Elon Musk. I read all, you know, his bi his biography. I just read the his new one, The Book of Elon. My favorite book of the year is called The Science of Scaling. Okay. Totally awesome. ⁓ and one of the things they talk about in the book, the science of scaling, is if you want to scale, you have to set a floor, meaning you've got to set a a standard and like it's non-negotiable. Now, in manufacturing or service industry, you know, that might be like if you're a roofer, we don't we don't do any jobs that aren't at least twenty thousand dollars. Yeah. Or higher. Yep. Yeah. And stick to that and focus on it. You can scale. You can't be like, all right, well, we'll take a five thousand dollar repair job or two thousand. No, you've got to this is what we do, this is what we're gonna do. Anything below that floor is is just unacceptable. So I think this is really, really important, important point. You can expand on it, but if you own a practice or multiple practices, your number one focus, again, I always go at proper cation patient care. So let's just leave that as assumption. You're not gonna over treat. getting the best patient care possible. But from what what I'm hearing from you is the number one focus if you want to grow organically and be best in class is you've got to do whatever you need to do to get 75 new patients per month coming into each practice. Am I on point there or did I miss something? No. I y you you should ⁓ cater that number to the size of your practice, how many ⁓ doctors you have and what the operatories are. Understood. But but yes, like if you analyzed your own practices, you looked at how many chairs you have in each, how many providers that you have in each, and how many new patients you were averaging by provider, you'd be looking at most, I think, of the practices in our network are ⁓ two plus dentist practices. And so you would you would be wanting to see if you were aligned with that same ⁓ criteria, 75 plus new patients, you're going to be growing. There's there's it the thing is new patients cut can cover from a multitude of other operational sins, right? Like if you're ending up having leakage on the back end of patients that are existing, if your patients are not being if your hygiene is not ⁓ surfacing SRP opportunities that ⁓ are treating gum disease. If you're like there's so many different things the practices struggle with that new patients by themselves are able to ⁓ cover and create ⁓ with growth. You want to dial in all the things. Dental is a complex ⁓ space in many ways. There's there's so many levers that can be pulled, but the one most straightforward lever is the new patient piece. I have a follow up question on that. So First of all, I'll say this. If you're s if you're gonna sell your practice or group, one of the main things the buyers look at is organic growth in the practices. Yep. If you're flat or negative, you are not gonna get a premium on your EBITDA multiple. Correct. If you're I mean, if you're clipping along at nine percent organic growth per year, you might actually get you might get an extra turn on that mu EBITDA multiple. Yep. I mean, just that alone could could be worth, you know, millions of dollars extra when you go to sell. But W if if you had to ⁓ postulate what would be the minimum number of chairs a dental a a a dental practice should have? That's a tough one because it depends on what you use the chairs for. And so if you've got a couple hygiene chairs, you have ⁓ a a dentist chair, like what what we have seen though is what I what the way I would think about it is your production per chair. Not necessarily total chair count. And so the yeah, let me jump in. Sorry, sorry to interrupt, but like we have buyers out there say, I'm not buying a practice with four chairs. Yeah, yeah. Well not. Yeah, sure. And and because it's gonna be hard to create ⁓ a lot of production in EBITDA with only four chairs if it's just hygiene and then you've got ⁓ one dentist. So what we see, and this would align with that. Is that the average revenue per chair across the DSOs in our network is 205,000? So if you're only four chairs and you fall into that average, you're at a you're at an $800,000 ⁓ annual producing practice. If you've got eight chairs and you fall into that average, now you're at 1.6 million. You're a much more sizable ⁓ business. ⁓ where we see the growth zone, and this is why I think the chairs piece is a little bit tricky. Is when you are at 300,000 plus in production per chair, growth accelerates significantly. And so it's like a 33% increase in growth when you're able to maximize the chairs that you have. So the mistake I think some people make, probably not at four chairs, but when you're getting into six, seven, eight to ten chairs, is that you are seeking to add more chairs or operatories in a practice without actually evaluating are you maximizing the the space that you have? And are you taking full advantage of the opportunities that are right in front of you? And so that's why I think the production by chair is an interesting metric to evaluate. And if you're really low at four chairs, well, you've got some some challenges there. ⁓ if you're really high ⁓ at four chairs, well, yeah, you need more chairs. ⁓ and you're you're limiting your ability to grow in all likelihood by not expanding. Yeah. So I guess I'm gonna throw a caveat in there. ⁓ assuming you're getting great chair utilization on production per chair. I mean, from what I'm what I see in the industry is like you sh if you can have at least eight chairs in your practice. Yeah. Provided you're getting great revenue production utilization. ⁓ y do you agree, disagree? I I agree. Very few I I would say very few of our practices have less than than eight chairs. Yeah. Yeah. Yeah. Yeah. Yeah, well, we have some that are very large that are 20, 30, 40 chairs. But yes, I I would agree completely. ⁓ one other thing I think I found was really interesting is operational consistency. And what I mean by this is day-to-day volatility in your operations. We actually found a correlation to growth with this. And so the largest production day on average are Tuesdays. The smallest production day, I don't think it's gonna be a shocker to anybody listening, is Fridays. ⁓ the gap between your largest day and your smallest day on average over the course of the year says a lot about your ability to grow. The most consistent practices not only generate twenty-eight percent more ⁓ average daily production, but they have significantly higher growth. year over year than the ones that have a big Tuesday, a small Wednesday, an okay Thursday. And we know that there's a lot of things that go into this, right? It's schedule management, it's doctor hours, it's access to care. ⁓ and one of the other really unique things, and this is a smaller data set, which you will make sense after I share it, is offices whose peak ⁓ day is Friday, those grew at 8% versus the 4% industry average. Not as many of them fall under that criteria because Friday is there's a Friday problem in dentistry. ⁓ but the offices that really lean into ensuring that patients have accessibility to care on Fridays to the point where their Fridays are their highest or near highest production day, grow twice as fast as those that don't have that same ⁓ operational consistency. And then we see it on the other end, the, the Really volatile practices where day to day it's like bounces all over the place, the production that they are actually successful with. Those practices all shrink. They do 28% less on an average daily production. Those that have been able to tame their schedule to slay this the the dragon and make sure that they have providers available, treatment available, and patients in the chairs day after day, they grow significantly more and have twenty eight percent production increase. That's that's ⁓ fascinating. ⁓ here's another one for you. ⁓ assuming ⁓ you know you've got data on seven days a week, including Saturdays and Sundays. What days of the week? I know you said Tuesday, but like what days of the week are most profitable for dental offices, in your opinion? Or like are Tuesdays more profitable than being open on a Saturday or a Sunday? You know, I actually don't have a view on that. So I I I don't want to to s to speculate ⁓ without having some data to back it up. ⁓ I'm not entirely sure. I think it's a good question. Yeah. ⁓ the the doctors that I know that are open on the weekends, all the the ones that I know that I'm friends with tell me their busiest days are Saturday and Sundays. Saturdays and Sundays. One of my buddies, well, I know two doctors that are open every Saturday, every Sunday. And then they ⁓ I think they take ⁓ like Wednesday and Thursday off. And they like that schedule. That doesn't work for everybody because you know people like to socialize on the weekends and be with their family. But ⁓ I can tell you personal anecdote. my ⁓ ophthalmologist is open on the weekend and that's why I go to them because I don't like during the week going to do medical appointments. It's just like I'm busy. I got I got a lot going on. ⁓ and the fact that they are available to me on the weekend, like is so incredible. And I'll like I'll never stop going to them because A, they're good at what they do, they provide amazing care and they offer convenience. And that is so important. And there are so many people that likely don't make it to the dental dentists because they're like, when am I supposed to go? You're you're only open when I'm working. Like what what's what's up with that? And then so I've seen some practices that that offer extended hours that are, you know, they're open till seven or eight o'clock at night. during the week, others that open on the weekends. ⁓ I think it's a real testament towards a desire to actually make care accessible to patients when people find ways to open on those extended hours. And I'll have to do some digging on the data, but I would have a hunch that those practices grow ⁓ in in ways that other practices don't. Yeah. I, you know, it one of the statistics that just blows my mind is that, and you already brought it up. ⁓ one out of two people in the United States have never been to a dentist, which is ⁓ I mean, that's just it it it it it truly like blows my mind. ⁓ but then you you know you have a lot of f ⁓ families that at least on the pediatric side it's challenging to take a kid out of school Monday through Friday and get them to the get them to the dent dentist's office. So absolutely. ⁓ I don't begrudge people for not wanting to work on the weekends. Totally get it. But I also I don't have the data to back up what I'm saying either, but I do think and ⁓ from the my friends that do stay open on the weekends, half day on Saturday or they're open all day on Saturday, they're telling me that they are just slammed. Their schedules are completely full. And it does make sense. It doesn't but it's a quality of life balance. So ⁓ I certainly get it. ⁓ so I'd love as we're kind of wrapping this up, ⁓ Can you just tell, you know, like t tell the listeners and the watchers here, like how working with Planet DDS, like what what tools, what feedback, what support does Planet DDS provide to help these dentists? If the dentists say, look, I do want to hit that nine percent organic growth. I really want to understand the data and optimize ⁓ my practice. Can you just give a little bit more detail or color on on ⁓ how Planet DDS stands out in that area? Yeah, absolutely. So one of the and you'll you'll hear this a lot this year. It I think it's every year there's like a new theme in the dental space. Like a couple of years ago it was same store growth. So every time anybody was talking publicly, they would talk about same store growth, which is still important, but there was no explanation as to how you drive same store growth necessarily. It was just like you you need to have same store growth. This year. And I've heard it from a number of different stages, and it's something that I talk about too, is operational consistency, operational efficiency. Well, what does that mean? ⁓ what Planet DDS allows you to do by building the technology foundation is to create that. And so when we have a group that's 20 offices on multiple systems that are moving onto our platform, one of the things that we work with them on is creating SOPs. Standard operating procedures. What are the different workflows? How do you check in a patient? How do you collect payment at time of service? How do you follow up on your outstanding accounts receivable? How do you do same date claims? How do you shrink the amount of time between doing a procedure and receiving payment for that procedure? All of those things for most multi location groups that are on disparate solutions are impossible to do. You can't have unless you create custom procedures for every single office, which then you're never going to look at again and you're never going to modify as modify modifications need to be made in the way that you can do it at scale when you're on a single platform. And so what Planet DDS does is unlocks your ability to be efficient from an operations perspective, to be efficient from a chart auditing perspective, to be efficient from an RCM perspective. Which helps to accelerate your ability to drive EBITDA, to increase production, and to have consistent processes that you know work. You can actually replicate the success that you've had in your individual practice across all of your practices in a way that is absolutely impossible if you are not standardized on a single solution. And then as you scale more, it opens up and unlocks the opportunity to centralize some of the services, which then allow you labor arbitrage. Which then is an EBITDA boost. If you're able to take off the RCM function within individual practices and have a small RCM team that manage that at scale across 10, 15, 20, 30, 40 practices, you're able to actually reduce your headcount and your labor cost as well. So there's a number of elements to what a modern practice management enterprise class solution offers you that then goes extends into tying in your your radiographic AI provider that lives within the workflows that your providers work in, tying in ⁓ third-party agent tools for ⁓ an ⁓ front desk agent that's a receptionist or something along those lines. doing some really unique things with ⁓ insurance verification so that you have that done automatically right back to your insurance table coverage tables. You don't have to spend all the time with Marcy at the payer X every single day when you could be spending time with your patients. There's so many little things that all add up to incredible ⁓ benefits and outcomes. And that's what we do and that's what we focus on. How does someone get in touch with ⁓ someone from Planet D D S if they would like to talk more about using your platform? Yeah, always welcome to reach out directly to me. I'm I'm on LinkedIn. ⁓ you can send me a message there. You can also email me at mhuffaker at planetds.com or go to our website, planetdds.com, where you can find our industry deep dive report report, which a lot of the data that I was talking about today is available. It is ungated. We believe to get giving back to the space that we work in. So we're not going to hold your email or phone number or anything else hostage. You just click on it and download it. No, no asks from you at all. ⁓ we have our industry report, the industry deep dive report. And if you're interested in seeing a demo of the product or learning more about anything that we do, you can submit an inquiry there as well. All right. Well, I'm just gonna say just a a a little bit of a plug here. ⁓ we do use Planet DDS at our DSO. Our CEO and our operational team love it. ⁓ they would not switch under any circumstance. So and the support we get from ⁓ Planet D D S is fantastic. So as we wrap this up, you know, I like to leave everybody with a couple actionable items, usable points of value. ⁓ so that it so in you know, the two things that you touched on, case acceptance is important, but what's way more important than just case acceptance is case completion. Yep. And number two, if you're trying to grow organically and grow your net income. your EBITDA at a minimum, you be you should be shooting for 35 new patients per month per location. And and if you really, really want to superchar supercharge your organic growth, and I know it depends a little bit here and there, but if you really want to hit that, you know, try to go for that nine, 10% organic growth annually, you should be striving for 75 new patients per month. So those two points are ⁓ very, very valuable. Really appreciate your time. I don't know if we'll put this in there. I ask I ask everybody this. So ⁓ how many times a year do you go to the dentist? ⁓ I go twice. Yeah. Okay. Absolutely. I go four times a year. ⁓ and I can happily say I have not had a cavity in gosh, thirty something years. So I'm like, yeah, I'm not a high value patient, ⁓ to to my dentist. And I and you brought that ⁓ up, you know. All right. Do you floss regularly? ⁓ man. Don't lie, Mike. I do not. ⁓ not regularly. I do floss. So caveat there for sure. but not daily. Not daily, probably a couple times a week. A couple times a week. Okay. Yep. Yep. Fair enough. I had Mitch Olin on here, who was the ⁓ former CEO of ⁓ DCA. Yeah, absolutely. And Mitch at f he was honest, but he said he never flosses. And I'm like, man, gotta start flossing. I so I I know what I can get Mitch for Christmas. I can get him ⁓ Absolutely get him some good dental floss. All right, what's the next conference you're gonna be at? ⁓ I will be at ADSO next month. And then ⁓ I will be on the big stage at Dykoma after six years in the industry. I finally convinced Brian Kalea that I'm competent enough to stand in front of a couple thousand people and give a presentation. So ⁓ those are those are my next two. Yeah, well, your presentations on stage are amazing. And ⁓ I will definitely see it at the Daicoma conference. I really appreciate it. You've always been nice to me since the first time I met you many years ago. always shared all your wisdom and knowledge. Planet DDS is awesome. And I think you provided just tr tremendous value to anybody watching or listening. So ⁓ thank you very, very, very much for your time. I'm gonna ask you to stay on for 15 seconds after I stop recording so it can load up. Yeah. Yeah, of course. I know the watch. Yeah. I know the drill. Everybody who's watching, ⁓ thank you very much. Thanks for watching Dental Mentors Podcast. And if you see us on LinkedIn or Facebook or YouTube, please subscribe. We have amazing people like Mike on the on the podcast and just here to help you build your wealth, grow your income, grow your practices, and have an amazing ⁓ high value exit when you if and when you choose to sell. So thank you, everybody. Thank you, Mike. I appreciate your time. Thank you. Absolutely. If you enjoyed today's video, we'd love to invite you to join the Dental Mentors Facebook group. The group is completely free, but it is private at invite only. The group is for practice owners, dentists, specialists, and dental CEOs. If that's you, we'd love to see you inside. As part of Dental Mentors, you're going have direct access to the brightest minds in dentistry and the brightest mentors, and some of the greatest CEOs that have ever worked in the dental space. You're going to learn all the best practices that you're going to need. To optimize the profitability of your practices, to properly scale your practices, and to achieve a high value exit. 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