Latest / Becker’s Healthcare Podcast / Faraz Edalatpajouh, DDS, CEO of Clark St. Dental Partners

Transcript

Faraz Edalatpajouh, DDS, CEO of Clark St. Dental Partners · Becker’s Healthcare Podcast

• 0:00
  Hi, everyone. This is Arianna Portallatin with the
• 0:02
  Becker's Dental and DSO review podcast. I'm thrilled
• 0:05
  to be joined today by doctor Peraz Edelat,
• 0:07
  the CEO of Clark Street Dental Partners. Doctor
• 0:09
  Edelat, thank you so much for being here
• 0:11
  today. It's great to have you. Thank you
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  so much for having me. I'm excited to
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  do this.
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  Of course. Yes. To start us off, can
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  you introduce yourself for our listeners and tell
• 0:19
  us a little bit about your background as
• 0:20
  well?
• 0:21
  Sure. My name is Faraz. I'm an orthodontist
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  in, Southern California.
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  I went to, USC for dental school, so,
• 0:29
  go Trojans and, UOP
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  up north for my ortho residency.
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  About five years ago, we started
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  our company with our first practice,
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  and
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  now we've grown to six, soon seven practices.
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  And,
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  you know,
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  during COVID, we sort of saw an opportunity
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  where,
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  you know, people were slowing down or wanting
• 0:53
  to get out. So, you know, we took
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  it, and
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  we're excited to be here.
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  Yeah. Thank you so much for that introduction.
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  Looking forward to getting into our conversation today.
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  My first question for you here is, what
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  are some of the biggest issues that you're
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  following in the dental industry this year?
• 1:09
  Of course.
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  I mean, I think one of the biggest
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  things right now is,
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  increases in
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  not only
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  sort of supplies, but also
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  just on the margins in terms of, marketing
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  dollars. You know, the cost per click has
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  gone up, and
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  the cost of, patient acquisition has gone up.
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  So there is a, you know, sort of,
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  a nibbling on the on the margins of
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  the you know, from the top line.
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  But also in terms of,
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  there's a few legislative issues and some, regulatory
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  things that are coming down the pike, especially,
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  where we practice in California that, you know,
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  is gonna throw a wrench into some things,
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  but
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  isn't anything that, you know, we're not prepared
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  for, and we,
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  haven't been putting our ducks in a row
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  to handle.
• 2:00
  Yeah. Yeah. Definitely. I'd love to to get
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  a little bit more detail on the legislative,
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  proposals that you're following as well. Can you
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  give me some more insight into what you're
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  keeping track of there? Yeah. Of course. So,
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  July 1, they're
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  slated to make some changes to Dentical, which
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  is,
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  you know, the the, government subsidized
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  air
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  that the residents of California can receive.
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  They're cutting
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  a few benefits from adults,
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  some to kids. It's it's essentially
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  a
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  a clawback
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  of proposition 56,
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  which was the, tobacco
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  tax that was passed,
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  I believe, in 2014. So,
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  you know, Dennis, she was, seeing
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  a bit of that money go to them.
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  But I think as less people smoke,
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  there's less money. Well, so I guess this
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  is a good thing. Mhmm. But,
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  but,
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  again, these are things where if,
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  if we can apply a little bit of
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  foresight
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  and prepare for,
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  us as operators shouldn't see a huge
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  drop in revenue or, services offered to patients.
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  Okay. Yeah. I I know you mentioned also
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  not putting all your ducks in a row.
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  Can you tell me a little bit more
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  about what that looks like at Clark Street?
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  How are you adapting?
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  What Of course. Any changes you're making? Anything
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  that you need to keep the same?
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  Yeah. So,
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  I think payer mix is huge. I think,
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  from day one, I've had really, really great
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  mentors who,
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  have told me, you know, don't put your
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  eggs in one basket. So you don't wanna
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  have too much exposure to one payer versus
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  another. And, you know, this is true for
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  PPOs either. You know, PPOs are
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  sort of the holy grail in
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  in, dentistry. We get excited when we see
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  our PPO patients, but, you know, you don't
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  wanna overexpose yourself theirs. And same thing goes
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  for, you know, government subsidized patients.
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  So we've done as good of a job
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  as we could have done in terms of,
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  you know, balancing out our,
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  payer mixes
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  and,
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  and offering our services to as many people
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  as we can so that there isn't
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  any one
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  payer type that
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  you know, should they go away, we
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  we see,
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  a huge drop in revenue. But the other
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  thing is thinking outside the box and offering
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  maybe cash plans to patients or in house
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  plans to patients where,
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  you know, they they can become part of
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  our membership group, and
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  they don't they don't lose out on any
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  of the benefits that their
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  insurance was providing them prior to, you know,
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  July 1.
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  Alright. Yeah. Well, very interesting. Thank you so
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  much for sharing a bit more about that.
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  I'm also curious to know, what are you
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  most excited about when it comes to dentistry
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  right now, and what is making you nervous
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  about the industry as well?
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  Yeah.
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  So I think the nervous probably just went
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  over. Right? So, you know, they're cutting huge,
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  or or some of the portions of our
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  revenue.
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  But, you know, I think you know, like
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  any business, I don't think dentistry is immune
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  from AI and
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  the things that it can bring and how
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  it can shape not just, you know, back
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  office and actually a clinical
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  delivery of dentistry chairside, because we've seen that
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  with,
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  OverJED
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  and different AI tools that we have where
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  it helps,
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  with diagnosis and sort of,
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  hunkering down and making sure that the diagnosis
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  is, a, accurate,
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  b, correct for what the patient needs, and
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  sort of and and fits our
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  rubric of how we wanna treat our patients,
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  but also the front office.
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  And,
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  at the intake or the call center level,
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  I've seen
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  really, really cool,
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  tools in terms of
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  AI. The company we just partnered with called
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  Flossy,
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  where
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  they're able to monitor our, call center agents
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  and help us train them on
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  different aspects of what makes a call
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  successful. You know, and a successful call is
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  a call that leads to a patient who
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  shows up. So they're able to
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  gauge for
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  empathy at the AI level where
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  they've gone through
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  so many phone calls and, you know, they've
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  they've ran enough
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  verbiage by an algorithm that they know what
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  can get a call center agent in or
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  a a patient in from a call center
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  agent.
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  And we've been able to use this to
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  sit, you know, side by side and have
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  one on ones with our call center agents.
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  Hey.
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  You know, Liana,
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  you did great on this call, and this
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  is why this patient came in. So good,
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  you know, good on you. Keep it keep
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  it up. Or,
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  hey, call center agent. You know, let's work
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  on using this phraseology to make sure that
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  we convert these phone calls and we bring
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  the patients in.
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  Yeah. Super interesting. Thank you. Yeah. Really cool.
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  I yeah. Yeah. And I'd love to talk
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  more specifically about DSOs as well. In your
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  opinion,
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  you know, your predictions for this year, what
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  will the biggest challenges for DSOs be, in
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  2026?
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  I think the biggest biggest thing that we'll
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  see from,
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  DSOs and, you know, I think we're sort
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  of
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  hopefully, getting on the other side of that
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  is is interest rates. Right? You know, as,
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  as the DSOs, we're only
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  you know, our value comes from our ability
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  to grow and scale. So
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  to be able to acquire debt from a
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  lender,
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  if your interest rates are too high, then
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  it might not debt service. So you so
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  it does hinder growth a little bit.
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  Another thing that becomes important
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  for DSOs and DSO operators is having a
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  reserve.
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  We've been blessed enough where we're actually able
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  to do a few of our deals with
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  cash. So we've
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  been able to sort of navigate this minefield
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  of
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  of the current debt environment.
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  And, you know, we have our fingers crossed
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  and, you know,
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  think that it's gonna get better. So maybe
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  we can go back to a little bit
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  more of a traditional lending model outside of
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  just, you know, using our own cash to
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  grow.
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  Yeah. It it's interesting you say that too.
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  I think I've heard that from a few
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  other DSO leaders, that they are optimistic, but
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  maybe more so, like, cautiously optimistic just because
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  of what the debt environment and inflation kinda
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  looks like right now and some of the
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  other economic challenges.
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  I know
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  the
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  ADA recently released its economic report for the
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  fourth quarter, and it kinda shows that,
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  when you're looking ahead at the next six
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  months or so, dentist economic confidence is kind
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  of declining a little bit more.
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  Are you remaining cautiously optimistic, or are you
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  more optimistic than maybe some of the other
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  DSO executives are?
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  I think so. I think,
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  inflation is slowly getting under control.
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  I think,
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  you know, the Fed shoots for a 2%
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  rate, but I think, you know, given what's
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  transpired in the past,
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  I guess, six years now,
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  2% might might be a tough goal to
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  reach. But, you know, if you can be
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  somewhere between 22.7%
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  of inflation,
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  then,
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  lenders feel better about lending.
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  And then
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  depending on your relationship with the banks as
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  well, it shouldn't be an impediment to growth.
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  Alright.
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  And last question for you here. What will
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  the most effective dental leaders need to be
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  successful in the next two to three years?
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  I think foresight is very important. I think
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  as I grow in this industry and as
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  I sort of, you know, take my slings
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  and arrows, I realized that,
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  you know, you gotta keep your eye on
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  the ball as to what's currently happening in
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  your business and in the industry. But what's
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  coming down the pike is also very, very
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  important. And not just the bad things, not
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  just, you know,
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  cuts from the insurance, but also the good
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  things that are, you know, coming down the
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  pike in terms of,
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  you know, job reports being high. So there's,
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  you know, higher higher employment in in certain
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  areas, so more people have access to insurance.
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  So,
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  they can patronize our practices.
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  Or, like we were just talking about, AI
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  and how to help streamline and bring efficiencies
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  to a DSO where,
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  previously,
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  you know, it it would take three to
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  four people to process a claim.
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  Now, you know, as long as you have
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  one solid person overseeing it, a lot of
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  this can happen,
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  you know, digitally through AI and through AI
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  tools.
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  Alright. Well, those are the questions I have
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  for you today, doctor Edelab. Thank you so
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  much for joining us. It's been a pleasure
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  speaking with you on our podcast, and I'm
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  looking forward to connecting with you again in
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  the future. Of course. Thank you so much.