Think of your dental insurance adjustments as a marketing expense.

Dr. Hornbrook and Gary Takacs (@gary_takacs) discuss maximizing your practice’s production, the importance of customer service, and getting out from under the thumb of the insurance industry – without forgetting to relive their long-haired 70’s heyday.  This week’s podcast is a must listen for every practitioner.

Download Gary’s Free 5 KPI’s Video- (Key Performance Indicators) bit.ly/KDA5KPIs

Visit Gary at his home site: takacslearningcenter.com

More Dental Practice Enhancer Podcasts here:
itunes.com/podcast/dentalup

 

Podcast Transcription:

Dr. Hornbrook: Hello. I’m Dr. David Hornbrook, the clinical director of education and technology at Keating Dental Lab, here in beautiful Irvine, California. This is our weekly Podcast under dentalup, for those that haven’t seen it in the past, dentalup, all one word dot -x-y-z. We’re doing some incredible things and today’s even going to that incredible list. We have an unbelievable person in the studio today, Gary Takacs. Hi Gary.

Gary: Hey David.

Dr. Hornbrook: We’ve known each other a while now. Gary gets around. Not in that way but in a way that he’s traveling and lecturing and educating Doctors and their teams almost every week. Gary and I, a lot of people don’t know this, you see my face in some magazine, you see Gary, and you think I wonder if they know each other? We do, not just through dentistry. We actually went to high school together. That was the 70s and in the 70s you did all the things that your parents didn’t want you to do. With that hair down the middle of our backs and we surfed a lot and we played water polo and swam. We’d known each other a long time and then I went to college in a different place and he went to college, and we kind of lost track of each other. In the small little world of dentistry we got back together. Now we reconnected a while back, ten, 15 plus years ago and it’s been awesome.

Gary: Would you like to hear a sobering fact, David?

Dr. Hornbrook: Maybe. I don’t know.

Gary: We met 43 years ago.

Dr. Hornbrook: I wasn’t born.

Gary: Forty-three years ago.

Dr. Hornbrook: Forty-three years ago? That doesn’t seem right.

Gary: We met as freshmen. We were incoming freshmen at Grossmont High School.

Dr. Hornbrook: Great.

Gary: It was 43 years ago. There’s not a lot of people in the world I can say I’ve known for 43 years, but you’re one of those.

Dr. Hornbrook: I only have one now, other than my sisters, I guess. Just you. You and my sisters.

Gary: There you go.

Dr. Hornbrook: It’s been awesome and you’ve done incredibly well. You’re very successful and you’re doing some really cool things.

Gary: Thanks.

Dr. Hornbrook: We’re going to talk about that. A lot of our listeners and people that are viewing as well, have seen Gary’s name or have seen him at one of the major dental meetings. His primary lecture is “Dentistry Rocks”. I’ve seen that a couple of times. I had him as a guest speaker in some of my Hornbrook Group, and some of the cool things we did. It’s really cool because your energy is, as you’ll see, it’s inspiring and you just want to sit on the edge of the seat and say I want to be like him. I want to do the things that he’s talking about. You’re having a good time with that.

Gary: I’m having a blast with it. You know, we call the course Dentistry Rocks for two reasons. One is, pardon my enthusiasm but, David, dentistry rocks! I am so excited about it because you know this as well as I do, and all of our viewers and listeners know this, that you have the ability to change people’s lives every day. Every day.

Dr. Hornbrook: There’s not many professions … and change it in a good way.

Gary: Yeah in a good way. You have the ability to change people’s lives every day. It could be something as significant as the patient that comes in with a compromised smile. I think the kids these days would call that a jacked-up grill.

Dr. Hornbrook: Jacked-up grill, yeah.

Gary: You see this everyday in your practice. They come in with a very compromised smile and through your skill and judgement and artistry, you transform that patient as far as their personality. They might have been reserved. They might have been introverted. Kind of shy because of the way they felt about their smile. Through your and your team member’s wonderful compassion and skill, you transform them. You’ve seen them blossom after that. It doesn’t have to be anything as significant as that, it could be a patient that … here we are on a Wednesday. I bet this happened this week in your practice. I’ll bet that this week you had a patient that just needed someone to listen to them.

Dr. Hornbrook: Yeah. We see that all the time. Physicians have totally dropped the ball on that. When is the last time you went to the physician and they sat down across the table from you and actually said “What can I do to help you”? It’s like, why are you here? I got 30 seconds because I’ve got 45 other patients just this one hour in my reception room. We’re in a unique opportunity. For those listeners who don’t know or aren’t as familiar, Gary is not a dentist, but, and this is a big but, you’re part-owner in two practices now?

Gary: Two practices now.

Dr. Hornbrook: Two practices and you have the opportunity to work with dentists all over the country every week. We get sometimes people that we talk to that are in the dental field and they throw out some dental terms because they heard about them somewhere. They’re not sure what they mean. They say oh yeah I did a class 5, and they don’t know what the hell that is, right? But you do, and so as you talk about the things that we do, the things that I do as a dentist, as your partner does in the practice. You see that in your practices, your practices, but the practices that you coach.

Gary: You know this, David, that Arizona is one of those states where you don’t have to be a dentist to own a practice. Eight years ago now, it was May 2007. I bought a practice. A dilapidated backwards fixer-upper and bought it in partnership with Dr. Paul Nielsen, a young dentist. He’s a 2005 graduate of the University of Washington. We bought this practice in May of ’07 and the last eight years, we’ve been evolving that into our ideal practice. It’s still a work in progress.

Dr. Hornbrook: It’s called LifeSmiles

Gary: It’s call LifeSmiles.

Dr. Hornbrook: LifeSmiles.

Gary: We just made up a made name. We liked the way it sounded. LifeSmiles. It’s called LifeSmiles Dental Care. It’s in Phoenix, Arizona. The last eight years we’ve been working our tails off to develop that into our version of our ideal practice. About four months ago, Paul and I bought a second practice. We had an opportunity to buy a practice in Tucson and a really sharp young Doctor that we can plug in there. We’re now in the process of doing what we’ve done with LifeSmiles with this new practice in Tucson.

Dr. Hornbrook: So you’re going through the same … the growing, and the evolution that someone who’s either starting a practice or someone that has a practice and as things change. We’re going to talk about that today. As the evolution and the changes you have to make to make the right decisions. Whether it be when you choose this certain lab, or this material, or hire this person. There’s so much we can talk about and the problem with this, you know my podcasts, I call them treadmill podcasts. It’s 30 minutes because that’s when you’re done with your treadmill and you want to be done with podcast. We could two hours but that’s not going to work for us. If we go 40 we’ll do it, if we go 25, which we won’t … I’ll just say we won’t.

There’s so many things we can talk about and this is our 12th now. We’ve had some lab communication. We had Jack Hadley last week on social media which is awesome. I knew you could talk about that, but we’re not. The only really person that we’ve had the opportunity to talk to about building a team and structuring, the things you have to look at in your practice, is Steve Anderson. You know Steve from Crown Council. He was unbelievable. He talked a little bit about team development, which was great because all of us typically we’re not good team managers, because we don’t have training. We become that by personality types, but we don’t have that, so he was awesome.

Something we haven’t really talked about are some things I think that are right up in your expertise. Not only owning a practice, because you have to look at your P & L’s, you have to look at numbers, you have to make decisions. Going into an office like mine or another office and say listen, these are the changes you need to make, these are things you’re doing right and aren’t. So, two primary things I want to cover today. One is, I think you did a paper or a blog on the seven things you need to monitor in your practice. Seven important things. I know even if we wrote those down or whoever is listening goes home and writes these things down, they would say, uh oh four of them I have never even thought about. I think that’s important.

Then recently, and this is really important, is you’ve been on this kick about getting out from under the thumb or shackles of insurance based dentistry. That’s a tough one. I don’t take insurance, other than giving them a form and saying here’s a picture and here’s a narrative. For a lot of our listeners and our viewers, insurance is a big deal for them. They can just imagine if 80 percent of their patients is a teachers union and all of a sudden they say, no more Concordia or whatever teachers union, and they lose the 80 percent of their practice. It works. It can work.

Gary: It can work. Well, can we start there?

Dr. Hornbrook: Absolutely. Let’s start with that.

Gary: When we bought this practice eight years ago, one of the things we quickly discovered as we took over ownership and stewardship of the practice is, we discovered the practice is overrun with PPO plans. Like so many practices are. It was literally overrun. We came in and Paul is industrious, hard working, young dentist. We lavish some TLC, some love and attention on this practice, and we quickly started to grow this practice that was stagnant. As we grew, the impact of the adjustments was overwhelming. Is it okay if I talk about numbers?

Dr. Hornbrook: Yeah!

Gary: In August of 2007 …

Dr. Hornbrook: These aren’t fish stories, are they?

Gary: These are not fish stories.

Dr. Hornbrook: Yesterday it wasn’t a thousand, today it’s ten … okay just checking.

Gary: That one fish barely fit in the back of the truck.

Dr. Hornbrook: Yeah. I’m sure. A semi, of course. Or was it a train.

Dr. Hornbrook: There we go. By August of 2007, so three months into our ownership, we had a month where we produced $70,000 and we collected $45,000. On the surface it might look like we have a collections problem, right?

Dr. Hornbrook: Right.

Gary: So Paul came to me, and we have a pretty simple business arrangement. He does the dentistry and I do the business. That makes sense.

Dr. Hornbrook: Yeah that makes sense. I think I’d rather have your job on some days.

Gary: He came to me and said Gary I think we have collections problems because we produced $70,000 this month and we collected $45,000. I said Paul I really don’t think we have a collections problem. Our team’s doing a great job of collecting at time of service, we’re filing the claims electronically, we’ve got a really buttoned down system to make sure we’re submitting the claims properly for adjudication, and I don’t think we have a collections problem. He said well then what is it? I dug a little bit deeper and discovered that the $70,000 that we produced was gross production. That was our UCR fees. We had $30,000 of adjustments that month. If you do the math, you take your 70, subtract 30. We actually produced an adjusted production of $40,000. My team deserved a pat on that back, because they pulled a $5,000 rabbit out of their pocket. They over-collected $5,000. David, may I share a piece of advice with our viewers and listeners that is worth the …

Dr. Hornbrook: Absolutely. That’s why we have you here. Share advice.

Gary: From this moment forward, I want you to think about those insurance adjustments as a marketing expense. A marketing expense. Why is that? Because you’re paying the insurance company to provide you patients. Now David, I remember in high school you were pretty good at math. Can I put you on the spot?

Dr. Hornbrook: Sure. Let me get my … I’ve got to get my iPhone.

Gary: You won’t need it on this one. You can call a friend on this one if you need to.

But David, if you accept my definition of thinking of your adjustments as a marketing expense, and I spend $30,000 as we did in August of 2007, annualize that for me. What am I spending on an annual basis on marketing?

Dr. Hornbrook: $360,000.

Gary: $360,000. I knew you’d get that right.

Dr. Hornbrook: I had someone who called ahead and I have this little ear piece. teleprompter, like Obama.

Gary: That was a breakthrough for me because I took one look at that and said oh my gosh, we can spend a fraction of $360,000 and produce a better result. From that moment forward, we made the decision to either negotiate with the insurance companies to get an acceptable fee schedule, or we were going to resign. This didn’t happen overnight. It happened over a period of time. I want to emphasize this. This was not some knee-jerk decision that we woke up and said tomorrow we’re not going to accept …

Dr. Hornbrook: And too many people do that.

Gary: Right. It was calculated. Very calculated. Over a period of time, we reduced our insurance dependency to today, we accept one PPO Plan, Delta Premier. In the state of Arizona you can be a Delta Premier provider and not be a Delta PPO provider. We negotiated our Delta Premier fee. It’s a negotiated fee. It’s higher than the standard Delta Premier fee. I’m not happy with those adjustments with Delta but there palatable. I can deal with those. We literally resigned from all of the other PPO plans over the course of time. Again it didn’t happen overnight. We did it over time.

One of the first things we did for example, David, I calculated the number of new patients that came from each plan. Met Life for example. By the way, I can get on my soapbox a little bit about MetLife?

Dr. Hornbrook: Yes. Absolutely.

Gary: They were the most caustic insurance company that we dealt with. We discovered that every time we did a crown on a MetLife patient, it cost Paul and I $138. You mentioned you had Steve here to talk about team building?

Dr. Hornbrook: Right.

Gary: I’d like to share how we got our team involved in this. Came into a team meeting when Paul and I did the math and determined every time we did a crown on a MetLife patient, it cost us $138. I brought in a crisp $100 bill to our team meeting. I shared with the team, I said, you know that front desk drawer that every office has that is loaded with sticky notes and pens? I’m sure you have one.

Dr. Hornbrook: Oh yeah. We’ve got two of those.

Gary: I said let’s take that drawer out. Let’s dump it out. Let’s dump out the sticky notes and pens and fill that drawer with crisp $100 bills. Every time a MetLife patient comes in, lets hand that patient a $100 and tell them to go somewhere else. I’m being facetious about it, but in fact, that would have been a good business move for Paul and I because it would have cost us less to hand the patient a $100 bill and tell them go somewhere else, than it would have been to provide them that crown.

When I shared with the team in that graphic way, it was like a light bulb went off and they realized that oh my goodness, this doesn’t make sense. It was kind of fun because what we did at that point … we have a philosophy with our team. I want my team members to be the best paid in dentistry. I want them to be the best paid. It has to be in a model that works for them as well as works for us. Our team members knew that if the practice was losing money on these PPO plans, the likelihood that they’d be able to get raises, that they’d be able to get bonuses, that they’d be able to receive the benefits from the practice, were diminished so they were in it with both feet. In some ways they pushed Paul and I to reduce some of these plans because they realized it didn’t make any sense.

Back to the story of MetLife. When we did the calculation, we determined that we had five new patients a month that came to us through MetLife. They either found us in the book, or they found us online that we were a provider with MetLife. What we did is we developed another marketing strategy to produce five new patients a month. Once we had a consistent marketing strategy that would produce five or more new patients a month, then we could pull the plug on MetLife and not miss anything. Then the next thing that we did is we developed a very specific strategy to retain as many of those MetLife patients as possible. This gives me a bridge to talk about another tip that I think our listeners will appreciate.

We’re now out of network with all but one plan. Everyday we get phone calls from our office, do you accept my insurance? You do as well, correct?

Dr. Hornbrook: Uh huh.

Gary: I believe that the way that call is answered has everything to do with your success. Sadly, many team members don’t have the training or skills, or haven’t been provided the proper resources to answer that question properly. May I share with you how we answer that question in our office?

Dr. Hornbrook: Absolutely.

Gary: If that call comes in, and let’s say it’s David and David calls Carly and says do you take my insurance. Carly would say, first of all thanks your call, we love seeing new patients in our practice. My name is Carly. Who am I speaking with?

Dr. Hornbrook: It’s David. Do you take my insurance?

Gary: It’s great to meet you by phone. I can’t wait to meet you in person. I want to answer your question very specifically. By the way, what insurance do you have?

Dr. Hornbrook: MetLife.

Gary: MetLife.

Dr. Hornbrook: I want a $100 bill. That’s the only reason I’m calling.

Gary: Although we are not a contracted provider with MetLife you can absolutely use your insurance benefits in our practice. In fact, when you come in you’re going to meet Lori. Lori’s our insurance expert. She does everything possible to help you maximize your insurance benefits. In fact, we have many patients that have MetLife. By the way David, do you like mornings or afternoons.

Dr. Hornbrook: I just want to make sure there’s $100 bill still in the drawer.

Gary: But you get the …

Dr. Hornbrook: No I absolutely get it because the typical answer would be no.

Gary: … and clunk and they’ll call somebody else.

Dr. Hornbrook: Then they’re going to look around.

Gary: Or they fumble around with it. You know, patients can come to you outside of network. First of all, we had massive retention after we resigned from plans. We had very high retention of our patients. I want to be very candid with you. Did we lose some patients when we went out of network? The answer is yes. Yes we did. However, the number with each plan was fewer than we expected.

By the way, I have repeated this in practices all over the country. This is not unique to our practice. One of the cool things about owning a practice … I wanted to own practice because I wanted to have a learning and teaching laboratory. I wanted to have a test kitchen where we could test concepts out. I could test them on my dime and then I could report back to audiences when I’m speaking and clients that we’re working with, what worked and what didn’t work. I thought it would be useful to own a practice, and I have to tell you that it has so far exceeded my expectations. If I’m lecturing on a Friday, I’ll typically have two or three new slides on things I learned this week in my own practice.

Dr. Hornbrook: We look at your model, so you had some income coming in, right? If that was a brand new practice you aren’t going to say it cost me $360,000 a year, so instead I’m going to take $300,000 and I’m going to do a marketing program. I’m a new practitioner, I don’t have $300,000, right?

The model of a young practitioner, and I’ll give you an example, a good friend of mine … Semper energy just built a building in downtown San Diego and that’s our new energy building, right? They actually have Delta, the one that’s worse than a PPO. It’s Delta, something. DO or whatever it is. It’s 2,000 employees and there’s no dental practice in downtown San Diego. He found an office that only did all-on-fours, all-on-fives and they’re just kind of in and out. No general dentistry and people would come in because it’s a transient community downtown. They’d come in and say do you guys take our insurance. No we don’t take insurance. In fact we don’t do fillings and we don’t do cleanings.

He decided to go into this office and say, you know what, the practice is here. There’s no value to your practice, right? What if I utilize your practice. I either pay you a little bit per month or you get a percentage of my production, and I’m going to try to grab one of those 2,500 Sempra people.

Gary: Right next door?

Dr. Hornbrook: Yeah. His model is totally different than what my model or what you did. He has no income. He says I’m just going to reach out and I’m going to grab on to all the plans. Then try to at least get some money. Then hopefully put TLC into it and retain the patients that are worthwhile in retaining.

Let’s use that model as an example. I’m coming to you I’m saying Gary, I know you’ve worked for a lot of practices. I need some help here. I have this facility that I have no money, it’s not costing me a lot of money, but I have no money. I’ve got this building across the street that are all people looking for someone to take some insurance.

Gary: I would politely disagree with the strategy, and I’ll tell you why. Once you move down the path of being an insurance dependent practice, it’s a slippery slope. It’s a quagmire. You can get absolutely caught up in that quicksand.

Dr. Hornbrook: Every practice has done that.

Gary: Oh everyone does it.

Dr. Hornbrook: Yeah I’ve done that too, right and slowly, I used to be a Delta. I’m not even a Premier provider anymore.

Gary: It’s a quagmire. It’s much harder to extract yourself from that quagmire than it is to get on the right path right from the beginning. What I would do in this case and what a brilliant move to go where there aren’t dentists. I mean what a great move. I don’t know what the numbers are of the people that work downtown in San Diego, but I know that it’s tens of thousands, if not hundreds of thousands of people. I would figure out a way to market and I would do it grassroots. I would figure out a way to market to that captive audience that’s within walking distance. I know downtown San Diego. They’re within walking distance of this dental practice. Rather than going down the route of subscribing to all these plans, and then trying to figure out how in the world they can make that work when they’re being subjected to 35, 40 and even deeper percentage discounts than that. I think our biggest challenge …

Dr. Hornbrook: Here’s his number. Call him.

Gary: I think our biggest challenge in dentistry, David, and correct me if you feel differently, but I think our biggest challenge is helping patients value what it is we do for them. Would you agree with that?

Dr. Hornbrook: Absolutely.

Gary: When patients come to us with an insurance mentality, Dr. I’m only going to have this done if my insurance covers it. By the way that patient could span socio-economic definitions. That could be a very wealthy patient.

Dr. Hornbrook: We see that all that time. Does my insurance cover this? Dude, you drove up in a Bentley. You live in Rancho Santa Fe, and your home is 28 million dollars. Who cares?

Gary: You only want to have …

Dr. Hornbrook: You don’t want root planing because it’s going to be $125 out of pocket. Really?

Gary: We see that as well. We’re on the border of Scottsdale and Paradise Valley. We see that. We see that all the time. I think our biggest challenge is helping patients that value their health and … A good friend of mine, Ashley Latter, Ashley is a friend of mine from the UK. I’m going to use a quote that Ashley has taught me. The quote that he taught me is, “Is money the issue, or is it an issue”. I believe that in many cases money is an issue. It’s not necessarily the issue.

For example, one the things that we did was created our own in-office membership plan for patients that don’t have insurance. They pay an annual fee. That annual fee covers their two visits every year that we provide a cleaning, we provide x-rays, we provide comprehensive exams. We wrote our custom fee schedule that Paul and I determined. Our discount on that fee schedule is somewhere between ten and 15 percent depending on the fee. I’m not happy with that ten to 15 percent discount, but it’s way better than the 35, 40, 45 percent discount that was on the PPO plans. That way we can roll the red carpet out and let them know that we welcome them. We love to see people …

Dr. Hornbrook: Since we’ve been throwing out numbers … because I know everyone’s going to say I wonder what he charges, I wonder what he charges … what is that? It’s a yearly fee or do they pay it monthly. If I came and said Dr. I don’t have any insurance but I like this place …

Gary: We love to see patients. We love to help patients that don’t have any insurance. We’re family people. We understand. I understand budgets. David I’m not embarrassed to tell you that there’s been times where there’s been more month than money. We’re happy to help people, help our patients.

Dr. Hornbrook: How does that work in your practice?

Gary: We created a membership plan. You can’t call it insurance by the way. It’s called a membership plan. In our practice we charge $197 for the first person and $147 each additional person.

Dr. Hornbrook: That’s per year?

Gary: That’s per year.

Dr. Hornbrook: And that covers …

Gary: That covers their two hygiene visits. It covers x-rays and by the way, we don’t get cheap with those. We’ll take a full mouth series. We’ll take a pan. We need to have the records and we’re doing it all digitally so what’s our expense on those radiographs? We are very generous in the coverage of those records that we need. It covers the exams. Then we have a fee schedule that we put together that varies between ten and 15 percent, depending on the service. If you need treatment, if you’re part of our membership plan, then you receive the special fee schedule that’s somewhere between a ten and 15 percent discount.

It’s a way to symbolically roll the red carpet out. We’re also is a fairly transient area. You are as well. People move around. That membership plan only applies to our office so when they move five miles away, they don’t change dentists. They keep coming to us because that’s where that membership applies for. The other thing we discovered David, and this is a dirty little secret the insurance companies don’t want you to know about. We resigned from over 30 plans overtime.

Dr. Hornbrook: That’s a lot of plans.

Gary: That’s a lot of plans. I didn’t know there were that many. We discovered that 66 percent of the plans that we resigned from, paid us more when we went out of network.

Dr. Hornbrook: Isn’t that interesting.

Gary: Does that make any sense?

Dr. Hornbrook: It’s crazy.

Gary: On a rational, logical level, does that make any sense?

Dr. Hornbrook: No it doesn’t. You talked about the discount. It always me because of course physicians are so embedded, medicine is so embedded to insurance. I went to the doctors several weeks ago. I got blood work and got all this stuff done and it’s $197 and it said discounted $185 so my bill is like $12. At the end it was like, shoot, 1800 bucks for all this? Then I looked and it was discounted so I only owe $139. That’s ridiculous. Our insurance is kind of like, a lot of insurances are as well. You’re losing money even though you say I produced $100,000 because that’s what it will look like on the books. They just did $1500 worth of medicine on me and …

Gary: Your expenses are indexed at the gross production. Back in August of 07 when we produced 70, our expenses were indexed at 70. Yet our revenue was indexed at the 45 [inaudible 00:25:34] income.

I have to tell you, of all the different decisions that Paul and I have made, the most important strategic decision that we made was to break free from the shackles of insurance. Now David let me share an addendum to that story. We started this process in July of 2007. A year later, August of 2008, 13 months later the economy went upside down. You know that. You were effected in Southern California. We were deeply affected in Arizona.

There were 1800 general dentists in Maricopa County prior to the downturn of the economy. It’s a big county, geographically and also population-wise. We know from public records that 400 of those are gone. They’ve bankrupt, foreclosed, or just closed their doors. If you do the math on that, that’s one out of 4.5 practices failed. We not only survived and continued to grow during that time period, we figured out how to thrive during that timeframe. I’m not saying that to boast, I’m saying that as a hopeful message for our listeners and viewers to realize that if we could do this in Phoenix, Arizona when the economy was upside down, then I’m sure they can have success doing this where they are. I can’t think of a more cataclysmic perfect storm of things that were happening and we navigated that.

One of the coolest things is, as we started to attract patients that were not insurance dependent. In other words, they were now choosing us for reasons other than you’re on my plan. We weren’t on their plan. They’re choosing us for other reasons. They started to choose us because of the content on our website. They started to see it and said oh wow, it looks like they know what they’re doing. They embraced the technology. They were choosing us because we want to go to an office that has state of the art technology. When we started to attract patients that were choosing us for reasons other than we’re on their insurance, magical things began to happen.

Dr. Hornbrook: That’s where the creating value, especially in your 2009, 2010. All the discretionary dentistry went down the tubes. The people thought the sky was falling. Things have changed a lot now. The economy is much better. In San Diego we’re doing really well. You look at Ritz-Carlton, you look at Nordstroms, you look at Four Seasons, they’re all having record years. It’s not because you’re going to sleep any better, necessarily. It’s because you feel better when you go and you feel really good when you leave and you want to talk about it.

I think that’s what we need to do with dentistry. I mentioned earlier the physicians have totally screwed that up because they’ve gotten better with insurance. They say anytime you’re getting better with something you kind of get screwed, right. They got screwed. They are so heavily embedded in it that they can’t get out.

Gary: I read a statistic the other day David, that said the average general practitioner M.D. sees about 100 patients a day. If you do the math on that, figure out how many minutes they have with each patient.

Dr. Hornbrook: You can’t. They come in and they say hi and Suzy gives you the shot or Roland takes your blood pressure, and the doctor says whatever my PA said or my nurse, do whatever they say because I don’t have time.

Gary: The customer service aspect of that has just disappeared. I have to this day a wonderful mentor, Dr. Omer Reed. You know him.

Dr. Hornbrook: I know him. He was at my last … I just lectured in Phoenix a month ago and he was there but he had to leave. He had some call. He left before I got to actually talk to him. If you talk to him tell him I said hi.

Gary: I will. He’s been a friend of mine for over 30 years. Omer taught me that dentistry’s a people game. I think the way to succeed with reducing insurance [inaudible 00:29:18] in your practice is to provide such incredible care, such incredible customer service, treat patients so well that they simply wouldn’t want to go anywhere else. There’s a segment of our population, and I happen to believe that it’s a large segment, they want to go to a dentist and a dental office where they’re being taken care of by people who they know, like, and trust. Not everybody. For some people, dentistry is a commodity, is that true?

Dr. Hornbrook: Absolutely.

Gary: A crown’s a crown’s a crown, right?

Dr. Hornbrook: Right.

Gary: In their minds.

Dr. Hornbrook: Absolutely. We’re kind of getting toward the end of the treadmill run. Which I can’t believe. I thought it was like seven minutes and it’s almost 30.

Gary: Could we look at more of a cardiac treadmill run on this one?

Dr. Hornbrook: I think this is going to be a marathon. It’s not going to be a 10K because I’d be running a little faster. So slow down. Start walking. Put the treadmill on a little bit of an incline.

You know two things I’ve been thinking about as you’re talking, and we had Damien MacDonald, do you know Damien McDonald?

Gary: Yes.

Dr. Hornbrook: Damien is the president of Kerr Sybron. He brought up some issues you don’t think about. One we do think about and that’s the DMSO, corporate dentistry. They have an unfair advantage. They come in, if I was a dental supply rep and they say aqua sells $40. They would say, I own 250 practices, I have 900 dentists, we’ll pay 70, and those places, okay? Then they come to you or me as a single practitioner and they say $140 and I’ll say can I pay $90 and they say screw you. You’re paying $140.

They have that unfair advantage that they’re cost of doing business is less, right? When you’ve got the insurance-based practices or the practices are trying to chase down the [inaudible 00:30:56]. We see that at Keating Dental Lab, too. We’re never going to compete with the Chinese crown. Ever. We charge $99 for a high translucent [inaudible 00:31:05]. That’s an unbelievable price. Half of a PFM. We talked about it earlier. The most expensive thing we do in our lab is a gold crown, then a PFM, then and EMAC, then an empress, and the least expensive [inaudible 00:31:16] Opaque and ugly, now they’re translucent.

Gary: What a great value by the way.

Dr. Hornbrook: Unbelievable. $99, but …

Gary: Thank you by the way.

Dr. Hornbrook: No problem. It’s a great restoration. But we’re never going to compete with a Chinese crown and we’re not going to be able to compete maybe with the lab down the street. What we can compete with, is customer service, education, doing the things that make patients, doctors feel good. DMSO’s, I want to talk a little bit about that quickly and what’s your take on that. We’re seeing them in California, Pacific Dental Services and in the Midwest Heartland owns 450 practices. It’s absolutely crazy.

The second is women in dentistry. I heard statistics several years ago, that on average about 60 percent now of graduating dental students are women. They’re coming into our dental marketplace, which is awesome. On average they practice about eight days a year and they average about two to 2.5 days a week. Which is different then … I’ve had a practice 28 years, four days a week and I’ll probably practice another 28 years. So that’s changing things a little bit.

The second was that I thought was interesting was the whole ergonomics deal. You know how Damien in Kerr [inaudible 00:32:29] how they have to go back and redesign equipment based on someone that is more petite. That could be holding a curing light or a hand piece. Those things you just don’t think about as a manufacturer. Let’s talk a little bit about where you see the role that DMSO, the DMO’s corporate dentistry and how it’s going to effect practices like mine and yours.

Gary: Corporate dentistry has an advantage, and I would actually characterize it as an unfair advantage on both ends. On the revenue end, they’re able to negotiate higher fee schedules with the insurance companies because they’re negotiating on behalf of hundreds of practices as opposed to one practice. What leverage do you have when you contact an insurance company, as Dr. David Hornbrook …

Dr. Hornbrook: I have my handsome face and my charming smile.

Gary: Well sure you do. But do they need you? Think about whether it be Pacific, or Harland, or Aspan, or whatever. They’re negotiating for hundreds of practices and many of the places they’re located, the insurance companies needs them because they ultimately need to have providers.

Dr. Hornbrook: A lot of them are small towns, Bakersfield, Fresno.

Gary: Somehow the whole table got turned in insurance. If you think about it for just a minute at a very basic level, the insurance company needs you. Without you as a provider, they have no policy to sell. So remember that. Just remember that. The insurance company, the DMSOs have an unfair advantage because on the revenue side, they’re able to negotiate a higher fee schedule because the insurance companies need them. Then on the expense side, they’re able to negotiate lower costs with their vendors, because they’re again, buying in scale and they have the economy of scale. How do you compete against that? When we talk about group practices DMSOs David, I think one of the statements I need to make about that is that it’s not fair to paint them all with the same brush.

Dr. Hornbrook: Right. I agree with that.

Gary: Just like it’s not fair to paint private practitioners with the brush. The truth is, solo dentists, there’s good, bad, and ugly. The same is true with the group practices. Even the best group practices only do a mediocre job of customer service. They only do a mediocre job on their best day, their best day.

Dr. Hornbrook: Remember that’s not their goal. Their goal is to make money. I want people to like me. I want people to like my practice. I want people to talk about me. A lot of the group practices their venture capitalists are saying you got three percent that you can buy. I have a friend that works for one and they ran out of dental materials. Something he uses every single and he went to his assistant and said I need to order this and they said sorry we’re already at our three percent this month. They had seven more days in the month but because they had already hit three percent because this big venture capitalist, someone who knows how to run a business said, you’re done.

Gary: If you turn that to an advantage, let’s turn that to an advantage. The best DMSO on their best day is about a B, B- when it comes to customer service. Frankly, in your practice or my practice, we wouldn’t accept that on a daily basis. It might happen now and again but we won’t accept that. We have a competitive advantage to deliver unbelievable customer service. One of the things, and it’s very simple, and David you heard this 25 years ago but it’s still not being done today. One of the things we do, our Doctors, Paul and Tim, they call our patients at 7:00 in the evening. They call any patient that received a shot that day in our practice. If they received an injection, they get a call from the doctor. We have data on this. Eighty-five percent of those calls go to voice mail. Frankly, I wish 100 percent went to voice mail. They wish 100 percent went to voice mail.

Dr. Hornbrook: I do that as well. A lot of times I wish it went to voice mail.

Gary: When Doctor Hornbrook calls, and let’s say I was your patient. I’m sure you’re going to call and say hey Gary, it’s Dr. Hornbrook calling. I like to call my patients on the evening of treatment. I was just giving a call to see how well you’re doing. Now you can turbocharge this. David you know that my youngest daughter Callie is a sophomore at University of Arizona. That might have come up in our conversation. When you call me that night, you might say, hey by the way I looked at the calendar and realized that Callie’s going to be heading off to U of A in a couple of weeks. Please wish her well for me.

When you do that, the emotions that are involved with that and the furthering of our relationship is something no DMSO can compete with.

Dr. Hornbrook: Right absolutely.

Gary: So Doctor, a simple thing that you can do. Develop your own method for doing this. I happen to love technology so I would do it digitally. Come up with some way to capture the notes and the details about your patient’s life so when you make those phone calls you can incorporate that. For example, I know that you’re son Brighton is about to start his senior year at Grossmont High School. If I was to call you, and say hey David, Dr. Takacs calling. I just wanted to call and see how well you’re doing. By the way notice what I didn’t say. I didn’t say I’m calling to see if you’re having any problems. No you’re not having any problems. I just like to call my patients on the evening of treatment to see how well you’re doing. By the way, I noticed that Brighton is about to be a senior at Grossmont. Would you wish him a great season for me.

Dr. Hornbrook: Yeah. Anything personal. The other thing too that I found, because I do make those calls, is to write down the spouse’s name. I take home a sheet on … so my schedule has the phone numbers. I make them write down the spouse’s name because I can remember, if I saw what tooth, I can tell you everything about your life based on a tooth that you told me about, but I’m not going to remember you name. If you and your wife have been patients in my practice for 15 years, and I call to see how she’s doing, and you answer and I’m like, um, is Joe there? Who’s this? This is Dr. Hornbrook calling. Oh, hi Dr. Hornbrook. It’s like crap. I’ve known this person for 20 years in my practice and I can’t remember their name. Is this Steve? Hey Steve it’s Dr. Hornbrook. How’s Jill doing? you know. It’s things like that that are going to separate us. You’re absolutely right.

Gary: That gives us a competitive advantage. There isn’t a DMSO in the country that does a good job of that. That’s not their business. No one’s focusing on that.

Dr. Hornbrook: That isn’t their business.

Gary: I really think the takeaway for people watching this and listening to this, is our advantage is developing the rapport and relationship with patients. We talked about Omer a minute ago. I learned this from Omer. David, you and I are old enough to remember what Rolodex’s are. Remember those Rolodex files?

Dr. Hornbrook: Yeah I have one.

Gary: In the early 80s, Dr. Reed had a Rolodex file. For those of you that don’t know that that is, it’s a circular file that’s organized alphabetically. Omer had 5 x 7 cards on his Rolodex file. So in addition to his charts back then, because it was analog, it was charts, Dr. Reed also had a card of every one of his patients. As he would learn about the details about patients lives. About their dog’s name, their spouse’s name, their kids name, their hobbies, their interests, he would scribble those down between patients on his Rolodex card.

What he did next was really the most important step. He came in 30 minutes before the morning huddle every day. Printed out the daily schedule and then went through the Rolodex cards to re-orient himself to the patient. Omer happens to have a very good memory. He has a great memory today in his 80’s. He has a fantastic memory. Let’s face it, if you’re taking care of 3 or 4,000 patients you can’t necessarily remember everything. He would do his homework and he would prepare and so when he came in to do his hygiene exams he’d slap you on the knee and say how’s Brighton doing? My goodness I saw that video the other day when he did that vertical leap. Was it 48 inches? Oh my god that’s amazing.

Dr. Hornbrook: You’re absolutely right.

Gary: That connection.

Dr. Hornbrook: People want to feel important, that’s the bottom line. Also you just mentioned some of these DMSO’s, you’re not going to go and see the same dentist every single time.

Gary: If dentistry is a commodity to a patient, it doesn’t matter.

Dr. Hornbrook: It’s not a big deal.

Gary: I think the other advantage that we have, and David I know you know this, but I think that the mouth is one of the most intimate places on the body to receive treatment. I can only think of one other area that might be …

Dr. Hornbrook: The ear?

Gary: Something like that. Let’s face it, between nerve endings and the emotions that are involved in that. We know that 49 percent of the adults in the United States put off a visit to the dentist because of fear. If we can connect with them on an emotional level and really master emotional intelligence. Emotional intelligence is a topic I’m spending a lot of time with our clients now. How to read patients emotions. How to respond to their emotions. How to be emotionally intelligent as the leader of the practice. If we can master that, the way that that can impact the practice is unbelievable. It’s an advantage that just is never going to exist in the DMSO model.

Dr. Hornbrook: You’re absolutely right.

Gary: Pardon my enthusiasm, but I ….

Dr. Hornbrook: No that’s all right. That’s why I invited you here and I appreciate it. We are going to have to wrap up. We didn’t get to go through the seven things you need to monitor in your practice, but we’ll have you back.

Gary: I’ll come back.

Dr. Hornbrook: Gary Takacs T-A-K-A-C-S. You have a website. You have a really good website with blogs and some videos.

Gary: Takacs Learning Center. I wouldn’t have named it after myself but there was a marketing company I worked for years ago that said if we called the company Takacs Learning Center it made a nice acronym, T-L-C. We like to think every practice could use a little TLC. Takacs T-A-K-A-C-S Learning Center dot com. David, you also know that I’m a fellow podcaster. I’ve had you on my show a number of times. I’d like to invite our listeners to cross over and listen to my podcast as well.

Dr. Hornbrook: What’s the address?

Gary: That’s called The Thriving Dentist Show. So if you go iTunes or your go to Stitcher Radio and type in Thriving Dentist Show, you’ll find that podcast. Today, we published our 184th episode.

Dr. Hornbrook: Nice.

Gary: You’ve been on two of those?

Dr. Hornbrook: This is twelve. We always have so much to talk about.

Gary: We do.

Dr. Hornbrook: We don’t give much of a message, but we still have a lot to talk about.

Gary: We still have to go back and talk about that surf trip we took in … I don’t remember it fully, but maybe it will come back to us when we talk about it.

Dr. Hornbrook: I still go down to Mexico almost every week. I went last weekend, I’ll go again this weekend. Surf the same spot. The problem is K-55 where we used to always used to camp and surf. The most incredible homes. It’s all built up.

Gary: What about Sal Su Puedas? Sal Su Puedas still there?

Dr. Hornbrook: Sal Su puedes you can’t even get to anymore because they’re building these gorgeous homes. I tried to go down there. They wouldn’t even let me down the road. They had a little guard shack. Things are change … things are changed. With us, with Mexico, with life. All good things.

Gary: Hair?

Dr. Hornbrook: Absolutely. Yeah you don’t have any and I’m losing mine, but that’s all right. That’s all right. As I tell my sons you change the things you can and you try to fix the things that are difficult or impossible.

Anyway I want to thank you for watching or listening, whatever you’re doing right now. Again, we’re in Irvine, California, Keating Dental Lab. I certainly invite you to come visit us. We’re about five miles from Disneyland, ten miles from Newport Beach. If you’re ever in the Southern California area, you’re more than welcome to come visit us at Keating. We’re doing some incredible things, not only in our podcast like today, and we had so much fun, but also in videos, educational opportunities. You can go to dentalup dot xyz. Hope I see you soon. Thanks for listening and watching.

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