The Group Dentistry Now Show: The Voice of the DSO Industry – Episode 2

Tom von Sydow, COO of Cornerstone Group, discusses his specialty endodontic DSO, their products division, and their new training facility. Dave Monahan, CEO of Kleer, discusses the reimbursement crisis and a turn-key and free way to implement a successful membership plan for uninsured patients. We also highlight some of our favorite news stories from the month and important information for upcoming events.

Our podcast series brings you dental support and emerging dental group practice analysis, conversation, trends, news and events. Listen to leaders in the DSO and emerging dental group space talk about their challenges, successes, and the future of group dentistry.

Watch the video interview or choose your favorite listening app below and subscribe today so you don’t miss an episode! Full transcript is also provided below. 

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Interview with Tom von Sydow, COO, Cornerstone Group

Bill Neumann: Tom von Sydow is the COO of the Cornerstone Group. Prior to this, Tom was the COO of Acuity Eye Group. And prior to that, he was with the DSO, Pacific Dental Services, you may have heard of it before. He was there for nine years, his last position was the VP of Strategy and Platform Development. Prior to that, he was the Vice President of Specialties where he led the effort to drive all of their non-general dentistry business lines.

Bill Neumann: Tom has been in healthcare field since 1981 and started his career in the US Navy as a hospital corpsman, he holds a Bachelor of Science degree in Healthcare Management from Southern Illinois University Carbondale and Advanced Leadership certificates from Harvard. Tom, welcome to the show.

Tom von Sydow: Thank you very much, glad to be here today.

Bill Neumann: It looks like you’re sitting in your training center.

Tom von Sydow: Yeah, so we’re really excited about this. Maybe talk a little bit later in the podcast about it but yes, we just got our final inspection, and we’re starting to do some final touch-ups. And hopefully we’ll run our first course here in June and pack the calendar for the remaining year with advanced surgical training courses for the dental community.

Bill Neumann: That sounds great. You’re right. We’ll hold off on that and find out a little bit more about the training center later. So, tell me about Cornerstone.

Tom von Sydow: Cornerstone was founded about 17 years ago by Dr. Hamid Abedi with the goal of having the endodontists go to the patient versus the patient coming to the endodontist in your typical brick and mortar type program. Dr. Abedi came up with the idea of creating a mobile platform where the endodontist would bring all of the supplies and necessary equipment and go to the patient with the dental assistant and take care of the patient in the general practitioner’s office. Currently, we serve about 300 locations, we have 38 endodontists. We are the largest endodontic group in the United States. We roughly perform about 40,000 root canals per year. So, we’ve got a lot of experience and a lot of history with delivering services through this mobile platform.

Bill Neumann: That’s pretty compelling. Tell me a little bit about why a mobile platform versus a traditional platform.

Tom von Sydow: There’s a couple of reason for it. We serve as DSOs primarily. And they prefer to have their patients treated under their own roof, so that was part of the reason. But what’s kind of come out from this whole exercise, if you will, is we found that patients really like it. Patients no longer have to go to a separate location, drive to that location, they have to them fill out additional forms, they have new staff that they’re meeting. In both cases, they’re meeting the endodontist for the first time, but new staff members, new environment. Endodontics tends to be an emotionally-charged procedure anyway due to the fact that most of these patients are in pain or they have some type of fear of having the procedure be painful, which really isn’t the case nowadays. Most root canals performed today, we can’t say painless because that doesn’t really exist. But the level of discomfort that a modern day endodontic treatment has versus a few decades ago is night and day.

Tom von Sydow: But still the fear is there nonetheless, so by going to the office where they’re comfortable and they know the staff and they know the environment, they know the referring dentist, it tends to calm them down, and they also just like the convenience of it. So, it’s actually ended up becoming a very, very popular way of delivering specialty care and in particular, endodontics.

Bill Neumann: It makes a lot of sense, the comfort level being in the practice that you’re used to, and it’s really consumerism, right? It’s what the patient wants, it’s what the consumer wants.

Tom von Sydow: Exactly. The specialist and the general dentist that’s referred to a specialist like it as well because in this environment, instead of having to fax over something or maybe get on a telephone call where the records are not integrated, there’s a lack of communication that can transpire and miscommunication from the general dentist perspective, how they want to treat that patient post-root canal. So, if there is some confusion or there is some clarification that’s needed, in this particular model, the endodontist can simply walk down the hallway, tap the general dentist on the shoulder, slip off into the break room or their office and just say, “Hey, I want to clarify what you’re trying to do here. I want to make sure that we’re on the same page so I can support your treatment plan post-root canal.” Or, “I have a question about why you referred this particular tooth,” and they can do that in the comfort and convenience of their office face-to-face. So that’s a huge advantage over the traditional referral model, which that’s done by telephone or via facsimile. Hoping not today by facsimile but some type of HIPAA secured network. You know?

Bill Neumann: Right. So, one of the biggest challenges DSOs have, and actually I think just dentistry has is recruitment. How do you find these specialists, how do you attract them to your DSO? What’s that look like?

Tom von Sydow: That’s a great question, it’s a challenge for everybody in the dental industry right now I think, both staff and clinicians. We have taken a pretty aggressive approach, we are very active in the association meetings, we have a full-time, my vice president of recruitment operations is Judy Forsyth. She spent three-plus decades in the dental industry, she’s actually sat on the California Dental Board I believe for nine years. She actively goes out and months with the residents in their programs, so we do a lot of lunch-and-learns, if you will, we do various types of events.

Tom von Sydow: We utilize social media, and really, what the biggest challenge that we’re hearing from the younger endodontists is they’re realizing that the traditional brick-and-mortar practices are becoming more and more difficult. They’re not impossible, a lot of endodontics is still delivered through a traditional brick-and-mortar, so I don’t want to overstate the issue. But it is an issue, and as young residents are coming out of their programs, especially ones that didn’t spend a lot of time in private practice prior to their residency, so they’ve never really practiced full-time in an environment where all the burden is on their shoulders, and they have to kind of get productive. There’s not a lot of opportunities compared to what there used to be. The economic downturn certainly hurt some of the endodontists that were out there, so they had to rearrange their lifestyle and also rearrange their future plans for retirement. So many of them have pushed retirement off to regain their financial war chest, if you will, so they could retire in comfort.

Tom von Sydow: A lot of young associates go into practices, and they do a lot of the work that the owner may not particularly want to do anymore difficult cases, retreatments, calcified canals. It’s kind of a slog, it’s pretty rough go. I’ve heard this from a lot of residents that moonlight. So they get attracted to this kind of opportunity, this blue ocean opportunity where it’s your practice. It’s the endodontics practice, but it’s our platform. Meaning that we provide all the support for them, we provide all the supplies, the equipment, and we allow them to practice their craft in an environment where they’re unencumbered from some of the stresses of owning a practice. Plus, they’re getting exposure to a lot of different types of endodontic procedures, you know, apical surgery, younger virgin teeth that are not as complicated. You want a few of those in your day so that you can have an easier day. You don’t want every case to be easy, you don’t want every case to be hard. So they are attracted with that.

Tom von Sydow: The other thing that they’re burdened with is tuition. And we all know this, we’ve heard this, it’s a topic on the political circuit, everywhere. And some of these kids have a lot, and I say kids because I’m 54 years old, so I can say kids, but they have a lot of debt. And some of them in the neighborhood of $500,000, $600,000. So while we offer a very good opportunity for them to earn a very aggressive income, still, they’re strapped with this debt. So we’ve been able to come up with some creative ways to help them with that, to service that debt. Be in a private company owned by five endodontists, six endodontists, including Dr. Abedi. We are able to be a little flexible on what we can do under contract terms with these individuals, so that’s been a very big help for us.

Tom von Sydow: I think the last thing that they like about us is our geographic diversity. We’re not a brick-and-mortar building in Los Angeles or St. Louis or New York where if they come to work for the group, they’re kind of confined geographically. We have a lot of different opportunities around the country. Like I said, we’re in about seven states now, and the nice thing about it is overtime if they choose, maybe their spouse or significant other has an opportunity in a different city or they just choose they want to live somewhere different versus the last five years they’ve spent, we have the opportunity to give them some the choices of where they could live and reside maybe even for the next five years if they want to move around again, which is not something that’s generally available through the traditional practice model.

Bill Neumann: That’s wonderful. So you said seven states right now? Is that correct?

Tom von Sydow: Correct.

Bill Neumann: All right, we hit one of the challenges which was the recruitment of specialists and how do you recruit them, and of course retention as well. What other challenges do you see at Cornerstone?

Tom von Sydow: A lot of the … And we address this through our owner model. So we’re an owner model. We have, like I said, partners. One of the challenges, the training that some of the programs have, it’s good training, they only have two years to get these folks trained. But there are still a lot of opportunity for enhanced mentoring and training, so it’s transitioning from the academic world of doing two or three cases a day at the most, and half of it you have to do it all yourself, quite frankly, you don’t have dental assistants. So kind of transitioning from that model to a model that starts to move more towards what it’s like in private practice, whether that be in a brick-and-mortar private practice or in a model such as ours, you still have to get your speed up a little bit, you have to get your number of cases up a little bit or you’re not going to make a living. Especially fees are not going up, they’re only going down.

Tom von Sydow: So, we have a mentor program in place where the new residents or the new hires especially that come right out of school, they get partnered up with a seasoned endodontist, a partner in the firm, and that partner spends time with them prior to their credentialing process being complete. And then after they’re in the field working they have access to this specialist via our proprietary app, which I can mention to you about, but the communications was key and the ability for this young associate to feel comfortable going to this mentor and asking questions that they may not feel comfortable asking somebody else because the trust level has been established that they can ask a question that may seem silly, but it’s not silly, it’s really important to learn how to practice endodontics as a profession versus what you learn in academia. That’s a big challenge.

Bill Neumann: Yeah, that definitely sounds appealing for a younger endodontist really looking at things like mentorship, those are the types of things that I think you see the dentists and Millennials maybe, they’re looking for that additional support.

Bill Neumann: So specialty DSOs, which Cornerstone is one of those. Where do you see the future in, let’s say, five, 10 years? Is it something that’s going to expand? Is it going to change? What are your thoughts on that? Are you seeing anything?

Tom von Sydow: I think it started in the world of oral surgery. There’s a lot of energy around oral surgery practices that are more of a spoke and hub model where the patient still has to leave the general practice and go to the surgical location, but there’s more services offered, a broader perspective of services offered. And I believe we’re going to see multidisciplinary spoke and hub type models out there, which there is a place for those. For a multitude of reasons, there is an opportunity for those to thrive, especially in high-density markets. Supporting DSOs that may not necessarily have the traditional owner model where many of the practitioners in the locations around the spoke and hub are associate dentists. So there’s not so much of the desire to keep some of the revenue in-house. So I think those have a place.

Tom von Sydow: I also see the mobile platform expanding massively in particular for implants and I believe for endodontic services and probably with your periodontics. Endodontics lends itself really well. There’s not a lot of heavy equipment, you have a microscope head, if you can get a stand in the office, you’ve got some hand pieces, files and supplies. It’s really easy to transport around quickly to set up. Same thing with perio, and in implants, it’s relatively easy to set up. You can mobilize it fairly easily.

Tom von Sydow: Some of the imaging technology has been a challenge, so I think those things will be solved. Portable cone-beam scanners, a cone-beam I think will become more ubiquitous in normal dental offices as time goes on and they come down in price. They’ve already come down almost half what they were before. So I see the trend continuing. Now, I don’t think it’s limited to DSOs, by the way, I think that one of the things that we’ll see, and this is just by editorial, my opinion, is general dentists that do not belong to a DSO that look for ways to compete with the DSO through some of the innovations DSOs have, such as direct-to-consumer marketing, much better processes in how they manage their collection, how they manage their insurance, how they manage their team, education, modern technology, location, extended hours, there are going to be entrepreneurial providers that are going to take that approach to how they practice their dentistry. They’re going to change with the times, so there already are some of them. I believe they will incorporate some of these into their practice as well. And expand the specialist network on how the specialist delivers care, but I definitely see the brick-and-mortar in the next five to 10 years becoming less. Less locations, more centralized, more multidisciplinary, and I think you’re going to see a massive emergence of the mobile platform especially as technology advances.

Bill Neumann: That’s pretty compelling. It’ll be interesting to see what the future looks like for sure. It makes sense. And we’ll see where it all goes.

Bill Neumann: We mentioned that Cornerstone is a specialty DSO, but that’s not all Cornerstone is, right? Tell us a little bit about some of the other things that Cornerstone is doing, it sounds like you’ve got a lot going on right now. Right now, you’re sitting in the training area, so tell us about that, and then tell us about the products division as well.

Tom von Sydow: You bet. We kind of rejigged our vision statement as an organization when I joined, and right now our mission statement and vision statement should stay stationary for a long period of time is to be the world-leading scalable practice platform that enable surgical specialist to maximize their personal and professional life. And what we found when we put that down on paper and started to pressure test that on what are we doing as an organization to achieve that goal? To achieve that vision of maximizing their personal and professional life? We quickly realized that we were missing some critical elements to this, so we had the service organization, which is great, and we provide great support services around that, but we also saw a massive need for training. Not just training of our own endodontists, but training in general. There’s not a lot of advanced surgical training facilities in the United States. There’s a lot of restorative, there’s a lot of implant training centers, but nothing that kind of takes a comprehensive look at how do you help all surgical specialists develop their skills and enhance their opportunities?

Tom von Sydow: We invested heavily into this training center, so we believe it’s the most advanced in the country, we’ve got a cone-beam scanner being installed, we have microscopes, we have, as you can see behind me, we got a microscope for every two students, we have 14 stations. And then as you can see in my background there, we actually have an operatory, so we have actually three operatories here. And we’re importing the latest technology available, all digital workflow, robotic surgery, advanced procedures for both our own clinicians and the public-at-large. But what we’re really excited about, and this was something that was also part of our desire was how do we give back to the community at large? This kind of goes to maximize people’s personal life.

Tom von Sydow: And we partnered with the Lestonnac Clinic, which is a large clinic here in Orange County, they serve about 100,000 patients per year. And their clinic charges nothing. They charge nothing to the patient. They had two dental chairs in their office in Orange County, and they service a lot of veterans. They closed the VA Long Beach dental clinic here, and so the veterans had nowhere to go. So, they’re taking care of many of the veterans as well as the disenfranchised folks in Orange County. And so we partnered with them, and we’re excited to say that we’re going to be doing not only full days of charity work here, but we’re going to do their advanced surgical procedures that they can’t do at the clinic here at the training center for free.

Tom von Sydow: This also allows us to have the ability for some of our students, if they’re licensed in California, to end their course with a over-the-shoulder opportunity to work on live patients here at the training center as well, so it kind of serves a dual purpose. But we’re super excited to partner with the Lestonnac Clinic, pardon me, I always mispronounce it, Lestonnac Clinic in Orange County and really develop out the most state-of-the-art advanced surgical training that you can find. Not only in North America but hopefully in the world. So it’s a lofty goal, it’s a big hairy goal, but we believe we can achieve it, and we certainly have the technology and the facility to do that.

Bill Neumann: That sounds great. A lot of exciting stuff going on for sure. So, products division. Tell us about that.

Tom von Sydow: It’s kind of a natural progression from this was Dr. Abedi and many of our clinicians are, like a lot of dentists, other tinkers and kind of serial inventors, and there really wasn’t a place … You can go to some large firms and try to incubate your idea, but it’s a very long arduous process. I understand it well, I worked at Nobel Biocare for four years. And I understand why it’s an arduous process and there’s thousands of ideas that come in. But we wanted to kind of create an opportunity, a platform for our internal dentists but also anybody that has a great idea outside of our network that wants to figure out a way to maybe incubate this idea and create it.

Tom von Sydow: So, we’ve got 3D printing technology, rapid prototype technology, we have on-staff engineer PhD, we also have engineers that are on call. And we’re trying to create unique products. So we’re not trying to create anything that’s commonplace but things that are unique in the market that actually serve the clinician and add advantage to his or her day. For example, we’ve just patented a clamp, rubber dam clamp that also functions as a suction device. A lot of time, a lot of dental assistants’ time is spent taking the fluid off of the rubber dam during the endodontic procedure, so this actually attaches to the rubber dam clamp so you don’t have to have that dental assistant stand there the whole time. Another example would be we’ve invented a file that instead of putting the Apex locator on the shaft of the file to get the depth of the root, it actually comes out of the handle so you can place it on the handle. These are little innovations that make the life easier for the dentist, but they’re unique and patentable. And so we’re really excited. We don’t know where this is going to go. We’ve got very interesting technology under patent right now that I can’t discuss, under patent pending. And we’re really excited to partner with the community as well, not just our own folks but to partner with the community to see if we can come up with innovative ideas to make things simpler, faster, more effective and better for the patient.

Bill Neumann: You certainly have your hands full. You’ve got a lot going on there. So how did you personally get involved with Cornerstone? What was the catalyst, you were at Pacific for quite a while, you were at Nobel Biocare as you mentioned, you’ve done a lot of things. You’re a COO of Acuity so you’re on the vision side of things. Tell us why did you make the move to Cornerstone?

Tom von Sydow: Like all careers, you have your best times and your tougher times. I’ve spent 31 … I’ve been in healthcare since 1981. Spent a lot of my time in sales and marketing, and after I left Nobel in 2008, Steve Thorn and I had developed a relationship, friendship, and he asked me to come help him develop out an implant concept he had as well as manage his specialty program. So I spent nine years there, very great years, wonderful years. A great organization. But I had a heart in ophthalmology going back to my early days in the Navy, and opportunity came along to help a platform that was similar, only, they were trying to do it in the ophthalmic space. So I joined there, and for whatever reason, things didn’t work as we liked it to. So, I had already developed a relationship with Dr. Abedi obviously through his time working with PDS as well, so I knew him for nine years.

Tom von Sydow: When I left Acuity, he asked me to come help him initially as a consultant, which I did, and then this just turned into kind of a full-time position and vision for both of us. So, it was kind of a circular way to get here. But that’s kind of how it happened and really excited and got a great groups docs I’m working with and great clients to work with. So, we’re really about the future.

Bill Neumann: And I love the idea of the mobile platform. I mean, that just makes a ton of sense and exciting stuff and the training center and the products division. You got a lot going on. So, big question for you, this is probably one of the last questions. Will Cornerstone remain in endodontics?

Tom von Sydow: I don’t believe so. We have no immediate plans on the horizon to diversify but as I mentioned to you, a lot of things we’re doing, and that’s what we call at Cornerstone dental specialties as one of the divisions is we didn’t want to go endodontic specialties because we do have, a lot of our platform is ubiquitous. And I’ll talk just briefly about the app as a perfect example. So, our app, which we’re really excited about, it’s proprietary. It’s got four major components to it. The first major component is what every dentist, regardless of specialty loves to look at. And it’s their schedule. Dentists love to monitor their schedule which makes sense because that’s how they’re productive. So, this gives them real-time access to their schedule for the next three days in advance. And it rolls. So it allows them to contact the office if they want to fill a hole or move something around. They’ve got real-time access on their phone, 24/7 anywhere in the world to their schedule, which is hugely important. Especially in a mobile platform.

Tom von Sydow: The second major leg of this is our communication, which I mentioned earlier in the cast where at any given time, you can communicate with anybody in your network, including your referral clinicians in a HIPAA secured environment. Think of it as a proprietary WhatsApp. So you can video talk, you can send photographs, you can chat, you can phone call. Give you all these different functions in real-time in a HIPAA-secured environment. So, in a distributed environment that we’re in, it really pulled everything together.

Tom von Sydow: The third is the knowledge base. In the knowledge base, we have videos, we have lunch and learn presentations, we’ve got algorithms for our way of suggesting how we run things, we’ve got forms, other types of knowledge in there. And that content is constantly being added to. And so they can, again, reach that anytime day or night, they can watch a video, they can read a paper, they could do whatever. And that’s a nice whole system.

Tom von Sydow: And then last but not least, another big problem with variability in a distributed environment is supply chain management. From their app, we have relationship with our vendors that when they place their order in the app, it goes through the internet superhighway, flies through internet superhighway and lands in the vendors’ inbox, and they automatically process that order. And that gets shipped to the location that the clinician prefers, whether it be in office or their home. But it’s a pick list, it’s a quick shopping list, it allows them to do ordering. You pull all those four elements together and you can see how that would be attractive to a periodontist, how that would be attractive to an oral surgeon, an implant specialist, anybody that’s a specialist that’s working in an itinerate or mobile platform that are moving from office to office.

Tom von Sydow: You can see how that could be cross pollinated, and really, from our perspective, everything we do in the backend service is helping the clinicians with their taxes, helping them with their legal, helping them with their training, helping them with their lifestyle, helping them with all the things that we help them with to make them successful. Those all transport over to multi-specialty. So, I do think there will be a day when we expand our platform. Like I said, there’s nothing in the immediate horizon, but as soon as we get these things completely nailed down, which we’re probably 75%, 80% there now, I do think we’ll see a demand. Actually, I think we’ll see people requesting us to take this platform to other specialties.

Bill Neumann: I mean, certainly the app with everything it can do sounds really appealing. It doesn’t sound like, as far as I know, there’s anybody else out there that has anything remotely similar, so kudos to you for coming up with that and addressing the needs of specialists, especially specialists that are mobile.

Bill Neumann: I think that kind of rounds out the questions. I really appreciate your time today, Tom, and I think that it’s going to be really exciting to see, and you’ll keep us informed, I hope, as the progress of Cornerstone and everything that you’ve got going on there. I’d like to just thank you again, Tom von Sydow and Cornerstone for being part of our video podcast.

Tom von Sydow: You’re welcome and I appreciate the opportunity to have a chat with you and look forward to seeing you out there in the world.

Bill Neumann: Sounds great, thanks again.

Tom von Sydow: You have a great day.

Interview with Dave Monahan, CEO, Kleer, LLC

Bill Neumann: I’d like to welcome to the Group Dentistry Now podcast our sponsor, Dave Monahan, Dave is the CEO of Kleer, and I’ll give you a little introduction today, a little background on Dave. So Dave, prior to joining Kleer, actually, Dave served as the president and CEO of a company called FitLinxx. A leader in the wearables market, and then Dave also spent quite a few years from 1999 to 2006 with a little company you may have all heard of, Microsoft, where he developed new product market and partnering strategies at Dell Microsoft and Microsoft partners enter new markets and grow. He’s a grad of Penn State and Loyola University and resides in Greater Philadelphia area, which I also do. So that’s wonderful. Dave is married, has three kids, 12, 14, and 16. So you’re a busy man besides running the business.

Bill Neumann: Dave, first off, thanks for sponsoring our podcast, and welcome to the show.

Dave Monahan: Thanks. You’re welcome, and I’m glad to be on your show. Thanks for having me.

Bill Neumann: This is wonderful. Let’s find out a little bit about what Kleer is, and then we can ask you some deeper questions besides that.

Dave Monahan: Great. Yeah, just real high level, Kleer is a cloud-based platform, and basically it enables Dell Practice and Dell Groups to create membership plans for their patients. And this basically everything they need to be successful, it’s not just about the product, we have a great product and has all the features a practice needs, but we also provide Kleer success managers or that helps a practice or a group set up their membership plan, design it, price it properly, promote it properly, and then all the tools they need in addition to the support itself, but like marketing tools, commercial tools, things like that. Everything you need, again, to be successful with the membership plan.

Bill Neumann: That’s great. You’ve been involved in a lot of other, you were at Microsoft for a while, you were at that company FitLinxx and so why did you decide to get into dental and then why start Kleer?

Dave Monahan: Good question. There’s a few things that run through my background. One thing is I love technology, I love software, I love being able to take technology and apply it to problems, that’s sort of a high level. And where I really started developing the expertise is applying software and technology to healthcare. So, at Microsoft, actually, I learned a lot of Microsoft as far as how you work with other companies to create software that meets the needs of a given industry or a market. I actually created a partner network that basically took the Microsoft software and customized it for industries like manufacturing and healthcare and so on. So, learned a lot there.

Dave Monahan: Then when I went to FitLinxx, basically at FitLinxx what we were doing was creating devices that monitor your body. And then we got into the healthcare space and helping people monitor their body from their home. And then we partner with healthcare providers who would build software on top of our infrastructure that we can customize for their patients. From there, after I left there, I was trying to figure out what I wanted to do next, ran into some people in the dental market and realized there was a big opportunity there. And that was, without going too far into it, did a lot of market research, spent about a year in market research and decided to go into the dental market.

Bill Neumann: That’s great. There are several membership plans that exist out there now. Can you tell us a little bit what sets Kleer apart from maybe some of the other options out there for dentists and emerging groups and DSOs?

Dave Monahan: Absolutely. What we did, just following up on the comments I just made, we spent about a year doing market research. And we would bring dentists into focus groups, to one-on-one interviews, and same thing with patients and talk to them. Try and understand the needs in the marketplace. And we basically designed Kleer around those needs. And the real high level we learned is dentist were having obviously issues with insurers and being able to make a profit and sort of not have all the hassles between them and the patient.

Dave Monahan: On the patient side what we learned was a deep need and value to oral care but staying away because it was either too complex, too opaque, too complicated, too expensive. There was all kinds of reasons to stay away. And it wasn’t because they were afraid of dentists, it was because typically financial issues or being afraid of cost and things like that. So, we designed Kleer to meet the needs of both the patient and the practice. So, at real high level, and I said before, Kleer includes everything a practice needs to design their plan, to plan and offer to the patients, everything a patient needs to buy the plan and manage their plan from their side well. It’s all online, it’s all cloud-based, and it includes all the support both sides need to be successful with the membership plan.

Dave Monahan: Where we really set ourselves apart is on the product, the features we offer, the design and user experience, it’s such a great user experience, and then on the support side, providing the guidance and the consultation to practice the design and market or plan properly.

Bill Neumann: That’s couple great points there. I was looking at some surveys recently, and you’re right, it’s not fear of dentists, that is not the number one reason why they don’t go to the dentist, it’s the cost, right? So that’s number one. Fear’s on the list but it’s down the list.

Dave Monahan: Absolutely.

Bill Neumann: So if you can offer some options from an emerging group or DSOs standpoint to get patients to the practice and lower the cost, make the navigation of what the pricing would look like easier, that’s wonderful. You touched on something regarding like the training and the support that make you different, and I know with emerging groups and DSOs in particular, that’s what they really need. How do you onboard not just one location but 20 or 30 or a hundred? That’s where a lot of the struggles come in. Some people offer great products and services but then actually to communicate the value and the services and then for them to in turn provide those to the patient becomes a little bit more difficult when you’re at scale. So, it’s great that you offer that type of training and support.

Dave Monahan: Absolutely. And there are some areas we see some of the groups strip off is, one of them is, a big one is trying to set it up properly, trying to manage it across lots of locations and lots of teams. You know, the Kleer includes all the tools they need to do that, and it’s all automated, it’s all cloud-based, you don’t have any manual things you need to do, it’s all set up from the very beginning to be successful and to be easy to manage both for the practice and for the patient.

Bill Neumann: Here’s a question, if you have your crystal ball out, what does the future of membership plans look like? Is it going to change? I’m sure as a software it’s something that there’s always updates, you’re always trying to improve it. So, what do you maybe in the next year or so, and then further down the line maybe in five years, what does that look like? ?

Dave Monahan: It’s great. A real good question. Think there’s a couple things that are going to happen over the next few years. First, your answer about adoption, what we’re seeing is about 20% of practices are offering a membership plan, and many of those are done manually. So they set them up with paper and you sign up by filling out forms. And then somebody on the backend on the administrative side is managing a … And it’s a bit of a mess. And we see those break down in about 50 patients where it’s just too hard to manage.

Dave Monahan: So, think in the short-term what we’re going to see, I think we’re hitting an inflection point in the market. What we’re seeing is we’re doubling about every three months. Our number of patients, the number of practices on our platform. And what we’re seeing I think is that first wave of adoption that’s going to turn into, it’s going to be a standard. Every practice is going to offer a membership plan because the value it provides is huge, both to the patient and to the practice. So I think that’s the first thing you’re going to see is it becomes a standard practice.

Dave Monahan: To our point about the evolution of the product, we release features every two weeks. And the reason we do that is the market is constantly asking for new things. New services to have on top of it, new ways of managing patients on the platform. New services you want to offer to the patient through marketing and things like that. So, the market right now, and this is typical in the beginning of a market is driving features that the product needs to have to be successful. So, we’re seeing that every day, perhaps for different things in the features and things like that.

Dave Monahan: Then the third wave, I think, when you think more strategically and further out, once the practices have critical mass, there’s enough of them on the platform, enough people offering membership plans, then it’s going to migrate. Right now, it’s sort of being offered for the most part to uninsured patients. Where it’s going to go is into the employer market. It just makes all the sense in the world for employers do a membership plan versus insurance. I can go through all the reasons for that, but here’s the net of it is it makes a lot more sense financially, the patients get and their employees get better care and the practice makes more money. So, if you can bring all those three things together, it’s going to go there. Think of it as what Uber did to the taxi business. Eventually, the middleman’s not needed anymore, it is a lot of hassle, costs, it’s not needed and you just bring the groups together directly.

Bill Neumann: So the employer. That makes a lot of sense. So that’s a year down the road, two years down the road, happening now?

Dave Monahan: It’s happening now in fits and spurts. The typical evolution of membership plan is a practice brings it in, they learn and they adopt it and they create processes around it and they become successful with their existing patients. The existing uninsured patients, both ones that are existing and ones that are new. It becomes a natural things to do. And that’s a six to 12-month learning process to do that and do it well and have whole team aligned.

Dave Monahan: Then what we see is after about 12 months, the practice start offering it to new patients and basically attracting new patient into their practice by advertising it on Google Ads or wherever, it can be local communities, things like that, events. Then the third wave is going to be the employer. Just to get back to timeline, we’re seeing practices already offered from employers, we actually had one practice that signed 4,000 employee university not far from their practice. And all the employees go to the practice under the membership plan.

Bill Neumann: That’s great.

Dave Monahan: It’s amazing. So, they’re offering it in pieces now, but to really make it into the employer space, what we’re going to do, our plans are is to do ads and promotions into the employer space so they start to understand it. It’s not one off anymore. It’s more of a mass movement. So think 12 to 18 months out.

Bill Neumann: That makes a lot of sense. That’s exciting. I think that’s a compelling reason for emerging groups and DSOs to get involved from the employer aspect of things, so they can actually go out and reach out to the employers as well. And they have the manpower, the people, the scale to actually service these large employers where they don’t have one location, they have 50 or a hundred or 20, and they surround where that employer is, they make it convenient for them. So that’s very exciting from an emerging group or DSO’s standpoint.

Dave Monahan: Absolutely. The groups or the DSOs are in perfect position for the employer market. Employer wants some scale around the practices that are going to be offered inside the membership plan.

Bill Neumann: Right. Makes total sense. Great opportunity. Okay. I have a couple more questions for you. Let’s talk about something that I’ve heard you mention a time or two before, so you talk about this reimbursement crisis. Can you elaborate a little bit about what that is and then how Kleer can help with that issue?

Dave Monahan: Absolutely. Here’s the reimbursement crisis, I know practices and groups see this every day but they probably don’t understand the scale of it. So, basically what’s happened over the last 10 or 15 years, a few things, one is the dental market itself has grown about 70% basically over the last 10 years and 15 years. But the dentist themselves, general dentists actually, their earnings remain flat during the same period of time. So, obviously a huge issue. Right? How can a market grow 70% and earnings remain flat?

Dave Monahan: When we dig into it a little deeper, what you see is the reason for that is reimbursement has dropped over that same period of time. 99% of dentists in the US are getting reimbursed less now than they did 10 years ago. I mean, you think about it. It’s again crazy. What cost in the dental practice has gone down in that 10-year period?

Bill Neumann: None.

Dave Monahan: Nothing, right? Except what they’re getting paid. Then there’s one other piece of data which is the more, within any state, the more the dentist participate in PPOs, the lower their reimbursement rates. Think about that. PPOs, they’re sort of controlling the reimbursements. There’s a reimbursement crisis, it’s not getting any better, all the forecasts show it’s only going to go down from here on out.

Dave Monahan: So, what a membership plan does is it enables the practice to offer their own care plan directly to the patients and control reimbursement. You’re controlling the fee schedule, you’re controlling the subscription you’re going to charge, you’re controlling the treatment protocol. You control all of it. You’re not at the mercy of a third-party, so it basically instantaneously changes that whole dynamic.

Bill Neumann: That’s great. I think that obviously right into the offering of membership plans. You’ve got this reimbursement crisis, and you have stagnant, you know, dentists, I forget what the number was, but ADA had it whereas 2008, it was, let’s say, the average dentist made $170,000 or $180,000.

Dave Monahan: 180, yeah.

Bill Neumann: Looked at 2017 or 2018, can’t remember which year, and it was exactly the same. So you’re right, I mean, to go through 10 years, you have this growth in the market from a patient standpoint, but yet, the dentist are making exactly the same.

Bill Neumann: Okay, so membership plans seem to fit right in with all the … Maybe this is the reason they exist because of this reimbursement crisis. Let me ask you this, though. Some of the emerging groups and DSOs have their own in-house plans, and they may be underperforming. What would you say to a DSOs that maybe are like, “Hey, I already have an in-house plan and it’s really not doing so well for me”?

Dave Monahan: It’s funny. One of the issues we typically have or one of the things we got to get through in the beginning when we talk to groups and DSOs is how is it performing? They actually a lot of times don’t know whether they’re performing well, good, different, poorly, whatever. So first thing is we like to benchmark how they’re doing.

Dave Monahan: Here’s a quick stacks stat for you. They should have 100 members in their membership plan within, for every dentist in the group, within 12 months of launching it. That sort of a metric. So if you do that and multiply that out, that’s how you practice should be and your group should be performing. So first thing we do is we try to understand performance and then are they doing what they should be doing?

Dave Monahan: But then why go to a platform instead of doing it yourself? What we’ve seen is the groups we’ve worked with, it’s very costly to do it on your own. And you typically have a lot of administrative work going on in the background that might be hidden because people are just sort of doing it as part of their job, but somebody’s spending a lot of time on it. Then what you see over time is renewal rates are very important to membership plans. So the plans go for 12 months, and you need to renew those members every year. Over a long period of time, you’re going to see a return on the plan. So, we see renewal rates in 25%, 50% range because it’s being done manually, somebody has to call the patient or the patient has to come in, got to recollect the credit card or cash, and it just becomes a lot of work and it’s not very efficient work.

Dave Monahan: So under a Kleer program the members auto renew every year, and our renewal rates are 80-percent-plus and you can easily get to 90-percent-plus. If you just do that calculation, it’s well worth the cost of the platform itself just that piece alone. Then there’s a bunch of other things around like support and compliance. We have scale, we have a lot of practices and a lot of patients on our platform so we can afford to do those things at a very detailed level. So you just get the advantages of a platform that scales across lots and lots of practice groups.

Bill Neumann: Right. It’s certainly compelling enough reason to talk to you all and find out a little bit more especially if you may have somebody, you’ve got a membership plan, it’s not maybe working as well as you think or, like you said, they may not even really know. May not have any idea.

Bill Neumann: We went through quite a few things. As far as DSOs, are there any other things they need to look at? Let’s say they don’t have a membership plan. What would be a reason to even, besides the fact that they have a lot of uninsured patients and the uninsured patients are probably, and you have the cost issue. Are there any other reasons that maybe a DSO or an emerging group in particular would want to investigate more?

Dave Monahan: There’s a few sort of core benefits we see with practices and groups on our platform. First is, and typically, the most important is patient loyalty, visits, treatment, acceptance. What we see when you offer membership plan is the patients will come in three to four times more than they used to, they’ll accept almost twice the amount of treatment when they’re in the chair. And the reason is this membership club effect, I bought in, I’m going to take advantage of that plan. And I feel comfortable. I now have coverage that I haven’t before. So I’m more comfortable, more trusting of the practice itself and the group itself.

Dave Monahan: As part of that, what ends up happening is you increase production. It’s a pretty straightforward formula between those two. Then the other one is the one we talked about is you’ll increase reimbursements. So you’re controlling the fee schedule, you’re controlling the subscription, you’re controlling the treatment protocol. Just as an outcome of all that, your reimbursement goes up.

Dave Monahan: Then lastly, and I know this isn’t necessarily top of mind in the very beginning, but it ends up increasing valuation over time of the practice and the group because you’re creating a subscription business and a recurring subscription business with a high renewal rate and an investor coming into buy something will value that. We see typically two to five times more than somebody who’s coming in randomly and it’s very unpredictable whether they’re going to spend money with your practice.

Bill Neumann: That’s certainly newsworthy for the emerging groups and the DSOs. That’s at least at the top level, the C-Suite level, that’s what it’s all about.

Bill Neumann: All right, so this is probably going to be, this is the last question, and it might be the most difficult question. Since we’re both Philly guys, Pat’s Steaks or Geno’s?

Dave Monahan: The classic battle. I love them both. I actually will eat both of them. But I have preference towards Pat’s. And it’s really just a simple reason which is I grew up with Pat’s and had Pat’s when I was a child and there’s a strong connection with the things you grow up with and your childhood connection thing. So, there’s something about it, it takes me back. So for me, it’s Pat’s.

Bill Neumann: There you go. Okay, well, for anybody visiting Philadelphia, they’re right across the street from each other, so whichever line’s shorter if you’ve never been to either one of them. But I personally like Geno’s-

Dave Monahan: [crosstalk 00:48:47]

Bill Neumann: … but that’s okay. Dave Monahan from Kleer, thanks a lot for first off sponsoring this podcast but also taking the time to explain your membership plan, the future of membership plans and how an emerging group or DSO can take full advantage of this great opportunity.

Dave Monahan: Thank you. It was a great participating.

Bill Neumann: Take care, Dave. Thanks.

Bill Neumann & Kim Larson with New & Events

Bill Neumann: And now we have Kim Larson that’s going to help us with the news events.

Kim Larson: Thanks, Bill. Those were two great interviews with Tom von Sydow of Cornerstone Dental Specialists and Dave Monahan from Kleer, our podcast sponsor. Thank you for those.

Bill Neumann: They were a lot of fun. Lot of great information. Both on the membership plan side and then also with the specialty DSO specializing in endodontics.

Kim Larson: That’s great. So let’s start pout the news with Dr. Dental. They’re in Massachusetts, and it’s actually, it was started by a brother-sister team, Dr. Julia Fagel and her brother Alex in 2004, and they service mostly lower-income and middle-income families. Their first year, they had three employees and about a thousand patients. And at their Christmas party, they sort of laughed, “Wouldn’t it great to bring this out to other communities in the area?” And that’s exactly what they did, and now they have 44 locations and 250 operatories.

Bill Neumann: It’s amazing. I was fortunate enough to meet several members of the team at the ADOS Summit during the marketing panel, they came over and introduced themselves to me and got some great people and sounds like they have big plans in store for the future, so we’ll continue to watch Dr. Dental and see what they have.

Kim Larson: Absolutely. It’s interesting, too, with this. Like I said, they service lower-income to middle-income families, and they have things like $25 specials, cleaning specials. And I sometimes hear people who are in the dental space but not in the DSO space, and they laugh and they say they cringe when they see signs like this. But I always argue, “Don’t these people deserve dental care? This is how they have to access it. How can you laugh and cringe? This is amazing opportunities for DSOs in order to help people like that and increase access to care”?

Bill Neumann: Totally agree. I mean, that’s one of the huge benefits to DSOs, they can operate in areas where the underserved are and where solo practitioners can’t afford to operate because of the margins.

Kim Larson: Right. They have this capital infusion and they’re going to expand. It’s going to be really interesting to watch where they take this, it’s great.

Bill Neumann: Totally agree. So, what else do we have?

Kim Larson: We have US Oral Surgery Management, as a matter of fact, we reported on that in 2018. Yeah, it’s pretty amazing, they started with three multi-surgeon practices in Texas and now fast forward to now and they’ve doubled in size, and they’ve created a governance board with seven oral surgeons on that governance board to help them in order to continue to grow.

Bill Neumann: So they also expanded into Denver. So they’re in Colorado right now as well, so, again, another specialty DSO. We had Tom from an endodontic DSO, Cornerstone, and now we have an oral surgery specialty DSO and there’s several others out there that are orthodontic specialty DSOs.

Kim Larson: And not a lot of people understand that a DSO can be a specialty DSO. They just assume, and sometimes people in the DSO industry assume that it’s only for general dentist or multispecialty. That is not true, we feature specialty DSOs on our website all the time.

Kim Larson: So let’s talk about an article by Dr. Mark Hodge wrote for us on-

Bill Neumann: Formerly of Heartland.

Kim Larson: Yeah, he was their Clear Aligner Clinical Director from 2011 to 2018, and he actually compared the DSO industry to the oil and gas industry and the fracking that happens there.

Kim Larson: He made some really interesting comparisons just as the dental support organization community was once treated as the fracker by organized dentistry, obviously, group dentistry resoundingly proved and demonstrated the positive impact the standardized system, centralized services and expert business acumen has on standard of care, access to care, and the business of dentistry. So the profession is now changed forever.

Kim Larson: Now, our supported offices of doctors that are on the other side of the equation. And the disruptor is now the disrupted.

Bill Neumann: You have Smile Direct, who’s certainly disrupting the clear aligner market, direct to consumer. And they have been growing rapidly, I believe they are in Canada now as well.

Kim Larson: That’s great.

Bill Neumann: So, yeah, Dr. Hodges makes some great points. It’s a great article, I think everybody needs to read it. I like the fracking comparison, then taking a look at DSOs and how they were, and to a lesser degree now are still kind of vilified or looked at as the outsiders. Now we have the direct-to-consumer model and of course organized dentistry is unhappy with that.

Kim Larson: That’s right. Smile Direct Club actually patterned their PCs and doctor agreements exactly the way that DSOs do, and they were actually refined by the AADGP and the ADSO.

Bill Neumann: Correct. What do we have next?

Kim Larson: The next article is on Henry the Dentist. We’ve seen and we’ve reported about the millennial generation, now they’ve in 2019 overtaken the Baby Boomers in terms of sheer numbers. We’ve also explored how Millennials are looking for certain things, obviously convenience is a huge component for them in their consumer purchasing habits.

Bill Neumann: On consumerism. Right?

Kim Larson:  We see a trend in the healthcare industry shifting towards convenience for people including on-site models, and now that, of course, is shifting into dental. We’ve reported about on-site dental as well as Lydian Dental, and now there’s this Henry the Dentist. And they just received $10 million Series A financing in order to expand their fleet of mobile dental practices which are actually, they look like buses. They are also going to be expanding into other states because currently they’re only in New Jersey.

Kim Larson: This is an interesting model. They are full-service dental practice, and you can see some pictures of their buses, their mobile units on our website.

Bill Neumann: They partner with the businesses, the businesses are happy because the employees don’t have to leave.

Kim Larson: Absolutely. As a matter of fact, 196 million hours are lost every year for people traveling to dental appointments. A lot of people don’t want to do that. And only 36% of Americans have not gone to the dentist this year because of that.

Bill Neumann: Right. Yeah, it’s one of the main reasons that they haven’t gone is because of the inconvenience. This is great. You bring the dentist to your place of business, the employers are happy, the patients are happy, people that wouldn’t necessarily go to the dentist are now going because of the convenience factor. So I think we’re going to see this mobile model continue to expand.

Kim Larson: Saving employees a lot of money. $1 spent on preventive care saves $5 to $50 in care down the line.

Bill Neumann: Incredible. So we’re going to stay focused on again these different mobile models and see. I’m sure they’re going to expand.

Kim Larson: Let’s talk about events next.

Bill Neumann: Yeah, sure. There’s no lack of events in the DSO space. We’re just coming off of the ADSO Summit that was held in San Diego, great event. We’re going to do a recap that you’ll be able to read about on Group Dentistry Now, so check that out for sure.

Kim Larson: They actually have their dates ready for next year, too, the summit.

Bill Neumann: So the 2020 dates. When are they?

Kim Larson: They’re on March 11th through 13th in Washington DC. I’m extremely excited, that’s where I went to college. So I’m very excited to go back to my old stomping grounds.

Bill Neumann: We’ll have more details on that later on as we get them from the ADOS. This month, Futuredontics had their DSO Leadership Summit in Santa Monica, and then in May, so it’s May 17th through the 18th, Henry Shine has their DSO Education Forum.

Kim Larson: That’s actually grown into one of the largest DSO events in the country. Last year they had 600 attendees from 140 emerging groups and DSOs.

Bill Neumann: Yes, they had emerging groups, not only in the US but in Canada. And so they have three unique tracks?

Kim Larson: They sure do. There’s an emerging, a national DSO track, there’s the hygiene track, and new for 2019 is the leadership track.

Bill Neumann: So, we’re excited to go an attend that event and see how many people they have there, how many groups this year.

Bill Neumann: Then of course there is the Dentist Entrepreneur Organization, the DEO is having their summer summit, the future of group dentistry. And where is that, Kim?

Kim Larson: That’s in Phoenix, Arizona. Bring your golf clubs.

Bill Neumann: Yes, it’s at the JW Marriott, couple of great golf courses right there at the JW. And there’s plenty of gold course surrounding it for sure. That is going to be June 27th through the 29th.

Kim Larson: Yep. We have Dykema DSO conference in July.

Bill Neumann: That will be in Dallas again. July 10th through the 12th at the Omni in downtown Dallas. So, looking forward to that event as well. Then we have Mortenson Dental’s Scaling Up Group Dental Symposium, that is in August this year.

Kim Larson: Big date change.

Bill Neumann: Big date change. The 21st through the 23rd and that will also be … Where will that be?

Kim Larson: That’s in, let’s see. That’s in Louisville, Kentucky.

Bill Neumann: Also at an Omni. So it’ll be in downtown Louisville.

Kim Larson: They just had their meeting in November. Isn’t that right?

Bill Neumann: They did. So they moved it, so make sure you have this. This is earlier in the year and weather should be great in Louisville, Kentucky in August.

Kim Larson: That’s right.

Bill Neumann: Then of course there is the Dental Forum Meeting, which I always like. It’s a speed-dating, these DSOs sit across the table from industry partners, and they get 15 minutes to talk to each other, talk about what the products and services industry partner offers and then the DSO can see if there is an opportunity.

Kim Larson: That’s an incredibly efficient meeting.

Bill Neumann: Sure is. Yeah, one of the best.

Kim Larson: You’ll be speaking there.

Bill Neumann: I will.

Kim Larson: Again.

Bill Neumann: Yes. And very efficiently, only 10 minutes.

Kim Larson: That’s great. Get your information and move onto the next person.

Bill Neumann: Right. That will be in Nashville, and that is in September.

Kim Larson:  And then we have the ADSO Partnering For Growth.

Bill Neumann: This is for emerging groups, the dental group practices to learn from the established DSOs.

Kim Larson: It’s a great place to go.

Bill Neumann: Where is this going to be?

Kim Larson: This is in Orlando, sunny Orlando, Florida, September 25th through 27th. So if you’re a solo practitioner, a small group or an emerging group looking to understand how to do this, this is where you want to go and really learn from the experts. Yeah, it’s a great event.

Bill Neumann: Totally agree. And that will be at another Omni Resort at Champions Gate in Orlando.

Kim Larson: We’ll have to get Omni reward points.

Bill Neumann: Yes, absolutely, we should sign up for the Omni rewards.

Kim Larson: Hey, if you what we do here at Group Dentistry Now and you do your due diligence and research through us, please support our sponsors because without them we can’t do what we do.

Bill Neumann: Thank you.

Kim Larson: I’m going to through the list here. We’ve got Careington Patient Loyalty, Sterngold, Biolase, Implant Direct, Planet DDFs, Henry Shine, Citibank, Scaling Up Group Dental, Zyris, MouthWatch, and Kleer, who’s also our podcast sponsor, so thank you all.

Bill Neumann: Thank you all.

Kim Larson: We’ve got some really incredibly exciting things coming up this month, so stay tuned.

Bill Neumann: We’ll see you all next month. Thank you.