Financial Tips From A Dental CFO

Chris Pistorius (00:04):

Hey everybody. This is Chris Pistorius again with the Dental and Orthodontic Marketing podcast. Today we have got a super awesome guest. We have Mr. Brandon Rogers from the Verber Dental Group out in Pennsylvania. He is the chief financial officer there and we’ve interviewed several DSO presidents and CEOs, but never a CFO. So Brandon, welcome to the show.

Brandon Rogers (00:34):

Thanks so much for having me. I appreciate the opportunity.

Chris Pistorius (00:37):

Absolutely. So I just said that we typically will interview CEOs, marketing guys, but never a financial guy and maybe possibly you’re the most important part of that whole core, right?

Brandon Rogers (00:52):

Well I saw you at important. It’s like the members of the body. I mean, everybody’s got a different function, but specifically around watching COVID happen and certainly people got a little bit tighter and a little bit scared. I think-

Chris Pistorius (01:07):

Yeah.

Brandon Rogers (01:07):

I think we saw finance jump out and people with a decent macroeconomic understanding of the world were able to capitalize and I feel very fortunate that we were in that group.

Chris Pistorius (01:18):

Yeah. Absolutely. And off air we were talking a little bit about the landscape of now we’re coming out of COVID hopefully, knock on wood and people’s behaviors and how we’re starting to see some rebounding. Why don’t you, first of all, I guess, let me back up. Tell me a little bit about Verber and what your goals are and just a little bit about the organization.

Brandon Rogers (01:39):

Sure. So Verber Dental Group’s been around for a while. We started as a single prop as most dentists typically do, but then we’ve got a great visionary CEO, Dr. Michael Verber. He’s brilliant, he’s got a great visionary mind, and that really kind of set us all in motion. So I’m the newest of the executives and partners of the 13 partners we have and over 150 employees, but they got moving, they started to grow and said, “Hey. In 10 years wouldn’t it be great to have five locations?” And that happened within, I think, three. So growth is one thing, but what makes Verber such an amazing brand and product really is the way that we connect with our community. So we do a lot of community outreach.

Brandon Rogers (02:32):

We’re very big on giving back. We talk about the holistic approach to dentistry and how that impacts the people. So people understand when they come in, there’s a concierge service model that we provide, but we don’t over diagnose, we don’t under diagnose, we give you what we know is important for you to know and then we talk about it. It’s a very conversational interaction and I think that just goes to speak to our wonderful staff of clinicians and everyone from our TCS, our front desk to the admin team. Everybody works to make this work well and again, we’re in a space now where we feel like we just want to continue to increase our influence and be able to do that for more.

Chris Pistorius (03:17):

Yeah. I think those are awesome points and we talked a little bit also about how DSOs typically kind of have this negative tone to them when you talk about them in the industry. And I’ve spoken with several leaders in the industry and could you talk a little bit about that, about why maybe there’s a little bit of that negative attitude towards DSOs in the industry and how you guys are trying to change that?

Brandon Rogers (03:46):

Sure. By definition a DSO is a Dental Support Organization. The concept is about shared services and I’ve worked in different environments where they do have that. Sort of like a hub and spoke FedEx model. The difference though is that most DSOs they centralize what they think is the core and then they take the opportunity for the producers, the dentists, and they create the spokes and then they have all these accesses. What makes us different, I would first remove the DSO acronym and put a DHS acronym.

Brandon Rogers (04:19):

So that allows us to talk about what a dental health system is. And dental health system for Verber Dental group is more about having the holistic approach much like what the Mayo Clinic might do. So we have all of the specialties right now with the exception of orthodontics so that when we have someone internal that has a big case and there’s everything from the K to a crown to a root canal and veneers and everything, surgery, we have them end to end covered because it’s important for us to understand that they’re not a product, we’re not referring out.

Brandon Rogers (04:53):

This isn’t a dollar sign to us. This is a person looking for holistic care and we want to be able to provide that. So the DSO gets a little bit of a bad rap and some people use the definition by proxy of growth and numbers when in reality what we are creating is anything, but that. We’re creating something of a closed system so that we can protect the product more sufficiently.

Chris Pistorius (05:18):

Yeah. So I think that’s an interesting analogy when you mention the Mayo Clinic and it just kind of hit me. So if somebody has a complex case, we’ll say in one location, you guys have the ability to bring the entire team together, specialists and whoever, and talk about a particular case to help that patient. Am I on the right track there?

Brandon Rogers (05:38):

You’re 100% spot on. Yeah. I mean, the connectivity of the managing partners, the other associates, the doctors, we’re extremely communicative. And I think as everyone scales, as you grow, you want to keep that communication strong. But for sure, having a big workup with a lot of different moving parts requires collaboration, requires good conversation, and friction. We’re not afraid to disagree with one another. We’re not afraid to push one way or the other. And that, to be honest, is what makes a familial organization like ours so successful and poised for such good growth because we’re not afraid to fight a little bit to make sure that we’re doing what’s best for the patient.

Chris Pistorius (06:19):

That’s awesome. And I think that you hit it right on the head. People think DSOs, they think companies that come in and take over a community, offer $19 cleaning and x-ray and churn and burn, right?

Brandon Rogers (06:32):

That’s right.

Chris Pistorius (06:33):

And this is really the first time that I’ve heard somebody explain it as it doesn’t have to be that way. It can be a holistic, very personalized care, and, “Oh, by the way, you’re not just getting one doctor or two doctors.” You’re getting a team of specialists all around the area that can help at any given time that they’re needed.

Brandon Rogers (06:50):

Exactly.

Chris Pistorius (06:51):

I think that’s really cool. So tell me a little bit as a CFO, obviously the financial guy, you got to make sure that you’re growing responsibly, I think is probably the best way to put that. What are you seeing now that we’re coming out of COVID? Are you seeing a rebound? Are you seeing your organizations starting to rebound a little bit?

Brandon Rogers (07:10):

Absolutely. Not just a rebound. Fiscally I can see that happen. What happened with COVID was an interesting, it’s going to be talked about for years and I’m an economics interest. I wouldn’t say aficionado. No one’s that good, but I love them. And so I think studying macro micro trends in any industry, but specific to dental, it was an opportunity for us to look at something like this pandemic and try to figure out, “All right. What are our lessons learned?” And there is a remarkable rebound, but people are rebounding for different reasons. Before it was a mentality of, “We need to do this to maintain.” We’ve changed the narrative here a good bit. It’s not about maintenance, it’s about prevention, it’s about understanding the whole. We recognize that a lot of COVID patients there was preventative opportunities from the source of the mouth.

Brandon Rogers (08:08):

So we have dentists being able to get in there and do some preventative measures or even identified some opportunities. So the rebound is coming in what I think is illustrating more of what dentistry is as a whole unit. It’s not just microcosm of health. It is truly the gateway to the whole body, through the mouth and we do a lot with it. I mean, we’ve got doctors here that are advancing sleep studies as it relates to your oral care and it’s pretty remarkable. So I would say we took this time to stop, pause, spend a year making sure that financially we were solvent and we were positioned to grow, but more than that, I think we re-evaluated what’s important to our organization and how we get there.

Chris Pistorius (08:52):

Yeah. That’s good to hear and that’s why I really was excited about having you on the show is the financial side of things because I think when dentists come out of school, they know a lot about dentistry, but sometimes we find that they don’t always know everything about business. Certainly marketing from my perspective and how to run a business and how to understand the economics of a business. And I think it’s important, not every dentist is going to be able to bring in a CFO certainly, but it’s great to get a perspective on where the market is now kind of post-COVID and where you think it’s headed. And so I want to get into that. What do you think the next 12 months to 24 months looks like in dentistry?

Brandon Rogers (09:36):

Sure. No. It’s an interesting juxtaposition right now. COVID being one part of that variable, but the other part of it’s just happenstance on timing. You’ve got a whole generation of single providers that are just aging out. They’re ready to retire and COVID maybe was an accelerant, but it was inevitable nonetheless. And then you’ve got people that are just remarkably interested. This is why you see DSOs such a recurring theme because they want to gobble up and make sure they’re giving these sole props this great premium. What we’re trying to do is a little bit different. We see that the market’s consolidating, but we understand that the consumer’s still looking for quality of care and they’re still looking for trust. I mean, that’s a big thing when you’re handling anything that has to do with your body, but specifically the form and what can be seen.

Brandon Rogers (10:29):

So we see the opportunity as consolidation, not slowly, but I think strategically and consolidation in a way that allows other people to recognize that we’re not looking to grow for profit over patient. In fact, it’s always patient first, profit is always a secondary variable. It’s always secondary. If you’re doing the former first, the latter, is handles itself.

Chris Pistorius (10:54):

Right.

Brandon Rogers (10:55):

The market at the end of the day is moving to a place where if we can marry those two things well, we’ll actually have providers preferring to sell to us because you preserve their brand, which is what we do. It’s a big thing here at Verber. We’ve got all of our locations have their own brand. They have their own unique style and look, even when you walk into one and every doctor their own and we encourage them to stay that way. We don’t want them to be different. I mean, we don’t want them to stay the same, we want them to be different.

Chris Pistorius (11:23):

Right.

Brandon Rogers (11:24):

As an admin and me and my role, my job is to support that. My job is to make sure that they have the tools fiscally, the tools operationally to do their job well and to maintain that brand identity. And I think that’s what is going to allow us to flourish.

Chris Pistorius (11:41):

Yeah. I think that’s a great strategy. I’m going to put you on the spot a little bit here and I know this isn’t your deal, but it sort of is. So you’re the CFO of a large DSO. Talk to me about if you had an individual practice, right, and you’ve been in business for a few years, what are some tips that you can give somebody that’s looking at their financials? What should they be looking at? What kind of strategies would you suggest to a smaller network?

Brandon Rogers (12:08):

Sure. Yeah. So it’s all about the balance sheet really. The balance sheets a funny thing. People get scared when you talk about financial statements. They think about income statements and it’s all about debt coverage ratios, debt to equity ratios, those things matter, but really you can simplify it. It doesn’t have to be that difficult. It’s much like the way that you were raised and this is kind of how I approach finance in general. what is your income? Understanding taxation and those kinds of things. What’s your income and what are your expenses? How do you deploy the excess when there is excess and how do you create a safety net?

Brandon Rogers (12:44):

So for those that are single prop that may not have the acumen that they would want to pay for it otherwise I would say look at the way that you’re growing or look at the way that you’re maintaining what you have. Treat it the same way you do your personal budget, your grocery list. Prices go up and your personal rate of income doesn’t move in tandem with that. So what do you do? Well, you make concessions here. I do a lot of personal negotiations with a lot of the vendors to make sure that they’re keeping up with what we’re keeping up. So negotiations important and it’s not about beating up people for price. It’s about making sure that everybody’s winning. Going back to that concept I was talking about earlier. Nash equilibrium is a very real thing and you can create it when you’re talking honestly and openly.

Brandon Rogers (13:32):

So for those that are wanting to get a better sense of their finances, take a look at the relationships you have, keep them honest and make sure they’re keeping you honest, and then make sure that when you are deploying capital that you’re doing it in a way that’s from a fiduciary perspective, enabling the whole and not just yourself. When you take care of the people that are taking care of you, your hygienists and assistants and your front desk, make sure that they’re taking that because they work harder, they work better, you grow. It’s a nice cycle.

Chris Pistorius (14:01):

Yeah. That’s great advice. If you’re a dentist that’s looking to age out or retire, maybe they’re looking at a couple of different DSO options, what should a dentist have in place and ready to go so that they can make a sound financial decision about selling their practice?

Brandon Rogers (14:19):

Sure. It’s a great one. So I’d say always have your collections ready to go. 2020 was this big black hole that nobody really understands, but you can study trends and understand where things are going. And then you make adjustments to your point about the rebound in ’21 post-COVID, what that rebound looks like and then you apply a certain multiplier or a premium to help understand where the trend dipped in 2020. However, I would say that they come to the table with their collections, their patient base, more importantly than that their loss ratio on retention from their patient base. Those are very good indicators. For me, I’m looking for guys and girls, females and males in this industry, they have high retention, they’ve got a solid patient base.

Brandon Rogers (15:08):

Long-term because we don’t want to come in and take over, want to come in and empower. Keep doing your job well. If you want an associate we can provide an associate, but those people are there because you’re there. So if they’re looking to sell, we’re also saying, “We’re willing to pay a premium if you stay on for 12 or 24 months,” because that way it’s the best win for everyone. We learn your patients-

Chris Pistorius (15:31):

Yeah.

Brandon Rogers (15:31):

They kind of adjust to you and to us. And then they understand that this isn’t a transaction. This is a transition much like the Baton in an Olympic race. We’re not done our piece. It’s still required that all the other legs are keeping up their end and that’s very much part of it. So it’s a relational dance when we talk about acquisition or purchasing because on both sides they’ve got to be transparent, they’ve got to be okay to talk the numbers, and then they’ve got to understand that for all of us, the money means nothing. When you’re talking about the products you’re buying the goodwill and you’re buying the brand equity of the organization.

Chris Pistorius (16:10):

Yeah. That’s great. That’s great. Let me ask you a little bit about your organization. You have eight locations now, is that right?

Brandon Rogers (16:17):

Correct. Yeah.

Chris Pistorius (16:18):

All in Pennsylvania?

Brandon Rogers (16:18):

All in Pennsylvania.

Chris Pistorius (16:21):

Tell us what are your growth plans for the next year or two? Where do you plan on being?

Brandon Rogers (16:24):

So there’s opportunities all over. We want to keep the footprint, I think, within a certain radial mileage. That’s a partner conversation we’re still discussing, but I don’t think anything’s off the table as far as geography. I think what kind of drives those decisions, expansion is going to happen, growth is going to happen, is where we can have product control. QA QC. We want to be able to shore quality and we want to be able to control the quality. The whole is only as good as the sum of its parts and we got to make sure all of those parts are moving in tandem synchronously and they’re also moving in a way that allows refinement and some friction, I mentioned that earlier.

Brandon Rogers (17:13):

You’ve got to be okay being able to look at a different way. And so for us, our growth is also internal. What are we doing differently? What could we be changing? And at the end of the day, what needs to be done? Everybody’s got a different playbook in all those locations, who’s got the best play on this one? And we take our cues from them.

Chris Pistorius (17:35):

Yeah. That’s awesome. It’s so exciting to start talking about growth again, isn’t it?

Brandon Rogers (17:40):

It is. One is I’ll tell you, this world, we can do a lot for the consumer in a post-COVID world, not just about the dentistry. It’s also helping them work through some of the anxiety about what just happened. A lot of people are still reeling, not unlike what happened in the crash of 2008. What happened in 2001. You can keep going down, but everything has one common denominator and that’s that people, they get scared and they have three responses. They flight, they freezer, or they fight. And Verber Dental Group that were fighters. We push through because we don’t know another way and we want to continue to stay loyal to our organization and our people.

Chris Pistorius (18:26):

Wow. Well Brandon, I got to thank you for being on. You’ve given myself and I’m sure everybody that’s going to watch this a very fresh perspective on the whole DSO landscape and how you are doing things a little bit differently. So thank you so much for your time today. I really appreciate it.

Brandon Rogers (18:45):

I appreciate your time Chris, and thanks for having me on.

Chris Pistorius (18:47):

Great. And thanks to everybody for listening to this episode. Make sure you tune in next week for another great guest. Thanks again.