Thinking of Selling Your Dental Practice? Here Are Some Things To Consider!

Thinking of Selling Your Dental Practice? Here Are Some Things To Consider!

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Chris Pistorius:                  00:05                     Hi everybody. This is Chris Pistorius again with Kickstart Dental Marketing. Today I’ve got a really special guest. We have the CEO of Lone Peak Dental Group with us. His name is Ray Caruso. Ray, I hope I pronounced that right. Is that correct?

Ray Caruso:                        00:21                     Yeah, absolutely. Thank you.

Chris Pistorius:                  00:23                     Okay. Awesome. Well, thanks so much for being with us. I appreciate it.

Ray Caruso:                        00:27                     Yeah. Thanks for having me. I appreciate it.

Chris Pistorius:                  00:29                     Yeah. So like I said, Ray is the CEO of Lone Peak Dental Group. They have 60 plus practices kind of in their umbrella. They cover 15 states all over the United States. They do most, I think, almost all pediatric and orthodontic practices. They do both new builds from scratch as well as acquisitions, of course. And I think probably you’re the expert on this Ray so I’ll let you maybe tell us a little bit more about the business and what got you involved.

Ray Caruso:                        00:59                     Yeah. So I’ve been in dentistry since I was 19. I actually started out as a dental assistant way back in the day and I’ve just stayed with dentistry my whole life. So I’ve loved it. Been a great part of it. I worked with a very large DSO as a youngster and got to watch them grow. Stayed with them for 11 years. Worked my way up into director role and then moved on to another dental service organization up in Chicago. Worked with them for another four or five years in a chief operating officer role and was recruited to come over here. The interesting thing about this group is all of our offices are owned in some capacity by the practicing doctor. And that’s where we look at it as our secret sauce and the two DSOs I was in before, while they had amazing, great things for their doctors and their team members, one thing they did not provide was ownership at that actual office level.

So they got to-

Chris Pistorius:                  00:59                     Right.

Ray Caruso:                        02:06                     See the fruits of their hard labor. It wasn’t just at a HoldCo level or some kind of stock option or whatever. This was actual true ownership. And it’s really been a blessing because those doctors really, really care about it. It’s great for the team members, it’s great for the patients, great for the community. And it’s very similar to a locally owned mom and pop, if you will, practice. And for me, what that does is it brings in these local owners and their associates and it allows us to still provide best practices and good human resources and marketing and things like that so that they can be even more successful than maybe their counterparts that are trying to do it all on their own.

Chris Pistorius:                  02:55                     Great. Yeah. I know that can be very appealing for some dentists out there that kind of got one foot out the door of retirement, but they don’t really want to retire, but at the same time there’s a lot of stress that comes from owning a dental practice and just doing the day to day operations. And I know that we have several clients that have mentioned before that, “I love being a dentist, but I don’t necessarily having employees and running businesses and things like that.” So it-

Ray Caruso:                        03:23                     Yeah.

Chris Pistorius:                  03:24                     Definitely can be very appealing, right?

Ray Caruso:                        03:26                     Yeah. And even for our associate doctors because we do build two, three brand new dental offices where it makes sense for those communities. And we take our known docs. And if we’ve got a doctor that’s been working with us for two or three years and they’re phenomenal and they’re like, “Hey. How can I be an owner?” We start looking. And if it all lines up and matches up, every single new office has always had a current doctor become the owner of that practice.

Chris Pistorius:                  04:06                     Oh, that’s very cool. So you provide some opportunity on the other side of the spectrum where people are getting ready to buy a practice or should they spend millions to do it themselves. So that’s great.

Ray Caruso:                        04:17                     [inaudible 00:04:17] because-

Chris Pistorius:                  04:17                     Yeah.

Ray Caruso:                        04:19                     I wouldn’t have gone into so many of these communities and it’s a doctor who says, “This is where I want to get back to that area.” And so we’re like, “All right. Let’s do that.” And we’ll build out a pod in that area along with them. Yeah.

Chris Pistorius:                  04:29                     Yeah. That’s awesome. Okay. So when you look too, on the acquisition side of things, did you kind of have an ideal situation, like a particular type of market. I know you all pediatric and ortho, but when you go to acquire mode, what’s the best way to put it? Kind of [crosstalk 00:04:56] practice. Yeah. Yeah.

Ray Caruso:                        05:00                     [crosstalk 00:05:00] We have four main gates that we look at and really-

Chris Pistorius:                  05:04                     Okay.

Ray Caruso:                        05:05                     We won’t even cross into that yard unless we can get through these four gates. And the first one is we have to have that doctor. If we’re going to acquire that practice, they have to maintain some level of ownership. Whether it’s-

Chris Pistorius:                  05:05                     Okay.

Ray Caruso:                        05:18                     20%, 30%, even 40%. Some doctors don’t want to sell the whole thing, they want to hold on to a big piece of it. Our goal is though to have an owner doctor because that’s how we’re designed, that’s how we train, that’s how we work, and all of our training and all of our design is around how to support an owner, not how to tell an associate what to do. And so that’s-

Chris Pistorius:                  05:18                     Yeah.

Ray Caruso:                        05:46                     Number one, we have to have that. And then number two is a pediatric. It has to be a pediatric practice. We know what our lane is and we stay in it. If it has ortho, great. If it doesn’t have ortho, we’ll look to see, is this something that we can add, but that’s not a priority. It would be something down the road if it made sense. The third thing that we’d want is it in the geography that we’re currently in? Will we be able to support it with the people that we have? And then the fourth is, well there’s a fourth. I just can’t remember what it is off the top of my head. You put me on the spot.

Chris Pistorius:                  06:24                     No problem at all.

Ray Caruso:                        06:27                     Yeah. Oh, it’s [crosstalk 00:06:29] it’s the number of chairs cause pediatrics-

Chris Pistorius:                  06:33                     Ah.

Ray Caruso:                        06:33                     Based business. And if it’s a three chair practice in a four story of a professional building, it’s not going to work for us. We need to make sure that we’ve got the ability to treat a lot of kids because that’s really what we’re all about.

Chris Pistorius:                  06:51                     Right. Okay. Gotcha. I think it’s good to kind of stay in your lane, know-

Ray Caruso:                        06:51                     Mm-hmm (affirmative).

Chris Pistorius:                  06:55                     Know what you’re good at, maybe what you don’t know, and go there. I know with our business kickstart, kind of when we first started, we kind of said, “Hey. Anybody that can pay, come on in.” And then we realized very quickly that not everybody’s a great fit for us and that’s okay because we’re experts with specific types of marketing in dental and it’s just we learned pretty quickly that it’s good to find the right fit on both sides. So that makes sense.

Ray Caruso:                        07:25                     It’s very, very true. Very true.

Chris Pistorius:                  07:26                     Yeah. So of the practices, now they’re all individually branded, right? They’re not branded with your name.

Ray Caruso:                        07:33                     That’s correct. Yep.

Chris Pistorius:                  07:34                     Okay.

Ray Caruso:                        07:37                     Two or three of them might have the same name in the same town or the same community, but for the most part-

Chris Pistorius:                  07:42                     Okay.

Ray Caruso:                        07:42                     They’re all separate.

Chris Pistorius:                  07:44                     Okay. And then when you set these up, I’m assuming, I don’t know maybe you’ve read the book E-Myth Revisited. I don’t know if you’ve ever read that, but-

Ray Caruso:                        07:52                     I have not.

Chris Pistorius:                  07:53                     Okay. It’s a great book. And it talks a lot about like setting up your, and not just about dental practices, but business in general, it talks about kind of setting up your business as if it were a McDonald’s. So not that you’re ever going to do that, but just to set it up so you have like processes, procedures, just all documented and that anybody that you hire can kind of come in and they get this workbook, if you will and it details every part of their job that they need to do.

Ray Caruso:                        08:21                     Mm-hmm (affirmative).

Chris Pistorius:                  08:22                     And I can imagine that when you acquire a practice or even start from scratch, you probably have something like this that you know has worked in the past in successful practices and you probably, I don’t want to say cookie cutter, but you applied some of those winning strategies. Is that a fair way to look at it?

Ray Caruso:                        08:40                     Yeah. That’s a great way to look at it. We’ve got what we call processes or systems or whatever you want to call them, but-

Chris Pistorius:                  08:48                     Right.

Ray Caruso:                        08:48                     Processes for certain things. We also have policies and then we have guidelines because not everything is going to work in every community.

Chris Pistorius:                  08:57                     Yeah.

Ray Caruso:                        08:57                     A really small town in upstate Washington is going to run differently than an office in San Antonio.

Chris Pistorius:                  09:05                     Right.

Ray Caruso:                        09:05                     So there are some areas where it’s a guideline. This makes sense. But what we’ve put together is really a full service model that will encapsulate pretty much everything no matter where you go and we call it kid-sperience because we’re a pediatric practice and we’re looking at how can we improve the experience. I got with my team and we came up with this service model that will allow all of our practices to have one way to do many things, whether it’s how we answer the phone, how we confirm patients. This has nothing to do with scheduling.

It’s all about how the customer service interaction with the team and the parents or the team and the patient. And all the way through to rescheduling their next visit and bringing them back in for re-care and things like that. So that is our best practices strategy, if you want to call it that, and it doesn’t matter if you’re in upstate Washington or if you’re in San Antonio. It works, everywhere.

Chris Pistorius:                  10:17                     Yeah.

Ray Caruso:                        10:18                     So that’s our like model, handbook for everybody. We’re still in the process of rolling it out. It has been adopted in many of our practices, but not everywhere. And in everything that we acquire, it’s a prerequisite. This is something that we speak to our doctors in advance of saying, “Hey. Here’s how we’re going to work together and this is what we believe and this is how we anticipate we will be training all of our offices. How do you feel about this?” So far no one’s ever looked at it and go, “Oh my God. This is ridiculous.” They’re all like-

Chris Pistorius:                  11:00                     Right.

Ray Caruso:                        11:01                     Amazing.

Chris Pistorius:                  11:02                     Yeah. Yeah. I know exactly what you mean. Part of what we do is we can help on the front desk training side of things. So our job for our clients is to generate new patient leads essentially.

Ray Caruso:                        11:17                     Mm-hmm (affirmative).

Chris Pistorius:                  11:17                     And the unfortunate part of it is sometimes we can generate those leads, but if we don’t have really a solid front desk staff with good training-

Ray Caruso:                        11:27                     Yep.

Chris Pistorius:                  11:27                     Sometimes those leads can kind of not close, if you will. So-

Ray Caruso:                        11:31                     Yeah.

Chris Pistorius:                  11:32                     About a year ago, we generated kind of an online training platform just to help people and front desk staff understand they’re not all referrals. Some people are just going to find you on the internet, not know anything about you or why you’re great, and you’ve got to know how to sell yourself a little bit to those folks and make them understand why you’re a special practice. So-

Ray Caruso:                        11:54                     Yep.

Chris Pistorius:                  11:54                     I think just having that kind of stuff in place can help a ton and I can tell you most dentists don’t have stuff like that in place. So it totally makes sense when you say that where they’re like, “Oh, wow. This is great,” because they probably always wanted something like that, but they just not had the resources or time to do it.

Ray Caruso:                        12:10                     Mm-hmm (affirmative).

Chris Pistorius:                  12:13                     Okay, great. What would you say to a dental practice owner that maybe is considering selling or maybe partnering up with an organization like yours? What is some advice that you would give them on evaluating offers and kind of getting into this process?

Ray Caruso:                        12:31                     Yeah. Well, I think that it’s good for anybody who’s thinking about doing a sell to talk to people who have sold, whether it’s to a larger group or to a smaller group or even to another partner because you want to hear what’s the truth and you want to know, “Well, how did it go a year from now? How did it go two years from now?” And when you are, let’s say, somebody out there wants to talk to me. Don’t just talk to me. Talk to the doctors that are in my company that have sold their practices to me or to our company. I shouldn’t say is to me. I’m not [inaudible 00:13:17] And talk to some of these doctors who we’ve built new practices for and see how’s their experience been.

Because that’s an important piece. A lot of times people are talking about EBITDA and valuations and how much money can I get and if that’s it, great. Good for you. Make as much money as you can. Right now the industry’s hot and brokers will tell you anything you want to hear. But the reality is, is you want to hear from people that you trust, not to say a broker you can’t trust, you can trust them, but they’re-

Chris Pistorius:                  12:31                     Sure.

Ray Caruso:                        13:49                     Also making money off of the money in which you sell the practice for. So they’re going to want to tell you why it’s worth so much and they may want to push you towards somebody who’s going to be willing to pay that much. And it’s, hopefully I don’t get blacklisted from all the brokers, but just because you’re willing to pay that much doesn’t necessarily mean you’re the right fit. So look at who’s the right fit for your organization. If I’m out there buying general practices, I may not be the right fit for you because we do all of our marketing and all of our training and everything is geared around pediatrics and ortho.

So are you going to get the right fit there? Find out about the organization. Yelp them. Look them up and see what Glassdoor says. Find out what their employees are saying about them. And by the way, I’m not perfect. You can look us up. There’s all kinds of stuff out there, but the reality is, is know who you’re going to get into. You’re basically walking down the aisle. Who are you going to be with?

Chris Pistorius:                  15:04                     Yeah. Yeah. No, I think that’s great advice. And maybe just not your experience here, but you’ve been in the industry a long time and a common question that we get that doesn’t really relate to marketing and what we do, but a lot of practices are having issues right now with hiring staff, finding qualified people, getting people to stay sometimes, and it seems like some of these practice owners are getting into these cycles of they hire somebody and then for a few months they leave and then they’ve got to rehire and retrain and it’s like they never stopped training. What’s-

Ray Caruso:                        15:41                     Yeah.

Chris Pistorius:                  15:42                     Some advice you could give an owner on hiring and firing and do you hire typically with dental experience or without? What’s your advice on that?

Ray Caruso:                        15:51                     Oh, man. We’re going through that too.

Chris Pistorius:                  15:51                     Really?

Ray Caruso:                        15:57                     Well we can blame it on the wake of COVID, but the reality is, is just look at your leaders. If your leaders aren’t training well and holding people accountable and ensuring that they’re taken good care of, then they’re going to leave you.

Chris Pistorius:                  16:15                     Yeah.

Ray Caruso:                        16:16                     The number one reason for people leaving is not pay. The number one reason is their direct supervisor. So keep that in mind. All right. Secondly, so for hiring, do you look for dental experience? Yeah. I mean, if you want a dental assistant it’s better-

Chris Pistorius:                  16:16                     Yeah.

Ray Caruso:                        16:35                     Two or three years experience, but keep in mind-

Chris Pistorius:                  16:37                     Yeah.

Ray Caruso:                        16:38                     You hire one and you get them for 13 bucks an hour or something, I’m just making up a number, and then you train them for a year, immediately they’re worth $17 an hour. So make sure that you make that adjustment because they’ll know after six months or a year that they have experience, they can go right across the street and get paid three to four to $5 an hour and you’re the one who trained them. So keep that in mind. Be looking at market rate and adjust for-

Chris Pistorius:                  17:04                     Yeah.

Ray Caruso:                        17:05                     Too. The other thing that we do because I started noticing that we had a lot of turnover in our office manager. We call them team leaders, but in that office manager role and I started to recognize, “Well, why did we have so much turnover in this role?” And it all came down to accountability. We were working towards bringing more accountability to that role and they just weren’t ready for it, they didn’t want it, they weren’t used to it. And so we might’ve gone too soon, too fast. I don’t think so, but it could have also been that we set the expectation and then we kind of forgot about it and didn’t train them and keep going back to helping them and helping them and helping them and supporting them and supporting them and supporting them. So then when it came to like, “Hey,” they felt like they weren’t being able to do a good job.

Chris Pistorius:                  17:05                     Yeah.

Ray Caruso:                        18:03                     Yeah.

Chris Pistorius:                  18:03                     Yeah.

Ray Caruso:                        18:04                     [inaudible 00:18:04].

Chris Pistorius:                  18:03                     That’s [inaudible 00:18:05].

Ray Caruso:                        18:06                     You brought out a book that you appreciate. I’ll tell you the best book that I could tell you about is from Patrick Lencioni. It’s called the Ideal Team Player. And he goes into the three virtues that you look for when you’re hiring people. And it’s something that you really can’t train on and that’s humble or humility, hungry or what you might call work ethic, and then he calls it smart, but really it’s the emotional quotient, the ability to interact well with people. And-

Chris Pistorius:                  18:06                     Right.

Ray Caruso:                        18:42                     And then the opposite of that is ego, lazy, and disrespectful to people. So if you could just find those people that are hungry, humble, and smart, you’re always going to win.

Chris Pistorius:                  18:56                     I’m just curious. Do you ever use personality tests when hiring?

Ray Caruso:                        19:00                     No. No we don’t. As far as like our smile center, that’s what we call our corporate office. I like to be pretty cheesy. Our smile center, we did assessments to help us interact with each other better, but from-

Chris Pistorius:                  19:00                     Yeah.

Ray Caruso:                        19:18                     The office level, no. We haven’t done that, but I do like the disc profile. I think that’s super helpful.

Chris Pistorius:                  19:24                     Yeah.

Ray Caruso:                        19:25                     I’ve been in-

Chris Pistorius:                  19:25                     Yeah. When we hire, we use the Colby test, I think, or something like that. There’s several out there, but my advice there is that don’t let it be the end all, be all. Just use it as a guide-

Ray Caruso:                        19:42                     Yeah.

Chris Pistorius:                  19:42                     Versus saying, “Oh, well, this test doesn’t line up with what we want. So no way.” Go with your-

Ray Caruso:                        19:42                     Right.

Chris Pistorius:                  19:48                     Gut, but just use the personality test as kind of a guideline. Those are great insights. I think that can definitely help a lot of people. So I’m going to start wrapping up here, but I think you guys are still in acquisition mode out there looking for practices in both startup and acquisition. Where do you see your business over the next five years? How big do you guys want to get?

Ray Caruso:                        20:12                     You know, I would love to just go by the results or what I look back in my rear view mirror and say, “Hey. We should be at 300 practices,” or whatever.

Chris Pistorius:                  20:22                     Yeah.

Ray Caruso:                        20:23                     But the reality is I look at it as how are we influencing the industry? So five years from now, have we influenced the industry to where people see that the ownership doctor model is better than other models because we are better for the community, we’re better for the doctors, we have longer-term relationships with our doctors, we typically have low turnover, typically, and we’re better for our patient base in our patient population.

And so for us to be able to influence, we have to get bigger. We must get bigger because otherwise a company with 60 practices doesn’t have the same influence as say a company with a thousand practices. And-

Chris Pistorius:                  21:16                     Right.

Ray Caruso:                        21:16                     Us to be at that table for us to be able to treat more patients, for us to be able to influence more doctors we have to grow. And so-

Chris Pistorius:                  21:24                     Right.

Ray Caruso:                        21:26                     If that’s a 150 practices after five years and we’ve got 150 amazing practices that we’re doing what we believe, so be it. I think we’ll be a lot further along than that.

Chris Pistorius:                  21:39                     Right. That’s exciting. That’s great to have goals and whether you hit them or not, at least you have something you’re trying to achieve for. And I don’t think it’s always all about growth either. I mean, we talk about our annual goals here and a lot of it’s around what you mentioned, making sure we’re doing the right things for our clients, making sure we’re not going too fast.

Ray Caruso:                        22:00                     Mm-hmm (affirmative).

Chris Pistorius:                  22:01                     Grow responsibly type stuff. I’ve been part of companies in the corporate world in my past where it just exploded growth, which is fun, but once the growth slows down, you look back and you’re like, “Oh my gosh. What did we do?” And you can ruin a business that way too. So I always-

Ray Caruso:                        22:18                     Yeah.

Chris Pistorius:                  22:18                     I always say, “Grow responsibly and the better your process and procedures are is going to dictate how fast you can do that.” So-

Ray Caruso:                        22:25                     Yeah.

Chris Pistorius:                  22:26                     Well, awesome. Right. Thanks so much for being a part of the show. If somebody happens to maybe want some more information about your organization, if they’re looking to maybe make a move, what’s the best way to maybe reach out to you?

Ray Caruso:                        22:39                     Yeah. Just email me directly. My email is so easy. Ray@. Ray at Ray. No,

Chris Pistorius:                  22:50                     Okay. And that’s L-O-N-E, right?

Ray Caruso:                        22:53                     Yep. L-O-N-E, yes. Yeah.

Chris Pistorius:                  22:53                     Okay.

Ray Caruso:                        22:56                     Not loan like, yeah.

Chris Pistorius:                  22:56                     Yeah. What are you getting into here?

Ray Caruso:                        23:02                     Yeah, right? Yeah.

Chris Pistorius:                  23:03                     Yeah.

Ray Caruso:                        23:03                     Well Chris, it’s been a pleasure. I really appreciate you doing this.

Chris Pistorius:                  23:07                     Yeah. I appreciate you taking the time. I know how busy you are and I’ve learned a lot, I know, and I know a lot of our listeners have too and maybe we’ll check in with you in a few months and see how you’re doing. Okay?

Ray Caruso:                        23:18                     Yeah. Do that. I’d love to hear from you again. Thanks Chris.

Chris Pistorius:                  23:21                     All right. Thanks Ray. We’ll talk to you-

Ray Caruso:                        23:23                     Great weekend. Bye-bye.