TUSK was invited to the 2017 ADSO Summit to share the stage with Dr. Marc Cooper of the Mastery Group to present to emerging group practices and DSOs. I focused on the Strategies + Tactics to grow your group / DSO, while Dr. Cooper discussed the leadership qualities necessary to build a group. We had the pleasure of presenting to over 200 industry professionals over the course of 4 hours – it was a remarkable morning.
If you were not at the ADSO Summit, download a free copy of our slide deck here:
Although the presentations and conversations around them were a pleasure, the highlight of the morning for me was the roundtable discussion with 3 DSO owners. Each doctor-owner was at a different phase of growth in their business and shared the challenges and rewards of each step in their maturation. Dr. AJ Aceirno’s comments drew the most attention when he said that although he now had 19 locations, he continued to make less and less personal income as he grew his group. This drew out gasps from the crowd. They questioned, “how is that possible?” and “why is that happening?” His answer was eloquent and simple: in order to continue to grow, you have to keep investing in your business with additional resources, talent, and assets. His only wish was that he could invest more. This is passion. AJ was happy to take less personal income to invest in his business, strengthen his culture and build out his platform to facilitate more growth. Yes, he is creating value on the balance sheet, but that equity does not pay his mortgage.
I had to smile a little bit as I could relate. Over the past three years, since leaving the comfort of a steady paycheck, I have never worked harder or made less personal income, but I also have never had this much passion or joy – and isn’t that what it is really all about?
Below are some of my major takeaways from an amazing week in Orlando.
Brief History of the ADSO
In 2002, 13 charter members of the ADSO met to discuss their businesses in a spirit of collaboration. It was a humble beginning of likeminded business leaders in the DSO space to share their successes and challenges as they navigated a new dental economy.
15 years later, there are 54 DSO members with over $10 Billion of revenue and 159 Industry Partners. The group has gained the attention and sponsorship of distributers like Henry Schein, Patterson and Benco; nationwide corporate transactional attorneys like Choate, Dykema, McGuire Woods and Waller; and large investment banks like Deliotte, Houlihan Lokey, Jeffries LLC, and KeyBanc Capital Markets. This is the new dental economy that includes sophisticated finance and M&A.
The ADSO has matured into a coalition of business owners with a shared vision for their industry. It became clear over the course of the week that the member leadership of this group has worked tirelessly to elevate the awareness of responsibility that each DSO should feel as they grow their businesses. The focus is more on ensuring growth that is patient focused and clinically responsible than valuations and sales multiples. Yes, there were conversations about recent deals that closed, but most of the dialog over the week was on creating amazing cultures and practice groups for dentists, team members and patients.
Opening Session – Your Potential
The Title Sponsor, Dentsply Sirona kicked off the meeting by welcoming Dr. Tarun (“T-Bone”) Agarwal to the stage to discuss the impact technology has had on his practice. I had the pleasure of meeting T-Bone at one of his workshops at his 3D Dentists Educational Center in Raleigh in 2016 and knew we were in for a treat. He focused his presentation on the importance of family (something all workaholics in the crowd need reminding of from time-to-time) and the huge opportunity in the implant market in the US. Most notably, only 5% of the teeth extracted today in the US receive an implant. I found that remarkable. Clearly, dentists and DSOs that focus on implants as a value driver in their business models have a lot of runway ahead of them.
Dr. Agarwal was followed by Chip Madera, a nationally recognized healthcare motivational speaker. Chip was full of energy and shared an abundance of insight with the crowd. Early in the presentation he reminded us all that the gap between what you KNOW and what you DO is your potential, and the bigger the gap the bigger the potential. This is good news for all of us leaning into a new idea or business.
Q: How do you fit 28 hours of continuing education into a 7-hour day? A: Attend the ADSO.
The Speaker Session Committee of the ADSO outdid themselves this year with the abundance of opportunity to learn about the DSO space. Thursday offered 28 one-hour presentations over a 7-hour period! Here is a small sampling of the topics covered over the course of the day:- Building a Centralized Infrastructure (Dr. Scott Leune – Breakaway Practice)
- DSO Entity Setups (Ken Kaufman – Community Dental Partners + David Slezak – Affordable Dentures)
- The DSO Vision + Purpose (Dr. Rick Workman – Heartland Dental)
- Practice + Staff Key Performance Indicators (Michael White – MWA CPAs)
- DSO Transactions – Sales + Acquisitions (Lance Beder – Grant Thornton, Ira Kaplan – Benesch + Ken Cooper – North American Dental Group)
- Balancing Patient Experience, Profitability + Clinical Quality (Dr. Gregory Heintschel)
- Developing a High Performance Culture (Dr. Marc Cooper)
I opted to see Dr. Rick Workman, the DSO Transaction Panel, Michael White discuss KPIs, and Dr. Marc Cooper. It was like drinking from a fire hydrant. My only complaint is that I could not clone myself and be in every presentation offered.
Dr. Workman offered up a brief history of his career in dentistry and his company, Heartland Dental. Dr. Workman set the “Wayback Machine” to 1980, the year he graduated from dental school. At that time, only 15% of his classmates were women, tuition was $6,000 per year and the profession was close to 100% solo dentists working in their single practices. My how times have changed…
Dr. Workman juxtaposed an image of his first, modest dental practice from 1980 with the business he and his team have built at Heartland over the past 20 years: 1,250 dentists in over 800 practices with $1.3 billion in revenue. It is staggering what Heartland has built and continues to create. It dawned on me that without Dr. Workman, Heartland Dental and other early movers in the market, the DSO market as we know it today, would not exist and every emerging group owes a debt of thanks to that man. The Q&A session brought out the best in Dr. Workman who shared that he, "believes that the quick flip is over" in the space. He underscored these comments by adding, “if your business model is to build and flip, that only hurts our collective efforts [at the ADSO].”
I spent the next hour with Michael White, CPA, Founder of M. White & Associates. Michael has built a remarkable accounting firm in the Texas market serving solo dentists and DSOs nationwide. I was so happy to see his KPI analysis baked into each of his monthly P&Ls for his clients. It was clear to me that Michael and his team have a true passion and understanding of the space.
Next up was the DSO Transition Panel. This was an open discussion roundtable with accountants, bankers, Private Equity (PE) and DSO owners all sharing their perspectives on the dental M&A market. When asked about pricing and multiples, bankers stated on the demand side, that there was "no end in sight" of the money flooding into the space due to the large availability of capital and the large fragmented market. Additionally, they reminded the audience that the market has been “pretty resilient for the last 5 years” and the likelihood of seeing multiples drop below 10x range for scalable platform DSOs (this does not include a collection of dots on a map) was low.
When asked about the drivers of value, the conversation steered away from the number of locations to the quality of the Management. The PE representative shared that, “size and scale is not a great indicator of future success. It is more around the management.” He continued, “true platforms drive monstrous multiples. PE will invest in a business with centralization and a structure that can replicate successes with a high degree of certainty.”
I ended my day with Dr. Marc Cooper, Founder of the Mastery Company. I have had the pleasure of working with Marc in recent months and have grown to love his message and delivery. He is not like any other speaker I have seen in the space – he does not rant, rave, or self-promote. Instead, Marc asks you to look into yourself, ask yourself hard questions and own your emotional state. Marc’s presentation was excellent as he delivered a message that culture drives success. It was a perfect end to a cerebral day.
ADSO + Disney Magic
That evening, attendees were hosted for a dinner and fireworks show at Disney’s Epcot. My family enjoyed a trip to Disney in 2016 but focused our attention on princesses (for my 5-year-old girl) and Jedi Training (for my 8-year-old boy). As a result, we did not make it to Epcot and I was excited to experience it. The dinner was delicious but the fireworks show from a private viewing deck was spectacular. Thanks to all of the sponsors that made this night possible.
What do Apple, Tesla, Amazon + the ADSO Have in Common?
The final speaker of the week was a business hero of mine, George Blankenship. George has focused on remarkable customer experiences since the 1980’s. He is responsible for the best-in-class and industry defining retail experiences at GAP, Apple, Microsoft Retail Stores and Tesla Motors. Currently, George is consulting with Amazon on their new retail bookstore initiatives. I cannot think of anyone else who has had the pleasure of working with many of the greatest innovators and disrupters in the world today: Steve Jobs, Elon Musk and Jeff Bezos.
For a sample of George’s work, check out this video on Fast Company from 2011 as he describes the Tesla retail experience he and his team crafted.
I arrived at the event early to find George before he spoke and was lucky enough to speak with him for close to 15 minutes before he took the stage. Although speaking at the Summit, connecting with like-minded peers and the educational content was excellent at the ADSO, this was the highlight of my trip. George shared with me what it was like working with Elon and how he is met on a daily basis with resistance to his mission to improve the world and emancipate us from fossil fuels. He told me stories about Jobs and others who are driven to make changes. We chatted about a world of abundance, opportunity and disruption. I was like a kid in a candy story. This is what ADSO is about. This is what TUSK is about – disruption and change. Sticking to your mission, despite what the rest of the world keeps telling you and especially when it gets hard. Breaking new ground is hard, but I think we all know it is worth it.
Thanks to the ADSO for an amazing week. I am excited to see everyone again next year in Austin, TX.
Team TUSK is headed to Atlanta for the Thomas P. Hinman Dental Convention March 23-25. We hope to see you there!
If you were not at the ADSO Summit, download a free copy of our slide deck here:
