567: Howard’s Best Advice for a Successful Career in Dentistry - Dr. Howard Farran

Howard’s Best Advice for a Successful Career in Dentistry

Episode #567 with Dr. Howard Farran

An A in dental school is an A in dental school. Without learning about business, you won't have a successful practice. To help you think better about the business side of dentistry, Kirk Behrendt brings in Dr. Howard Farran, founder and owner of Dentaltown, to offer some of his best advice for a successful career in dentistry. To hear Dr. Farran’s insights and to learn what dental school never taught you, listen to Episode 567 of The Best Practices Show!

Episode Resources:

• Dr. Farran’s website: https://www.howardfarran.com
• Dr. Farran’s Facebook: https://www.facebook.com/HowardFarran
• Dr. Farran’s social media: @howardfarran
• Dentaltown: https://www.dentaltown.com
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Links Mentioned in This Episode:

Uncomplicate Business: All It Takes Is People , Time, And Money by Dr. Howard Farran: https://www.barnesandnoble.com/w/uncomplicate-business-howard-farran/1120331563

Main Takeaways:

Your practice is a business. Learn about business.

Learn about demographics before starting your practice.

There's no “good” time to start your business. Just start now.

Audit the people, especially the dentists, you choose to be around.

You're not a doctor of everything. Learn to delegate things you're bad at.

Spend and invest wisely! Bad spending habits will be the source of your stress.

Quotes:

“If you get an A in business and you're a horrible dentist, you'll be a millionaire. If you're the best dentist in Kansas City and you don't know anything about business, you're going to have a very miserable career. You have to learn business when you live in capitalism, especially somewhere like the United States.” (4:45—5:01)

“Demographics is the most important thing [to learn]. I'd say in the last ten years, every time I see a kid come out of school and they do $1 million the first year and put $350,000 take-home, they always went to a town of 5,000 and they're the only dentist. A lot of them went to a town of 2,500. But you see in Arizona, where we have two schools, every kid thinks that if they go to North Scottsdale where all the rich people live, that's where they would make the most money. And in 2008, when we had the economic collapse, I think Arizona had like 74 or 76 dental offices go under. Half of them were in North Scottsdale. And when I opened up in Phoenix, Arizona, the town south of me, Maricopa, which is a 30-minute drive, did not have a dentist for the first seven years I opened. And then, there's a town next to it called Florence, which didn't get one for seven years. I'd have all these faces, ‘It took me an hour to get here. It took me 30 minutes.’ And so, these kids don't understand demographics. You go to any major city, there are all these medical dental buildings. They seduce these young, dumb, green kids who don't know any better and say, ‘We’ll do your buildout for free, and we’ll give you six months’ free rent.’ Well, why do you think they're doing that? Because they have a horrible, horrible, horrible location that only you would rent. No Starbucks would go there. If a Starbucks or a mani-pedi — if something retail would not go in your location, then why the hell are you going there?” (7:52—9:28)

“You don't do mani-pedis and hair. But you clean teeth, whiten teeth — it’s basically the same thing. It really is. As far as a business, it’s hair, nails, teeth, gums. [Patients] don't go to the dental office because they're worried about P. gingivalis and anaerobic bacteria. They go because they want whiter, brighter, sexier teeth, and they want their nails done and their hair done. You're on the third floor of a medical dental building in an area that has a dentist for every 500 people, and you think you're going to solve this massive nightmare demographic problem with a Facebook Ad? Are you out of your mind?” (9:29—10:04)

“Business in three words is supply and demand. Why are you going to create a supply of something where there's no demand?” (10:57—11:03)

“It took me four months and ten days to open up [my practice]. I see these kids now, and they're like, ‘Well, I need more training,’ so they go do a residency. And then, they go to the Navy. Then, they go work for some corporate dental chain. And the bottom line is, they're just fear-driven. There's no “good” time to have a child, and there's no “good” time to start a business.” (11:32—11:54)

“The reason that banks are loaning to these kids, I mean, 99.5% of the loans get approved because dentistry is so non-competitive. The only reason you fail on a bank loan is a personal failure of getting your license taken away. And it’s usually drugs. So, if you can look in the mirror and say, ‘I can stay clean. I'm not going to lose my license,’ from whatever drug you're on — you're only going to fail if you get addicted to something. So, if that's not your problem, borrow the money and get in.” (13:03—13:36)

“The markets have changed over the years, but I like acquisition better than de novo. De novo is when you open up a store from scratch. I like acquisition better because look at what happens. Let's say you go to a town, and let's say there are 5,000 people and there are five dentists there. If you open up a dental office, now there are six dentists there. If you go in and buy an old man out, now, there are still five. When you purchase, you eliminate a supplier and you're not adding supply to the standard demand equation. So, I like acquisition better.” (13:38—14:18)

“Half of America lives in 147 towns. The other half lives in 19,008 towns. And many of these states — take Iowa, for instance. If you go to Iowa, they’ll give you a list of 20 towns. If you go there, the state of Iowa will give you $100,000, and Delta Dental of Iowa will give you another $100,000. So, you're complaining about your $300,000 student loans, and you can pay off two-thirds of it. So, then you go to this town. Then, you go down to the mayor, and it’s a town of 5,000. They’ve got like eight empty buildings on 1st Street and Main, and they’ll say, ‘Do you want one of these buildings?’ They’ll give you the building. So, now, you own the land and the building. You've got $100,000 from Delta and $100,000 from Iowa. And those small towns, they think a really great job is $10 an hour. I mean, they'd kill for $10 an hour. So, now, your number-one cost of labor, which is 28%, is now your lowest cost. You have no competitors. You don't have to do all these PPOs. And it’s crazy good.” (14:24—15:26)

“It’s all trust because we sell the invisible. These young dentists will go in there and they’ll buy this practice. They’ll see all these old ladies who are 60 years old that have been there for 30 years, and they got a raise every time the earth went around the sun, and he thinks his labor cost is too high. So, he says, ‘You know what? I'm going to fire these five 60-year-old women and replace them with five 20-year-olds for half the money.’ And then, what does that town of 5,000 think? ‘Oh my god. When old man McGregor left, all them good ladies, they didn't even stay for 30 days. That guy is a disaster.’ And then, you're going to try to change your brand on Facebook, and Twitter, and Pinterest, and all this bullshit where it’s just noise — they don't trust you.” (18:07—18:54)

“The dentists that unleash their staff to communicate, and diagnose, and get out the intraoral camera and show the X-ray, and all that stuff, they have a far higher treatment plan acceptance. I can't tell you how many dental offices I've been in where the dentist blames it on exogenous factors like the economy, and Obama, and Trump, and “build the wall”, and the Chinese, and all this crap. And I'm like, ‘Okay. I've heard all your noise. But you collect $750,000 and take home $145,000 on the same number of patients, 1,800, as the guy next door. He’s got 1,800 patients in the same damn town, and he’s collecting $1.4 million and taking home $400,000. You both have the same president, the same country, all the exogenous variables.” (19:46—20:32)

“You're a summary of your five best dentist friends in your dental office. At home, you're a summary of your five best friends who are out of the dental office. And when you join the Academy of General Dentistry and when you're going to those AGD meetings, those other five dentists who become your friends, they're CE junkies. They're on a quest to learn everything. No little detail is going to be missed. So, now, you're with five guys who are gunners. They're just going for it. They want to learn implants, ortho, endo, perio, and ped. They want to learn it all. So, now, your five best friends are getting their FAGD, their MAGD, and then they're calling you up saying, ‘Hey, are you going to that course on Saturday?’ And you're like, ‘What course?’ It reminded me of when I was in the dorm and you tell a friend, ‘Are you ready for that test tomorrow?’ And they're like, ‘What test tomorrow?’ I'm like, ‘God, are you out of your mind? We have a test at 8:00 tomorrow.’ So, if you hang around with people who know there's a test tomorrow, who know there's a CE course, who are telling you to go do this, you're a much better dentist.” (22:17—23:18)

“Really, really, really audit your dentist friends. That's why I like Dentaltown. I mean, who are these dentists that after 5:00, half of them want to go home, watch ESPN, drink beer, and say they hope their dental office burns down and they collect the insurance policy. And then, the other half are on Dentaltown arguing about the best bonding, root canals, whatever, till 3:00 in the morning. You need to feed off that energy.” (23:43—24:08)

“Look at sports. You watch the Super Bowl or a basketball game, the coach is totally engaged, walking up and down the field, yelling in plays. He’s totally in with his team. As they come off the field, he hugs them, and all this stuff. You go into dentistry, the dentist gets done with the root canal, walks in his office, and shuts the door. I would check out my patient and talk to them, and then greet the next one in the waiting room, super engaged. I'm in the game the whole time. I'm pacing the floor. When they say, ‘Okay, I've got to greet the next patient,’ I'll say, ‘Do you want me to go get them?’ Because I like to go out in the waiting room and shake their hand, talk to the next people, and make them laugh or whatever. But you're totally engaged, and you feed off that.” (25:22—26:07)

“Half the dental offices in America, the dentist is the last person to get to work. He shows up 10 minutes late. This patient is in the room at 8:00, and he walks in at nine after, and sits down with his Starbucks coffee. And then, when he’s done at 4:30, he’s like, ‘Well, can you make the temporary?’ And he goes home. When you're the last there and the first to leave — take the offices where the dentist is there first, and he stopped by Safeway and got a dozen donuts. He's in there first, and he’s the life of the party, and greeting them, and listening to them, and also making them feel safe. You go to most staff meetings, the doctor does all the talking because the staff is not even engaged, and they live in fear. In fact, if somebody wasn't going to go to the staff meeting, it should be the dentist. Or the dentist should go and not talk, because you need your team to talk. You need them to tell you — communication, communication, communication.” (26:12—27:08)

“If you had an A+ team and you did horrible dentistry, you'll have a $1 million practice. If you're the best dentist in Kansas City and your team is miserable, you'll be miserable your whole life. It’s all HR. It’s 80% people. It’s people management. It’s quarterly reviews. You go on Dentaltown, and people say all these things like, ‘I can't believe my hygienist . . .’ They're always griping about their hygienist, or their staff, or whatever. And the problem with gossip and griping is it’s misdirected.” (27:10—27:44)

“The worst thing in HR is not realizing that you have a toxic person in there that comes to work. Their glass is half empty. It’s not the man in the mirror; it’s everyone else’s fault. They have this super bad attitude.” (28:30—28:43)

“Look what they do with players. Not only is the coach walking up and down the basketball court, the football field, and all this stuff. At the end of the season, what percent of the teams trade players? All of them! They're like, ‘You know what? You were a B. But I'm looking for a B+. I'm looking for an A-.’ And then, look at dentistry. Ethel has hated her job for a decade. You go to the dental office, and there's a glass wall. You have to knock on the glass wall, and she slides it open and hands you a chart. Doesn't even make eye contact. And she’ll have her job in healthcare for a decade. I mean, that's just crazy.” (31:45—32:21)

“The one thing dentists have a problem with is they're a Doctor of Dental Surgery, but they often think they're a doctor of everything. And so many times in a business, like, the dad was really good at planting and harvesting corn or wheat or small grains. But it was mom at the kitchen table that was really good on a calculator, and worked with the accountant and the IRS, and paid the bills. If I go into a dental office and the average team members, their morale is low and the turnover is high, I'll say, ‘Who’s been doing all the hiring?’ And they say, ‘The dentist.’ I say, ‘Okay. Well, you suck at it. You're not intuitive at it. This is not your skill.’” (33:22—34:01)

“Some of these dental office teams, they're all bowlers and like country music. Other teams, they're all line dancers. They all have their flavors. They all have their chemistry. You build up this corporate culture. And when the culture is bad — the fish rots from the head first. And the dentist is the head — capital, Latin, head. When that culture is dysfunctional, that's yours, buddy. You own that culture.” (36:10—36:37)

“I want the dentists there first, leave last. I want them to focus on HR. I want them in between patients. I'd like to go in most dental offices and take their private door down because you always see staff standing outside the door, waiting for the emperor with no clothes to walk out. Take that door down. Get engaged. If you nail the HR — I've been doing this for 30 years. When I walk into an office, I can smell success in 30 seconds. It’s fun, it’s energy, everybody is smiling, and you feel it.” (38:28—39:02)

“Hire slow, fire quickly, and get rid of toxic people.” (46:09—46:12)

“A lot of these dentists think that they're going to have a $1 million practice if they buy $1 million of technology. If they have a CBCT and a CAD/CAM and a laser, everybody is going to be super impressed with that. I don't see any evidence of that. In fact, I see the opposite of that. Whenever I see a dentist collecting $1 million and taking home $350,000, they almost never do ortho, Invisalign, place implants — they don't do any of that shit. They’ve got two or three full-time hygienists that have been there for a decade, a bunch of long-term staff doing a bunch of restorative dentistry. Their overhead is low, and they make mint. And instead of putting all their money in CAD/CAM, CBCTs, and laser, they're putting more money in labor. Because those girls that have been there 10, 15 years make more money. But I see so many people that get out of school with $350,000 in debt, and they think the secret is to buy $150,000 CAD/CAM, $100,000 CBCT, and fly out to the Dominican Republic to learn how to place implants. They keep spending all this money.” (47:54—48:57)

“The average dental office collects $675,000. But everybody who has a $1 million practice puts their money into consultants.” (50:07—50:14)

“If you can triple the trust, you'll triple your treatment plan presentation. And remember, if all your bills cost $1 and you do $1 worth of dentistry a month, your overhead is 100%. Don't change any of your bills and do $2, and now your overhead is 50%. The number-one cause of overhead is treatment plan acceptance. If you double your treatment planning — and the national data is scary. For every 100 cavities diagnosed, we drill, fill, and bill 38. So, we’re only doing — and I believe this. When you tell three people they have a cavity each, dentistry is doing one. One of those people wouldn't do it if you gave them a golden egg, because the sapien is a crazy monkey. But the better treatment plan presenters with more trust in the office, long-term staff, they get the middle third. And that's the difference between doing $750,000 and taking home $140,000, and doing $1.5 million and taking home $350,000, is getting that middle guy to do it.” (56:47—57:48)

“Again, it’s trust. It’s treatment plan presentation. If you want to buy technology, get intraoral cameras. Get digital radiography. Get 60-inch monitors so when I put that camera in the mouth, that cavity looks like you could go stick your foot in it. And when mom’s looking at that, then start talking about hair, nails, and teeth like, ‘I could smell that cavity.’ And she’s like, ‘Oh my gawd! Oh my god! You can smell it? Oh my gawd! Oh my gawd, do it right now!’ They care more about beauty than they do an anaerobic bacterial infection in a rock in their head.” (59:09—59:49)

“If you're going to invest money, the millionaires invest it in income-producing assets. Poor people spend all their money on consumption. A fool and money will soon be parted. If you're going to part with your money, you'd better buy something — if I'm going to spend a dollar, it better make me a nickel a year in perpetuity. Because I can buy a tax-free bond. I can buy a government bond. Every time I buy a government bond for a dollar, it'll get me a nickel till the end of the government. I can die, and that bond will still be giving me a nickel. You want to have a dollar? Then you need to buy $20 of these bonds. And if I can spend a dollar on something that’ll get me a nickel every year till the end of time, why are you buying a boat, a jet ski, a condo, and a BMW? It’s just dumb. Quit spending money.” (1:05:01—1:05:54)

“If buying a laser or a CAD/CAM or a CBCT makes you run 20 red lights on the way to work, it makes you be the first one there, it’s a boys-and-their-toys — if buying it lights your fire,