Scott Leune:

I tell you what, I agree with a lot of private dentists that have pretty strong feelings about corporate groups, about DSOs, about the buying groups that are out there right now. Some dentists are super passionate about that. They're like, screw DSOs. Screw the big corporate companies in dentistry, overcharging dentists, shoot, screw the buying groups that are in bed with those larger corporate groups. Screw all of this. We dentists are getting abused financially. We are dealing with the hardest things to pay for and to budget for, and we're not getting preferential treatment. We're not getting DSO level pricing. As the DSOs get lower pricing, we get hit with bigger, higher prices. Of course, it's hard for us to pay people more. Of course, it's hard for us to make a bunch of money. Screw corporate groups. Screw the dsso side, screw the current buying groups. That is the opinion of a lot of dentists, and I am going to unpack that on the dental CEO podcast.

Alright, so I said the word screw a lot there, didn't I? Well, that's how we all feel sometimes. We feel completely screwed in how things are set up right now in dentistry, and I think we're ready for a shift and a reset. So to kind of talk about this, how can the private dentist compete in today's world? And this has been a conversation for decades, but the environment keeps changing a bit, right? So we have to relive this conversation in new ways as the world has changed. So right now what we see is we see the large publicly traded companies that sell dentist a bunch of stuff. I'm not going to name any names, I don't have to name any names. You can imagine the types of companies I'm talking about. Those companies are finding themselves in this situation where they have been doing these sweet deals, these deals protected under nondisclosure agreements with DSOs for decades.

And I've had a DSO, I've had those deals protected by nondisclosure agreements. I know firsthand the kinds of benefits that the DSOs are getting. They've been doing those deals with DSOs, they've been doing those deals with buying groups. And the problem though is that the market forces are also in a way challenging for these equipment and supply companies. How can they lower their pricing for a huge growing group of dentistry and still have a nice share price? They've got to find the profit somewhere. And that has resulted in private dentist bearing some of the negativity of this as the DSOs. Hypothetically here, if a dsso is getting a lower price, a private dentist is getting a higher price so that the supply company can still maintain its margin and get its stock price. And oh by the way, it has to grow its margin. It has to grow its cashflow, it has to grow its stock price.

And so this is challenging. Supply companies, equipment companies, these big dealers over the years, they've had to do big layoffs to try to cut costs. They've had to buy up factories and manufacturers to try to get more and more margin, more and more revenue for things so that they could prop up their financial statements and their stock prices. And at the same time, they're getting crushed, in my opinion, by this expansion of the DSO world that gets low pricing and some of these buying groups that of course gotten low pricing. And so the private dentist, whether it's intended or not, whether there's ill intent or not by anyone, the private dentist is basically having to deal with escalating costs. Isn't that weird? Think about it. What has happened to other things you buy? You used to buy something at a local store and then there's technology and there's efficiencies.

And Amazon. Now you can buy things from Amazon and there's mass production and there's just in time ordering and all of the shipping and all of these things has resulted in other parts of our life cost for the same thing going down. Cost for a TV has gone down, right? Costs have gone down for a lot of those purchases that we used to make yet for whatever reason in dentistry, they just keep going up. Whoa, for whatever reason, what's the reason? And one reason might be that the DSOs are expanding and the DSOs get these sweetheart deals and the private dentists aren't getting those deals. So it's not that the DSOs are trying to damage private dentists, it's just that's one aspect of the new wave of dentistry here that as small, medium, large and jumbo, DSOs keep expanding. They keep having more and more power to have lower pricing. And the results in some way is that private dentists are getting hit and screwed by it.

Now in comes the buying group, and in a previous part of my career, I even built a buying group, became one of the biggest in the country. In comes the buying group. The buying group has this mission that says, Hey look, we're going to take dentists and we're going to group them together and we're going to try to negotiate preferential pricing, kind of like the DSOs get. And in the beginning when I was part of this world, I was doing this for mostly private dentists and we were getting great pricing from companies that I thought weren't the big companies. Companies that I thought were individually owned companies that did not have some sort of connection or financial interest with the bigger publicly traded companies. It's almost like the bigger company pricing was the enemy and the independent company pricing was the hero in the story.

And so we were trying to get private dentists to group together and work with the independent companies to get lower pricing. Well, boy did I learn a lot, and again, I'm going to do my very best to not name any names here, but you would be surprised at what companies are owned by what other companies. You would be surprised that you think you might be leaving a big publicly traded company and going to some other little company or some buying group only to learn that the publicly traded company also owns the other company. You're like, screw this company. I'm going over here to save money. Well, that big company is like, ha, I own that company too. And because of that, there's almost this conflict of interest at some point in my opinion, where you're not going to get the lowest level pricing and you're not going to get exposure to lower pricing brands because at the end of the day, you're still in a way serving the share price of the big company.

That is the one having to charge more to private dentists. Also, these buying groups, they want to make money. They want to have a lot of dentists paying their fees or they want to have a lot of dentists where they're getting rebates and things. They want to make money. And so these buying groups are letting in the DSOs and also these buying groups in their kind of race to try to make more money and be everything to everyone. They end up doing deals with a whole lot of different suppliers, a whole lot of different labs, a whole lot of different equipment companies. And what does that mean? Any individual lab is not getting a lot of business from the buying group. And so therefore the lab can't charge you the lowest price because even though you might be a big buying group, you're not a big customer of that one lab.

So the result of this is that private dentists think they're getting the best they can get. Private dentists think I'm using an independent buying group that uses independent companies and they've negotiated the lowest rates that are reasonable for a private dentist, and I've done the right thing. Well, no, I disagree. Scott Leune disagrees because number one, the buying group has many times got a direct financial connection with the companies you're trying to leave. Number two, the vendors in the buying group are many times owned by the company you're trying to leave. Number three, there's so many vendors that not any single vendor is getting the volume they need to give you the private dentist, A DSL level price. Your buying group might have a thousand dentists in it, but to that vendor, you're only 12 practices, right? You're not a thousand practice DSO to that vendor because there's too many labs, for example in it.

You're not that. So unfortunately, dentists are just financially being impacted by this in a negative way thinking that they're doing the best thing they can. And so much of this stuff is hidden in secrecy of non-disclosure agreements to protect ultimately the largest companies at the top in so many different instances, I've been part these nondisclosure agreements in the past. I've seen them. I've been on the wrong side of this coin. I've been looking back now in my past buying group for example, I actually was doing what I disagree with at the time. I didn't know what at the time I was trying to do the best thing for the dentist, but I just didn't know what I didn't know. And so I'm looking back at my old self and I'm like, damn, he's guilty. He's guilty of doing what I now think is not necessarily the best thing for private dentistry.

And I didn't know it at the time, but I do now. And man, I wish I could just say everything I know, but I can't. I won't. But I'm here to tell you that where we're at right now is in this weird kind of moment where the DSOs are steamrolling ahead in growth and negotiating really low pricing. And private dentists are being, in my opinion, manipulated into thinking that what they're spending is appropriate and it's not. We need to have lower pricing and we need to have access to lower priced brands. And its the biggest suppliers can't give us that. They can't because that would kill their profit margin, that would reduce their share price. They can't do that, and it is their own damn fault because they're still stuck in a model that 50 years ago where they got all these sales reps everywhere and they got all these showrooms everywhere.

There's all this overhead everywhere, and they can't be the company they need to be today to give us the pricing that makes sense today. Our pricing should go down on a whole lot of things every year, not up. And if we're part of a buying group, damn, we should be getting the lowest level DSO pricing, but we don't. So in walks the sponsor of our podcast, which I didn't intend for this to be a podcast episode about them, but I can't be fully transparent about this topic without mentioning them. The sponsor of our podcast is the Private Dental Alliance, and it is what I believe the first true buying group for private dentists, as I would define, they're a buying group that does not have a whole lot of vendors so that every vendor that works with that group gives DSL level pricing because the group is big enough to that vendor, that specific vendor to justify it.

Also, the private dental alliance is not sending all the supply orders to all the freaking big boys, publicly traded companies that are having to control and influence and manipulate this whole thing. The private Dental alliance is actually using the largest or some of the largest privately held suppliers to get supplies privately held that aren't having to meet some shareholder quarterly demand, privately held companies that weren't built off of decades of infrastructure costs, right? And so these privately held really successful nationwide family suppliers, family offices, family suppliers, these privately held companies are able to use their more modern corporate infrastructure to deliver next day shipping. All the things we're used to service. And at a price point that is insanely competitive, it is on par with what the biggest DSOs are paying oftentimes. So when we have private companies, not the same old freaking big boys we've always been using, but the private companies that are hungry to compete with the big boys and they've got lower costs themselves, and we're using the private dental alliance buying group that's sending all the business to just a select group of vendors, we end up with maybe the first situation where a private dentist truly is getting on par pricing with the DSOs like lab work, all porcelain crown $54 or dental chair.

Instead of it being 12 to $15,000 for dental chair of some known brand that you always are told you have to buy, you can buy a wonderful chair, brand new with a different brand that works great and it's less than $4,000 or supply costs lower than what you've paid supply costs on par with DSOs. So I want to change the expectation here in this podcast. We should be expecting as dentists that our costs go down with added technologies with added efficiencies, efficiencies in warehousing and shipping and manufacturing. Our costs should go down on all the crap we've been buying all these years, just like other things have. Of course, some costs are going to go up as new technology comes out and upgrades, but we should expect all in all our costs to go down. We should also expect our costs to go down if we're part of a buying group, because we are gaining leverage, we're gaining volume.

Assuming that buying group, like the private dental alliance, I'm just going to call 'em PDA for short, PDA, private dental alliance, PDA, assuming PDA is managing the buying group properly and not overextending itself with too many vendors and it's working with as many of those privately held companies that do things differently and are hungry. Our pricing should go down and someone damnit needs to say it. Someone needs to start calling this stuff out. And I bet I just made some enemies on this podcast episode, but it's fine. It's fine if I made some enemies. I'm trying to stay true. I'm trying to be ethical. I'm trying not to call anyone out specifically. I'm trying to talk about this topic in generalities that I feel does good for dentistry. And if I'm making an enemy because of that, it's probably because that enemy is not aligned with what I think is good for dentistry.

They're not my enemy. I just understand what all this is, and I believe that we're due for a complete reset. I would love to see a huge wave of private dentists start acting together, start acting together like joining PDA and getting better pricing, start acting together with dental insurance plans, for example. I mean, we all fantasize about the day. The entire country decides to drop a specific, I'm not going to name them, but it rhymes with elta. We all fantasize about the day that on any given some random Tuesday, everyone in the entire country said, let's drop this insurance plan and get out of network. We all fantasize about that day because if we start acting private dentist, if we start acting as a group, we start getting better results. So anyway, I hope this was interesting for you. If you are sitting here and you're in a buying group, chances are very high that buying group is heavily influenced by the largest companies that I'm describing that aren't necessarily doing what's best for you. If you're not in a buying group and you're buying from these large companies, you might think you've got a sweetheart deal. You might love your local rep. You might say, oh, we'll price match this or that. You aren't even playing the right game yet. You might be winning in the wrong game. You might be getting the lowest high pricing, the lowest high pricing, right? So I encourage you to look at what you're doing. If you contact PDA, they can scan a lab invoice, they can scan a supply invoice and immediately within a second, show you what the pricing looks like. But even honestly, even if the pricing was the same, which is not, but even if the pricing was the same, I would want to be putting my support and my money as a dentist behind a company that's trying to do good for private dentists instead of putting it behind a company that is obviously giving massive preferential treatment to large DSOs.

So even if the pricing is the same, I want to support the right companies, the right kind of efforts and initiatives just like we do in other parts of our life. So whatever that is for you, maybe you need to start doing that for me. It's what I'm describing here. Alright, well, I hope this was interesting for you. Please, no hate mail from the big companies. I am trying to be, we can all agree to disagree, but I hope this was helpful for you, private dentist, and tune in to our future episodes. Obviously, by the way, we're trying to do something good with this podcast. If you could subscribe and if you could post an online review, that would be amazing. And that is how you could maybe put a little bit of effort into giving to us. We're putting this effort in to give to you, and if we could all do that together, we can really start creating a voice for private dentistry. That is, of course, in the topic of business. And that was our episode today on the Dental CEO podcast. Thank you.