Secure Dental_Mark Greenstein.mp3: Audio automatically transcribed by Sonix

Secure Dental_Mark Greenstein.mp3: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Noel Liu:
Welcome to the Secure Dental Podcast. Through conversations with the brightest minds in the dental and business communities, we'll share practical tips you can use to scale your practice and create financial freedom for yourself and your family. My name is Dr. Noel Liu, CEO and Dentist at Secure Dental, and also co-founder of DentVia. I'm your host for the Secure Dental podcast, and I'm so glad you're joining in.

Noel Liu:
Hey, everybody, welcome to another episode of our Secure Dental pod. And today we have a very special guest. This guy is from the Heartland Dental Group, and he has some severe experience. I would call it severe because he is one hell of a guy. And I'm going to introduce him real quick. But before we dive in, I just wanted to give a shout out to our sponsor. DentVia is a local company where they have virtual dental administration staff that helps the front desk and the office managers. So definitely visit them at DentVia.com; www.DentVia.com. And without further ado, let's pass the mic. And I have Mark Greenstein. So Mark joined Dental Heartland in October 2015. And he serves as a company executive Vice President and Chief Growth officer. He leads the Heartland's affiliation and de novo footprint, growth and management, corporate development, payor relationships, strategic sourcing, and Mark brings over 25 years of experience in business growth through strategy, operations, procurement, mergers, integration, leadership. Now, Mark, I would like you to continue with your intro and tell us a little bit what exactly do you do at Heartland in layman's terms?

Mark Greenstein:
Sure. First, Dr. Liu, thanks for inviting me on your podcast. It's a real pleasure to be here and talk a little bit about Heartland and hopefully answer some, some questions that are out there. My experience before Heartland had very little to do with health care or dentistry. I was a strategist in a variety of corporate settings, from financial services to wealth management to manufacturing and distribution. I just had a wide variety, and I was introduced to Heartland in the summer of 2015, and I fell in love. I went down to Effingham, Illinois. And for your listeners who do not know where Effingham, Illinois is, we often say, take the effing highway, but it's in the southern part of Illinois. It's about 240 miles south of the Chicago area where I live. And I keep an apartment down there. I spend about half of my time down there. The company was founded by Doctor Rick Workman. He had a dental practice there almost 40 years ago. He is essentially is the pioneer of the large group dentistry space. Back when he started with one practice became two, became three, and then so on and so forth to where it is today. He's still our executive chairman and 100% involved in the business. So he is the grand, we think of him as the granddaddy of the DSO space. Companies, also led by rest of my colleagues on the senior team are long, long-time folks at Hartwood. Our CEO Pat's been with us 27 years, our CEO DeAnn 28 years, our CFO Travis 21 years, our chief dental officer, Doctor Singh, clinical officer has been with, leads also Heartland Dental University has been with us 23 years. So a very strong group of leaders who this is their passion is supporting doctors and their teams and trying to create a better life for dentists and a better way of doing dentistry in America. So that's a little bit about my background management consulting. And I've just been blessed to be trained up and taught by these great folks who have really helped me lean into the business. To answer your question about what I exactly do, Heartland adds about 150-170 practices per year to its footprint. That consists of our de novo program, which are scratch start builds, starting from a piece of dirt, usually in front of a nice supermarket. If you're in Florida, it could be a Publix. In Texas, it could be an H-e-b, but a nice supermarket, maybe in Illinois and Mariano's. And it's that beautiful outparcel right in front that people get a lot of visibility when they drive by. So we do about 100 of those per year, and then we add somewhere between 50 and 70 solo practices, which are typically doctors who are looking we call that affiliation; they're looking to affiliate with Heartland. And we try to find top 20% of doctors across the country, those who are certainly seasoned and have built their practices and their communities, but also looking for something more, more community, more leadership, more growth, more patient care. So folks who are looking for the kinds of support that we provide to them. I also lead our relationships with payers, being the largest DSO or typically also the largest check that most or a set of checks that any of the major players in the United States write each year. So we have a dedicated team focused there. And then, Heartland as a community, is the largest procurer of dental supplies and equipment in the United States so outside of the government. So we are very active in the dental supply and equipment markets, obviously for labs as well. And so I have the privilege of leading that team also, and then as an umbrella of corporate strategy. So those are the hats that I wear. And it's been a great ride. I've been here just about nine years. And it's just a wonderful way to be involved at this point in my career in such a wonderful endeavor, with such a great group of people and a company that has just a strong set of values.

Noel Liu:
That's remarkable. It's so impressive. Like, all these guys have been over, like two decades. And it seems like, yeah, exactly, over two, three getting there. So that kind of speaks a lot about the leadership and the culture in this organization. So do you want to share a little bit about what's it like on a day-to-day with executives and the doctors and the team?

Mark Greenstein:
Yeah. First, we all wake up. Every one of us at Heartland, our job is to support doctors so that, and their teams, so that they can take care of their patients. And that's an important distinction between how Heartland looks at dentistry versus maybe some others. A lot of other organizations that at least I've had the experience with, they tend to, they don't think of the patients; they think of, that they they're responsible for the patients or that the patients are part of the DSO. That's not the case in the Heartland model. Our job is to just enable and support doctors as best as we possibly can. They're in their communities. They can take care of their patients. We want to provide a full range of non-clinical services, and we want to provide the very best education, on clinical leadership and operational skills. And we do that for not only doctors and hygienists, but the dental assistants, the business assistants in the office, as well as the entire field infrastructure. In fact, Heartland Dental University, which Doctor Singh leads for us, is the largest educator of dentists and their teams in the United States. So we provide over 250,000 CE hours per year. We have our own facilities. We have our own faculty and relationships both internally and externally. We run the largest aesthetic continuum in the United States. We teach oral surgery. We teach endodontics, we teach orthodontics with Invisalign, and we also teach leadership skills. And the Heartland model, the doctor is the leader of their practice and, or the doctors. And so we spend a lot of time with our doctors is how do you lead a large practice? What are the skill sets that you need to inspire and empower your team to achieve whatever your goals are? And so we're focused very much on taking care of the doctors and supporting them. And that's always been Doctor Workman's vision. That's something we all carry with us as we wake up every day. So we start every day thinking about what do our doctors need, where are their pain points? And where can we add value? Where can we take the external environment and bring it inside? A good example is we just deployed the largest installation of clinical AI in dentistry anywhere in the world. We have now, have a clinical AI in over 1500 dental practices in 40 states. So we're super excited by that. And that's really taking hold. ... which is a preventative treatment; we started rolling that out in January, and that's just doing great things for our doctors and the care of their patients. So our job is to bring to them opportunities that help them advance dentistry and give them community, which we do quite a bit to help grow themselves and grow their practice.

Noel Liu:
That's awesome. You guys are hitting it all fronts of dentistry. So I can see like a group size, like Heartland having so much firepower. Right? So let's switch gears a little bit like a solo practitioner who's actually running bread and butter dentistry day-to-day. I know, like they are trying to run the practice and Heartland is on the other side of the spectrum. How do you see yourself or see Heartland, or maybe like other DSOs? How do you see, what's the future going to hold? Is there going to be a merge? Is there going to be a collaboration? Is there going to be a competition? What's the landscape like?

Mark Greenstein:
Well, even at Heartland's vast size, I think we're roughly maybe 2, 2.5% of dentistry, general dentistry in the United States. So there's still 97% that we're not. There's a lot.

Noel Liu:
That's a lot.

Mark Greenstein:
There's a lot, I think there's always going to be room for the sole practitioner. Just like in medicine, there's still plenty of room for solo practitioners. But I would say just like in medicine, there's a set of natural forces that are creating opportunities to perhaps consider a group practice. And there are benefits that a group practice can provide. Certainly, community and knowledge exchange is one of the key ones. If I, when I talk to doctors who affiliate with us and they say, Oh geez, I wish I did this ten years earlier, I'd say to them why? They said, Because I know so much more now than I did then, and I would never have had a path to learn it if it wasn't for Heartland. So I think, first and foremost, what we end up doing is bringing education to doctors and their teams on all parts of just clinical and operational and leadership dimensions, and I think they value that the most. And that's of course, we're taking care of, helping them take care of HR topics and accounting topics and IT topics and legal topics, should they have them. We have an entire set of armies that are there to support doctors in their practices. But if you ask doctors what is it that they makes them wish they did it for ten years earlier? I think it's the peace of mind of having all of those non-clinical functions performed at a world-class level, and then a series of educational capabilities and community for knowledge exchange. All the programs we run on weekends where they can learn how to do full-arch implants if they want, or go shadow someone who they see is doing really nice Invisalign cases; how do you do it? You go, Well, you don't have to talk to me; just come to my office and watch. And I think that community and knowledge sharing, both from a formal setting with Heartland Dental University and then informally in the doctors working side by side with each other, I don't even get involved in that. But we do bring them together for dinners every quarter, and that forms those relationships. I think that speaks a lot to where they get value from their relationship with Heartland.

Noel Liu:
So one thing I just wanted to clarify was, so the doctor in your group with Heartland, basically they are in control, right, I mean of clinical. So they can do let's say full-arch implant, they want to do Invisalign, they can do any of that stuff. Because that was one of the misconceptions that was passed on, like it's Heartland telling them what to do and what they cannot do. I'm glad that you brought that up and you clarified this.

Mark Greenstein:
I would, I'd also say, Dr. Liu, I think we have 18 or 19 doctors and hygienists on state dental boards. If we, for a minute, for a minute, were to actually do that, we wouldn't have been here for ... almost 30 years.

Noel Liu:
Wow, wow. I was telling you before this, before we started this recording, this is, Heartland is one of those companies that I really, I'm really proud seeing you guys as so, like, vigilant and so compliant, let's put it this way, with the state laws and everything else that goes along hand-in-hand with dentistry.

Mark Greenstein:
Yes, I would agree with that. We, Doctor Singh leads our clinical audit functions. We're very much in touch with our doctors who are on state dental boards, and we have some hygienists on state dental boards. And this is not a financial enterprise. Of course, it's a business, don't make no mistake, but this is simply the outgrowth of Dr. Workman's vision that there's a better way for dentists to be happier, to be more productive, to take better care of their patients, provide more for their patients. And so we just have created a set of services to enable them to do just that.

Noel Liu:
And it shows, right, it shows that you guys are growing exponentially. And one of those things where I always say that if there are doctors who's out there who cannot stand Heartland, they are always going to be that those group of people, I mean, regardless.

Mark Greenstein:
We don't always get it right either, Dr. Liu. We're far from perfect. We're human. We have a saying, though, Do the right thing for the right reason. So if we make a mistake, we try to own up to it, and we try to fix it. And that you can hold us, we're pretty good. We try to fix it almost 100% of the time. If we know that we're making a mistake, we'll try to fix it. So do the right thing for the right reason is a core value of ours, and we empower our people to do just that. So they won't always get it right, it's complicated. Every practice is different. Every doctor is different. Their needs are different. We're trying to serve the needs of doctors and their teams in 40 different states. So regulations are different. So we're not going to be perfect, but we are going to try to be and we're going to try to definitely, we're absolutely going to.

Noel Liu:
Absolutely, absolutely. So we spoke about one aspect where there is a lot of solo practitioners. And now the other aspect is sooner or later, we all know dentistry is going to be like pharmacy or medicine, right? There are going to be roll ups. Where do you see like we are currently and where do you see like us in ten years or maybe even 20 years in the future? And how has Heartland positioned itself?

Mark Greenstein:
Yeah, we're in what I call the messy middle. So I think there's a couple of DSOs that are very strong, of which Heartland is one of them. They tend to be the larger ones with the most duration in the marketplace. You learn something. If you do something long enough, you learn all the things not to do, and you develop all the things you should do. And I think those models, Pacific Dental is another one that comes to mind, high-quality businesses that are focused on their doctors. And I think they have a long, prosperous road ahead of them. Just like in medicine, I think they will continue to grow because they create real value. I think that's a, it's a concept that I think cuts through a lot of the noise that you have out there is: Does the group create value? Does one and one equals three? Are you bringing people together and doing support, or enabling them to do things that they otherwise would not do for the benefit of their patients and their communities? If you can do that and do that repeatedly and demonstrably, you're creating value. I think there are some DSOs that are very good at that. There's also a group of DSOs that, and it's a large group that are still trying to figure out how to do that. And they're often caught between a rock and a hard place because they have financial constraints, often a sponsor or time window that sometimes gets in the way of the longer-term decisions that you have to make or investments that you have to make in order to build that true value creation engine. And so you have a lot of enterprises out there that are I would call aggregations and that are selling more around what we won't tell you at all what to do. In fact, we won't even support, give you much support. We're just going to let you be. But in 12 months we're going to do an IPO and you can sell your part of the, you can keep a part of your practice and you can sell. It's more, if you actually strip it down, it's more of a financial play than a play around the creation of value for the doctor and their team in order to enable them to improve care to their community, which at any, any way you slice it, if you're not delivering that set of value, it's not a sustainable model for the long term. And we do have organizations that are in that middle, and there are some that are trying to figure out how they're going to play, because so many have grown up in the last decade or so, and I think there will be a shakeout of those. I think we've seen it. Great Expressions is a good example of one several years ago. Elite dentistry is another example. Many of these groups are going to, they'll find their way, or they will struggle and be either absorbed or just fail. And I think that's an unfortunate reality. But it's also not unlike what's happened in medicine over the decades. And medicine is still, is now probably 80% consolidated. So it's hit a pretty consolidated. Look at Optum. Optum is the largest employer of doctors in the United States. They have 90,000 MDs. A full 10% of the doctors in the US work for Optum. So does dentistry eventually get there? I would argue, since there is a path and companies are doing it that actually create value, then you'd suggest, why wouldn't it? Why wouldn't if there is a different, better way, why wouldn't that take place? And if I'm a solo doctor, you can absolutely be wildly successful now and in the future. But you might want to look at what these DSOs offer and see if it's a value to you in helping you grow and create what you want to achieve and serve your patients.

Noel Liu:
One of the things that I see Mark these days is it's all about control. And I think that's where most of the solo practitioners, they're wary because they're like, Hey, if I join a DSO, I'm going to get ripped off and I will have no control. So that's one of those, I guess we call it misconception or whatever you want to call it. And one of the biggest things that I always see is equity, right? So let's say practices that are affiliated with Heartland, you don't have to give Heartland example, but let's say any other DSO. What are some of the equity models out there for some of these solo practitioners where they can feel a little bit, let's say safe?

Mark Greenstein:
So two dots, one on the notion of control. I get that a lot. They're going to tell me what to do. Now, the question I would ask folks just to consider. There's 2800 and change doctors at Heartland Dental, many of whom have got 20 and 30 years of experience, many of whom hundreds had wildly successful solo practices. And yet they're still at Hartland. Now, do you think they'd be at Hartland if they actually thought they didn't have any control? I mean, at the end of the day, the notion that some corporation is going to tell somebody what, a professional doctor what to do, and would, in a highly competitive marketplace where there's so much more demand for dentistry than there are doctors to do it, we wouldn't have the high retention rates, we wouldn't have these doctors staying with us five, ten, fifteen years. It wouldn't happen. So that alone, I think, is the biggest kind of data point that I share with doctors. And then I give them a list of 100 doctors and say, You randomly call these 100, find 100 of your own. I don't really care. And what you'll find, and ask them their why. Find out, are they being told what to do? Most of them will say, Νo. In fact, I get to do more of what I want to do because I don't have to worry about hiring and all the labor challenges. People get sick. Somebody else takes care of replacements. There's a water leak in the office. I don't have to worry about that. I'm actually doing more of what I want to do. I have more control, especially over my patient care and my life than I ever did before. And you'll hear that by the hundreds. I don't think a business could be successful at our size, or be successful for as long as we've been doing this. If in fact, that notion of control was actually true. This doesn't pan out. In terms of equity models, there are a couple of different models out there. There are models like Heartland where you get which I think is the, let me start with some of the other ones. Some models allow you to retain a portion of your practice, and that really feeds into the notion of, I still have 20% equity in my practice and I'm in control. But what are you in control of? You're in control, I guess, of your practice. But what, how are you benefiting from the collective growth of the entire enterprise? You're part of something much bigger. That's typically the reason why you want to join a group organization to be part of the group. So if you're incentive and you're, everything is revolving around your four walls, did you, did much really change or are you growing or benefiting as much as you possibly can? That's a question. So that's one model. Another question is where do you, how do you get rid of that 20%? Who buys it from you, and at what price? How do you know it's actually going to transact when you need it to transact? And by the way, if you still have that 20%, that means you only got 80% of the value for your practice. So what was the best? If you would have gotten 100%, you could have taken 20%, could have invested it in Treasury bills and watched it grow, and perhaps had more liquidity in Treasury bills than you're going to get under 20% that you might have to hold for 15 years. And at what value, again? So there's a lot of questions about that 20%. People latch on to it because they think they are going to get control. But that 20% is, and I would submit and I would encourage folks to talk to Heartland doctors or others with our model, that you can have control a lot of different ways. One is just work for a company that just gives you control. That's its ethos. Doctors are the leaders of our practice. They have control. They have autonomy. It's been that way since the day we started. The other model is they, you also can get what's called topco equity. So topco equity is you can get equity at the overall enterprise. And that's a very interesting model because now you're participating in the growth of the whole. And that feels very right to me because you're joining a group, you're partnering with the rest of the doctors in the group to grow the entire enterprise. That gives you incentive to help the next generation of doctors get ramped up. It gives you incentive to advise the company on ways to solve problems. It's got a lot of real community and teamwork embedded in it, and a model that has both of those is pretty good, except when that model doesn't really have the ability for you to get liquidity. And that's where I think having that equity is fine. But can you get cash for it at some point because it costs you money to get that equity? You bought it with your practice or you bought it with cash after you had your practice. So those are the two different kinds of equity, local equity, I call it in your practice, and then global equity in the DSO. In the Heartland model, what we have is we give all of our doctors virtual profit sharing at the practice level. They don't have to put a penny in to get that. All Heartland doctors are paid the same way. And I'm talking about our general dentists, which are, and general dentistry is 97% of our business, so it's the vast majority. They're all paid the same way, and they get a virtual profit sharing in their practice. They don't have to put any cash up to do that. So unlike some other models where you actually have to, you have an opportunity cost with whatever that 20% might have been. At Heartland, you can you get an equity interest or it's a virtual profit sharing, so that's what you get with equity is profit sharing, without putting up any cash. And that ties you locally to the practice, the better the practice does, just as if you all did, the more you're going to make. And in a multi doctor practice you both can share. And that's proportional to how you contribute to the profits of the practice. Then we do allow Heartland-supported doctors to buy equity in Heartland and every five years, and we've done this I think 6 or 7 times now, so we've done it more than every five years, we've provided a liquidity event. And so we have a really strong track record of providing liquidity to doctors when they, every period of time, and they can buy in that equity and they can grow with, alongside the company. And if they retire or they get sick, their spouse gets sick, well, let's just call it life happens, then we have paths for them to also get liquidity if they need to for life. And we have a long track record of taking care of our doctors in that way. So it's a, I would say the equity models have some similarities, they have some differences, but it's really about what's the track record on executing the model? And that's what I encourage all of your listeners to pay attention to. You can, anybody can tell you, We're going to go public in a year, and you're going to make a lot of money on that piece. Every dental group I've ever seen go public has done quite poorly. One current big public one is Dental Corp of Canada. I think it's down 40% or 50% since it went public. Years ago, there were public dental companies they did not do. So I really be careful about promises that say, We're going to go public, and that's how you're going to get your liquidity. It's a, there's not a lot of track record around that.

Noel Liu:
Let's talk a little bit about that profit sharing. So you are like they can, they get up without buying in. They get a little piece of the profit sharing and that local office. Right? So are now, are these like the affiliates or are these like?

Mark Greenstein:
All doctors.

Noel Liu:
All doctors?

Mark Greenstein:
100% of our general practitioners, 97% of our doctors.

Noel Liu:
So how does an affiliate doctor work? So let's say you guys acquire a practice. So now are you doing like a capital event with a doctor, let's say if they have a single practice?

Mark Greenstein:
Affiliation, what we typically will do is we're buying 100% of it. We're not buying ... not paying 80. We're buying 100%. So you can, now you've got a full 100%. Now you can do with that 100. You've got more cash. So with that cash you can buy treasury bills, you can buy CDs, you can invest it in the stock market, but you don't have to sit on the sidelines and have to wait for a trickle of dividends from the practice; you're getting it day one. So you're getting a higher value for your practice in cash. And now that interest rates are between 5% and 6%, you can get a very nice return on that cash from day one. And that's, we're finding that's a real advantage for especially those doctors that invested in their practices. Maybe they have some debt, a post-pandemic, and now the interest rates are causing them to service that debt at a higher level. So we're giving them more cash at closing. And then if they want, they can at any time, the closing, or every year, we provide an event where doctors can take some of their cash they want and they can buy Heartland stock. It's 100% optional for them. If they do.

Noel Liu:
It's not like a require?

Mark Greenstein:
No. 100% optional, but you.

Noel Liu:
And any, and is there any like staggered, like they got to be like with Heartland for a while to get the other percent? No? Okay.

Mark Greenstein:
No. They got to buy it every year, every, typically in the summertime. We offer an event and they can buy. So they get, every doctor who joins by affiliation. Remember we're doing, we also have our de novo models and we also hire associates everywhere. So the affiliation selling doctors can buy stock at the time of affiliation, or they can wait for the next annual event. Every other doctor can just wait for the annual event. So it's no less than once per year that they can buy in and they can buy, that's topco. The local profit sharing is free from day one for everybody.

Noel Liu:
Wow. Okay. ...

Mark Greenstein:
Can we call it an aligned model? Because without, so let me give you a good example. Let's assume you're a doctor, and you're affiliated in a model that gives you 20% equity, they let you keep 20% or 25% equity in your practice. You have that. Now, let's assume it's a large practice. It grows. It works. The DSO adds value. You add a second or third doctor. You've got. It's beautiful. But the problem is, you're the only one who's profit sharing. So now you have a hierarchy or a caste system inside the practice, and those second and third doctors who don't have that equity, they're not waking up with the same energy level that you are. They don't have it. In fact, many cases, two-thirds of the capacity of the practice doesn't have the energy level that the owner doctor does. And so you typically see in those models higher turnover and less commitment. And that makes complete sense to me because two-thirds of the doctors don't have equity in the practice. In the Heartland model, everybody has virtual profit sharing, which is the purpose of the equity, is to give you profit sharing. We take the hierarchy out whether you're 72-years-old or you're 29-years-old; you have the same compensation model in the practice. So now, not only are you aligned with Heartland, but you're aligned with each other. One grows, you both grow. And now we have a team that's trying to be of most service to their communities. And that's the power of our particular model is it takes away hierarchy. Hierarchy, I believe in most organizations, kills. And once you give a doctor a special status in that practice, they, the next generation isn't as motivated. It's harder to find them. The very best doctors out there in the country who may be chose, and many of them are coming out of dental school, the last thing I want is to own my own practice. I don't want the headache. I grew up in organized medicine. I want somebody else to hire all the people. I want somebody else to manage. I just want to practice dentistry. Many of those doctors come chasing us down now, especially many of them are women; over 50% of the dental students are female today. So they're looking for a higher level of support. They're looking for higher level of flexibility. For them, they don't want to be owners, so they're immediately going into a practice and they're at a disadvantage to the owner doctor of the practice. It would much rather, much, they prefer our model where they're all equal, they're an equal partner, and they also have the support network that if they need to take time off for their family or raise a family, they can do that, they can drop the part time. Many of them shift offices if their spouse needs to move for work, and they get a whole set of services they otherwise wouldn't. That's, and by the way, if you are the owner doctor, one of the biggest opportunities we provide our more senior doctors is they get their grandchildren come along, they want to move to warmer climates, right? If you have 20%, you're stuck to your practice if you're the seller. Can't move. In our model, and we do this all the time, doctors move all the time. They move from one practice to another. We love it. We have doctors that moved from Illinois to Florida to South Carolina. Sometimes we build them their own practice because they've got so much energy at age 55, they want to start again. Other times they move into existing practices. This is a much, this model also supports mobility because it doesn't tie you to your physical box. And everybody now is also equal. It takes out hierarchy and it promotes mobility for those that want it.

Noel Liu:
And that is for your associate doctors as well, right, from day one?

Mark Greenstein:
Happens all the time. A lot of doctors, especially the younger ones, are married to doctors, and so, or MDS, and they go through residencies, they go through fellowships, and they need to move around. And Heartland provides a, especially with the size of our footprint and the number of states we're in, provides a very convenient opportunity for them to be mobile.

Noel Liu:
Oh, that's great. So the de novos, let's talk a little bit about that. So de novos, you guys like to know what's as well. Right? What are some of the pros and cons that you guys see like with existing and de novos? And let's talk a little bit about that because there's a whole, you can write a whole book on that.

Mark Greenstein:
Yeah. Well, we do have a book on it/. And say the pros are the biggest pro is the opportunity is just massive at de novo. But like any new business, it comes with a risk and it comes with a lot of hard work to start a business. And I think that's doesn't have, the door opens, doesn't have a patient base. Now our de novo is typically open with 150 to 200 patients on the schedule when we open it because of where we situate them. Start with the pros first. The pros are, it's a state of the art practice. Our de novos are 10 to 12 operatories with the very latest of all technology, from intraoral scanning to AI to the displays in the office, the way the office is designed, the lab in the office, it's all perfected, to be honest with you. And we know what works, right? We built 100 a year. So we know how to lay them out. We know how, what are the right chairs to buy? What are the right waiting room chairs to buy? What's the right things to put in the wall? What's the right color schemes to use? All of the decisions doctors typically fret over when they're designing their dental offic, we've invested and I've learned over the years what actually works; how wide to make the hallways, how many surgical suites to put in, how, what should be in the surgical suite versus regular laboratory, all of that stuff. But it's a true state of the art. They're absolutely stunning. They're built to be 30, 40-year assets in their community. When people drive by them, they go, Wow. And that's, and we've been doing that at scale. Probably have 8 or 900 of those at this point. Or for, that's the probably the biggest pro. And because of where they're situated, they're at the center of their community. So for patient volume, patient visibility, when you're going into the high schools or you're sponsoring the high school games, right? People will remember your practice because of where it's located. Yes, I'm right in front of the Publix or in front of Mariano's or the Wegmans or whatever.

Noel Liu:
So location.

Mark Greenstein:
Location matters. We've done so many.

Noel Liu:
So you mentioned something about opportunity. What did you mean by that?

Mark Greenstein:
The opportunity is to be so visible in your community. You're trying strengthen your community. And that opportunity and the size of the practice as well is you haven't put up the capital for that. So you can, so we have. We put up the capital. No capital investment required, not a dime. And now you are the leader, of a 10 or 12 operatory dental practice that.

Noel Liu:
Who goes in there? Which doctor goes in there?

Mark Greenstein:
What do you mean, which doctor?

Noel Liu:
So who would be your ideal, like, let's say avatar to go in there?

Mark Greenstein:
I wish I knew because we've seen every size and shape be wildly successful. When we started new de novo, they do best when we have a senior doctor, an experienced doctor, and a junior doctor. The senior doctor typically comes in. They're very productive, and they train up the junior doctor. And junior, I only mean junior in terms of tenure, not in terms of, they're still all, they're both paying the same. But that's the ideal model when we can do it. But I was just in Florida last week, and I had two practices where I had male-female doctor teams, both started within months of graduation from dental school. And they're both just, they've been together now seven years in each of their practices. They're just crushing it. We've seen it all work. I would say, though, the senior and junior doctor model work is the one that you try to get if you can, but there's, even two junior doctors, we have so much mentorship surrounding our practices that they have plenty of resources available to them both to go see and also come into their practice to help them grow that business. It does on the downside, it's a little scary. Are the patients going to come? Many doctors aren't used to going and talking to the physical therapy location next door and telling them about what you provide, and maybe giving some cleanings to their employees so that they can experience your care, building that relationship with the community. So we have to teach them that. It's scarier because the patients are just not coming in the door. In an affiliation, these are often practices that have been in their communities 20 to 30 years. Sometimes more. Sometimes they're second, third generation before they transition. It's, we like to say we have something for everyone, and we have enough practices everywhere that we have something for someone, everybody, something for everyone, in whatever flavor that they want. And that's what we try to provide. It's really a spectrum to meet the personality and the interests of the doctors. But those are the pros and cons of the de novos is, the biggest con is just you're starting a business and it may be a few months going slow.

Noel Liu:
Exactly, exactly. Now let's dive into the other bucket.

Mark Greenstein:
Which, by the way, just to mention, because of their size, they typically grow to be larger. And they typically grow longer because they're newer, so they'll keep growing seven, ten years after they opened. Whereas an affiliation and may only be six chairs is probably going to start to cap out. So it's both are great. Both, we have, we have junior and we have younger doctors who love the affiliations. They love that idea of continuing somebody's legacy. They just love it. And others, sometimes even in the communities they grew up in. So it's like, Oh my God, I always wanted to be a dentist in that practice. Sometimes they take over for the dentist that inspired them to be a dentist when they were a kid. We've seen all of this, and I think that's the key point, is that there's something for everybody.

Noel Liu:
So with de novo, why 12-14 chairs if it's only going to be two doctors, right? What's your game plan? Is it like, just continuous growth like down the road? Is it just future-proofing it?

Mark Greenstein:
No. They get to three doctors eventually. So they go to three doctors and they try to go to 50 to 60 hours a week. Because convenience is important as well. You just want to, it's a capacity, and it's a capacity for having enough to be able to have two doctors and 2 to 3 hygienists per doctor at the same time. And most of our de novos do just that. So they, because the demand is there, the community wants the, it's not a lack of demand for dentistry. There's a lack of dentists and hygienists to meet the demand.

Noel Liu:
All right. Let's dive straight into the acquisition bucket. And what's the pros and cons that you've encountered?

Mark Greenstein:
We've done acquisitions of, we've done, the largest acquisition in dentistry was done in June of '21. So it'll be three years ago and two months June 15th.

Noel Liu:
Wow. After Covid.

Mark Greenstein:
Yeah, we did that, we bought American Dental Partners, another wonderful practice that had been in their communities 30 years, Metro Dental up in Wisconsin. Excuse me, Minnesota. Sorry. Metro is up in Minnesota in western New York, Buffalo Market, the Western New York Dental Group, UDA, University Dental Associates in North Carolina. We had a bunch of regional brands, Forward Dental. And we, that was not easy, but boy was it the right thing to do. And we just introduced into Heartland a group of so such high quality clinicians and team members in just fantastic practices that have been deeply rooted in their communities. So it's been a real boon for us. So that's probably the biggest, that was 275 offices, and we've done smaller ones at ten offices. We've done 20 office groups. About 11 years ago we did nine-hour group, which has been also another great one. We bought MyDentist, which is in Oklahoma and the southwest many years ago. Every couple of years we try to find the very best dental groups out there. And if they're interested and they're willing to be open to our model around how we like to empower the dentist, that the doctor is the leader of the practice. If they're interested in that and the services that we offer, then it can be a great match. And so far we've had pretty good luck. They don't all work out what's a portfolio like anything else, but for the most part it's been something we've been very successful with and we're continuing to be quite active.

Noel Liu:
So for the most part, do you guys just replace the entire executive team or do you like keep some of them who's good?

Mark Greenstein:
So it really, it becomes, very rarely just the CEO ... be A CEO somewhere else. Not really us. It's what do they want to do, right, at the operational level? So it's, but we're, I mean, even if, there's what they call the magic word of synergies. Once you get, we have so many team members from American Dental Partners that are still with us because we're constantly growing. So we need great operations talent, we need great data scientists. We need great folks who can handle legal and accounting and finance and payroll and everything else that we do, HR. In fact, we have HR members during our HR team from American Dental Partners. So it's, I think when you net out those who actually want to stay, it works out pretty well. The Neibauer, our chief of staff, or our COO, Kim Urso, came from Neibauer; that was 11 years ago. We had many doctors still with us from MyDentist. Many of their ... Tom McKnight and our, one of our vice presidents of operations came from MyDentist, and that was over a decade ago. So I think we've got a really good track record of creating long careers for those who are interested in growing.

Noel Liu:
Hey, Mark, all I can say is if they're staying, there is definitely something going on, which is, which you guys are doing right. Otherwise, we know how they are, right? They will come and go.

Mark Greenstein:
Dr. Liu, that is the easiest way. People say, I often get asked, How do you evaluate? Because we evaluate 300 dental practices a year, probably a dozen groups. And they say, How do you do all that? How big is your team? It's like, you know, it's not that big. How do you do it so fast? It's really easy; you prioritize what you look at. What do you, what's the first thing you look at? How long are the doctors and team members there? All right. I can learn more about any asset from that. And so you're spot on, Dr. Liu, if the doctors have been there for a long time, if the turnover is low, hygienist turnover is low, team members are there, then that's the entry point to then say, Okay, now please send me the financials.

Noel Liu:
Precisely, precisely. And I think that's a huge point to take away, because that's where it drives the value of an organization. Like, how long has the team members been in that place? Last question for you is: What is Heartland's vision moving forward?

Mark Greenstein:
Our vision is to be a world-class company and the leader in dentistry. That is our stated vision. And I think our vision is to keep doing that. We think we are the leader in dentistry and that gives us responsibilities. So AI, for us, is as much about helping the sector move forward with AI. So a lot, if you look at the company, we're working with and how they're advancing their AI in a real, right now, at a record rate, it's going to benefit the entire industry because we're just pushing the limits of that technology. We partnered with Align Technology. Oh, geez, for well over a decade now, a truly world-class company, pure R&D that has created the entire digital ortho. And we've been partnered with them for a long time, and we helped them get better. And they help us obviously every day with their products and services. But we, so being the leader in dentistry requires us to give back. And we do that through helping other companies serve dentistry better. That's one of our key planks. And then of course, we do many mission trips and give back to communities in need and help dentists grow. We help dentists from other countries come to the United States if they want and get their license. We have a lot of programs designed to help, basically, Americans get the dental care that they need, want and, desire. I think that's essentially what we're all about. If you focus on the doctors and you focus on eating dentistry and helping them lead dentistry, the rest of it, the PNL, the metrics, everything else takes care of itself. It really does. Just stay focused on helping doctors take care of their patients, helping them get the skills that they need to do as much as they'd like to do, practice where they want to practice, do the procedures that they want to do, and help them engage with their communities. The rest just takes care of itself. Heartland Dental University is the largest education, as I said earlier in the country, and we're super proud of it. Our founder, Dr. Workman, invested in High Point University. The Workman School of Dental Medicine takes its first class in August. So that's the newest dental school in the United States. And it's, so this August, it starts its first class. We're working actively on creation of hygiene schools. We're, that's how we interpret our vision to be the leader in dentistry.

Noel Liu:
You mentioned international. What about growing international? Global?

Mark Greenstein:
Two years ago we made an investment in Canada and that is international. Coast international, but within a second largest group up in Canada, it's called 1-2-3 Dentist. And we're getting smarter. And it's very different. We often say when we look at our opportunity strategically, we still think there's far more opportunity in the United States. The runway here is far longer than it is in any other opportunity globally. So I think you'll, I think our investment in Canada is a very important one, and we're continuing to invest in it. And they're doing just fine. We support them. We provide our systems. When we say systems, I mean how we help doctors and teams with workflow and verbiage and whatever services they want. And, but, you know, Canada in total is only dental is only 10%. It's only 10% of the US population. It's only, dentistry is only 10% of the size of it is in the United States. And so there's still so much more opportunity. We just opened our first office in Salt Lake City, Utah. We could do a lot more there. That community is just booming. Nashville is booming. The Carolinas are booming. There's so much in the United States still to go that I still think that's our greatest opportunity.

Noel Liu:
I think that's a great strategy because you can do so much more here. That's so much more land to fill. So love it.

Mark Greenstein:
And I don't see a lot of synergies cross border. It's hard enough to navigate the regulatory environment in the United States and do it at our quality level, which is exceptionally high. It's very different elsewhere. So we love the United States. We'll continue to support our partners in Canada. They're doing great. They have all, they need to continue to grow and expand across that country. But I think our focus is primarily on growing here in the US.

Noel Liu:
Got it. That was great, Mark, thanks so much for coming on. Thank you for sharing so much knowledge. This is something which I think I took away a lot of keynotes. Well, I'm not sure if you know or not, I was taking a lot of notes.

Mark Greenstein:
Okay, Dr. Liu. Listen, I really appreciate the opportunity. If you or any of your listeners have any questions, they can reach out at Greenstein@Heartland.com, and I'm on LinkedIn, they can connect with me. We spend quite, part of our vision to be a world-class company, and the leader in dentistry means we help doctors and other groups all the time. It's not a competition. How could it be a competition when we're not 97%?

Noel Liu:
And that's one of those key takeaways I would like everybody to know. It's more about collaboration and networking, and that's what I feel it is. And that's where the future is.

Mark Greenstein:
I think that's exactly right. It is about collaboration. In fact, we call our quarterly meetings collaborate to connect, c2c's, and, or connect to collaborate, sorry, I had it backwards; connect to collaborate. I think the essence of Heartland is collaboration. The model, we talked about equity and how we should profit, share, and all that. Those are really just aligned to get people to work together.

Noel Liu:
Whatever it takes, right?

Mark Greenstein:
Whatever it takes. Because one and one definitely can equal three or more.

Noel Liu:
Mark, thanks again for your time, and we appreciate the opportunity. Mark Greenstein, you guys know where to reach him at. Once again, make sure to like and subscribe, and we will catch you on the next episode.

Mark Greenstein:
Have a great evening.

Noel Liu:
Thanks for tuning in to the Secure Dental Podcast. We hope you found today's podcast inspiring and useful to your practice and financial growth. For show notes, resources, and ways to stay engaged with us, visit us at NoelLiuDDs.com. That's N O E L L I U D D S.com.

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