DSOs Uncovered: What Works, What Doesn't and What's Next

I'm sorry we were doing the podcast and all that stuff and it went really good We did like one take about 40 some minutes and he called me next was like yeah, and you're gonna kill me I forgot to record the zoom Welcome to it comes in points a Seattle study club podcast where we will explore a myriad of topics clinical health and well-being psychological education business and much more I'm your host Greg Tice Yeah, thanks for having me Greg. It's it's always fun to work with Seattle study club But yeah, I'm the co-founder and CEO of icon dental partners and excited to kind of talk about the DSO landscape And what's happening in the dental industry right now? That's great So we've known each other for quite a while. Why don't you give everybody a little bit of your background? Yeah, happy to happy to I started a Marketing company back in 2009 and Really by 2011 we decided to focus exclusively on the dental industry and so that company became weo media So we oh used to partner with Seattle study club years ago and have a great relationship Actually built our website long long ago. Yeah, yeah sure did and yeah So that got me into the dental industry and it's just been a fun ride since then and So now you've moved into sort of the DSO space What does that journey look like? How did you transition from weo into into doing what you're doing now? Yeah, great question one of my former clients at weos a general dentist named Jeremy Dixon and he started a group But kind of a regional DSO in the northwest 2005 six-time frame and he grew that for maybe eight or ten years and sold it With some investors and he took some time off and then he started a consulting company called the DSO project It was really one of the first kind of national DSO kind of consulting agencies and that was 2017 and he approached me in 2018 about partnering with him because he knew I knew dental and we knew each other from weo And he knew I knew how to grow companies and so we we partnered up in 2018 and started working in the space and I found it fascinating. It's been a lot of fun and so you you were with a different organization prior to icon and What prompted the shift to icon? Yeah, great question. So we were Jeremy and I were spending you know quite a bit of time traveling the country consulting with kind of emerging DSOs around the country smaller groups You know who are trying to gain traction and learn and so we would help them you know build culture put in systems build management teams All kinds of stuff and it was a lot of fun, but after doing that for a few years You know, I went to Germany and said hey, what would you think if we built our own group? You know based on everything that we've we've collectively learned here. I think we could really do something you know Pretty cool and he was all in he's like, yeah, let's do it And so that's when we started working on the initial concepts for icon and You would classify icon as a DSO yes or no? Technically, yeah, but it's much more of a partnership than than what people typically think of when they think of DSO most people think Oh, it's corporate command and control That's not at all what icon is it's quite different from that so there is a different model and I think I am getting a Better picture of the icon model, but why don't you give us sort of the 35,000 foot view What does that look like? Why is icon different than a traditional DSO? Yeah, it's it's really different and a lot of it has to do with just the the origin story so when we decided to build it We spent a good 18 months in I interviewed over 200 doctors, you know, then it general Dennis and specialists Over the course about over 200 doctors over 18 months and I would ask some questions, you know Like what would an ideal situation look like you and a group, you know, what would what would be attractive? What kind of things stress you out that would be nice to offload and just kind of really tried to peel that onion back But on the flip side of that coin I was also asking them, you know What horror stories if you heard because everybody's heard horror stories you've been in dentistry more than 15 minutes You've heard a bad story about a DSO right and so You know, and that was that was something we were really cognizant of so we spent a lot of time asking docs what they wanted and So how most DSOs and groups form as you usually you start out with 3 4 5 doctors and they get you know a few locations going and then they they bring on some investors at some point and scale it up and they typically Build it on the fly as they go trying to figure it out as they go and that's how almost all DSOs their origin story Our group is quite different, you know, Jeremy had already built one for 10 years I had been consulting in the space for four years and so we had the luxury of really taking our time building from basically blank canvas You know, what are the biggest issues and problems in the current DSO model? How do we fix those and once we had figured all those problems out then we started building it Which is a totally different approach from how most groups start? Okay, so and I want to learn more about the model that I want to back up a second So what were you hearing from the doctors? What were they looking for if they were considering? Selling to a group or what would give me a horror story and give me a couple of things that they were They were looking for if they were to consider selling to a group. Yeah. Yeah, the horror stories are easy. Those are all over the place You know lack of clinical autonomy a lot of times groups will say oh sure doc you have clinical autonomy As long as you use you know this supply company this lab this bonding agent this formula right that's not clinical autonomy, right? Yeah Another huge horror story is on the staffing site. It's it's really common and normal For once a doctor joins a group that the group now is full control over the staffing and the practice So the group can come in any time you want me to group has command over that yeah, so they can come in fire the office manager fire the hygienist fire the associate doctors Anybody who's not a shareholder they can fire any time they want to and that's a nightmare and that happens all the time in these It does happen okay all the time it's very very common And so there are a bunch of things like that that we said that's those are easy things to fix in our opinion and we fix them But what the what the doctor said they really wanted in addition to obviously autonomy for those things was you know Just being able to delegate a lot of the non-clinical headaches being able to have like true financial upside a lot of times And I can explain to you you know a lot of how the financial piece of this works But a lot of times that the investors will structure things in a way that's really advantageous for them and not so much for the doctors Right so in essence what I'm hearing is the doctors were looking for clinical autonomy they wanted the ability to Make some staffing decisions and Then there's the financial component Now my understanding is also that you're not looking for The same type of practice that a traditional DSO That's the right way to say it you're that would be a traditional DSO model and you guys are A little different more of a partnership. Yeah, so So tell me a little bit about that. What is that what are the practices you're looking for Versus what is a traditional DSO typically doing? Yeah, so if you look at the doctor kind of demographic and in a traditional group You've got a lot of young doctors right out of school and then a lot of doctors who are kind of in the tail into their careers Last two three four years of their careers typically. So you've got a lot of docs in the 30s a lot of docs in their 60s That's kind of how most groups look ours is just the opposite almost all of our doctors in their 40s and 50s So we're really looking for doctors who want to help us build a phenomenal business and really I like to say we're disrupting the DSO status quo We're really trying to build a better model for the doctors And there's a lot of things we built into our model that are extremely beneficial for doctors But that requires us to partner with doctors for a longer period of time So we're looking for docs that are still planning to practice you know seven 10 15 years And then we can really build something amazing together and our business model is very much built on The benefits of these guys that they can get from us long term. Yeah, so that's very different than the traditional model Typically it's what a two three four year Exit plan yeah for the clinician who is selling the practice and you're looking for somebody who's gonna stick around long term Somebody who's gonna contribute to the organization wants to continue to grow yeah But grow with a larger group of individuals as well Yeah, that's right. That's right. We are really the things that we've built into our model You know, yes, there's a financial upside which is very significant and we can talk about that too But there's also a mentorship component You know, we built an in-house icon training institute and that's really to help the doctors and their teams Continue to build their clinical skills That's that's also why we're so excited to partner with Seattle study club Because our our philosophy is all about clinical skills, right? So we we try to partner with doctors who are running study clubs who are doing CE advanced courses Some of our doctors are presidents of state dental associations I mean we really try to partner with high level docs who are really trying to do dentistry the right way for the right reasons Okay, so let's get into some of the nitty gritty here then so You say clinical autonomy Yep, somebody else says clinical autonomy. Why should I believe you that yeah if I Join icon. I'm still gonna have clinical autonomy Yeah, you just said DSO traditional DSOs say that but don't do it Why should I believe you yeah, you got to read the legal So what happens with a lot of groups is they will put in their legal documents that they have a lot of Flexibility that there's like mutual decision-making on supplies or labs or things of that nature in an hour legal documents We very clearly specify that the doctor has full 100% control over which services to provide which labs to use Formula E's suppliers all of it is are fully up to the doctor's choice It's in our legal documents now you were telling me earlier about how you develop those legal documents With the assistance of clinicians who were helping you sort of found this group. Tell me a little bit more about that. Yeah, that was an interesting process. So when we were building the group, the dentist employment agreements and the non-compete and the support agreements, there's a number of legal documents that go into how you structure a group like this. We went through this process. We have a board of directors that are all doctors except for myself. And so we went through that process and we basically had the attorneys working with the Del Sto practicing. Yeah, yeah. Okay, so I'll active. Yep, yep, yep. Except, well, so Jeremy, my partner, Jeremy, he's on the board and he and I are on the board and then three other doctors on the board are all currently practicing doctors. We're kind of in this co-founder group. And so how we literally did this was the doctors met with our attorneys and we just literally said, okay, docs, how do you want this to read? What terms do you want? What do you think is fair? And they literally told the attorneys, here's how we want this to read and that's what we did. So the icon attorneys built all the legal documents based specifically on the doctor input and then the doctors got a separate law firm separate from our icon law firm and they did it again and they went through all the legal documents. Okay, here's what we're trying to accomplish is that what these things say. We made a few minor tweaks as a result of that process, but it was five months of legal, but the end result was totally worth it. So we have, I can say, with a high degree of confidence, the most doctor friendly legal documents are going to find in any group because it was literally written by doctors. Yeah, so written into those are true clinical autonomy, true choice in supplies and materials and products, technology as well. Technology and also staffing. So like I said, staffing is a big piece in that area. And that's the, that was the next one I was going to go to. So, so if I'm the clinician, I have full authority, hiring, firing, promotion, what about pay scale, those kinds of things, what does that look like? Yeah, yeah, so that again, the doctors have full control over setting the pay, offering the benefits, like whatever they want to offer to their, their practice team members, they can continue to do that. Now on our side, we can, we're a full service HR support and we do, you know, full service non-clinical, so IT, marketing, payroll, paying the bills, everything like we do all of it, but it's, it's the doctors have to approve these things, right? So we can hire and fire only if the doctor approves us and says, Hey, can you guys help me with this or that? We can do those things, but they have full control over all that and it is in the legal documents very clearly. So in essence, I can use you as almost as much or as little as I want to. If I need help finding a hygienist, you'll go help me find a hygienist. If I want to do that myself, I can do it myself. That's correct, but generally people will have us do those things just because they don't love doing those things, right? It's better for them to do clinical, let us do the non-clinical, and that's why it's a partnership, right? It's like they legally control all this stuff and we will help with everything that they don't really love to do. Okay. So let's cut to the chase with what obviously many people are concerned about. What does that look like for me financially if I were to join icon? Yeah, that's, that's a big difference. So this, this again goes to kind of the origins of how we structured this. So in a traditional groups, anytime you get a group over, I would say 10 locations or more, you're probably going to have investors involved at that point. Investments is much larger than that and we don't have investors and we probably won't need investors for years. So what that means, there's a lot of implications of what that means. In a traditional group, you will have investors probably owning half of the company. Doctors may be own 40% and management owns 10%. Okay. So that's kind of typical. In our model, since we decided not to have investors right now, we basically are treating the doctors like the investors. The doctors aren't literally like writing checks to invest, but they're kind of investing their, you know, their time and effort and practices into the group. So, functionally, I kind of think of them like the investors. So we basically gave the doctors the investors share. So the doctors have 90% ownership of icon and the management team has 10%. So. Okay. So let's just review that real quickly. So a traditional DSO model is 50% owned by investors, 40% by the doctors and 10% by the originators or technical owners. In the icon model, it's 90% owned by the clinicians, 10% by you, no investors. Correct. Okay. And what's really important to understand about that too is, is in a traditional group model, when you would have this 40 or 50% ownership to the doctors, that's a combination of ownership at different share levels. So normally what they will do is they'll have holding company like parent company shares and then more like a regional share. So like, hey doc, you can have, you know, 30% of your shares at the holding company, the parent company and the other 70% are going to be at the Washington level or the California or the Arizona level, like a regional approach. Okay. And the reason they do that is the parent company gets the biggest chunk of the returns. So they structure it that way so that most of the returns go to the holding company, meaning the investors. In our model, there is only holding company stock. That is all there is. So all of our doctors get all of their stock at holding company and they have 90% of it. So if you compare apples and apples, if I pay a doctor a million dollars for his or her practice and some other group does, not only are they getting a much better category of shares with us, but they're also getting 90% of the upside and the growth of that platform versus 40 or 50% with a traditional group. So there is massive financial upside in how we've structured this for our docs. Great. All right. So not being the brightest bulb in the room, explain to me like I'm a fifth grader. What? Financially, what does it look like? I run a million dollar practice. I join, I'm going to join icon. Be simple for me. Just spell it out plain. So the first thing that really people need to understand about how valuations work is basically on a multiple of EBITDA, right? So in the historically in our industry, dental practices have been valued, you know, bought and sold as a percentage of collections. 70 to 90% of collections is a typical purchase price with groups when you have investors involved in analysts and stuff like that. They look at an accounting metric called EBITDA, EBITDA, stands for earnings before interest taxes depreciation and amberjacks. Yeah. If I hear that term again, I'm going to get six. I know. It's everywhere, right? It's a, it's essential. It's an accounting acronym and it basically looks at the cash flow of the business. Different from net profit, it's actually the cash flow of the business, which is a way for analysts to compare and contrast businesses. If I'm an investor looking to deploy some capital, do I want to put that into this business or that business? Well, EBITDA is a good way to kind of compare apples and apples. Okay. So I have a million dollar practice in collections and production. What does that look like for me? So let's assume they have a multiple, you know, a margin of let's say 20%, so on a million dollars of collections, they got like a 20% margin, $200,000 of EBITDA. Right. Currently they would sell the practice for four to five times EBITDA, so 80 to 100% in collection. So it's a similar number when you're talking about an individual practice sale. Now where this gets very interesting and where all the wealth is created is a finance term called arbitrage and you may have heard that tossed around. It's not nefarious or bad or good. It just, it describes a finance condition, right? So arbitrage is an explanation. If you have an asset that you buy in one market and it's instantly worth more in a different market, the difference in that value is an arbitrage. So for example, if I pay for a dental practice, I pay a doctor five times EBITDA for their practice, but my platform is worth 10 or 15 times, right? So as a platform gets bigger, the EBITDA, the cash flow gets bigger, the multiplier also gets bigger. And so if you have a group worth, you know, 10 times EBITDA and they buy a practice for five times, the minute that that acquisition is done, that practice at yesterday was worth five times EBITDA, today is worth 10 times EBITDA. So we literally double or triple the value the practice overnight simply by putting it on the platform. And in a traditional model, most of that upside is going to the investors. In our model, it's going to the doctors. So how you play this out is typically like with investors, they are shooting for getting a three to five times return in three to five years. And that may sound crazy to like the general market was saying, how can you get a 300% return in three years? That's impossible. Not if you're buying things for five and you're worth 10 or 15. It's actually not hard to get triple at all. In our model, we actually think we can get a six times return in the first three years. And that's not aggressive. That's pretty conservative growth. So the numbers are staggering when you do the math on it. Yeah, it doesn't sound conservative to me at all. Yeah. All right. So bring it back. Remember, I'm simple here. So I have a 20% margin, which I'm assuming does not include the salary I'm drawing as a clinician in the practice. That's right. That's an expense that's already been accounted for. So the 20% margin, $200,000, EBITDA cash flow, however you want to refer to it. What does just compare and contrast for me in a simple way, traditional DSO sale with an icon purchase? What, to me, as an individual practice owner? Yeah. In a traditional group, they would typically offer 65 to 70% of the purchase price in cash, and then 30, 35, 40% would be in stock. And in our model, we do just the opposite for a number of reasons. So we'll typically give 30% in cash upfront if they want that. They don't have to. They can actually roll all of it into equity. But typically, they're going to roll between 70% or more into equity. And the reason we do it that way, there's a lot of reasons from a finance and a banking perspective, which we don't need to go down that route. I'll have a hole if you don't want to, but from an alignment perspective, it is much, much better for the doctors. So that they have way more upside in our model than they do in a traditional model. And so if you had in this example of a million dollar practice, $200,000, $200,000, $200,000, of EBITDA, we paid five multiples, so you get a million dollars, right? That's a purchase price. Well if you have 700,000 of that is in stock and we can get, let's just say we get half the projection we think and we get a three X and three years like a traditional group, that 700,000 is now worth 2.1 million after just three years and you're still getting your salary the whole time. The other thing that people have to understand is as you aggregate value with a stock, you're paying that out eventually when you cash that out, that's at a capital gains tax rate as opposed to salary which is an ordinary income rate. So you've got about twice as better from a tax advantage perspective. So when you do the math, it's 10 to 15 times more money over a five to seven year period in a group versus remaining independent. It's a staggering difference. Yeah, so I mean, it almost don't take this the wrong way. It almost sounds good to be true, right? I understand. And when it sounds too good to be true, what's the risk? Again, if I'm a clinician and I sell to an individual, so a private practitioner buys me, there's very little risk other than the transition time and potentially if I didn't choose the right person, what happens with my patients? But there is risk if I'm getting stock, et cetera. There's tell me why it's not too good to be true. So I think about it in terms of like, let's say, let's, let's, Greg, let's say you and I are going to start a real estate investment company, like the Greg, the and real estate company, okay? And we go out and we're buying homes, rental homes for a million dollars a piece. We go and we buy 10 rental homes. So we spent 10 million dollars and 10 rental homes. Now let's say instantly those homes are now worth 30 million dollars, even though we only paid 10. We would have a pretty good return on our rental business plus we'd have rental income, right? So now that doesn't exist in the real world, right? It only exists when you have arbitrage. And so where you get arbitrage is in situations where you can buy lots of independent practices or businesses and aggregate them so you have a large platform. The difference is in, they're literally considered different types of investment vehicles when you have small versus large. So independent practices are not investable. They're just independent. So they're valued at a single doctor transition basis. That's why they're valued the way they're valued. Once you get up to 100 million, 2, 3, 4, 500 million dollars of revenue, 20 percent margins, now you start looking like publicly traded companies. Those are traded between 12 and 18 times EBITDA. So if I'm an investor, I'm looking at, okay, I have 50 million dollars to deploy. Am I going to invest in the social media company, the software company, this dental platform? It's the dental platform then it becomes valued like an investment vehicle. And those are 12 to 18 times EBITDA. So it's not too good to be true. It's literally shifting. It's like the caterpillar becoming a butterfly. It's a totally different world we're playing in now when we get valued as a platform as opposed to being valued as an independent practice. So that's how that it's not too good to be true is because you have platforms with 12, 15, 18 times, buying up businesses for five or six or four times. You're instantly doubling your tripling your money every time you buy one. As long as you are smart with your debt ratios and your cash flow and a bunch of finance up, we don't need to go down that rabbit hole right now. But we are smart in those things and we've modeled this. As long as you do those things well, the financial returns are amazing. All right. So I want to shift gears just a little bit and just talk about the industry in general and get your feedback on that. There's a lot of discussion around how much of the market will DSOs take over? How many private practices are going to live independently five, ten years down the road? Obviously we're all just guessing at what that looks like. What you've been doing this for a while, you're ingrained in it. What does your take on what the market looks like over the next three, five, ten years? Yeah, that's a great question. We think a lot about that. So actually I think part of the answer that came from the Seattle Study Club Director's Summit this summer in Chicago. You guys had Dr. Marco Vuichich from the ADA's Health Policy Institute lecture phenomenal. If your listeners have not seen that guy talk before, man, they should seek him out. He has a wealth of information and a lot of it, frankly, is on their website too. But I reached out to him and he gave me a bunch of his slides from that presentation he did and he gave me permission to use them. So in those slides, there's a lot of information around that topic. So it's interesting. He breaks out the data by specialty, by age, and what you see is initially like years ago, general dentistry led the way. It was all general dentistry specialists. We're not really that involved. In over the last three to five years, specialists have come roaring on with a vengeance and now two of the top three kind of penetration are like oral surgery orthodontist and then general dentistry. So specialists are right there with the general dentists in terms of adopting this model. But if you look at the age demographics, it's staggering difference. If you have doctors that are 55 years and older, there are very few, maybe 10, 15% of those folks are involved in groups. Whereas if you look at the doctors that are like 35 to 40, it's like over half of them. And so as you play this model out over time, you kind of come to the logical conclusion. Like right now, people kind of guesstimate, there's maybe 15, maybe 20% of the doctors, they think 20% is high, but maybe 15 to 20% of the doctors are currently involved in some sort of group practice. But if you play this model forward 20 years looking at Marcos data, it's easy to see how half the industry is in a group 20, 15, 20 years right? If not more. 50%. I think so. Even though, and I'm going to challenge you a little bit on this, but even though, and I only hear this anecdotally, but the young clinicians coming out of school, many joining DSOs early on or group practices, but some of them becoming disillusioned and breaking out on their own, whether it's four or five, six years down the road, does that trend die out? What is, I don't think so actually. I think that's a great insight that you just raised. As I was interviewing doctors building icon, it was interesting. I talked to several doctors who were in the young ish part of their career. They told me which was really enlightening. They said, "Okay, I came out of school. I went straight to a DSO. They helped me pay down my debt. I didn't have to go into further debt because they already have a bunch of debt from dental school, right? It's even more of their specialists." They're coming out with a lot of debt. They don't really want the additional debt. They said, "Yeah, I want to put in my two, three, four, five years at a group, but my goal is really to leave here and start my own practice." I talked to a lot of doctors and that's exactly the path they took was starting with the DSO. They went private practice, but where this gets interesting is when I was talking to these guys, I said, "Yeah." I said, "When I was working for the DSO as an associate straight out of school, I saw how much money the other doctors were making who had shares." I was like, "This is stupid. I need to go build some EBITDA and come back and join the DSO with shares." What they were telling me, right? This is interesting. What they were telling me was, "I start with the DSO. I leave after a while, go private practice. I build up my own practice for five years or whatever, get some nice EBITDA, and then I sell back to the DSO and I join them again." Then you can make way more money that way, as opposed to if you just stay the whole time with the DSO. That's what some of the doctors are telling me. I don't know what percentage of people are going to follow that path, but I found it interesting that I talked to multiple doctors and that was their strategy. Yeah, I don't know. Maybe you're right. Maybe it won't be anywhere near 50 percent. Yeah, no. I'm projecting. I think it will be. We'll see. Right? Let's assume it's your 50 percent number in 10, 15, whatever the number of years is. If you look at the landscape from a large group DSO, right, the Heartland's Aspen, the very big DSOs to the mid-size, which is where I'm guessing you project the icon playing. Yeah. And the smaller multi-location practices or break the percentage of practices of that 50 percent, how many are in that huge DSO market and how many are mid and how many are just 15, 20 practices in a region? Yeah, that's interesting. I don't know that I have a lot of confidence in my answer here, but I'll tell you at least what I think. So what we're starting to see-- For the older folks in the audience, this is the Karnak says portions. That 90 percent of the audience won't get because it's Johnny Carson and he was dead before they were born. Right. Johnny Carson. Swami says, "Ed McMan's laughing on the side. I love it." So I think what we're starting to see are larger groups. They're really struggling to grow because when you're small and emerging, it's easy to get a three-ex return every few--I mean, it sounds flippant, but it is. It's actually not hard to get a three-ex return in three or four years. When you're 1,000 locations, it is really, really tough. What's happening with these really big guys is the only way they can get to that type of growth is to buy middle-sized guys. So if I'm 1,000 locations, I've got to buy somebody who's 200 locations in order for me to get a decent return. Or, there's also been talk before COVID. There were three DSOs that I know of that were, according to investment bankers, that were preparing for IPOs. Those all got shelved because of COVID. There are two, again, that investment bankers are telling me that are preparing and flirting with maybe doing an IPO in 2025, we shall see. So I think what you're going to see to answer your question, long-term, I think the big guys will continue to get bigger. I think there's going to be some consolidation. But I also think there's a lot of people like me out there that look at the big guys and think that's corporate. I want nothing to do with it. I'd much rather stay small and do this the right way. So I think you're going to see a lot of icon type groups out there that are trying to really flip the model around and make this how it should have been in the first place, mainly about the doctors and the patients. And so I do think that there's going to be a growing trend of groups like us that are fighting the corporate approach and say, no, this is a better way to do it. And as we gain traction, I think we'll start seeing the model shift more in our direction. but relative percentage is I don't know. - Yeah, and that's a great way to bring it full circle because one of the things you and I have talked about quite a bit before we ever even really started and moved forward with the Seattle Study Club icon relationship, just in our personal relationship, was the importance of comprehensive dentistry, right? Comprehensive diagnosis and treatment planning, which as everyone knows is at the core of Seattle Study Club, but that's a core, at least you've stated that to me, that that is a core belief for icon as well. - Absolutely. - It's not just the clinical autonomy and what I want people to know is one of the things that we've talked about is as practices join icon, one of the things you're encouraging them to do is join a Seattle Study Club in their area. - Yes. - And Seattle Study Club, any Seattle Study Club member that joins icon, now I'm gonna throw this out there 'cause you promised it, but anybody that joins icon, icon will actually pay their Study Club tuition because you recognize the value that that brings to that practice and the growth of that practice. - Right, so the idea is if there are study clubs who join icon, we want them to continue doing what they're doing. Right, we don't want this to be a financial burden on them. So yeah, we will help that cover that cost because from our perspective, we know the right way to do this is to have put clinical leadership development, clinical development, all that needs to be at the forefront 'cause that's a big part of what doctors looking for back to my earlier comment about the research that we did. They want a clinical autonomy, staffing autonomy, financial upside, all these kinds of things. Another big thing was really mentorship, like they wanted to learn and improve their skill sets. Some of that's on the business side, most of that's on the clinical side. And so yeah, partnering with an organization like Seattle Study Club was perfect for what we were trying to build. - Yeah, that's one of the reasons I'm so excited about this because of, and I've known you long enough to know about your commitment to comprehensive dentistry and the autonomy, but the word gets thrown around a lot of the clinician, the ability for them to make their own clinical decisions based on their own rationale and justification and not that being pushed on them or hoisted on them by someone else. - Right. - So let's wrap this up with some advice from you. If I am thinking about selling a practice and have decided to move to the group practice, DSO, side of the equation, give me the top three things I should be thinking about when looking at those opportunities. - Yeah, so I think when you're considering, you know, changing ownership to more of a group model, you really need to understand the employment details of the contract. So how are you compensated? What type of productivity thresholds are there? Are there cloudback situations where if you don't perform at a certain level, there's your stock at cloudback. Those are really important details to understand. - Okay, so let's just start there. So when you say the employment details, that's me is that not a clinician, obviously, but the individual clinician, their employment agreement with the DSO and what those parameters are, including if I don't meet a certain production level. - Right. - I may be giving back some of the stock that I was promised or I was given. - Yeah, that's pretty common in the agreements. And so you need to be aware of that. And one of the things that again, that we do at ICON, that's pretty cool is, so when we partner with the practice, we actually purchase the non-clinical assets of the business. So the doctor will continue to own the EIN. The doctor will continue to own all the patient records and patient charts. We're buying the non-clinicals, we're buying accounts receivable, equipment, things like that, right? So when we partner with the practice, the doctors are actually, when they sign an employment agreement, they're technically employing themselves. Because again, we have a firewall between the staffing decisions at the practice level and the support team. And so when I explain this to the doctors, like hey look, when you sign an employment agreement with ICON, it's the practice employing you, which you technically still know EIN, and you as a dentist, as a W2 dentist, you're being employed by the practice, not ICON, technically. Now ICON administers payroll, there's a contract between, you know, the group, between the ICON platform and the practice. And so that's where EBITDA can flows up in the form of a management fee and stuff like that. But the doctor technically is employed by themselves. And so when it comes to a lot of that, that's how we structure it is really a pro doctor. - Okay, so that's the first thing for them to look at, for us to look at is the employment agreement. What's the second? - How the ownership is structured. So we talked about this a bit earlier, but making sure it's holding company stock, if possible, that's the best kind of stock. And then also what kind of, you know, clawbacks are there, because again, it's very common when you go to, so a lot of times doctors get all, you know, enamored with the shiny thing that is the multiple. Oh, I got this multiple, and here's my practice valuation. And what they fail to understand is, okay, that's the starting point, and then the stock grows, and that's all well and good, but it only matters how much you can actually take home. What can you actually cash out at the end of the day? And there's a lot, a lot of groups they have. And again, in the legal, they have contracts, stipulations where if you don't replace a certain amount of your production in EBITDA before you leave, there's massive clawbacks. And so you might think you're walking with five million of stock, but you might only get three or two, because of, oh, I didn't understand that part about the deal. So again, how we structure this is very different and unique, how we give doctors a lot of flexibility at the end of their career, to hold on to their stock, and to allow us time to ramp up new doctors, to fulfill those thresholds. Our doctors never would need to walk away without the full value of their stock, but a lot of groups, that's kind of, if you really want to like, know like an insider trick, this is what investors are banking on, is that the doctors won't understand this. They think they're getting a butt load of money, pardon my French, when they leave. And what really happens. - That's the official term. - That's a financial term, butt load. And so what happens is when they go to leave, when they don't understand these clawback mechanisms, the investors know they're gonna claw back some of that stock and get to benefits from that, them, the investors, not the doctors. And so these are, I see so many doctors getting screwed on this stuff. And so when we designed our model, we were very careful to like, think about every step of the process and when they join, when they affiliate, they grow, they partner in when they exit. Every step of that needs to be carefully designed so that the doctors don't get screwed. And so we've done that very carefully in our model so that they don't get screwed in our model. But it happens a lot. - Okay, so that's two and then give me one more. - I would just say the type of timeline you're looking for, what kind of support. There's a lot of, like to say, if you've seen one DSO, you've seen one DSO, they're all different. There's some common characteristics, but in my opinion, how much longer do you want to practice? That's something you need to think about. How burnt out are you on dealing with the nonclinical versus running, being in control of everything? And those kinds of things will help dictate what type of group you're looking for. If you're like ready to be done in two or three years, there's certainly a whole category of DSOs that are happy to do that. If you're, and this is where I'd like to draw a distinction, the vast majority of doctors and icon were not looking to sell their group. They were not actively working with the broker. They weren't even on the radar of transition to their practice to a group. They heard about me from some other buddy who was in icon or new of icon. They said, "Hey, you should talk to Ian about this." I don't want to sell my practice. Like, no, no, no, no, you don't understand. Talk to Ian. After we would talk to, like, oh, this isn't what I thought it was. The vast majority of our doctors who join icon weren't looking to. That's the one thing I would caveat is, we're not necessarily looking for doctors who are looking to sell. We're not my retirement plan. Yeah. This is not a retired. This is not an exit strategy short term. This is an exit strategy medium to long term. And so I would just say from the doctor's perspective, how much longer do you want to work? That will help determine what kind of group you're looking for and what they're offering you. Good. Anything final statement, anything that I didn't ask that you want to make sure people understand or hear? From our perspective, we're always looking for great docs to partner with. So we know if they're in the Seattle City Club network. We're certainly love to chat with them. And so if anybody wants to chat with me, they can go to our website. And actually what I did is I recorded a video. It's a little over 40 minutes. And it really digs into a lot of the details we're talking about. I've got some of the slides from Mark over you, Chitchat, on there with some of the data. But most of that presentation is really geared towards, I identify kind of eight major problems and shortcomings in the current traditional DSO approach. And what icons on to innovate that. And so if they go to our website, icon.dentalpartners.com/learn or just go to our home page and click on learn, they can go to our page. And that video is there for anybody to watch. It's not behind a firewall. You don't have to enter your contact information to watch anybody can watch it. And it will really educate them about how the industry works. And there's a link right on there. There's a button to click on. You can schedule directly into my calendar if you want to talk or if you just want some information. You can fill out a form for information. But you don't have to do those things to watch the video. So I'd encourage people to watch the video. It'll teach you a lot about the industry. And they can obviously reach out to any of us at Seattle Study Club as well. And we can send them the link to that. So that's no problem there. Well, I want to appreciate-- I want to thank you and appreciate the time you spent with us today. It was fun. We had a good time. [MUSIC PLAYING]