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00:00:10.100[on-hold music] Welcome to the Dental Business Guide Podcast. From money to marketing to management, this podcast will help you run a better dental business.
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00:00:30.940Okay. Welcome everybody here back to the Dental Business Guide podcast here with myself, Arun Mehra, and Dr. Smita Mehra. So hi, Smita. How are you doing today? Hello. Yeah, very well, thank you, Arun.
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00:00:45.200Thanks for having me back. So in this vein of us talking about DSOs and groups, I thought we'd do a podcast today about, um, if you were gonna start a DSO or group today, what would you do? So Smita,
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00:00:55.840just give a quick background about who you are, what you do, and where you come from quickly, just for everyone's benefit, and then we can ask- start asking some-- answering some interesting questions. Uh, great. Yes.
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00:01:05.460Uh, thank you. I'm, um, a dentist, and I run a group, but I started back nearly 30 years ago, uh, qualifying from the University of Birmingham.
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00:01:26.660And, um, now I'm in a position where I'm looking at, uh, helping DSOs grow, uh, buy or sell, and yeah, the, the, the, the whole environment, uh, and canvas has changed so dramatically over certainly the last 22 years, which is when I started, um, the first Neemtree.
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00:01:35.300Uh, and so yeah, things have changed a lot. I think the biggest change, uh, I would say now is, um, it's staffing.
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00:01:49.200So trying to get, uh, really, really good members of staff and labor generally, whether they be clinicians or auxiliary staff, um, and team is-- has, has sort of changed dramatically since COVID and certainly since Brexit.
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00:02:07.140So, um, with that in mind, if I were to start up a new group today, I would make sure that the surgeries or the practices are very much close in proximity to one another as opposed to 22 years ago, I wouldn't have minded if one was in Scotland and one was in Newcastle and one was in
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00:02:17.080Norfolk. It wouldn't have really mattered to me, but now definitely the geography matters. So on that note, so thank you for, for, for sharing that.
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00:02:25.240So your non-negotiable when you're starting a-- if you were starting a group today, would be what? Geography? Yeah, geography of the, the, the, the practices.
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00:02:41.840Either if, like me, you, you like opening squats or if you're taking over a group, um, just try and make sure that, A, the locations of the practices are close to each other because you can share so many things, not just obviously staff, et cetera, but you can share team members.
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00:02:47.269Like the, the practices I'm in at the moment, we've got somebody off at the moment, and we're, we're borrowing somebody from the other clinic.
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00:02:53.240Uh, and that's not a problem 'cause they're just half an hour away from each other. But if they were five hours away from each other, you wouldn't be able to do that.
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00:03:06.500So, and that becomes, um, so much more cost-effective and efficient because then instead of taking on two full-time members of staff or three full-time members of staff, you might, you might get two and then one part-time.
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00:03:16.280And, and so the, the cost starts to, uh, make sense as well. Not only that, you, you've got things like, uh, specialists that you can easily share when the geography is common.
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00:03:23.080Uh, again, that would be a lot harder if they had to travel two, three, four, five hours. You'd have to pick new people. And the other thing is geography matters.
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00:03:30.160You don't want to be buying or setting up in a place where it's so remote that trying to staff it is very difficult.
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00:03:38.120If you're taking over an existing practice in a remote, uh, area, you might think, great, 'cause you've got full monopoly 'cause there are no other practices there. That's brilliant.
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00:03:48.000But when you're trying to then recruit for a changeover or handover of staff, you might not have many people wanting to relocate there or living there in order to work for you.
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00:03:56.960So just these-- geography, in other words, is very important. So right now we're seeing a real flight to quality kind of in the DSO market now.
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00:04:07.880So if it was a new group, how do you balance, I suppose, the, the need for rapid growth with the kind of boutique clinical excellence you've always championed at the Neemtree?
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00:04:11.600How, how, how, how, how would you advise people to do that? What, what should be their focus?
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00:04:23.400Well, for me it is, and, and this is obviously just personal, the budiq- boutique side of things, uh, and the private side of things, um, have always trumped the, the rapid growth.
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00:04:32.660I always, you know, even back in the day, never wanted to have a group that was, you know, 50, 60, 100 in size. It was always five to 10 clinics.
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00:04:47.000Really good, high-end, good quality, um, and, you know, selling, I suppose, the vision of dentistry that, that in my opinion, was what the patients deserved. So it, it depends on what your business model is.
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00:04:58.520Um, but certainly in my case, I, I definitely believe that quality trumps quantity. Um, you can still grow a group, but it, it can be a small group, but high quality and earning just as well for you.
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00:05:08.760You could grow the number of chairs in each clinic, which obviously you've got to look at the square footage of the place you're in and the ability to grow when you take over a practice or when you're setting up a squat.
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00:05:19.200Um, so as long as it's in a really great location, then, uh, you know, you, you can grow that, no problem. It doesn't have to be the number of clinics, it can be the number of chairs.
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00:05:31.560But quality definitely over quantity. Okay. So on that note, if you look at the current environment today, as a, as a, as a, an individual, you go to a hospital today and you have a--
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00:05:45.420you go to an NHS hospital and your normal care is you're waiting for quite a while, could be a number of hours. But-- and I suppose patients are used to that kind of mindset in the NHS world.
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00:05:52.590But now, if you were going down the route of, as you've done in pr- private, private clinics, private care, um,
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00:06:02.620how does a new group design a patient journey that actually feels like an oasis rather than a clinical assembly line like you might feel when you go to an NHS clinic or an NHS hospital?
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00:06:15.086Well, like, like everything, I think it's all about the quality and the small touches. It's about the front of house. Um, and the first port of call has to be, um, top-notch.
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00:06:25.376It's g- it's, it's customer service or patient care. Um, y- you know, you've got to have a bright, smiley face at the front desk, a very cheery voice on the phone. Um, that's where it all starts.
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00:06:37.106Their first point of contact has to be, um, uh, you know, quite, q- quite a sort of wow, uh, service. And then little touches within the, in the, the clinic or, or little touches within reception.
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00:06:54.056A nice environment, a bright environment, fresh environment, regularly changed, redecorated, um, is what i- you know, it takes so that a patient comes in and feels like they wanna take a deep breath as opposed to hunch up their shoulders with, with worry because the phone's constantly ringing and it sounds like intensive care.
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00:07:08.536So these sorts of things matter, but again, it depends on your, what, what sort of, um, your ethos is within the practice. Um, these little things where the patient is treated like a VVIP is, is what matters.
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00:07:13.576Uh, and that can be in a, in a wide variety of different clinical settings and non-clinical settings.
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00:07:26.836Uh, the bottom line is the patient has to be on top of your list and on top of your wish list of, of who to treat really, really well, and then the rest follows. Okay. All right. So you've always said
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00:07:38.696staffing, um, not staffing, location is an important aspect in dentistry, okay? As you mentioned that earlier. Um, now we're in a world of remote work and changing city centers.
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00:07:51.056In your mind, someone who's been doing this for so long, what does the ideal 2026 location look like for someone who wanted to build a multi-site group? Because remember, patients work from home a lot more now, okay?
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00:08:02.336Um, you ha- you had a clinic many years ago in Canary Wharf, right in the heart of the financial district. Um, would you open up one there again? D- just, just wondering what your thoughts were. Uh, really good question.
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00:08:11.236I think, um, my-- the, the main kind of, kind of drastic shift in my mindset with regards to thinking about this, it has to have been COVID.
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00:08:18.216I think prior to COVID, there was the life before COVID, uh, BC, and li- life after COVID, AC.
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00:08:36.126So I think before COVID, obviously the, the high footfall, central city, London, for example, um, locations were, were key, uh, where everybody went to work and they saw you at work and, and, and that was, you know, uh, very visible, um, centers, um, and, and high footfall.
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00:08:48.576I think after COVID, um, the, the big change has been, for me, the answer to this question would be still a high density population, but somewhere that's got a high residential population.
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00:08:57.486Uh, and still maybe a, a nice village street or a, or a nice town street. Um, probably not in central London or centr- center of the city, wherever you are in the country.
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00:09:07.856But, uh, somewhere suburban, where, as I say, there's a high density, but more residential and definitely somewhere close to a supermarket. We all know the power of the supermarket back in COVID.
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00:09:21.016That never stopped, uh, even for a single day. So, um, yeah, that has changed. In other words, high density, but residential, but still a kind of affluent population, but that's just my business model.
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00:09:28.266So people have to eat at the end of the day, as you said. They need to go to the supermarket. Correct. Correct. And that will never stop. So- Sure... yes. Okay.
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00:09:34.236So now as, as you mentioned earlier, staffing clinics is a massive hurdle still in this industry.
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00:09:42.876So if you were building a team from scratch today, how would you structure the practice culture to ensure that you're the employer of choice, so people would choose you?
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00:09:55.436Well, I guess, again, since COVID, things have changed a lot, and Brexit, because, um, there's been so much movement of labor, uh, you know, uh, well, to, to, to Europe and beyond.
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00:10:08.886Um, and so I think the, the sort of, uh, people that are, are now looking for jobs and certainly auxiliary, uh, team members, um, they have got used to this kind of hybrid working pattern.
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00:10:18.006And even though within the dental industry, i- that's not really been a possibility, far less than other industries anyway. Uh, people sort of have that expectation.
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00:10:28.296So if you can, if you want to be an ideal employer, if you can, either instead of, let's say, having two or three or four full-time members of staff, what you might do is do split shifts.
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00:10:36.856So you might have some people who want to work mornings, and they want to get home for their children, et cetera. And that's fine. If your business can allow that, then why not?
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00:10:41.975Why not listen to, to the, the sort of l- uh, labor demands, I suppose, that are, that are out there right now.
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00:10:47.656Uh, and others, uh, for example, they might have other issues going on in the morning and they-- but they can do the afternoon, evening.
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00:10:56.476They can't get to you in, in rush hour, so they can-- you can then offer them a split shift, and they can do afternoon, evenings, or they can do-- or you get separate peop- members of staff at the weekend.
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00:11:09.536It's a little bit more of a hassle, but it certainly can be done where you're listening to the demands and needs of your team members, but still running, uh, a viable business whereby, um, everyone's a winner, I guess.
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00:11:17.586Sure. Okay. Thank you. I suppose now let's move on to something more kind of financially orientated, I suppose, with my he- hat on.
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00:11:29.296Um, now, in, uh, in the DSO playbook, we talk about EBITDA and the predictability of EBITDA above all else, okay, for folk-- for groups to focus on in terms of profitability for, for valuation purposes.
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00:11:41.256But from your perspective as a clinician, okay, and this is sometimes where it gets lost in the translation by many investors, is that ultimately EBITDA is important, but what do you measure instead?
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00:11:49.616Okay, what are the metrics that makes you know or makes you happy that, okay, my clinic, so if we get that right, the EBITDA will follow anyway.
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00:11:53.076Okay, so from a clinic-- I suppose from a clinician's point of view, what's the most important metric?
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00:12:01.876Yeah, I, I get the question, and I think it's, uh, obviously EBITDA is very, very valuable, certainly when you're looking at your business as an asset, and certainly when you're looking to buy and sell.
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00:12:26.748But from a pure clinical point of view, I suppose, you know, now when I look at the, uh, at the practice, I suppose my measure of success are full books because, um, the practices are mature enough To be, uh, looking at, um, recall appointments, i.e., you know, the, the quality of your dentists that you have, in my case, associate dentists, are measured at the six-month stage or the three-month stage or whenever they recall their patients.
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00:12:45.098If the patients want to come back and see them and agree to booking that at the time that they treatment complete or, or they finish their last course of treatment, then that to me is a real measure of success in that I've got my, my team right and, um, and the customer service is right and, uh, you know, everything we're doing is aligning.
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00:12:59.168Um, if however, they see these dentists or clinicians or hygienists, um, and, and they sort of don't book back and you've got empty books in three months or in six months or whenever or even next week, um, and, you know, everything else is equal.
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00:13:06.608In other words, the financial s- situation of the country is okay and, um, there are no tsunamis or there's no COVID or there's no- nothing else.
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00:13:16.668If everything else is equal, then to me, full books and, and good comments and good reviews, um, are a real measure of success. Okay.
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00:13:28.148No, it's very, very interesting because, uh, me from an accountant's perspective is valuation and EBITA, you from a clinical perspective is the chair occupancy ultimately and, and positive comments. Correct. Yeah. Yeah.
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00:13:38.708Okay. Very- Happy patients at the end of the day. If you've got happy customers, happy patients, um, you've got a really good, viable, and successful business. Correct. And that translates ultimately into- Correct.
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00:13:48.488-profitability. EBITDA. Yeah. EBITDA. Okay. All right. So you've over the years set up multiple practices, um, i- in, across the kind of Southeast and London area.
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00:13:57.468What is the one mistake you made early in, in the early days that you would be most, would be m- be most careful to avoid if you started another practice tomorrow?
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00:14:06.468If I were to open up a squat, um, again tomorrow, I think that the biggest mistake I made right at the beginning was just going with one provider for everything.
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00:14:18.208Not having the knowledge, being very green, uh, not, not sort of getting the best of three quotes in, in anything really. Um, and as a, as a result, like many others, you know, you tend to get ripped off.
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00:14:29.728Um, I don't think I'd make that mistake again now because I've got my little black book of, of everything from, uh, electricians to chair providers to, uh, sundries, um, and also specialists.
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00:14:36.768So, uh, I'd like to think I wouldn't be making that mistake again, but made plenty of mistakes across the years. Sure.
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00:14:49.448I suppose, okay, I suppose a closing question here on this short podcast today is, um, we have lots of listeners who are young dental associates, not just here in the UK, but all over the world, male, female.
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00:15:02.548Um, if you had to give a 60-second elevator pitch, who wants to start their own practice or even their own group today, what would your golden rule be? Um, [chuckles] great. That's being put on the spot.
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00:15:13.948I think, um, my elevator speech today would be, let's say, I mean, I, you know, I wouldn't say I was a specialist, but I, my, my sort of pet passion is, um, squat practices.
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00:15:22.308So I, I suppose my pitch would be more related to the squat practices. Um, and things have changed so dramatically over the last 22 years.
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00:15:28.238For example, the whole E-class planning permission has changed the whole landscape of opening up squats.
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00:15:44.808Back in the day, it was D- D1 planning and, you know, we fought long and hard to get D1 planning status for the, certainly the five clinics that we looked to open, um, which were anything from, uh, architectural offices to laundrettes, to basement car parks and, and so on and so forth.
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00:15:50.268And there was such a joy in actually converting them, but it was a bit of a battle to try and get that planning permission.
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00:16:02.428Nowadays, you don't have to worry about any of that, as a result of which, many, many more, uh, young, uh, dentists ha- have sort of joined the force, as it were, to open up squat practices on, on busy high streets.
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00:16:15.648What that has done though is it, it has flooded the market, um, with providers, and that has its own problems with competition and so on and so forth, which, you know, is not-- competition's never a bad thing, but, um,
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00:16:26.668you know, a, a little bit of experience with sort of handling practices and business does go a long way. So, uh, good and bad has happened over the last, you know, 22 years.
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00:16:40.588But, uh, like I suppose my advice was, uh, then, is exactly the same now. It's all about location, location, location. Okay. And then one, one final question to kinda just get your thoughts on is
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00:16:54.168when we, when you started, when we started these group many, many years ago, back in 2002, 2003, okay, we were fresh-faced, kinda naive, not really sure, thinking, "Oh, okay, we can start a group up." And
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00:17:02.768you, you saw the groups of other industries like coffee shops like Starbucks or Costa and, and we thought, "Oh, well, maybe we could mirror that."
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00:17:13.368But the reality is that running dental clinics is very, very different to running a, a franchise coffee chain or whatever it like, as, as, as, as I just mentioned. Okay?
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00:17:24.868So, and we've seen many, many groups emerge over the years, but struggle really with keeping the soul of the practices alive whilst they try to scale.
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00:17:34.328So from your perspective, how do you, how, how, how do you, or how do you suggest people keep the soul of the practices alive whilst they try to scale?
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00:17:45.108Um, I don't think I've seen many people do that particularly well, but I've seen that worked well in the Neen Tree when you got to a size of about five clinics. Um, but going beyond that, it gets even harder.
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00:17:49.728What would your advice and thoughts be on this point? I think you're absolutely right.
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00:18:01.028Um, the difference between a coffee shop and a dental practice is, is very, very difficult because, uh, I suppose a coffee shop or a chain of shops like, I don't know, H&M or Marks & Spencer, et cetera, they all are product-based.
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00:18:11.128And I suppose if you've got the general culture, uh, or staff, um, ethos or customer service, then you're kind of onto a bit of a winner because what you're trying to sell is the same product.
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00:18:22.858You've just gotta look after your customers and how you sell it to them or how you market it or how you label it. But in a dental practice, it's all about the service, and it's a need and want-based industry.
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00:18:30.048But patients really, really rank their dentists based on the, the, the care levels and their personalities.
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00:18:36.068In other words, the, the dentist's personality or the clinician's personalities, as well as front of house and nurses, of course.
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00:18:47.008So, um, I think, yes, g- getting to, let's say, five clinics is, is doable, I suppose, because you can try and translate that culture across the board.
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00:19:05.068But getting beyond that is very, very hard unless you've got a sort of owner-operated person within each clinic or a heavily incentivized, let's say, clinician or somebody who's got shares or some other financial, uh, incentive to, for the clinic to do really, really well.
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00:19:11.468If that's the case, then the clinic has a chance of translating that vision across the board.
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00:19:24.308Um, but if not, then it becomes very, very difficult as you scale and grow because then it, then it starts to become about the numbers, uh, and less about the ethos. Very interesting, Smita.
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00:19:34.828Well, thank you very much today for sharing your insights, uh, of, and your experiences. Um, um, so this is Arun Mehra, and we've had Dr. Smita Mehra talking about- Thank you very much. Yeah, no problem at all.
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00:19:52.368On, on topics ar- sur- surrounding DSOs. Uh, and, uh, watch out for our next, uh, podcast soon. Thank you. [outro jingle] Thanks for listening in to the Dental Business Guide podcast.
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00:19:59.768We welcome your feedback, and if you're enjoying it, please let your friends know too. Until the next time on the Dental Business Guide podcast.
