E61: Podcast: Breaking up is hard to do with MSOs

Kevin: Welcome. This is Dr. Kevin Coughlin. You’re listening to Ascent Dental Solutions with a focus on knowledge, training, education, and development. I want to give special thanks to Mr. David Wolf for his production of these podcasts. The following episode is a combination of a variety of things as I’d like to think I’m an expert or have significant knowledge with managed service organizations, dental service organizations, because we’ve developed over fifteen practices over my thirty-six-year career. I’ve dealt with the DSOs, created my own DSOs and sold these DSOs to MSOs. For the new listeners, basically the difference is, one is venture capital and equity-backed group and the other is generally a dental-backed group. Both, along with private practices, have the same goals; that’s to expand their business, make them more efficient and effective for a better bottom line.

I’m not here to push you one way or the other, but lately for the last several weeks, I’ve been listening to the news and listening to the cost of what’s been going on with attorneys and lawyers and the representation of their clients. I also was privileged to listen to Elizabeth Holmes and what’s been going on with Theranos in the amount of money, in excess of over $300 million in legal expenses for them to defend their business, which is now less than zero as far as their net worth is concerned. And the reason I bring this up is I’ve had some difficulties with managed service organizations. Perhaps some of those difficulties were brought on by myself, perhaps it was brought on by them, or a combination of both. But that’s beside the point. The cost to litigate these differences were in the hundreds of thousands of dollars. The hours and time wasted has been enormous. In my thirty-six-year career, I have had partnership problems, employment-ship problems, a combination of problems along with managed service organizations.

And for our listeners, I can tell you this straight up: if you’re going to pick a fight, make sure you pick a fight with a group that you know you can at least control the finances. I can tell you with the MSOs, there’s almost an unlimited, bottomless pit of money, experts, and accountants, and attorneys and they can bury you in time and effort. I would tell the listeners, before you join an MSO, before you consider signing papers with MSOs, it is critical that you have a team that supports you that are experts in the managed service organizations. If you don’t have that, trust me, if a problem occurs, the ability to litigate, the ability to continue the fight, and the ability to come out winning or ahead or even breaking even is actually almost impossible. I can recall walking into several meetings where there were no less than four certified public accountants, six lawyers, and other expert testimonies. I can just tell you that as an average dentist, most of us will not have the financial means to put up the fight. So even though you may be clinically correct, even though your business may be clinically correct, in the end, if you don’t have the time, finances, and expertise, you’re probably going to lose the battle. Or if you’re fortunate enough to win, when you look at the actual cost of that litigation and your time and effort, I would think that in the end you’d say to yourself, you still got the hell beat out of you.

So the message today in this particular podcast is we hope that all discussions, all issues, and all contracts lead to an amiable reconciliation where both parties give a little bit, both parties take a little bit, but in the end there’s a compromise and a solution to the problem. But if anybody’s been through a divorce, if anybody’s been through partnership disputes, I think we all know that in the real world it can get personal, it can get mean, it can get ugly, it can be drawn out.

What the MSOs are particularly concerned about is protecting their reputation because if they allow one dentist, one partner, one individual to break away, that leaves the door open to potentially hundreds, if not thousands of other partners or investors. Their main concern is most of them know that their situation is they want to control, as tightly as possible, the management and the day-to-day workflow along with the production and collection. But as most dentists know, in most states, at least thirty-eight states, an MSO cannot own a dental practice. It is up to the dentist. So in many cases what they’re looking for is a managing dentist, and I don’t mean this in a derogatory manner, but basically someone that they can push and manipulate to do what they want. So the orders are coming from a non-dentist to a dentist and that dentist understands, without it so clear in the contract, that there are certain things that have to be done, certain ways that things have to be done. And if they’re not, trust me, you probably will not find yourself the managing partner.

As far as this podcast is concerned, I would like to say if you have questions, if you need information, I have been doing my consulting business now for five years and I find it extremely rewarding. I am still a full-time practicing dentist. I have now three practices since I sold the fifteen practices to a managed service organization, and I’d like to think that I’m non-biased and I could try to help you if you’re considering joining, competing against, or working with an MSO. The name of my consulting is Ascent Dental Solutions with a focus on knowledge, education, and management. I’d like to give special thanks to VOCO, supply company who provides the expertise, training, and education along with the materials to provide a high level of dentistry on a day-to-day basis. I also want to say special thanks again to Mr. David Wolf and his expertise in producing these podcasts. This is Dr. Kevin Coughlin. Have a great night and I look forward to speaking to you soon.