How DSOs and Practices Plan Ahead

April 04, 2020 Dental Whale Season 1 Episode 5
How DSOs and Practices Plan Ahead
How DSOs and Practices Plan Ahead
Apr 04, 2020 Season 1 Episode 5
Dental Whale

This week we're looking at sources of capital for the doctor. As more practices become cash-strapped, SBA loans will be an important consideration. Kerry Straine, DSO whisperer with over 10,000 practice consultations to his name, shares his people plan for his own businesses, how they're building patient confidence, and transitioning staff back into the practice so the owner isn't stifled with liquidity issues.

Show Notes Transcript

This week we're looking at sources of capital for the doctor. As more practices become cash-strapped, SBA loans will be an important consideration. Kerry Straine, DSO whisperer with over 10,000 practice consultations to his name, shares his people plan for his own businesses, how they're building patient confidence, and transitioning staff back into the practice so the owner isn't stifled with liquidity issues.

spk_0:   0:09
welcome everyone to this addition of insider by dental whale. I'm Joe Cava, Rhetta. And today have the pleasure of speaking with someone that I've known for Jesus probably 25 years. His name is Carrie Strain, and he's been in the industry for over 30 years, has consulted with thousands of clients, and he's here to talk to us about a few things. One is how to get through Cove in 19. Um, if you're a, uh, you're a doctor. And also life after Covert 19. And look, strain consulting is helping the dental industry through through this crisis right now. So, Carrie, welcome.

spk_1:   0:50
Thanks, Joe. Good to be with you.

spk_0:   0:52
Yeah, And I know earlier today you also had Ah, webinar. And you're going through with your with your customer base about the SP a long what's going on in industry today. So mind, uh, sharing a few things with us.

spk_1:   1:06
Yeah, sure. Certainly. Thanks for having us involved in today's presentation. Done. Well, we love working with you guys and appreciate this opportunity to reach out course. Right now, we're all faced with a shutdown of our business. Is if you're a dentist, there's very few. I think maybe 25% of the country is still offering some limited care. And I see that never going to zero quick. I mean, President came out the other night and said, Look, the day's the worst days of the next two weeks ahead, and that's because of containment. Um, California. We have a great governor. Hey, got on it early. You know Governor Cuomo working, getting on, um, you went from 18 March 18th scene. It was gonna be a big issue toe. It's a big issue to shutting down, so there's a lot of great leadership going on. But the real question is, what is what is the options the individual dental practice have today? Let's talk about the SP A programs. By now you've probably your listeners have probably already filled out there, eat alone the seven B loan where they apply online through sp a dot gov and they can ask for a grant of $10,000 and it opens the door for applying for economic income of disaster loan protection that limits about $2 million. It's advertiser pullout over 30 years, and I don't think it's really applicable to very many people they're in the dental industry. Although some of our clients are seeking to find out if they can reorganize debt with it. Big purchases they had planned for it. I mean, the interest rates three and seven, three and 3/4 percent. No payments. I think for 12 months I don't have my notes in front of me. But again, I don't see that is a big issue. If you've got a a customer of done a whale that finds itself short of cash, Um, that's a tough position to be in right now. I mean, I'm talking to clients. I just got off the phone with one up in the Dakotas. They have 1/2 a $1,000,000 in the bank. I just got off the phone and one in Virginia. They have 1/4 of a $1,000,000 in the bank. These people have properly capitalized their business so that when they're in a shutdown, yes, there will be some lingering expenses to keep the car idling or the business side of things, so to speak. Instead of putting it up on the blocks, shutting down the business like shutting down a car, they're gonna be prepared to make it with some minor outflow of capital. But the the the idol of the seven B loan is going to enable them to get a $10,000 grant. I haven't applied for one for my bests. A small business owner, we have 22 staff, and they're actively working, which is different than dental practices today. I do believe, if not all of them vast majority will be shut down here by from by Monday. It's a socially responsible thing to do. Truly, there's urgent care, emergency issues that the 80 Eights putting out guidelines lines on. Please follow them because it's gonna be a storm coming. That being said, let's look att sources of capital for the doctor number one like is the $10,000 grant that was supposed to be funded within 72 hours of submission of the request for the grant through the seven B S B A program. And it's the ID along, um, I think that's supplied for it. You get that step one, then you're gonna pivot over to the paycheck protection program. So the paycheck protection planned program. It's all part of The Cares Act, which is a stem of this act that the president signed in the law last Friday. I will say the ink is not dry on the final law, Joe. And even today, in conversation with several banks and other kids and strong ki opinion leaders in the financial world, in dentistry, they're going. There's a lot of pushback from the bank's going to the government, saying I really don't understand. Let me see. You want me to collect data to support the doctor's request for the paycheck production plan, which is a loan equal to 2.5 times the monthly average payroll costs for 2019? Was it a fiscal period from February 12 January 31. Are we gonna go from April 1 March 31? May they want to get the documentation right, because the devil is in the detail because the loan's gonna be extended to the borrower through the paycheck protection plan. Seven A long. And if you want this loan and want to look into it, you don't go through the S p A. On this one. Go to your local bank. They're gonna be working with over 1800 lenders, banks. They're gonna be processing these loans, and they're going to receive the document. The loan request documents the application from our beginning tomorrow, and with it you're gonna have to submit the detail of your payroll expenses. You're all the things that go up to determine what the loan amount will be in its roast wages, plus medical expenses that the practice owner paid on behalf of their employees, not employees portion before on one care retirement money that the employer contributed, not what the employees contributed and certain state unemployment taxes, not fighting. They're not gonna pay. They're not gonna include any federal taxes. But if you have state unemployment taxes, that would be pretty much for most of the employers out there. The only expense they would incur as an employer on behalf of an employee at the state level, because the disability insurance is typically paid for out of the employeeswages stained with their state income taxes, and those two amounts are included in the gross wage. So grossed wages, plus the unemployment insurance tax or whatever state local tax you have is what's going to determine that, and you're gonna have to support that document request Lis, when you fill out your application and go to your bank bank for your paycheck protection, Mom, because it's some of the expenses over a 12 month period divided by 12 times 2.5, and that will equal your lungs today they were talking about the grant. Let's just say your jealousy, your costs. Dr. Cabaret, there were 40,000 month, 2.5 You gross amount of your loan would be 100 as I understand it earlier this morning, if you got the grant that would come off the 10 off the top, you'd get a deposit of 90 grand in your bank account, and I would recommend you set up a separate bank account for this. And as soon as you get the money, an 80 day window of period of time starts ticking. And during that 80 days years, very specific expenses that your customers can expend money for wages, rent, utilities, medical, certain costs that are in there, that if they track it right and finally take that information back to their lender. Whatever bank they borrowed the money through, let's say you picked up 100,000 all alone, and you want to say, Well, I spend it for $80,000 of the expenses were for these reimbursable activities. And if you meet the criteria in the payroll protection plan, it says you've employed 75% of the people by June 30th that you had employed on February 15th of this year that you're paying them their wages minimally, not cutting their wages, all the thing that other things that come to moving people back into employment, which is the purpose of this loan when we're gonna be the next they're gonna forgive a large part of this loan that was made to the dock. They don't have to pay back. So they didn't. They're using this money. Ideally, in the early phase of ramping back up production when they're not collecting money from the insurance is still 234 weeks later, where the confidence factor of the patients coming into the practice is gaining. Dude, a good social media work. The marketing department's done talking about all of the OSHA compliance rules that on beyond that, the doctors now finding in their new normal so that they instill confidence to patients that they're not gonna get the virus by coming in etcetera, etcetera, etcetera. All these sayings. This money is intended not to go to Vegas and play with Joe. It's intended to lose. Have the team come back during that initial unsettled time when the cash flow isn't so strong. So the owner does it get stifled with the liquidity issue toe have salt, and so it's a pretty exciting time. Look for the final information to come out through your lender. The bigger lenders in the market. My vote Bank B of a. Wells Fargo, my bank. I mean, I bank would be available for at a local bank. And so they've all contacted me about these options. Unlike Dennis, who aren't working right now who aren't generating any revenue until they open, I'm not so sure this is alone that they want to file for, because you know, the government has is gonna be making millions of these loans and they're gonna follow their rules. And you need to know it because the real kicker is If you want the loan to be forgiven, I go borrow 100,000. I spent it for all the appropriate purposes. Within the time frame. I meet the criteria. I don't have to pay back the hungry. That's

spk_0:   10:17
great. Yeah, that's great information. We have our one of our partner, Eric Kasher, from B H G. Joining us next week. It was gonna be able to get into the East SPH ones. So we're excited to hear that Too

spk_1:   10:30
little. No more than than we know today.

spk_0:   10:33

spk_1:   10:33
I was giving. As you said, I was giving a a webinar on this this morning and during the webinar, my colleague that I was giving webinar with was sharing with me text of new information coming out. So there's hope the federal government's going to take care of those who pay attention and do the right things and bring back their employees. And we're all here to help you now on another note. Once we solve that cash flow issue what I'm doing, It's strain. I've instructed my team to do the following. Certainly everybody's moving patients out of the schedule between now and May 1st, right? I mean, some states, it's a little later than that. Pennsylvania Oregon might be June 15th a little bit later, but most of our clients have moved the patients off the schedule and, um, using our dashboard that we use within a whale. Um, use this on dental intel. We're able to manage the patient activity. No. Who's unscheduled scheduled, uh, have team members that are currently employed during the shutdown period work with the owner again? That does impact on them being on unemployment or not. So those rules they have to look into, But there's some great tools to assess where we are with scheduled patients. Get him into the schedule in the future so that when you come back to the operation you'll be moving forward at a pace really dictated by society and the confidence society has in the government to establish OSHA and health care guidelines that keeps everybody safe. And Dennis, you know, they're the gatekeeper. These guidelines, and I really think that everything the former head of the CDC was saying that was his name. Tim. I want to say feeding treatment, Friedman, he said, Look, there's there's gonna be new. The new normal. Is it going to be the old normal? The new normal is going to be, you know, sanitation. Hand sanitizers available everywhere you go to an appointment, you're gonna need to have your temperature taken. If you do have a temperature and you don't appear to be well, you won't be seen. They'll go look to your medical provider for guidelines. I mean, et cetera, et cetera. The new normal is gonna be different. What type of master gonna wear? How do we sterilize the environment, the opportunities and the rest of the practice? There'll be a whole set of guidelines. So I think the owners of practices today are gonna be very busy over the next six weeks. Understanding their responsibilities is owners and Dennis as employers and providers to understand the model that creates safety in the market so their employees and patients want to come back. And we could take care of the world and get back on our path. That's the clinical hat, the employer hat and then the economic cat. The last thing we're assessing today is our clients liquidity position. As I look at my larger de esos I mean, you know, they've got they're looking at shutting down their overhead furloughing people. How much money do we have available on our line of credit? How much do we have in the bank? What is the insurance portion of our receivables that's going to be coming in. What is going to be our eat alone grant $10,000 all adds up. What expenses are we going to be having to pay in the next two months? So we get down to a gnat cash flow, and then we add in our loans through our lines of credit, the PPP loan, and we can see that we're gonna have the economic wherewithal to permit to the right path and open up and try to find some normalcy in our future. So, Joe, that's what we're working on. It seems like 20 hours a day, seven days a week, because my team and I have been doing a great job on that.

spk_0:   14:13
That's quite a bit. And Harry, when you're looking at, I know it's impossible. But when you're looking at new, normal comes back and restrictions are lifted and the doors air ableto open the ramp up in your mind. And again, I know you're looking at a lot of the same data points that we all are. How do you see that happening? Do you see a slow trickle in May if it opens June. And then do you see Ah, rush? Because there's a lot of pent up demand for dentistry? Or How do you see that?

spk_1:   14:42
You know, there's an old saying. I think there's three kinds of people in the world job kind of people that make things happen kind of people that watch things happen. And then there's a group said What happened? So our clients, we're actually beginning next week with a Siri's off Uh uh, webinars to establish the protocol for them to follow once they've decided they're gonna open. If the loans appeared to still be available with the PPP alone will probably apply for that 3 to 4 weeks before they open, because it'll take a week to do to to get it. And in another week or two before they open their teams, we're gonna be on the phones, filling the schedule. We're gonna be prioritizing who we bring back into the schedule. Obviously, younger people like you versus older people like me. You just have to you have to do some profiling. I mean, I may look like I'm 40 but I just turned 64 I want to thank you for that birthday email. But that Biggs, um I think we met in 1995. I mean, it's just amazing how time those were the old days. Because they're not the new days, that's for sure. But you're going to find that a group of Venice or ahead of the game they've already understood they're gonna bring their new patients in on Fridays are gonna take care of their existing patients. Let me just say this and learn from this. If you want to get an SP alone right now and you're not working with a bank that could get you one, um, you're probably not gonna be at the front of the line that at some of the national banks, the way I hear it, they're gonna take care of their existing customers first. And I don't blame him, and you need to have a commitment to take care of your existing customers first. If you're a dentist, I would be adding hygienist to make up for losing 6 to 8 weeks worth of Think about a doctor with two hygienist, 64 hedging appointments a week, eight weeks, 500 people. What, you gonna wait two years to get a Mac back in the Cube. That's Doctor. What happened? My clients are getting on board early and adding hygiene days, doing everything they can all these days. We're missing right now. We're gonna make up over the next 20 to 24 weeks. We're gonna add Fridays that extra time off around the holidays. That'll be in 2021 in 2020. No extra time off. We're getting it now. And so we can't celebrate victory until we get back number one to get all your patients back in the queue into continuing care for your General Dennis. Number two that you're producing and collections of level levels that make you economically viable. And number three, your team feels safe that they belong, and they matter. And when that happens, then we know the cultures, right? The profits, right. The patient care is right. Then you could sit back and you could have a little dessert celebrate.

spk_0:   17:25
I love it. You know, Carrie, I can count on one hand my mentors in this industry, and you're definitely one of them talk. You always learn. And I really appreciate the time to spend some time with us. an insider by Donna Whale. And anytime you're available, please let me love you have I'd love to have you on the show again,

spk_1:   17:45
But any time for you and the folks that done well, we appreciate them very much. And you and the team, you guys there continue to put together just awesome in the industry. And I'm grateful to be have a professional relationship in a personal relationship with the all God bless you over the weeks ahead and let me know how I can help.

spk_0:   18:01
Thank you, Carrie. Appreciate it.