Why is Dentistry so Expensive? Money in Dentistry EXPLAINED!!

Why is Dentistry so Expensive? Money in Dentistry EXPLAINED!!


Damn, take me back to Giza So I can hold the Earth still when I research The reason of the purpose and the hurt with a day to work Damn, this is a last will and testament No matter what happens to me, my words are still relevant Soul’s still evident, works take precedence Hey, what’s up, this is Dr. C, back with
another video. A common question I get is, “why is dentistry
so expensive?” I totally get it, it’s a big issue. I stand by that dentistry is a valuable service. Your oral health is directly tied to your
overall quality of life, and I’m proud of my ability to help you with that. However, even in first-world countries like
Canada, United States, Australia, New Zealand, dentistry could be unaffordable to a large
segment of the population. I’m Canadian. I find it disturbing that a standard root
canal treatment and crown will put roughly half of you under financial duress. If you can’t afford standard-of-care treatment,
you are not alone. The numbers show that you’re becoming the
norm rather than the exception. How did that happen? On the clinician’s side of the story, and
myself as a potential buyer of my first dental practice, I’ve seen prices skyrocket over
the past decade. If I were to take out a loan to buy into a
clinic now, the cost to service that debt would be astronomical. The burden to pay off such a large loan would take me away from my goal of running a patient-centered practice. I’d have to think. To stay afloat, what corners would I have
to cut when ordering equipment and supplies? How do I reduce my staff’s wages, benefits,
and work hours? These compromises I don’t want to make to
stay profitable will ultimately come at the detriment of my patients. I chose not to have one, for now, because
I don’t like playing clinician-on-tilt. How did that happen? And then there’s the dental staff, caught
in the crossfire. The veterans have seen decreases of wages,
loss of regular employment, disappearance of benefits and paid vacations, etc. Some fresh blood coming in have only seen
part-time, contractual arrangements in overworked and dissatisfactory working conditons. You know, 9-9 with no break and no lunch? Yeah. And if you work for corporate dental, production
quotas are increasingly commonplace. That isn’t good for anyone but shareholders,
but how did we get here? As a dental practitioner whose primary goal
is to optimize the well-being of all patients, I have insights to share, and concerns for
the future of dentistry. This topic wasn’t an easy thing for me to
understand. I spent the last 5 years investigating markets
and how money worked to get some understanding of the bigger picture. That being said, the reason why dentistry
became expensive, is that it has become more profitable to speculate on dentistry than
it is to produce the actual dental work. That’s a shocker for me. I came to that conclusion when I discovered
that a lot more money was flowing into dentistry through the securities market, rather than
within the dental practice. OK, there’s a lot to unpack, so let’s
start with the dental practice. Many dental clinics in major cities are pushing
operational overheads of 65-75%. That’s a major increase from a couple of
decades ago. Associates, who contract their labour to practice
owners take around 40% commission of the work they do. Owners with multiple practices don’t make
a lot of money off having associates produce dental work. Net profit comes from hygiene and from their
own work. The name of the game nowadays is to grow a
patient base, then sell the files for profit. Short-term churning, that sucks. More on that later. In North American dentistry, 3 dental supply
companies, Benco, Henry Schein, and Patterson run the show. They control 85% of all sales of dental products
and services. They’re also named in a FTC lawsuit about
colluding to price-fix the dental market. Thousand percent mark-ups for resins, implant
components costing $450, while they cost dollars to produce, yadda yadda yadda. That’s old news As bad as that sounds, you’d be surprised
to hear that equipment and supplies account for only 5-10% of overhead costs. That alone, doesn’t account for the high
cost of dentistry. I spoke about selling patient files. Patients have in fact become the most valuable
commodity being traded in the dental industry. I’ve spent many long nights looking through
clinic appraisals, from big players like ROI and Tier 3, to small independent appraisers. These appraisers pretty much set the market
price for dental clinics. In most appraisals, the goodwill price, which
represents the patient files owned by a clinic, is the largest asset on the balance sheet. Example. For a clinic selling at $700,000 with 600
patients, the goodwill valuation will be close to $400,000. Works out to around $670/ patient. Part of the buying process is that I do my
due diligence and check out the patient files before buying. I found that it was common to find the same
patients being counted multiple times across different clinics, that some patients who
haven’t been to the clinic in several years were counted, and family members of active
patients who did not receive any treatment were also thrown in. Sometimes, the leasehold improvements and
equipment were listed over what it would’ve costed to buy new. My accountants assured me that this was standard
within the industry. After all, value is subjective. The bankers were willing to provide me with
100% financed loans to acquire any clinic I was looking at. When I brought up my concerns about the sketchy
valuations on the balance sheets, they would say that I can make it up by doing more crowns
and root canals. Buddy, that’s not how it works, you can’t
just make up unnecessary treatment. He assured me that I’ll be fine as long
as I expand my treatment range. Alright, so practice valuations have been
jacked up by subjective goodwill pricing, and the banks are willing to lend out full
credit on questionable valuations. Practice valuations could be measured in multiples
of EBITDA, Earnings Before Interest, Taxes, Depreciation, Amortization. Over the past decade, I’ve witnessed practices
go for 2-3x EBITDA in 2008, climb to 4-6x in 2014, to as high as 7-9x today. In some places in the States, I’ve seen
as high as 11.5-13x. I had to ask, who’s buying at those prices? Easy lending of credit is one piece of the
puzzle, but the most mind-blowing thing is, that most of the new money coming in is from
the securities markets. What do I mean? Good question. The new money pumping dental appraisals comes
from large dental corporations or DSO’s (Dental Service Organizations), like Heartland
Dental, Aspen Dental, 123, Altima, DentalCorp, Great Expressions and so on. OK, so how do DSO’s operate? Dentists would sell their clinic assets to
DSO’s. DSO’s would mask the sale through a nominee
dentist, usually a professional corporation acting as a subsidiary of a DSO. The DSO offers a mix of cash and private stock
for the takeover, and here’s where it gets interesting. A significant chunk of the money DSO’s use
to acquire dental clinics come from private stocks that they issue themselves. The SEC has no regulatory oversight over privately
traded stocks, and as a result, the reporting requirements are more lax compared to publicly
traded companies. Who’s pumping these private stocks? Many smaller private equity firms, and a lot
of big players. Let’s go through a few examples. Leonard Green & Partners, owns a large position in Aspen Dental. In the order of hundreds of millions. OMERS Private Equity, a subsidiary of the
Ontario Municipal Employee Retirement System, has a big position in Great Expressions. Also worth hundreds of millions. Dentalcorp this year, completed close to $1
billion of debt financing with CIBC and TD. Ontario again. Ontario Teacher’s Pension Plan (OTPP) dropped
around $2 billion dollars on Heartland dental in 2012. Then KKR, a global investment firm, bought
Heartland out from OTPP in 2018 at 126% higher than what OTPP paid. What is it then, are these hot investments? Hell naw. This is not investment advice, but Moody’s
rated Aspen’s CFR (Corporate Family Rating) at B2. Heartland was even lower at B3 That’s junk loan territory. These DSO’s are highly leveraged. But yet, they’re absorbing the dental industry
through balance sheet tricks. Take a moment and think about the coercive
nature of the takeover. Public workers, who are funded in large by
deficit spending, have to contribute to mandatory pension funds, managed by private equity firms,
to fund massive war chests to buy up the entire dental industry. What the hell, bro? (don’t mess with that) OK, this is important. Dental patients, when practice valuations
go up, you are paying a high price in the form of production quotas. Revenue targets need to be met to fluff up
balance sheets for shareholders. There’s already precedence for dental corporations,
not dentists, calling the shots on making treatment decisions. $450,000 fine, and business goes on like usual. That’s not in your best interests when it
comes to seeking unbiased, patient-focused dental care. Profit-focused care is becoming the norm. Anecdotally, I’ve been reprimanded by practice
managers many times in my career, for not being more aggressive in treatment. Fuck it, if it’s not a cavity, I’m not
drilling that shit. I’m not gonna compromise my ethics for your
quotas. If you go to mom-and-pop shops, you are paying
the price of reduced quality of care because the small guys inevitably have to cut corners
to stay profitable. No one runs a business that loses money. Dentists, you are giving up the autonomy you
had in the profession. When these corporations get big enough, they’ll
start calling the shots on the regulatory side. You can’t compete with their source of money. They’ve exploited the mechanics of securities
and derivatives at the expense of public debt, which flows fast, unlike the backbreaking
labour you produce with your 2 hands. They’ll pour money into advertising, regulatory
influence, and they’ll benefit from economies of scale. Eventually we’ll get the Shoppers, CVS,
and Costco of dentistry. Monopolization is the end result. And the tool of choice to get there is centrally
controlled debt, outside of your control. Lord Acton had it right, power corrupts, and
absolute power corrupts absolutely. Make no mistake, this is not a free market
– it’s a coercive kleptocracy facilitated by central banking. It’s a sick game played against my profession,
the patients, pension plan holders, and the integrity of the economy as a whole. Whatever, they can play team Empire, and I’ll
play team Rebellion. I just think the technological pieces are
in place to circumvent their influence. More on that in my next video. Thanks for watching all the way through, let’s
build solutions. Check out my video on why the separation of
money and state is part of the solution. Please subscribe and PEACE OUT! “Never more,” said the raven—goodbye to innocence Since he ate the bitter fruit, out the garden riot suit ‘Til the burner to your sweater, make another ‘til he’s dead Years later, here is me—another hurting human being Wonder why the serpent took the time just to ruin dreams Gattaca, will we ever make it back to better weather? “Nevermore,” said the raven—nothing else and see you later “Nevermore,” said the raven


2 thoughts on “Why is Dentistry so Expensive? Money in Dentistry EXPLAINED!!

  1. 7.30
    The coercive nature of the dental takeover:
    public workers, who are funded in large by deficit spending are forced to contribute to pension funds. These are managed by private equity firms to fund massive war chests to buy up the entire dental industry.
    <mon goooaaa>

  2. Because dentists are scammers! & they stopped taking payments because people on welfare refused to make the agreed upon payments so now they all demand full payment up front. & people like me who only get $790 a month from ssi Can't afford dental care. Do I look like I can afford a $400 dental bill up front when I have to pay rent that cost $360. I feel like I've been labeled because a few people refused to make payments. I told my dentist on Tuesday that they lost a patient because they refused to except payments & I have 2 cavitys, 1 broken tooth & decentigrated 1. (Only parts of the root remain) because of my bad experience I won't let a dentist look at or tuch my teeth because they demand full payment up front like a bunch of mafia thugs.

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