Dr. Allen Nazeri (DDS, MBA) addresses dentists facing post-COVID business challenges — reduced patient volume, higher PPE costs, and distancing — and argues that cooperation (grouping practices) is a better response than competition. He frames the case using Michael Porter’s competitive forces (supplier power, customer negotiation power, threat of substitutes, threat of new entry) and recommends growth strategies: form group practices, negotiate collectively, implement membership/retention programs, and pursue mergers or "virtual/ghost" pre-merger integrations to increase valuation and negotiating leverage. He closes with a call-to-action to join an upcoming webinar and contact him for advice.
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Hi, guys, this is Dr. Allen. Welcome to Dr. Allen Dental Consulting and Advisory Group. If this is the first time you reach me, I help dentists and doctors to develop, scale, and exit from their businesses successfully. Today I want to talk to you about a question that keeps coming up and different dentists contact me regarding their practices. And they're all worried about, obviously, the amount of business which they understand they cannot get back into the volume of dentistry for many reasons, including the fact that the cost of the PPE has risen so much and the fact that many patients, they don't want to sit together in a very crowded office. But some of these dentists, they're just trying to basically find a way where they can either survive or try to get out of clinical dentistry altogether, or at least their own practices altogether, because certainly they have, you know, practice that, practice death and so forth that they need to, you know, take care of. So. So I want to talk to you guys about, really, this is the time where you can make this problem into an opportunity for yourself, but you need to have a spirit of cooperation rather than competition. See, as dentists, most dentists, they like to have their own little individual, you know, place, and they like to kind of compete with other dentists. And many of them, they go out to, you know, social networks and different things, they smile at you. But on the other side, they go back and compete. And some of them are very, very cutthroat, okay? To a point that they can actually stab you in the back, okay? But most of them, the reason they do not cooperate is they do not understand the bigger picture. They only see their world through their own eyes. And they think, hey, you know what? I have to protect my territory. I have to protect my patients. Therefore, I don't care what happens with the other guys and so forth. But my recommendation to you is to really reconsider this because this is the best time that you certainly can cooperate with one another, rather compete, and you may have to become the leader in this process. Okay? True cooperation, there are number of advantages. And this was pointed out by a guy named Michael Porter, who was a professor. Professor that, you know, he looked at, you know, competitive forces, and he said, you know, people in any type of business, dentistry is one example, any type of a business, they typically think of competition as someone who is in the similar business, their rival, and they're competing with them, and they compete either through price or they try to differentiate themselves through quality of service and different things. But it's really more than just a rival. There are other Forces or four other forces in addition to this that really affects any type of a business. Number one is the power of suppliers, okay? As a single practitioner, as a single office, as a solo practitioner, you certainly have a lot less negotiation power than if you were united together, okay. And you had a much larger number of practices. This is one of the reasons that group practices flourish. Flourish because of the fact that they're able to compete.
With the regular dentist offices because of their high volume, they can't even scale is definitely to their advantage, okay? So you need to see how you can cooperate with the other offices so you can negotiate, okay. You can negotiate better terms with your suppliers and reduce that competitive force, okay. The other things that are.
Considered a competition is obviously your customer's negotiation power. If you are a smaller dentist office, customers tend to negotiate more than if you were a corporation or a bigger organization. And that is true with anything. You know, you, you don't just walk into a big corporation and start negotiating with them. If you're buying, you know, some, you know, any, anything you know. So, so you know, there's a less chance of negotiation with. So, so again, the, the, the amount of negotiation that your customers, your patient can have with you, that affects your profit margin. So that's again another force that affects your business in a competitive manner. The other one is obviously, which Michael Porter likes to call it, threat of substitute, which means that.
You know, practices that, or patients or customers, they all have an option to replace you as the dentist with somebody else, okay? Now as a bigger group, you have the opportunity to lock in some of these customers through various membership plans, through various programs that may be designed for the customer to stay, to be incentivized, to stay within your practice. That's exactly what telephone companies do to keep us, right? They lock us in part of a contract, so we stay with them. So we do not switch easily from one telephone company to the other. So again, as a group, you have this opportunity more to prevent this competitive force, which is threat of substitute. And finally is he talks about the threat of new entry, which means competing with other dentists coming in the market. So if you are a group of dentists, okay, then you certainly can compete more in terms of, you know.
Standing out in the marketplace and so forth as a group. So how do you go about doing this? Well, there are number of growth strategies that I, you know, teach my clients about that you certainly can do. And there is one other aspect of this is many of the dentists post COVID 19 that they want to Sell their practices. They're finding that there are either not enough investors out there because their practices are just too small. Okay.
Or they're not getting the value they deserve. So how do you go about doing that? Well, there are different ways that I teach my clients in terms of coalition and cooperation together. And it all depends on how well you can become integrated. Now, there are a couple of different options. You can certainly do what I like to call the regular merger and acquisitions, where you actually, if you have the money and power, you go and buy the other practices and bring them together. But then there is another option which is absolutely phenomenal, which is called the virtual merger, or I like to call them ghost merger, which really, it's a pre merger integration model which basically it helps you guys to share different types of platforms. Okay? And by platforms, I'm talking about, you know, common services such as legal marketing.
Human resources, accounting software, different things, buying supplies that you can certainly work together on a very simple agreement. And even as a group.
You can.
Bond all of these together and sell it to a larger organization. And that doesn't mean you will stop working. Okay? It has nothing to do with that. You can continue working after you sell and you cash out, but that's one way you can certainly increase your valuation substantially. Okay? So if this is something that you're thinking about, I would certainly like to invite you to join me for webinar that would be announced very soon. And you know, I'm looking to put some of these practices in various regions, various countries together. So not only in this process, you can help improve the performance of your practices. Okay. But also you get to cooperate with one another. Use that cooperation as a way to compete in the marketplace. Pay less for the services that you normally do. Okay. And also the increase the valuation of your companies. So feel free to reach out to me before I announce these webinars. But I will be happy to answer any questions that you may have and either through my WhatsApp line or through my email. Again, this is the first time you're reaching me. My name is Dr. Alan. I help dentists and doctors to develop, scale and exit from their businesses successfully. Thank you very much. And if you find value in this video, please hit the like button and share. Thank you.
