131: Aligning the Associate Mindset and the DSO Mindset to Create Great Partnerships

Welcome to DSO Secrets. I know what it's like to be an entrepreneur in the dental industry. I've had my ups and downs, just like you. There's so much opportunity to be excited about, but so few resources to get answers. From here on DSO Secrets, we get you those answers so you can change the lives you're meant to bless and achieve your personal success.

When I was working as an associate right out of school, I never imagined I could own these many practices with this amount of support. So thank you.

You have helped build my marketing mind

to a whole new level.

You have this natural talent, this unique ability. Happy day to you, and welcome to another episode of DSO Secrets. I am Ken Kaufman, your host for today, and we have an amazing topic called aligning the associate mindset and the DSO mindset to create great partnerships. And I'm so excited for our guest today. JD Stacy is the Chief Growth Officer at Community Dental Partners. JD welcome and thank you so much for joining today.

Thanks, Ken. It's fun to be here.

Yeah, I'm excited for this. I've been looking forward to this for a while.

So, J.D.

if you wouldn't mind, give the listeners a brief overview of your background and your history. It's been a long one at CDP and other things that you've done in your career.

Yeah, I mean, I've been asked this a lot of times. You know, how did I even get into dentistry? But I have an unusual background and path into dentistry. I actually graduated with a psychology and a marriage and family therapy degree. I went to Brigham Young University and then to University of Georgia for master's. And. And I go dogs, by the way.

You saw, they finally won the national championship last night. 41 years.

Yep. That was awesome. And, yeah. And, you know, I came out of school, my. My goal and my dream was always to be a therapist, to do counseling. And so that's what I. That's what I set out doing. I went down a path. I worked in. I worked in community mental health. I worked with troubled teenagers and their families. I did marriage and family therapy. I worked with depression and anxiety and addictions. You name it. I found a passion around all this. About 10 years into that, I actually had a really good friend who ran psychiatric units in hospitals. And so he kept bothering me and hounding me. He wanted me to come run a program or two in hospitals. And so he wore me down, and I finally relented and agreed to at least go check one out. So went to Kansas, a small town in rural Kansas, and looked at this Opportunity, running a psychiatric unit and fell in love with it, and so took my poor wife and at the time, our four kids, and we went and ran a psychiatric unit, got into hospital administration. Really found what I feel now is my core passion of. If you read Stephen Covey books, it's organizational behavior. Got into hospital administration, into operations. Had a really good friend that I knew from my days in marriage and family therapy named Emmett Scott. Many of you know Emmett, and we just stayed in touch over the years. And as he was doing some consulting and working with entrepreneurs out in Nevada, he and I just stayed touch and we would talk through kind of the ins and outs of the psychology of owners and what entrepreneurs are faced with and the challenges they're faced with. And I actually loved it. And I finally one day just said to Emmett, I'm coming out to work with you. And so that's what. That's what started that working relationship. And I'll pause there because we kind of know where Emmett. And you know where that heads when he meet. When he. When his childhood friend calls him. Who's the dentist?

Yeah, that's right. So then you're one of the initial founders. You were there day one when the very first practice opened that Dr. Evans, you know, was. Was opening and had a lot of energy around serving that specific patient. You and Emmett were there supporting and trying to figure out all these things about the dental industry and everything that's going on. So give us a brief overview of your journey from when CDP was originally founded.

Yeah. You know, when Chad. When Dr. Evans initially called Emmett, those two started talking. And Emmett and I were turning around businesses in the Las Vegas area. In fact, that's where I met Ken. Ken was a CFO for different businesses. And so we had some overlapping opportunities together. So I've known Ken for a long time as well.

Good times. Good times.

And so as Emmett and Chad really started looking at. And Chad was real clear on what he wanted his vision to be in the dental space, which is really amazing. He was a humble dentist who knew what he wanted to do, but also knew that he needed support around him. And so when they talked about how they'd love to build out a concept, that really, they started talking through what they loved about dentistry and what they wanted to change about dentistry. And the patient experience just kept coming up over and over again, because we know in the dental space that really, your customer, your patient, they'll find any excuse not to walk through your front door. So they just want to take that head on. And as they start to talk about it. Emmett said, chad, you know, I've got this. Here's this guy I've been partners with, and this is kind of his. His bread and butter. This is his space. So they, they brought me on very early on, before we even opened one practice, hired one employee, saw one patient, and we started to build out the. The cultural aspects of what became our foundation. So, yeah, I came in early and Chad, Dr. Evans told me early on, he said, listen, people are going to spend a lot of time, a lot of their day, and their life is going to be spent working in our building, and I want this to be the best job they've ever had. That was his first thing. And the second thing he said, and I want this to be the most unique patient experience. So that's what the three of us set out to start creating. And so credit to them for taking a chance on a quote unquote, marriage and family therapist to come in and. But I loved it. I found my home. In dentistry, you get to have such an impact. From a psychology standpoint, you get to take people and you get to make them better. I mean, you get to help them overcome fears. From a psychology standpoint, I've found my home. It's the best.

That's awesome. And then through the years, you've kind of been in different roles, but specifically as the Chief Growth Officer and prior to that, working with JV partners and with other affiliations, opportunities, and all sorts of things like that. So I think it's important that really most of your time has been understanding the psyche and the mindset of the associates, as well as understanding the psyche of the DSO and what it's trying to do and accomplish to support the associates and the doctors. And so really that's why we wanted to do this episode. And my guess is it'll probably roll into a few episodes, but we wanted to try to start to unpack this concept of what is the associate mindset, what is the DSO mindset, and why is it that sometimes they clash so much, and how can each side improve themselves and get the right mindsets to create really amazing partnerships? And so I think probably the best thing to do. And we know that at CDP early on, there were some failed attempts at trying to affiliate or to partner with or to help dentists. And so it'd be interesting if you take a minute and kind of unpack some of the lessons learned there, because I think our listeners are going to learn a lot from that, and then it'll lead into the discussion about how. How DO Associates and DSOs come together and learn to work together.

Yeah, and I appreciate that, Ken. In fact, I'm going to be vulnerable about where we did great and where we absolutely blew it. And I'll talk you through everything in between. And honestly, one of my responsibilities from the very beginning was to help recruit dentists, because I get asked the question, when does. When do you start talking to your associates about partnerships? When he start. To be honest with you, we've actually gone way back. It starts in the recruiting process. So I'm just going to make a plug there that we can circle back to if we want. Because when you're. When you're hiring dentists, what you're really asking yourself, if you're serious about partnership, you're asking yourself, before you hire them, is this someone I would eventually partner with. With. And that's really what goes through our mind. And let me explain why, because as. As we had our first couple JV partnerships, our joint ventures, where the way we do it at CDP is, we have our partnership, we have a couple different routes they can go, but in general, they. They go bring some money to the table and we'll partner with them. And we try as often as possible to make it a 50, 50 equity split at the practice level. It's important to us because a lot of doctors, that's important to them.

Well, and to be clear, when you say the practice, it can't be at the practice level. It's a 50, 50 relationship at an entity level that allow, you know, where both doctors, clinicians and non clinicians can own. I just want to make sure.

Yes, thank you, Ken. Thank you very much. Yes. But we want to create a partnership that everyone feels engaged and excited and so forth. Early on, our very first partner was with Dr. Copeland, who's our chief dental officer, one of the first associates we even hired at CDP and brought on, I should say I joke with them, but it's true. He was a false positive, meaning the partnership went amazing. And looking back, I attribute that a lot to him and his personality. Just because he's a smart guy, he's a humble guy, he gets it. He actually has a finance degree, so he totally understands the big picture. And so we really went forward thinking, hey, we're really good at this. That went extremely well. We got into our second partnership and in my opinion, this one changed the way we do in a good way, changed the way we think about partners, because this one did not go well, in all honesty. In fact, where. Because when you Know, as a dso, your primary responsibility is to support doctors. And so that is how you. And we kind of took that same approach into a partnership where we thought our job was to allow them to help support them around the pain points so that there's things they don't have to deal with if they don't want to let them go, be the superstar dentist, lead their teams. We took that approach into these partnerships and actually it backfired on us because here we were trying to remove some of the pain points of partnership. And as you know, anybody that's owned a business or ran a business, you know that there is, it's like the stock market, it trends in a direction, but there is a roller coaster that you go on there. The ramp up time, the. I mean, there's, I mean, let alone what happens if something like a global pandemic happens. I mean, there's just things that are out of your control that fly at you. There's, there's regulatory bodies, there's. There's staff that don't show up. There's. There's so much pain that goes into the business side of things. We thought we just try and insulate them from that, and it actually blew up on us. That partnership honestly taught us more than anything. It taught us that we absolutely want to include the partners in all discussions, in every step of the process. But more importantly, it realized if I were really honest with myself, I did not do a great job preparing them for what business ownership is there, because, Dennis. And you know, I mean, they're smart people, doctors are smart. We're all, I mean, we're all, we're all successful, we're all smart. And. But what I took for granted was, you know, there's not a lot of business education that happens in dental school. There's not a lot of prep work for what it means to run a business. You actually need very different skills to make a practice successful.

And often there is an experience either because, you know, the traditional path is you go to school, you know, you go to undergrad, and then you go straight to dental school. And so unless they've been doing moonlighting or other things, when a dentist comes out of dental school, they don't have experience running a business or being engaged in that. Now. Now, some do. I know, some go and sell pest control during the summers. And like, there are different things where they start to get some of that experience, but for the most part, they lack, not just on knowledge about business, but just general experience of what it's like to Be in one and how they work and that kind of.

Yeah, no, that's a great point, Ken. And you know what was fascinating to me because here I am. The psychology side of this always, always is interesting to me when I'm looking at that partnership that didn't go well anywhere where there were communication gaps and there were many. The assumption on their end was you're trying to take advantage of me or you're trying to screw me over or you're trying to. I mean, it just, it was amazing to me. And again, I have to own that. I'm not putting that on them. I'm owning that. Anywhere I left a communication gap, that's where the issues were created. And sometimes it was as simple as we weren't getting them financials in a timely manner so that they could, they could see the financials and how the practice was progressing and they didn't have a full appreciate. I mean, we, these partners came to us right out of dental school and were instantly successful. I mean, our work and in our practices, our doctors do really well. They make great money, they have success. We have amazing systems. They just, they just step into a system that just is ready to support that doctor. And so really what happened is they assumed that just everything was going to go the exact same way from an ownership standpoint. And it doesn't go that way, especially the first two years. First two years, there's so many ups and downs, there's so many places where you just struggle. So honestly, Ken, back to your original point is, yeah, there was a lot that was lacking from our end and helping get them ready for ownership and how to handle the emotions that come at them. You just don't get that in dental school.

Yeah, fair point. And honestly, you don't get that from a lot of disciplines in school or in anything. There's some amount of it that you can't even get enough education other than the school hard knocks a little bit and to get banged around a little bit or kicked in the teeth a few times, figuratively speaking, just trying to work through the issues that come with trying to run a business. So interesting. I think one of the concepts that you brought there that, that black hole, if you will, meaning where there's a communication gap or lapse in, hey, we're moving forward, making a couple decisions here and not including that can all of a sudden their minds can go to perceived as they're gonna. The way I like to say it is if there's a black hole or a vacuum and you leave it to somebody to fill. Oftentimes it goes more negative than it actually should be. Or. But. But it. For whatever reason, that seems to be the nature of how that works. So.

Yeah, yeah, exactly. So. So that's where I realized I got to step up, you know, as an or, if we're really going to be supportive and because there is. You want to turn art into science. You always want to do that. We, you know, you don't want to rely on, hey, we're friends. We can figure this out. No, you actually want to put a process in place. You actually want to build out a curriculum and a training. Just like, I mean, when we onboard a dentist, we go to great care to mentor and train them and get them ready for. I mean, it's like, you know, as. As you come out of dental school, it's like just getting your driver's license and now you got to go drive on in the nascar.

We really.

It's the same kind of gap between being an associate and now owning a practice. There's just a lot to learn and a lot that comes at you. So learning, just respecting that gap and filling it with a good education and training and development and mentorship that now became. So I'm grateful for. As grateful as I am for how good our first one went, I'm really grateful for how poorly the second one went because it built the foundation of what we now have as what we call our MBA program for our associates to become owners.

Oh, interesting. Okay, I think we're going to take a little bit and unpack that for

a minute

just to kind of go back and summarize here, then. There is a large percentage of dentists who graduate from dental school that desire to have ownership, and there's absolutely nothing wrong with that. That's natural. That's been the progression over the years. And depending on how a DSO is structured or group practice is structured, there's various ways to do that. And of course, every dentist still has the opportunity to go out and open their own thing and do it on their own. Or you can do with the support of an organization that's perhaps got processes and procedures in place to help along the way. All of that leading to, well, okay, if an associate wants ownership and if there's a group practice or a DSO that's organized that says, hey, we can provide that type of an opportunity here within our platform and bring the right support. The question then is, okay, how does the associate bridge the gap between, hey, I'm an associate to.

I need to.

I need to understand what it means to be an owner. And then also from the DSO perspective, there's got to be a gap bridged between the dso, just thinking, hey, everything's going to be fine and great, versus they've got to come with a mindset of, hey, I need to help this associate bridge the gap, and they're going to help me bridge the gap. Also to have empathy for the situation, as well as obviously understanding that that doctor has full autonomy to take care of the patients the right way, and they're going to have certain competencies that they want to pursue and, you know, the CE and all of that stuff to try to gain, you know, more capabilities to serve the patients that they're treating and, you know, visiting with every day. So there's.

There.

But there can be this wide gap. Like, you noticed that second partnership. Hey, there's a gap between what they were ready for and what we were ready for. And you've literally been the tip of the spear over the last 12 years trying to bridge that gap. And what you ended up doing was creating this sort of MBA program for associates. So let's take that on for a minute and let's unpack a little bit about that. What exactly the impetus for it and then what exactly do you include in that? And I've got some questions, too, around that, but you can set up.

I love that. I love the way you phrased all that, by the way packaged it. I mean, really, the impetus. I remember listening to Chad, Evan, Dr. Evans, and I remember listening to him. He had an adult in there who was. Who was. Who needed a root canal. And I remember how nervous that patient was. I just. And then watching how amazing Chad did at managing his fears and expectations. I just remember him laying out everything of, hey. And, you know, he instilled confidence in him. He said, I'm very comfortable doing this. We've done this many times. But here's some things that I just want you to be aware of. And he just laid out, you know, here's. Here's what you may encounter. Here's what we may experience. We may get in there and find some things we weren't expecting. And so he just kind of. It was amazing to me that root canal went so well. And I'm saying this about a root canal because of all the work he did before he even got the drill in the mouth. And so that's. I took that same concept of what would I want our doctors to know before we. Because we're going to go, I'm going to Help them go find funding. Because finding funding is a huge pain point. It's a massive barrier to this. And so I'm going to go help them find some funding. But before we do that, what would I love them to understand? And let's help manage their expectations. So that's what led into this. So really thought about what do we, what do they need to know what makes a business owner successful? And there have been many people that have contributed this over the years. Just. You've been one. So go ahead.

Yeah, yeah. And when we chatted about this, one of the things you brought up that you like to almost start with, very first off with, hey, here's an associate, they want to move into ownership and have that type of opportunity. You start with walking them through like the basics of investing. Like, what does that mean to invest in something? So walk us through a little bit how you approach that.

Yeah, so I talk them through investing. I personally, because we all have entrepreneur inside of us. Right. We wouldn't be here if we didn't. I personally, I've invested in all kinds of things. I've built rental. I mean, I've, I fixed up and bought rental homes. I've been involved and I bought other houses. I've looked into restaurants, I've looked in. I'm in the stock market. Ken's in the stock market. Ken's much more advanced than I am. But, but I've invested in different industries and now I've invested as I can in the, to the dental space. And what's interesting about that is I have never in my life seen a better return on investment. If, you know, if you know how to build out the proper culture, the proper, you know, make sure you got the right doctors, have the right support and so forth. So just, yeah, I walk them through the nuances of investing. I talk to them that there are risks involved. But what we want to do is we want, we don't necessarily eliminate risk, but we make it a more something that you calculate so it becomes a calculated risk at that point. Point. So I walk them through all of that and then the very next thing I jump into is I want them to understand what a dental practice really is. I want them, we. I want to, I walk them through a pro forma right up front. I want them to understand what ramp up looks like because we'll do, we'll do de novo practices often in cdp, we'll do acquisitions as well. But either way we get a pro forma and we walk through it. And these pro formas Break down month by month, year by year. And they just are. It takes some historical information, but. And then there's some pro forma information and I want them to see so that they. I just want them to get their eyes on what it means to invest in a dental practice. Because you don't just put, you know, put coins in the machine and you're off to the races. No, there's actual. It takes time to build this out, to get the right. The procedures and systems in place to where it's starting to kick money back out. So that's always step one.

Yeah. And then how do you prepare them for what you've called before? Emotional management. But it's the roller coaster of, you know, I put my money in and how's it going, and, oh, maybe my dental practice isn't doing as well as I thought and, and maybe I need to put more cash in or how do you, how do you prepare them for sort of the ups and downs of investing? You know, just the emotion of it all.

Yeah. So part of it is, and Ken's very involved in this too, is you, you have to help. You coach them on how to read financials. Number one, you, you spend time helping them understand what a profit and loss statement, an income statement is. You help them understand a balance sheet. You help them appreciate and understand the difference between cash and accrual accounting. That's actually a big deal because one, it's just, it's not. I show them what cash financials look like versus what we have accrual financials look like. And like, look at, look at how you get to really. I mean, one, you don't really get. Understand what your practice is doing. The other, you're like, oh, I know exactly what my practice is doing. So just coaching them on those because that helps manage their emotions for sure. The other thing that you do is we kind of walk them through a practice life cycle, right? You walk them through the ups and downs of business. You walk them through some of the things that they, you know, that are out of your control. You walk them through the, you know, things that you're going to encounter. And again, it's interesting that we had Covid, because Covid is a perfect example to talk about something that's totally out of your control that's going to impact your business negatively. So really, you start helping them understand that, that when you, when you're a dentist, 80% of what you do is tactical. Right. It's technical and tactical. 20%, you know, you're going to be managing some emotions in ownership. It's flipped. 80% of what you're going to do is emotional, meaning you're going to have to learn how to manage yourself, your emotions and lead from that spot, because you can't. What if your practice is struggling? And if you're looking, if you're the dentist and your practice is struggling, you just start blowing people out. That's not good for business. You have to learn how to manage that. And so the other piece, Ken, is I have. We walk through the big picture. We look at, we don't look at just month one, month two. We actually, we do look at that. But we want to see the next five years. We want to see, we know how it starts and we know what happens when we get to the spot. Now let's start talking about how do I manage myself in those year one, year two and year three specifically. So that's. We spend several, several of our trainings. I have about 18 of them. The first three or four are all around managing your emotions. Those are the most important ones to get through.

Well, and what's interesting, because I was thinking about your comment about the stock market earlier and it's the same. You invest money and maybe you have a few early wins, get excited and then all of a sudden the market goes down 10% or 12% or 20% and you're thinking, I got to sell everything. And there's all these emotions that come that we have to manage because we know the reality is the long term buy and hold over time in the stock market creates generally a better outcome. And for the most part in dentistry it's the same thing, albeit there are bumps in the road and there are challenges. And maybe you plan for that first month that you're going to see 50 patients and you see 10 and there's a lot of negative emotion that's going through around did I make the right idea? And what's going to happen here? And so I really appreciate that and I think that's where partners then can at times get sideways because some of these emotions and what's going on and anyways, it's a fascinating place and obviously over the years you've realized more and more that helping associates be aware of that and helping also the people that run a dso, for example, understand and appreciate and be empathetic toward that. Super critical.

Yeah. And honestly. And again, this is not our doctors who go through it the very first time, no matter how much I prep them, inevitably a month, three, month six, always in there. We kind of have to deal with some real pain, like I don't say falling apart, but they're really struggling, really struggling. So we always have to go back and say, and that's why I love having the pro forma. That's why we spend so much time in it early on. So I can walk them back, say, remember, here's where we are going to be. Here's where we're at. We're slightly ahead or slightly behind, but we're still, we're tracking. Because honestly, it's pretty normal. And I'm not faulting them for that. It's pretty normal. When we go through it with our, with our associates that have done several of these with us, it's interesting just having the first one under their belt. It's like having children, right? Your first one, you're reading all the books. You're like, what on earth am I? How's this going to go? You're just being thrown off by everything that's happening. Your first dental practice is similar. Once you get to the second and the third, like some of ours do, they, they, they understand it like, yeah, those two years, he means what he says. Those two years are, are up and down and they're painful and at times they're frustrating. And so really managing your emotions, but having a good tool to be able, because that would be a nightmare to me. This is, this is what our second partnership taught us. If you don't have the tools to go back and look at to see if you're on track or off track, that's chaos. Because now, I mean, if they don't get financials that Ken and his team, you know, that give to our associates if they don't have something to benchmark against. Now you've got different problems on your hands now. You, now you've got a communication gap. And like Ken said, now they're starting to tell a story and they're starting to look at you going, are you taking advantage of me? So those tools are critical.

Yeah, it's really, really helpful. I hope that the listeners are appreciating the pain and suffering experience to get to the level of knowledge that you have around this and even how you've built it out and how you think about it. I really think the listeners, too, JD Will get some benefit out of the MBA program. I think we should do another episode where we unpack that a little bit more, talk about what are, what are all the core topics in there. We touched on a few, like the basics of investing and emotional management. But we can unpack those and maybe you can give a little bit more detail because we really want to empower, you know, those that are running groups or have a formal DSO setup, empower them to have that empathy and know, hey, how can I help this associate prepare for ownership so that this can be a good experience and it can be successful? And then also I think it'd be helpful for associates listening in to gain some appreciation around all that as well. So again, just, I think there's some interesting opportunities. Anything else that comes to mind, just as we've been chatting here before we wrap up, that you're thinking about that would be helpful for our listeners around marrying these two mindsets together to become very efficient and effective at working with each other.

Yeah. And like you said, there's so much more to talk about just, you know, getting into some of the, you know, some of the trainings that we do. But. But ultimately I would say this, that just know that. And again, when we. Going back to my origins, when we started this, this dso, Emmett and I didn't even know what a DSO was. We didn't. It was our friend, our dentist friend, asking us for help and support. So that's what we started to do. And we just did what we've been. We were doing in Vegas and helping turn companies around that had been hit hard by the economy. We helped him build his vision. And honestly, when you think about that and whether you're with private practice or with a dso, honestly, as you're thinking about what are your goals, do you want to eventually own practice? And I think most dentists do. Really aligning yourself with people who have a growth mindset to begin with is huge. Is it a private practice? I mean, we've had a lot of doctors call us over the years who said, hey, I went private practice route. This doctor said that they promised me everything, including buy in. It hasn't played out. And so really it's. Does your. Does whoever you're affiliated with, can you see the clear path to your goals? Right. If it's ownership, if it's partnership, do they have a system, a process that's part of their DNA? That's my. If I could give advice, I would say look for that. Look for a company that or a DSO or an individual who has that in their DNA where they're ready to support you in your growth. Once they get you over the clinical hump, hopefully the opportunity is right behind it and it doesn't depend on their exit for it to happen. That's the Other big one.

That's great advice. As you were talking to, I was thinking about, I think we should name the next episode the Dental Practice Ownership mba. Isn't that really the title of what you've learned through the school of hard knocks primarily and built as a result of. And I think we'll try to unpack that in the next episode. So, J.D. if our listeners wanted to reach out or get in touch with you or contact you, what would be the best way for them to do that?

So you can always email me. I have conversations with individuals all the time reaching out asking questions about in doctors, these how to how to set up a good partnership program. My email is j stacydp.dental and J Stacy Stacy is S T A C e y j stacydp.dental awesome.

Well, JD cannot thank you enough for your time and your perspective today. Just, it's been an absolute pleasure to have you on the show. All right, so some, some of my key takeaways here. There's all these gold nuggets that we can grab and capture. And the key thing is, is if you're an associate, be thinking about how can you prepare yourself for ownership if that's where you want to go? Not just say I want to be an owner, but be humble and be willing to say, hey, there's a lot of things I need to learn and there's some mindsets that I need to gravitate towards toward to get there. And as DSOs find ways to be empathetic with associates that want to own and you want to help build a program to facilitate that, help them with this process. And you know, it's just, it's going to help help accelerate toward everybody building, you know, great businesses and finding the success they're looking for. So, again, so grateful for JD being on. Many, many thanks to all of you for joining. This is a a wrap on aligning the associate mindset and the DSO mindset to create great partnerships. Happy day.

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