149: Outsmarting Inflation with Technology

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. Hello everyone and welcome to another episode of DSO Secrets. I'm your fearless host, Emmett Scott, and today I'm here with founder CEO Kiltesh Patel of Tab32. And I've decided to name this podcast Outsmarting Inflation. Right now we're in a place where we've never experienced since, not in my lifetime, 1970s, I guess level inflation, maybe worse. I read an article that 1970s is wrong and you have to go back to 1845 to be in. I definitely wasn't around then as much as my kids think I might have been. But this kind of pressure that we're feeling is just so unique. We've always prided ourselves that dentistry is very recession resistant. But Kiltesh, we've never really said that dentistry was inflation resistant. That's almost like an inside job working on us versus external forces. And the reason I think I think of that differently is because recession is. And right now we're supposed to be in a recession, but there's a bunch of jobs. But in true terms, in my mind, recession is when there's more people than there are jobs and goods and services really aren't being bought. But since dentistry is so fundamental to our healthcare needs, it tends to be resistant to a lot of that. Now maybe some of your higher end care gets slowed down and that inflation is where this internal cost starts going up, squeezing margin and we just haven't really had to deal with that to some extent. We've had insurance companies and payers that have done that, but nothing this fast. That's kind of the inside along with the turnover rate of employees trying to figure out what they want to be when they grow up and all of that stuff. So anyway, I'm thrilled to have you on Kiltesh today because ultimately when I look at the models that are out there, others who have been in the fight, and I know you do, this too is like you mash up with Other industries. Like, it's not like dentistry lives in a silo. It's a business model of healthcare. And what can we steal from other retail, et cetera. I was down at Dallas Love and they have this walkthrough terminal where you slide your credit card and then you walk through and like grab whatever food you want or drink and so forth. And then you just walk out and it's got all these cameras that are. And then you get a charge for it. And it's kind of cool because you feel like, you know, I'm shoplifting, which is kind of a fun feeling, you know, as I run out. But what they've done is they've eliminated a bunch of labor costs, you know, and so we know that other retail environment. I mean, I'll be honest, I go into Walmart or Target and they do the self checkout and I feel like I should get a little bit of compensation. Like I'm working at Walmart, I'm the checker now. You know, it's like, look this up. And I'm like, I should have had an onboarding before I came in and bought groceries, you know. And then if it's like, if it doesn't work, there's a little screwdriver there, like, hey, this, this register is not working. Could you please fix it for us? So they continue to push down on how do they use technology, how do they leverage the workforce. So just curious your thoughts and you know, how did you get into to dentistry, Kiltesh, from your background?

So first of all, thank you so much for having me on this podcast. And couple things right where I felt like on the aspects, there are three things that are squeezing us that has never been before. One on a macro level is obviously the inflation contraction of the economy that is happening with what is going on and what we see every single quarter for last two quarters now. And then obviously, you know what, post Covid, what has led is into a situation of shortage of workforce and labor force along with escalation of the cost. So all of those squeezed together, if you put that, it becomes challenging now whatsoever. We had a very cushioned business forever, but now it's a challenge because now those cushions are waning away. And how do you really now make it efficient? Not in terms of scaling up, but in terms of operations at a tactical level on a daily basis. And that's the challenge that industry is facing today. Where my head goes is that if you take all the examples of Amazon, Starbucks, all those experience that we talk about on the retail side of the business. They are almost everyone driven by technology and they are using the technology to a level like you said, that they're trying to find a way that hey, can I serve this customer with almost zero touch points and all technology points, right? So that even, I mean there's been huge push for every single way. Like from a smallest way, when you walk into Costco's and Walmarts of the world, you see an auto kiosk that you really scan and walk out through. More and more are getting implemented, faster, they are getting implemented and we actually,

like, I mean I was joking about, you know, me having to do all the work. But the reality is is we as consumers are getting used to and prefer some self serve items. I saw there's a new Amazon cart for whole Foods where you're kind of scanning as you go and putting it in so you can just walk out with the cart and you never even, you know, now it's getting to where you don't even go through a checkout line.

Right. So.

And frankly that sounds amazing.

It is amazing, right. But pre Covid and post Covid and where we are today, it was a choice back then to do those things. It is a necessity basically to say, right, so that's the major difference if you put macroeconomics together under where the retail is going. And very much so, you know, dentistry is not any different or very similar to a retail business than, you know, other side of the physicians market and whatnot. That where I come from previously it needs to be efficient because again our revenues or productions are not increasing. By the way, inflation is increasing, gas station has a way to increase the pricing on you, but you as a provider do not have that ability to increase. So then where can we find a way? And that is where I feel that technology comes into play, which is a must today for everyone to think about. And it's not anymore like hey, I'm looking at this technology, but you should start looking at a technology. How can it help sustain my business and how can it help me create more efficiencies and growth over a period of time?

Well, I mean, kind of emphasizing that requirement level. You know, I've always been fascinated with technology. You know, I've built a huge ecosystem around open dental and so forth and kind of said okay, this industry is far behind, but I'll just kind of try to incrementally make it better and so forth and that's given me leverage and so forth allowed us to scale and grow. But now it's not A nice to competitive advantage. It's those who don't adopt this are going to struggle to be in business. And I think a couple things too on your points that are changing. One, this labor market, as tough as it is, is the best. I think it's going to be when you look at, I just saw a statistic on birth rates and birth rates are lower this last year than they have been since the founding of America. If you think about that and take that out 15 years, that means we're going to have less people operating basic tasks that we rely on. If you don't have those individuals now, technology, I think to your point too isn't replacing people. It's like just keeping the trains running on time at this point. It's like to operate a Starbucks, you're going to have to have this technology to operate a grocery store, to operate a fast food restaurant, you're going to have to have a few highly paid individuals doing tasks that you haven't automated yet. And everything else has to be automated. And dentistry is going to be no different. You've got to be able to keep the dollars for the dentists and those directly supporting them. And then you've got to start figuring out how do I automate everything else. The other thing I'd say just from a business perspective is we've gotten used to very low interest rates. And whether we've done this on a spreadsheet or just in our head, the payment structure we're used to getting sucked out of our business is about to change dramatically. So every little debt that we've pulled out, of course cost of goods have moved up. And I think where dentists have always prided themselves is being able to drive down supply costs. You know, if, if there's anything a dentist is going to, you know, what's your supply cost? Well, my supply cost, you know, that's where there's going to be some, some good jostling of ego. This is going to be different. Like supply cost isn't going to get you there. This is, this is labor costs while still providing an amazing patient experience. And in a lot of ways I think those who really lean into this and go intensely into it are going to provide a better patient experience. You're going to say, well, we're putting all this technology in place so I can streamline things, lower my cost. But the patient side is actually going to be better than what we had previously with a bunch of people.

Absolutely. Win is for consumers for sure. The quality, the experience is for the consumers. The patients in our case. I think the bigger picture from my if my 2 cents were that the focus basically is not an option, it is a requirement. And it was a before pre Covid debate when people were trying to automate. Like how do you drive automation? Right. That automation is not so much today a debate because we have a shortage, acute shortage, and we really need to fill that up. And the best friend here, or our best friend here is the technology in that context, if it's where my head is at, if it.

I liked what AJ Peak said. He was on a panel with me at dicoma just recently and he said, you know, three things that he's taking seriously. Number one, what can I centralize? Because if I centralize now, you have to do this well, but if you can centralize in theory, you've taken a one to one ratio and you made it maybe one to two ratio. I only need one person to do billing for two locations instead of one to one or scheduling or whatever it might be. Number two is what can I outsource? Or as support DDS likes to say what can I insource? So what can I though move that labor cost and then lastly, what can I automate now? Actually automation is the most powerful of those components. But you have to one, have the technology there and two, you have to have the culture to be able to drive that.

So that's amazing, right? Centralized in source, outsource and automate. Where is the challenge in that? Three points. I'll flip it to head. You can outsource if you have right technology. You can centralize if you have right technology. Right. You can automate if you have right technology choices.

Well, I'm getting, I'll give a case in point and just be vulnerable. I'm getting killed by the fact that it was bad before, but like let's say with open dental, I'm having to rds in. Right? So my centralized team is now rdsing in. Then I go to take this overseas and whatnot. And now they're rdsing in across all of these components that luckily have an IT team that can handle this, keep it secure and so forth. But most people aren't going to have those resources. But it's still becoming so cost prohibitive. I'm starting to lose some of the advantage of centralized. And to your point, it's technology on top of that. I used to be able to have them all in one room and that changed in two months of like okay, everybody's got it and I'm nervous and I Don't know that I should or could. I'm nervous to bring them all back and put them in a room only to have that change again. And frankly, I don't think anybody wants to work in a big environment like that like they used to. And I can get better labor just generally throughout the United States and globally if I can work off of a virtual mindset. But I do. We, we have to go cloud based. It has to be able to be simple. And it's got to do more than just be cloud based.

I think choice should not be cloud based. Choice should be, what is my business need? Where is my business today? Can I sustain my business and how do I grow that business? I think we have been doing this or making these choices so other way around or opposite by looking at change in terms of replacement rather than thinking more strategically from business perspective, your choices should be, can I do centralization? Can I do automation? Can I do this? How can a technology help? Where are the limitations of that technology? So just to break it down on what you were just saying about RDSing into different systems, right? The HIPAA doesn't change. HIPAA is still the same HIPAA that we had before COVID and after Covid, right? Data going out of this country's border is a HIPAA violation. So if you are doing a call center outside this country, you better make sure that your data doesn't flow out of this country where they are stored in there. Right? Because that immediate HIPAA violation, speaking more subtly about it, right? So that's where I think one needs to understand that it's not anymore a cloud choice. It's more of my business need and how do I drive that? Cloud could be a means to accomplish what you are trying to.

Well, let me give an example of how I think of cloud is. Cloud is like how everyone's talking about electric vehicles. I'm like, that's the wrong discussion. Autonomous vehicles is what's interesting because at some point everyone, no one says, oh wow, D solar, gas. I mean, I guess gearheads really are into that. But ultimately it's like electric's just how you're going to get around. The real question is, where's the software going with autonomous vehicles? That's who's going to win on this thing. And I think what you're saying is cloud is just kind of the base platform. What are we doing to actually create automated systems and wizards and making things simpler. Making things simpler for the practice staff We've talked about if you can cut your billing costs in Half that's different than like I went to the cloud, you know, that's like I made systems and processes. My EOBs are auto posting and those kind of things are tech enabled companies. That's a different level of margin and capability. And this is where I think you start outsmarting inflation because you're not playing an incremental game, you're playing an exponential one. Which I think the challenge there Kiltesh, is it takes a mindset to be willing to break everything and build it based on technology. The problem I've had, the technology wasn't there. I could break everything and say now what? Because the technology wasn't serving the need of automation that I needed. So I'm excited with what you're doing with Tab and the amount of things that you're building into the system. What makes it so interesting to me is it feels like we're going from Microsoft to Apple right now. And I can see that the most strategic players are thinking that way, like hey, here's all these disparate systems with all their drivers and blue screens and your team. And the problem with that, to your point, that's not exponential because now it's just another portal for that team to log into versus like an Apple all in one where it just works. Right? Isn't that their theme? Like it just works. And so you've got an ecosystem that truly works together and the team's not having to go to disparate portals and reenter information, et cetera. It's just one. Like that's what we need.

So I mean this particular aspect I met is very, very common where I come from. Technology background, the worlds of Microsoft, even Google, Oracle, SAP, biggest enterprise resource planning. These platforms are built to address the entire problem. It's not isolating one problem and addressing that, just one problem. The reason that they are not doing it is because then there is no transparency, there is no effectiveness, there is no efficiency. It's so hard to now have five different systems and have lot of black boxes what ends up. So I'll give you a very much example that is ingrained within dentistry. What we have is patients communication as one platform, we have reputation as another platform. Radiology is yet another platform on top of practice management. And also you have billing claims and attachments, right? So five, six. I'll just say that, right? What happens is that these are not really well integrated and built out in a way you can assemble them but that's not really. It's creating a black box effect for you where you are having to, you are always running into trouble either on the front end, back end, middle, somewhere, Right?

Yeah. The middleware sometimes breaks and you don't know it for two months.

What now happens is Emmett, lot of people are spending their dollars which are very, very critical here to find that black box and address that black box by writing a custom code to that particular situation. Now what happens the moment you start addressing this black boxes by writing certain custom codes? Oh, let me make sure this patient communication talks to my practice management. Let me just write a custom code. What happens is that you are now into a perpetual cost model of software rewriting it because software is not one time cost, it is always your ongoing repetitive cost which a lot of people fail to really realize. And what happens that by the time they realize it, it's a sunk cost of few million dollars or a couple million dollars. Right. That is when you really realize that oh, let me what happened here? And now you are so much into it that it's a sunk cost and you still cannot get out of it because it's a big decision to make.

Right, Right. Well you've got a bunch of customers on that too. So how do you hey, switch to my new product.

Right, right. And now that that's a catch 22 situation that should I keep investing in this and further get banded into it. But now what happens is that macroeconomics doesn't work the way you are working. Right. Your cost escalations, the efficiencies need is doesn't mean that you can do it or not. You have to do it no matter what it is. So now gap becomes bigger and bigger and bigger over a period of time unless it is thought more strategic, I guess. And people should at early stage decide this and make sure and understand this that they have a technology that will take them to 10, 20 years of Horizon, basically.

I'm not saying, I mean you went deep there Kiltesh, but you're basically saying that there's a fundamental flaw in the way that technology started. And it's not because they were fundamentally flawed. It might have been the years they started the technology available at that time, whatever it might be. Right? But where we're sitting today with what we know about the consolidation of the marketplace, with what we know about what we're going to have to do on leveraging labor and frankly with the power that's now been created in cloud computing, et cetera, we can build something different than we've had and doing kind of add on incremental changes to old Software just isn't going to get you there. So I think what you've given a lot of CEOs out there is if you're looking at practice management software, go deep, look at the fundamentals, grab a CTO to help you do this. Look at the fundamentals and say, okay, where does this scale for us? And not can they add. Because if you ask them how it will scale, they'll say, oh yeah, we can support 10,000 practices on here. That's not really the issue. The issue is can you support seamlessly all of the different features and functions and capabilities that I need? Do you have a built in capability around patient communication, around attachments, eventually around AI and ortho and every special? Like are you going down that route and can you get there? Can I get my BI data seamlessly or am I attaching a bunch of things to get to that? Right, that's, that's, I think the difference between Microsoft versus Apple kind of mindset here.

And also to add what you just said is also think that where am I today, where I need to be in five years. Today you might not have a need for centralization, but tomorrow when you scale up, the only way we have seen DSOs is to centralize as much as it is or it can rather. So make sure that you understand those two aspects of how your growth projection is where you are and where the efficiencies will come from and make that decision, which is based on a long term, at least, if not five, then three years to make sure that your technology can accommodate it. And you are not wanting to write that band aids of black box code to make two systems stock or three systems stock or because cost, again, development cost is also escalating and that's in fact not linear. That's exponential. Development cost that is happening is exponential. It's not linear anymore. Like it's not linearly increasing. I mean if you look at the jobs and other things, technology is the one. Everyone else is growing linearly even though there is a little bit labor cost up. But if you look at technology, the curve, it's always curved upwards in terms of the Bell curve. So I feel like one needs to be very, very careful about that.

Well, I mean, but speaking of that Bell curve of technology though isn't nearly as intense as the bell curve of labor for us. I mean it's working on, let's call it pennies per dollar compared to what labor is working on. And I think one that's not getting fully appreciated is you see like June's numbers that CPI inflation's 9.1% or whatever it might be. That's not how it's happening on labor. Labor is like 20 or 30%. I mean if we're using just easy numbers, if somebody was at $10 and they went to 15, that's a 50% increase in cost. I mean doing that on small scale or big scale, it sucks. If it's $13, it's 30%. So whatever your number was, it'd be interesting for everyone to sit down and say, okay, two years ago, you know, I could get someone for this amount. Now I'm at this. What is your labor inflation cost? I don't think it's 9%. It might be, but I bet it's even higher than that. And then the question becomes, okay, if that's true, then where am I cutting it out? Because I got to keep similar margin, right? Otherwise my gross got to get cut off. All these things have to get cut off. And then where do I just have to get innovative? You know, I can start with cutting, but you're not going to be able to cut your way to success on this. Eventually you're going to have to put some level of automation in place to be successful. And the customer wants it. They don't want to fill out your paperwork anymore. They want to get tax, they want to be able to look up their account in their profile and they don't want to have to log in to look at it. But it has to be, you know, HIPAA compliant. Right. They just have very intense demands that have got to get solved.

Right. I mean all of those things are the customer are patient when they come to a dental office has a mindset of retail when it comes to they go to a Starbucks store. Right. So we need to public technology that is given it's not anymore a feature. People can say it is a feature that's not a feature that is given your security posture is given. These are not really anything that you can compromise on. These are given stuff that you need to make sure that your security compliance, your patient experiences are at the base. Now is the challenge to rise up against all these odds and figuring it out how do you create efficiencies by centralizing it either or by creating different offerings. And unfortunately our hands are very tight for the top line of our profit.

Yeah, my son started working at Home Depot like eight months ago. I think he's gotten three $1 raises which he doesn't deserve because the basics of what he's doing there's no, but everyone, they're giving everyone that. So you're wondering why lumber is like 300%. It's not supply anymore issues, it's that they're giving these raises to all these K. So now they're able to keep moving up that part of the curve. We can't do that, right? Can't call your local insurance company or national one say, hey, could you move this up 300% so that I can compete in the marketplace? So we're getting squeezed here. This is why inflation's different than recession. Getting squeezed here. And then what are we going to do? We've got to centralize, we've got to outsource, we've got to automate. And to your point, I like it. It's a good one. Technology has to underline all of that. And I think we're lucky that we're barely going to catch this train on technology. I think the work you're doing at TAB is critical and just full disclosure. I think many of you listening know this, but we've been working with TAB doing beta testing, pushing where the limits can go on technology. And Kiltesh and team have been one of the most open with taking that feedback. And I think that's also been the challenge. Kiltesh is like group dentistry. DSOs just weren't getting the respect unless you were super large. It was hard to get the respect of the technology groups because in fairness, 80, 90% of their marketplace wasn't us, but we were driving the innovation. Like, no, we need this. I remember when I was like, I need access to your database. No, you can't have it. It's like, no, I need it, or I need a great BI solution. So I think we're at this amazing point, our relationship, kind of working through it. And listen, I don't care if another competitor figures this out. Whoever figures this out, the industry needs it. I know you're very open to that too, Kiltesh, like, bring on the competition because then we'll just continue to scale better and better solutions, which ultimately is a win for this industry. So with that, Kiltesh, any other thoughts? I mean, if someone wants to reach out to you, let's give them that contact info. If they want to kind of further the conversation, they might have a single practice. They might have 3, 5, 10, 50. I know you have groups at every level and I know you're talking to groups at every level, including some very large ones on this thing and how to solve it. So if someone wanted to reach out, what's the best way to get a hold of you or your team.

So our website is the best way to reach out. And obviously you being the referral would be another source to reach out. I'm always on LinkedIn and anyone can reach out to me also on LinkedIn along with the DSO group and I make sure that I'll promptly respond to all of the questions. We also have a lot of sales team around so if you email them on get startedap32.com we will make sure that we'll reach out or reach back to you.

You know, I'll put this out there if people want to. You know, if you listen to this and you want to come over to DSO Secrets on on Facebook and put this in here under this live cast that we're doing right now or just message me, here's something I think we could crowdsource. What does your practice management software not do today you wish it would do right? What is not automated? I would love for people to give that feedback. What is a complexity point? What is, you know, what's another software you're using to solve what your practice management software won't do? I would love that feedback. So if you just want to message me on Facebook or any other way you want to tag me Instagram or you just want to come over to DSO Secrets and put it under this, I'd be very curious because I think you're open to all of that. Kiltesh is how do you take this to the next level? We got to work together,

Emmett. I believe in abundance, first of all. Even competition is welcome. I personally believe that medical has been limping for so long even after incentives given where they try to bring in dentistry. But less than 10,000 dentists qualify for meaningful use, unfortunately. But what I'm trying to say to you is that dentistry being more retail today, it has an opportunity to leapfrog medical. Literally leapfrog medical because we have less barriers in terms of new technology coming in. We have less technical debt to be those EMRs and don't talk to each other. There was lot of things that doesn't work still. We don't come with those baggages. We can literally leapfrog medical in terms and get very close to retail and it cannot be far off that we could truly provide a Starbucks experience. I hate to say these are a one click experience of Amazon. It should not be far off. It just needs that. We need to come together and really discuss this and build solutions together.

That I think is giving Tab a competitive advantage right now is your open humility and your collaborative nature and your abundance. It is a competitive advantage. So I'm excited to see where this goes. It's. It's on a cool exponential curve and I think you're playing it out and saying if we really embrace this combination of healthcare to retail, we could really teach the rest of medical where they need to go next.

Absolutely. And it's possible for us because we have that opportunity. I'm just working towards that, that we don't lose on that opportunity. There is a window that I see for next five years and we just need to come through that window to make it happen.

Kiltesh, I really appreciate you being on giving us these ideas to outsmart inflation. I think it's going to be something we're going to be talking about a lot. You've got a great product and I love where it's developing to. Like I said, full disclosure, we're beta testing in a practice right now and we're giving tons of feedback and Kiltesh's team is taking that and continuing to develop out. So our pain will be the industry's gain as we continue to work on this. But love for more feedback, more people to say, here's what the ideal system would be. So Anyway, check out tab 32, check out some of the features and functions, see if it doesn't reduce some of the middleware and costs that you're paying for right now and see if it doesn't streamline some of the systems. And I think the other part I'll just end with Tab. With the Kiltesh around. Tab is a lot of people aren't using the full capabilities. And so if you currently have Tab, make sure that you're reaching out and getting trained up, because there's probably more there you could automate than what you're doing right? You see that in your numbers and you see that on the back end, there's features and functions that we're going to have to upgrade in our mindset to fully maximize technology. So, hey, thank you so much, Kiltesh. Anybody who wants to continue this conversation, come over to DSO Secrets on our Facebook page. And until next time, keep smiling.

Thank you for listening to DSO Secrets. Join our community on Facebook @DSO Secrets and get answers and resources to some of your most challenging questions. If you want to get a copy of the seven secrets of any DSO, go to our website at DSO secrets.com and we will get that emailed to you. Remember, don't go at this alone. Let us be your team while you build your team.