199: Essential Insurance and Retirement Strategies for Dental Entrepreneurs

As you're growing, of course your work comp payroll is going to increase. You're probably going to want to increase your employment practice liability because you have more employees. You're going to want to increase the cyber and the data breach coverage because you have more locations, more patient files, more data that could be stolen.

Hi, I'm Emmett Scott and just like you, I've had my ups and downs in the dental industry, but times are changing. The DEO has built a map of how to succeed in one of the most challenging industries to navigate. On this show, we talk to dental industry leaders, solve problems and get you

the answ you need to face these

challenging times and thrive. Welcome to DEO's Growth Secrets podcast for dental organizations. Now let's get started. All right, welcome everyone to the DEO Growth Secrets podcast. We have another expert here that's going to help you along with your journey today. I have Shawn Johnson, vice president of the business development for Tree Lauren Heisel. Along with him we have Laura Blaine, who is a property and casualty manager. And we are going to talk today about retirement planning and insurance planning from the beginning of your journey, whether you're, you know, deciding to open a practice, maybe you're just getting started, all the way to deciding to scale, deciding to add associates, add locations and all those considerations in between. So, Sean, do you want to say hello and maybe give any more detail to folks who are listening about who you are and where you're from?

Yeah.

Great.

Thanks, Jake. Happy to be here. Laura and I really appreciate the invitation. Tree Lauren Heisel is specifically focused on working with dentists and physicians and doctors. And what we do is we help them with their personal insurances like disability, life insurance, long term care, auto, home, those type of things as well as their professional insurances, your professional liability, malpractice, your business policies, workers comp, employment, practice, liability. And then we can also help you with installing retirement plans in your office as well as comprehensive fee based fiduciary type financial planning. So our heart is to look at you from the full comprehensive perspective and partner with you to help you reach your goals. We've been working with dentists for over 65 years. We're a national firm. We have over 27,000 dentists as clients in some way. We're really proud to to provide our services to them and partner with them. And today I also have a content expert who leads our property casualty division to help us with some of the more detailed explanations of some of the property casualty questions you might have. So thanks. Amazing.

I mean, that's almost unbelievable how many dentists you guys work with. You've been around over 60 years. You personally been in the, with the business for over 20 years. So so much experience. And when it. Insurance and retirement planning, it's, it's one of those things when you're excited, ambitious about growing. It's one of those things like, wait, do I need to think about 20 years down the road? I'm so excited about right now. Right. Or do I need to think about when things go bad? I think the folks, it's funny, the, the old, the weather. Dentists have been around for a while and have the, have the scars. They know. Yes. You need to be thinking about these things from the beginning. You need to be protecting yourself because if you're successful, then you're going to have like, you want to be right, which you're probably going to be. Then you need to have these things said. So super, super important. And Laura, would you want to give a little bit for yourself as well, a little introduction on what you're working with?

Yeah, sure. Like Sean said, I work in our property and casualty department, so I hope to be able to add in a little bit of, you know, insight on what our doctors are looking for from, you know, their, their first job out of school versus our, our seasoned, seasoned doctors that have been in practice for years and looking to grow and maybe sell their practice. I've been with a company for almost 15 years as well, so I have some, some background and some knowledge to add to the talk.

You've been, you've seen, you guys have seen it all between the two.

Definitely.

So let's talk about that journey. Right. You know, a lot of our, our audience, we kind of attract the most ambitious dentists. So we work with folks that are starting that the multiple locations track. And then we have a lot of folks that are just starting out that know they need to go to. People have been there and done that and so they listen as well. So let's just. For those people that are kind of thinking about starting their first location, what are the things they should be thinking about as they, you know, when it comes to insurance, when it comes to retirement? Sean, what advice would you give them?

Well, I think that the bank that they get, that they supposedly they're gonna, I assume they're gonna be taking a loan out to start their practice and it could be substantial. Right. And they may be buying or starting the practice and they may also at the same time be buying the real estate or could be leasing it. So the bank is going to make some requirements for them to gain approval. One of the things that Laura and I talk about is the bank is giving you the minimum requirements for approval. Doesn't necessarily mean you're insuring yourself properly. You know, are you doing the bare minimum? Are you being responsible in your protection? And I think from the very beginning the foundation is they want to have proof of disability insurance. And that's because you are the production line. You create the entire revenue stream for that practice. If you're not there in the beginning, unless you have associates, there's no production coming in, there's no revenue. So they're going to want to have proof of disability insurance. They may want proof of life insurance depending upon the type of loan. And then they also want to have the business insurances put together. If you're doing construction and you're doing a build out, then you would need to look at a builder's risk and general liability coverage. If you're buying a practice that's already, you know, been put together and you're just basically buying that practice as is with no construction, then you need to get your business owner's policy. But there's a big difference with that one. From the very beginning, a lot of advisors in insurance agents and insurance will provide business owners policy coverage when there's a build out being done. And we've seen instances where, hey, if you have a claim, you're not going to get that claim paid because there's construction happening at that office. So that's in the beginning, that's what you're looking for. And then of course, once you get the office set up, then you're going to have to worry about the business owner's policy to replace your contents, your employees possibly suing you, which we've had that happen to young doctors. So there's only clinical practice insurance, liability insurance, there's data breach and we can go on about all kinds of things that we've had in the ransomware and data cyber area. And then there's workers comp as well. So those are kind of the fundamentals. There's the disability and life side as well as the property and casualty side that we worry about in the very beginning.

Yeah, it's interesting. I remember starting out for myself, just had no idea how important this kind of thing is. And then really you hear these stories over time. Right. So we're going to get to. If you're looking at multiple locations, you're looking at growing your team. But Sean, maybe just for my own. My own. What are some of the stories you've heard out there where insurance has become absolutely crucial? You've got to be seeing these come across your desk all the time.

Yeah, Laura takes the calls. Our advisors across the nation take the calls. You know, from a disability perspective, when you have 27,000 dentists, you're going to have a lot of stories out there. Right. So. And most of the time, I don't really have to sell a dentist on the fact that you need insurance. But I had, you know, an endodontist client of mine just throw some luggage in the back of their trunk and hurt their finger. Didn't think it was really that hurt. But then he went back and started doing more procedures. Turns out there was a fracture there, and it just got worse and worse and worse. And had to go on disability claim for something that simple. Pediatric dentists going down and skiing and having an accident and tearing their predominant thumb and being totally disabled. They're still even in digital practice, but they're done clinically. So we have to talk really much about need. People know they need to have it. What I do see is that often they're underinsured or they skimp on it in the beginning, and it's protecting your most valuable assets. So disability insurance, you need to have your personal coverage to keep your family running, but you also need business loan protection, disability to pay back your loan if you're disabled, if you have a business loan, and then you should consider business overhead expense disability insurance to reimburse the practice for practice expenses if you're out. So those are some claims, just disability alone, that you know you can be wiped out if you're running at 60, $70,000 a month of expenses and you become disabled and the receivables end within 30 days and you're out for six months, seven months, eight months, taking $500,000 out of your investments to pay for that or from another area of your assets. You can't imagine how that impacts how much you have left at the end of your career. Right. So having nurses in place are vital. And then when it comes to property and casualty insurance, you know, I'll give an example. I had a doctor buy a practice. And of course, when you're buying a practice, you're buying the assets, but you're also buying the problems. And within a few weeks, he was putting in new procedures, a new software, and his. One of his staff members couldn't learn the new procedures, the new software, and he had to let them go. And he Was sued for age discrimination. Well, having the right amount of employment, practice liability insurance saved. Saved his entire practice. Right? Yeah. Laura, you have some examples, probably from a prop from a business owner's policy.

Yeah, definitely. I think one of. One of the larger claims that we saw was a ransomware claim. You know, Dennis might not think of that. You know, that's one of the things that are covered on that, that data breach and the cyber liability. And they can be rather large. You know, we've seen them as much as, you know, 300,000 just recently. And that's something that we're seeing more and more regularly. And then, I mean, we've had things like total losses from a tornado, a dumpster fire, which, I mean, people joke about dumpster fires, but we've actually had practices. Total loss from a dumpster fire from behind the building. We've had a car drive through a practice. And not only is this, you know, property that's needing replaced or repaired, but then that's that time you're down or, you know, a rental location that you need to, you know, quickly set up to be able to see your patients. You don't want to lose your patients during that time. And so you need to make sure you have the correct insurance in place to cover those things as well. It's not just, you know, I need this limit because this is how much my building costs. There are so many other things to take into consideration. And another thing is general liability. You know, we have doctors tell us, I'm a pediatric dentist, no one's going to slip and fall. Everything's fine. You know, a pediatric dentist, your patient isn't the only one coming in. Grandma's coming in. The siblings are coming in. You know, I got a call. Someone, you know, open the waiting room door to call the next patient. Fingers. Little brother's fingers smashed in the hinges of the door. So, you know, those are all things you might not think about. But we get calls on that stuff pretty regularly.

Yeah. And Jake, I would say, you know, that when we got the call that a tornado went through in just as a brick, pretty much practice under a year old, brand new, significant investment. And we're talking down to the ground. I mean, your heart just. Just drops for that person. I would say that you should be very mindful when you go to figure out who you want to partner with for these things. Do they understand how the. How the policy should be set up? Because they're. It's just like in dentistry, sometimes there's a bad treatment plan, you know, do they, are they working with an expert that understands how they should be set up? And are they working with somebody that's seen a claim before and can assist you in your time of need? I mean, you wouldn't believe what we see when we take over policies and how much more we can help somebody because of the volume that we do and how involved we are in our reputation in the industry. With these companies

we put on specifically for dentists, we see a lot of other policies come to us and they say, oh, can you beat, can you beat the price on this? That's not the most important thing. We go through the coverages and see this isn't set up as a dental practice policy. This is set up as a general business policy. You know, there's a lot more to a dental office than just a general policy.

Yeah, it's just, it's just one of those things that's easy to kind of think about it from a cost mindset, but when it comes to dealing with a big operation, you have a lot of moving parts. When again, if you're successful. Right. Think about this as a dentist, if you're starting out, if you're successful, you're going to have all these problems. It's just not something that you want to skimp out on. And you know, one of my favorite questions just for entertainment Value is just a particular in this enter in this industry, wild things happen all the time. So many wild things happen. And we deal with hundreds of multiple location docs. And my favorite thing is we'll get in the room like, hey guys, just tell me the craziest thing in the past week that's happened. Always something wild because you're dealing with a lot of things. And so, you know, we deal with all employees. You become a target. All these things are just super, super important to, to have buttoned down. So yes, I mean, I think by now people kind of know that they need to have a policy. The policy is all set, they know how important it is. They got to have a 360 degree kind of look at it. Do you guys do like auditing or would you take a look at current policies and basically show everyone where. I've again, personally had this done as well, just on the personal side. And gosh, I mean, for 10 years I had no idea I was underinsured in certain spots of my life. So you guys will take some of these policies and analyze them.

Love it, love it. And you know, all of our advisors, all they do all day long is find solutions for dentists Right. So. And we understand that you, that you are, you need to be with the patients. So we can have an office manager, you can put all your policies on the table. We can walk in, sit through everything while you're with patients and then say, here's what we see. Keep this, this looks great. We need to really address these areas. And then you'll leave feeling a lot more protected and you'll realize that, hey, I did some things right. Right. Some of the stuff I did was great, but boy, I kind of neglected those other things because, hey, human nature is you get your policies enforced, you throw them in a drawer and you go practice. Right?

Yeah. I mean, yeah, there's only, it's only upside, right? It's only upside to get these things audited or assessed and understand exactly where and also multiple times. So you just under. You got to learn where you're at. You got to kind of learn where your protections. And as you grow, that's a segue into kind of like the growth mindset here. Unless we want to go anything with retirement planning as well in the start. But as you grow, it changes, right? Like your vulnerabilities change, different things pop up. So you got to constantly be assessing this. Anything as somebody that's starting out or maybe just, you know, starting thinking about this on the retirement planning side, because I mean, it kind of go hand in hand.

Well, that's about. We always recommend that when you first start out with any surplus, you know, invest in your business because that is going to be where you get the biggest return. So whatever it takes, get that business up and running. Don't take money that you put in a retirement plan, put it towards your marketing, really get things moving, whatever you need, an assistance perspective. But once you're there and things are cooking, you have a surplus, then a retirement plan is one of the best ways to have asset building and growth opportunities. So I would just say that we monitor that. Typically in the first or second year, you have a surplus. Now we're looking at, can you afford to take that money and save it in a tax advantaged way, or do you need it for running the practice or for living personally? Right. But as soon as possible, get to work on that. Especially with how hard it is to retain employees and attract employees. I think more than ever. It used to be a doctor benefit and now people are looking at it as an employee benefit as well as building wealth to the doctor because it is so hard to attract and retain employees in this environment. And then typically you start out, you Just have to get it tested. You get your census tested so that you can see what plan might be best for you. The goal typically is that when we look at all the contributions and cost you have to make to your employees to make it compliant, are you getting a bigger tax benefit from your deductible contribution to that plan? Right. So if you're able to put, let's just say $60,000 for round numbers a little bit more than that, you're probably saving around 24 grand in taxes that year. How much are the contributions costing me? Right. We can make decisions. Is that the right type of plan to be in your office? But yeah, getting that plan up and running as soon as the surplus is really important. And then from a scalability perspective, as things change, you bring on a partner, maybe a partner and associate. We've got to keep on testing it and making sure it still works. And is there more opportunity to have enough? So that's a defined contribution plan. That'd be a 401k that you start out with, but as you grow and you have more of a surplus, could you put a defined benefit plan on top? And I know that we're kind of, you know, this is a podcast. We don't want to drone on and on about this, but it's always with all these things, don't just set it and forget it. Continue to evaluate. Take that meeting with your advisor, have us come and give you a second opinion and see if there's opportunity for additional tax advantage savings through a defined benefit plan or a different design for your defined contribution plan. And are you truly insured properly on the insurance? I would even mention simple things like the nuances of malpractice insurance. When I first started 25 years ago, we were recommending $1 million per lawsuit, $3 million for all lawsuits. I have people still carrying that today. Frequency is up, severity is up. And I think people think that, well, if I'm paying X for $1 million of coverage and I want 5 million, I got to pay 5 extra 5 million. That's not the case. You go up to 5 million and probably have a 15% increase in price. So it's a value proposition, you know, so I think just all those discussions should be played out so you really understand what you have. And is the juice worth the squeeze? Is it worth paying more for that added peace of mind?

Yeah, you know, it's another one where you want to be able to just outsource it completely. And the key is to finding the right partner.

Right.

But at the end of the day, you really kind of have to stay involved, and you got to stay kind of on top of this. The easiest way is cadence. A cadence is once a year that we're meeting and we're doing. We're, here's our agenda. We're just making sure everything. Maybe we don't make any changes, but we're just making sure that everything is set. Almost like an assessment. But you really do. You do not want to set it and forget it. It's one of the, you know, one of the toughest things to set and forget. Although it's so easy to do that, right. Because you're like, oh, it's taken care of.

It's taken care of.

So you guys are meeting with your clients, all, you know, 27,000, probably, as you know, on a regular basis for the retirement ones. But you're kind of going over this

regularly on both fronts. We aggressively reach out several times a year to, if not more, to try to schedule that review. You know, and I would say if you look at those clients, our advisors probably get maybe 15 to 20% of their clients to agree to do a review annually if they're just, if it's just the insurance relationship and that how many people out there are just not finding time to, to take the important step of sitting down with their insurance advisor to make sure they're still protected properly.

Yeah, Well, a great, a great example, Lara, is, is ransomware. So with all of the members we work with, and I mean, I would 100% agree, that is massively increasing. I think 3, 400 is what I've heard almost right off the bat, like you're going to get about 300k. As soon as you get attacked, boom, just get 300k. But that's, you know, that's something that would come up the last couple of years. If you're not doing a regular assessment, then you're not going to be thinking about that. I'm not sure if you need anything to add.

Yeah, Laura, what are the limits that we can go to now, now that people understand it and they're curious?

I mean, honestly, it depends on the size of the practice. You know, that's a, that's a coverage we can add right onto the business owner's policy, maybe for, you know, our starting practices and smaller, smaller practices. And then when you get into, you know, 10 locations, 15 locations, that's a policy that we pull off of the business owners. We write a separate policy, and maybe they're need a $5 million limit. Or a $10 million limit, you know, and we have that available and we kind of assess based on the, on the growth plan and the size of the practice, you know, what type of coverage would, would be the best fit.

That's a huge, it's a huge one. Again, this regular, you know, top of mind, this. So, so as I'm adding locations and I'm, as I'm adding associates, as I'm adding employees, anything different you'd be thinking about, anything additional? Sean, we'll start with you. How would you be thinking about that?

Well, I think that on your personal coverages, if you're adding associates and you're making more money, so you need to increase your disability and people are woefully underinsured for their, for their family, for life insurance as well. You know, people making 5, $600,000 carrying $2 million of life insurance and they think it's enough. So be mindful of that. But as far as scalability with your practice, you know, we want to make sure you're with quality companies that can cover you in multiple states if you have those type of expansion desires. And we want to have systems in place so that you have everything at your fingertips so that we can take it to market and make sure that you're with the best carrier as your situation changes and that you have some consistency and control of the coverages that the people that work for you should have. And Laura and I talk about this. You know, you start out and let's say that you're now you own or you're a partner in five locations, unless you have 10 associates. Each one of them has their. You're just reimbursing them maybe for their malpractice insurance. You just need proof of coverage. They might not be with LLC care, they might not have the right limits. And how are you tracking all this? And that's not a scalable situation. Right. So there's some things that we have you do both from the business owners policies perspective as well as the malpractice or professional liability perspective from a housekeeping and from a coverage and from a scalability perspective to just save yourself a lot of aggravation. So, Laura, we were talking a little bit about, you know, list bills for malpractice. We were talking about keeping track of, you know, your building characteristics and once things are updated, if you want to speak on that a little bit. Yeah.

So on the malpractice side of it, you know, we see a lot of practice owners require a certain carrier for their associates. And that really does keep things more consistent. You know, it's, it's a carrier that, that the owner trusts and that they may be used for years. So they, maybe they require the same carrier and the same limits. And if we can get on a common renewal date or group billing plan, that makes it even more convenient for everyone involved. And even, you know, from the advisor side of it, you know, when we do those renewal calls in touch base, you know, then we're able to talk about all of those policies all at the same time too and make any changes necessary. And then on the business owner side of it, you know, as you're growing, of course your work comp payroll is going to increase. You're probably going to want to increase your employment practice liability because you have more employees. You're going to want to increase the cyber and the data breach coverage because you have more locations, more patient files, you know, more, more data that could be, be stolen. And then also on the property side of things, you know, as you're acquiring new buildings, do you remember when the roof was replaced on your second location? When did we update the plumbing and the electrical on, you know, building five? So I think it's, you know, we recommend keeping like a statement of value sheet, you know, keep an Excel sheet, put each location on there, have a column for, you know, updates to electrical, updates to plumbing, square footage, when the roof was replaced, building value, things like that. Because you're going to know that information when you purchase the building or when you get those things done. And then five years down the road you're going to think now what, when was that? What year was that? What did we have done? And for us to market those policies, send us that Excel file and it, and it's that easy. That's basically the application.

So that's one of the great points. So cumbersome when that comes up, right? I mean it's all it is is being organized and having people that are helping you stay organized with it. But it's the difference between, you know, taking weeks kind of find these things, going back emailing, or just having it all ready to go.

Not to mention ownership. Like that's so important to understand what entity owns what and how they're organized when it comes to the coverage. I mean I, for, for my clients, when it gets complicated, I have like diagrams that I make and, and when we do a review, I'm like, is this still how it looks? Okay. That is truly impactful on the property and casualty side of the business. For us to understand how they should be set up.

Yeah, I mean any other doc. I mean I think you just talked about the documents needed. As you scale anything else, you just keep organized. As again, if you're listening and you're planning on growth and you're successful, just know you're gonna, these are the things you're going to have so you can predict them now it's probably going to be successful. And so it's good to start thinking about anything else on the, the document side, you know, or, or staying organized

side as you grow. I think, I think Laura did a good job on that. I think that for me it's think value instead of cost. You know, we don't want to be the, we don't want coverage, be the highest cost player, but we certainly want to make sure you're protected properly. And you know, we're looking at, like I said, company ratings, which tell us already does, is tell us if that insurance company is in a position to pay future claims. You know, that's advice we're looking at that we're looking at, hey, will they be able to provide coverage in all the different states that you might plan to expand into so you know that you can have all with one carrier consolidating coverages. And really I think that when you, what I would say is, you know, if you're looking at I gotta take care of disability business overhead, all the stuff we talked about, as well as property and casualty malpractice, you know, to have it all under one roof and with one concierge level service provider will save you a tremendous amount of time. You don't want to have 10 different agents that you reach out to to piecemeal this together. Number one, it's a headache for you. And number two, when you piecemeal things together, typically you don't get the outcome that you want.

Yeah, yeah, you just, I mean especially working with 27,000 dentists, you want to work with somebody who's just been there, done this. One of the things I will definitely say is when you start talking to the higher level dentists and leaders in the industry, everyone's cost conscious, but that's not how they're making the decision because you know, three years down the road you need people that are gonna, that are gonna be good so you can free up your time to go manage the associates, to manage the employees to solve, you know, big problems, tech problems, things like that. So you just, it's cost is a secondary thing. It's really quality. Those are the referrals. That are sent around first and then that are within a good cost range. It can be crazy. And then, and then some people who know exactly what they're doing. So I think people appreciate that. Laura, anything else you'd add for those folks listening?

No, I think we've covered most of it. Of course, there are many, many details that we haven't covered, but this is, this is a nice overview of it. Yeah. I think the most important thing is to work with someone who understands your business.

Yeah, exactly. The only thing that I really haven't touched on with the insurance is if you have a partner or multiple partners making sure that you're having routine valuations of the practice and that your buy sell agreement is set up properly. Again, with that buy sell agreement, are you funding it with life insurance or disability buy sell. And have you looked at that and have you updated it? Everything's more expensive. If, if you need to rebuild your practice because of a fire, it's going to cost more than what your current coverages probably are that are in place because inflation, the value of practice has gone up. You know, we need to be aware of all those other pieces. And if you have partners in the partnership agreement, you probably want to have it up to date. And if you're growing and you plan to, you know, look to, to sell, you want to have that valuation and all those things, but in the organized fashion with great coverage so that you look really attractive when you get a sale.

That's a great point. Yeah. And again, it's all that which begins well, ends well. So you can sort this out in the beginning of your partnerships and have it all documented out. And it's just all, it's all streamlined. So that's another, another one that you're going to encounter down further down the journey. That's new. Right. And they'll pop up if you're successful. So. Well, thanks so much, Sean. Thanks so much, Laura. It's, you know, really important topic. It's probably not the first topic thing people think about when things are going well, when they get out of bed in the morning, but that's when you want to think about it. Right. You don't want to be. You don't wait until it's too late and you got claims, you know, you know, things going wrong and things happening. So get this in order, get organized, know where you're at. I think that's the first step. And then you can just build a, build a plan. It's pretty straightforward, really. If you have the right people working on it for you. So thanks so much, everyone. Thanks, Sean. Thanks, Laura. And yeah, we'll continue to keep the industry safe. Thank you for listening to deo's Growth Secrets podcast for dental organizations. Continue the conversation on our Facebook group

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