219: The Sensor Problem Draining Your Cash Flow and How to Solve It

If you own 50 sensors, let's say across 10 offices, when one goes down, what do you do? Is it under warranty? Who did you buy it from? What are the terms? And all this investigation starts to take place. Meanwhile, the office is like, I just wouldn't take X rays, right? I just know I have a hygienist that doesn't have a sensor. And it's taken us five hours to figure out what to do with this thing. And that's a huge problem.

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 challenging industries to navigate. On this show, we talk to dental industry leaders, solve problems, and get you the answers you need to face these challenging times and thrive. Welcome to DEO's Growth Secrets podcast for dental organizations. Now let's get started.

Hello, everyone, and welcome to another episode of DEO's Growth Secrets podcast. I'm Jake Poole, the CEO of the DEO, the dentist entrepreneur organization. And with me today I have Aaron decourt, VP of sales and marketing and Jazz Imaging. Jazz is a company that's been around for over a few years here, but has been seeing a lot of growth inside of dental, particularly with multi locations with large, you know, DSOs. And so we're here to talk about, you know, how Jazz would approach a multi location office. So, Aaron, want to give yourself an introduction, tell people a little bit about yourself?

Hi. Yeah, thanks for having me. It's fantastic to be with you and your organization. I look forward to all the things we'll do this year for sure. We started in 2016, but our engineers have been making sensors since the late 1990s. So our engineering team made the original Dexys gendex sensors for many, many, many years in San Jose, California. And in 2016, that group of engineers decided to that doctors loved sensors, but they hate what they cost and they don't like how they're warrantied. So what we like to say is the world did not need another Sensor company in 2016. It definitely didn't. There's, there's plenty of them. But the challenges of the model were so important that Jazz. Jazz Axis was founded to solve those exact problems that I'm sure we'll talk about a little bit today. But I've been with them since 2016, since before we even sold our first sensor. My background is in 20 years of imaging with primarily Dexis beforehand. So I've been in Dental imaging space since like 2001. 2002.

So, so what are some of the trends you're seeing in the imaging space and sensor space? What, what's going on now and where do you see coming down the pipeline?

Yeah, so the imaging space, the 2D intro imaging space, I like to say is pretty boring, right? It's been around for almost 30 years in America. You have to do it right? The exciting technology and imaging is not 2D intraoral sensors, right? But we're like the tires, right? The tires on the car. If the tires go bad, the whole day falls apart because of the way images are taken into practice. So even though it's not a super exciting space, it's such a necessary part of your life, just like tires on a car that we were watching. What's evolving is the model, right? What's evolving is the way sensors are consumed, the way they're owned, and the decisions that are made for especially multi location practices that typically, you know, since most of them don't all do de novo, they're buying offices that are already that have existing sensors. And so the question is, how do you manage them all and what is your plan? Once you own 20 offices, you probably own 10 different brands across, you know, I mean, and it's, it's a, it's a nightmare. So it's funny because when we were founded in 2016, we, we didn't actually go after the DSO space. It was something that we had so much private practice business, if you will. We were kind of like, yeah, we're not really going to focus on it. And then we woke up like in 2019 and went, Boy, we have an awful lot of big names that are, that are getting censors from us that, you know, brands that, you know, DSOs that, you know. And we, we hadn't ever had a meeting. We've never talked to anybody there. They just order them on our website. So we thought there's probably something to this. And so we started to talk to them and ask them, you know, candidly, I'm sure you have an agreement with Patterson, Shine, whomever. Why, why do some of your offices have Jazz sensors? And they said, cash flow warranty. You guys are solving some problems that we really can't solve through a traditional model. And that's, that's when the light bulb went on. That boy. We, we actually, our model is perfect for people that own multi locations. And it, it's been a great learning tool, learning experience, I guess, for jazz, because the things that we do well matter a lot when you own a bunch of practices and sensors. You know, I'll give you one example. If you own 50 sensors, let's say, across 10 offices, when one goes down and they do die, right, they, they die, what do you do? Is it under warranty? Who did you buy it from? What, what are the terms? And all this investigation starts to take place. Meanwhile, the office is like, I just wouldn't take X rays, right? I, I, I just know I have a hygienist that doesn't have a sensor. And it's taken us, you know, five hours to figure out what to do with this thing. And that's a huge problem. Also, they don't, you know, everyone has their brands, right? So you might buy an office that has carestream and they're like, we love it, we don't want to give it up. But yet somehow the DSO wants to improve, right? The buying for them to scale out and make more money. So how do you do that? Not everybody wants to change vendors, but everybody wants to save money. So, yeah, it's been a weird, we felt kind of pulled into the space, if you will, and then we've just been on fire because it just solves a real problem.

So what do you recommend when your clients are taking over other locations and they have different, you know, you kind of get this Frankenstein thing that happens. Yeah. Well, how do you walk them through that? What do you recommend in that case?

So the first thing that we tell dsos is sensors are really personal, right? To the, to the clinical staff, they, whatever they're using, that's their tool. I mean, it's, it's, you don't want to take it away from them unless they don't like it. Now that's the question to ask. Do you love it? Do you like it? Now, they may say, you know what, we like the image quality, let's say, but we don't like the size and shape of the sensor. Whatever their complaint is, I think it's important for the DSO to understand, okay, this office has this inventory. They're using it right now, but they're open to something else or they're using it, that they love it, they don't want to change. And we got to figure out, okay, what is it they love? We should be doing that for other offices most of the time, you know, spoiler alert. What they're going to figure out is they don't like the price and the warranty. Even if they love the sensor, they're going to say, yeah, you know, we had two sensors die last year and we had a huge copay of, you know, six grand each. We weren't happy about it. We were really mad about that. Or, you know, we pay five grand a year to keep them under warranty. And it just pisses us off, just makes us angry because it, you know, it seems like that's a lot of wasted money that we're gambling with. So first we ask the DSOs. Ask them what, what they're doing, what they. And what they like and don't like. And then what are they open to? So that, and I recommend this is our policy, don't change them out wholesale. Let those sensors die and then you change them to whatever it is. I mean, if it's jazz, it's jazz, but it's, it's not a good decision to rip out 50 sensors and put 50 new ones. I mean, burst of money is crazy. But also, that's not. Your clinical staff isn't going to want to walk in on a Monday and be told like, this is your new sensor. They're going to want to have tried it. They're going to want to have held it in their hands. They're going to want to have held it with their patients. It's a, it's a, you know, it's a deeply personal tool. Like, only we know the brand of intraoral camera. The patient never, you know, closes down their mouth on it. So it doesn't really matter what brand of cameras you have. Patient doesn't know the difference. But if you're coming from a huge, clunky sensor to something shaped like a jazz sensor, they're going to go, oh my gosh, this is so much better. But. Or whatever the case may be. So I think you gotta realize this thing is the most handled piece of technology in the practice and it's the one that comes, you know, without anesthetic in contact with the mouth. So patients have an opinion. Right?

Yeah. Tread. Tread lightly in. With any changes like that. But.

Right.

You know, in any, in any kind of change management, though, if you kind of run. Sometimes you run things in parallel. Right. And then let, Let the, let the best user experience win. And so that's another way I'm sure that you, you help people kind of for sure.

A lot of, a lot of DSOs will say, hey, we're going to put a jaw sensor in this office that we just bought because we think they're going to like it better. And if they do, we usually see orders, you know, within a couple of days from that office, because they do, they've tried it, they like it. I think the model is, the model is attractive to the DSO owner, but the sensor is attractive in terms of how it's shaped and its size because that's what ultimately matters. You know, if it's free but your patients hate it, what good is it? Right?

Right. So, okay, so now I'm talking about like where to buy. Should, should a dentist buy sensors from dealers or how do you recommend the process here?

Yeah, So I think the thing that a lot of people don't realize when they buy sensors is there's only a few manufacturers in the world of dental sensors. There's, There might be 40 companies, but there's only like five or six places that actually make a sensor. Most of what's out there on the market is already made by a third party. And so back in, you know, 22,002, 2004, you wanted to buy sensor from a dealer. You wanted that protection. Hey, you know, I, I, these are new, this is new technology. I want my, my fsc, my, my PTR to come in and help us and you know, if something goes wrong, we can replace it. I mean, you needed a lot of handholding and those days were way gone for sensors right now. Sensors never get repaired, they just get picked up by FedEx, right, and swapped out. So because it doesn't require like for instance, if you're buying like a cone beam, you want to buy that from a dealer because if something goes wrong, you need a guy with tools to come and fix it, right? Like to bring the parts. And that's not what sensors are. So I think if DSOs want to save money, you have to take the dealer out of it. And most times you're also taking the middleman from the manufacturer. So if you have a brand that, that the dealer has, traditionally now three people have touched it, right? The person who made it, the person who sold it to the dealer under whatever brand name, the dealer then sells it to you. Every time it touches someone, the price goes up like 40%. But also it works in reverse, which is when I like, I play golf with doctors who will ask me, friends of mine, like, why are all the warranties so expensive? I'm like, because once something goes wrong, you gotta realize the dealer who sold it to you, they don't make that sensor. So they have to go back to the manufacturer or the manufacturer rep and say, hey, you know, Dr. Jones's sensor went out in 13 months. It only has a one year warranty. What are you gonna do for me. And everybody's fighting all down the chain. Meanwhile, the doctor's like, I just want it replaced. Right. And I also don't feel it's fair that it went out one month after the warranty, whatever the warranty period was. It is almost like a, it's almost like a grift. So, so as many people, you, you overpaid to get it and you're going to overpay to fix it because everybody's hands are involved. So that's when our engineer sat down and said, how do you, how do you make a better sensor? The only way you can make a better sensor. But you can also say, you got to make it yourself and you got to bring it right to the doctor. You got to bypass every pair of hands because these things break too often. They fail too much because of the way they're handled. You know, if they lasted 20 years, it wouldn't matter. Real life.

Yeah. And it's kind of classic cutting out, you know, fortunately, unfortunately, cutting out the middle, the middle layers. Do people know that, not know that they can do that or, you know, I guess, why doesn't everyone just do, just do that now?

You know, I think that part of it is, you know, they sign these big purchasing agreements with dealers and included in there are 2D sensors. The downside of that is that, you know, let's say you're going to buy 20 cone beams for your DSO. So you're going to get a smoking deal on the 2D sensor just for that time period, but you're not going to buy 20 cone beams every year. Right? Like so, yeah, you got, you got these expensive sensors and you might have got them for free because you spent, you know, hundreds, hundreds of thousands of dollars. But now they're out of warranty. So what happens now? They're not going to fix them for free. Right. They're not going to repair them. So I think people don't do it because they typically, the larger DSOs for sure, have this big umbrella agreement. But I can tell you kind of like what I was saying in the beginning. We know that dealers have agreements with people and we still see sensors getting sold to them through our Jazz Imaging website. They just do it because they're like, cash flow, cash flow, cash flow. I don't want to buy another huge brand name sensor. And especially in the DSO models where the purchasing can be decided by the, by the, by the doctor or the clinical staff, they're like, yeah, this is great, but I don't, I'm not in the market for a cone beam. I just want this 2D sensor, and I want it to be delivered to me tomorrow. And I don't want to call a hundred people. So that's the reason that I think it's an awareness issue. Like I said, when we go, when we come to your meetings, we meet a lot of doc. A lot of DSOs that say, I didn't know you could buy directly from the manufacturer. That's a huge one. Um, we make it in San Jose. That's another big one. A lot of people realize when they get their sensors, they're made overseas. I'm not saying anything bad about that. It's just the components are different, and so we decided it's better to make them in America and control the quality and not have them change three hands three times.

Yeah. Yeah, that's what. That's what I thought. I thought it was sometimes an awareness thing.

Some people just hear that. So why.

Why is your model in this model kind of so different than traditional sensor versions? I think you talked about this a little bit, but I'd love to hear.

It is really the number one thing that people know about us. We offer a subscription. That doesn't mean people don't buy them. They do. We have a purchase option, but it's really rare. And I'll tell you, one reason we stayed away from DSO in the beginning was everyone was like, we want to buy our sensors, you know, for tax reasons. And our CFO said this, and this is the right way to do it. But then what they realized when we started coming to meetings like yours is holy. You guys can basically, you're. I get a subscription and you fix it when anything goes wrong without a deductible forever. And I don't have to give you eight grand up front. I can just give you 120 bucks a month. What? And so that that model works because these things don't last 10 years. Right. That it doesn't make sense to own it. Essentially own it. When what you really want for it to do is just take images all day long. And if stops taking images, someone gives you another one that takes images the next minute. Right. That's what you want. That's what you're. That's what you're trying to get. So the subscription model had never been done before. It's really never been done in dental equipment ever. Right. It's being done more now. There's a couple companies not in the sensor business, but have followed us and are doing subscriptions for this Reason. And it works when things like a tire, a tire doesn't last forever. You just know that going in, you know, and that's what a 2D sensor, they just don't last long enough to own. And the cost of ownership is so high, what most people don't realize when they buy them is that the purchase is just the beginning. Right now you either got to decide to keep it under warranty every year, a couple thousand bucks or you run the risk of if it breaks, you have a big copay that you might as well just buy another sensor. And so faced with that versus I can just give you a monthly subscription cost so you could just take care of everything. Yeah. Yes please.

It's just easier. That's really interesting because it's almost like a payment plan with, with repairs and whatnot included in it and it's just peace of mind.

It's almost like, and we hear from a lot of people, even on the private practice side, we'll have doctors say, I don't, you know, I don't lease or rent anything. I buy my cars, I buy my building. I go, okay, but think about this. What if you were buying an $80,000 Mercedes and let's say your payment's 1200amonth, that doesn't include gas, it doesn't include insurance, it doesn't include tires. Right. You only get a three year manufacturer warranty or whatever it is, like two years, 24,100. But I can rent you that same Mercedes or BMW for a third of the cost. So 450amonth, but you never put gas in it, you never worried about extra insurance. And if the tires go bad, I'm just going to give you new tires now would you lease that Benz? They're like oh yeah, hell yeah. Right. Because the economics are so strong. Of course you would do that. Especially if you got into a wreck which most DSOs know, they don't handle their equipment as probably across the board as gingerly as a private practice owner. So they're going to face more breaks, they're going to face more people stepping on it. It's just the nature of when you have a lot of employees that work for a brand, they're just not as careful. And so everybody would love to do a subscription but the only way to pull it off in the sensor world is you got to make it yourself and decide that you can't go through distribution.

Yeah, yeah. That's why you're uniquely kind of set to do this because it's just you guys so Last question here is your role with DSO. So it sounds like are you focusing mostly on DSOs? Obviously when you focus on one part of the market, you just get better and better at serving them because they have unique needs inside our members, inside the deo. I know you guys work with a lot of our members. How did you become to focus on the multi location market?

Like I said, we got dragged into it by the customers. Offices were going on their own and then we realized we probably should have a conversation with the CFO or who's ever procuring equipment because people were calling us saying what is this subscription that this office has? We don't understand what this is. And we would explain to them at the senator, they're like, well you know, we have a deal with name the brand. And I'm like, look, I don't know what to tell you. Like we're like Amazon. You come to our website, you put your sensor in the basket, you put your credit card in, you put your provider number in and we ship it to you. We don't, we're not a traditional like sales company. We didn't send a salesperson to go talk to them. They may found us through an ad, through walking a trade show floor, whatever it was. And now we think we can solve your problem of managing sensors over time, which is exactly what's happened. Right? The DSO starts with a few sensors because I guarantee you they've got 10 of them sitting in a drawer somewhere that are dead and they need to replace them. But nobody wants to write a check for 8,000 each or whatever. So they go, oh, we'll get to it later, we'll get to it later. And finally the office calls up us or goes to our website and just buys one or rents one, right? Gets on a subscription and then we end up with a conversation with whoever their procurement people are to scale it and give them a better discount if they do so many sensors or whatever. But we really, we set out to just be private practice. And then in like 2019, 2020, that all changed for us. I would say all of our big growth is on the DSO side. We spun up an entire team around it both internally for tech support and for external. We do way more events, we do way more, you know, meetings on that side than we do on the private practice side for sure.

Amazing. So somebody wants to, you know, work with y'. All. It sounds like you, especially with the subscription, made it pretty easy to come with these big.

We do, we also, we also don't do any contracts so, meaning you don't have to have it for a year or two years. If you have it for 90 days and you don't like it, send it back. Right. Cancel the subscription. It's super easy. It's like turning off Netflix. It's like you've just decided, whatever. That's pretty rare. But we've had occasions where, like, a DSO gets bought and they go, hey, you have 10 locations. We just got bought by someone. They have this huge inventory of sensors. We're going to send them back. Okay, fine, we don't like it, but there's no contract to keep them. Yeah. And also we're going to let them try it for free. So that's a big part of it. Like, don't. Don't just let your staff try it. Let them decide. The money's the money part. You know, the contracting people know well, but don't put a sensor in there that they don't love, because that's the worst thing you could do. You just would make them mad.

Yeah, I like it. Sounds like you guys have made it very easy. And, you know, because it's something that's been around forever, I don't think, you know, doctors don't spend tons of time, you know, with, you know, worrying about it or frustrated. They just want it super simple and straightforward. So thank you again, Aaron.

Yeah, thanks for having me.

We will see you at the DEO events in the future.

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