Episode 529: Dropping Insurance How To

Question: Want to increase your profit margin AND drop insurance?

Morgan Hamon is back on the podcast! Morgan is co-founder and president of the HDA Accounting Group, and he gets real about what to consider when dropping insurances. With Kiera, he discusses:

• What a healthy profit margin is

• How to increase your profit margin

• How often to update your fee schedule

• When to take the leap and drop insurance

• The main KPIs to watch if you don’t have a healthy AR

• And a ton more

Morgan also shares what he’s hearing and seeing with the practices that HDA Accounting works with.

About Morgan:

Morgan is a graduate of the University of Arizona’s school of business. Following graduation, he was commissioned as an officer in the United States Navy and served for over 10 years as a naval aviator flying carrier-based F/A-18 Hornets. During that time, he deployed to the Persian Gulf and flew combat missions over Iraq in support of Operation Southern Watch. He also served as a flight instructor and landing signal officer for newly winged naval aviators transitioning to the hornet, training pilots in air-to-air combat, and landing on aircraft carriers.

After leaving the Navy, Morgan obtained a master's degree in accounting with a concentration in taxation from Metropolitan State University of Denver. He is a certified public accountant and is the co-founder and president of HDA Accounting Group, leading a large staff of professional accountants delivering a variety of financial accounting and tax services. Morgan regularly conducts practice profitability advising for over 500 dentists nationally, helping them analyze their financial data and identifying strategies for profit improvement.

Episode resources:

Look into HDA Accounting Group

Connect with Morgan over email: [email protected]

Listen to episode 430, Your Practice’s Most Important Numbers to Know

Reach out to Kiera

Subscribe to The Dental A-Team podcast

Become Dental A-Team Platinum!

Review the podcast on iTunes

Transcript:

0:00:05.6 Kiera Dent: Hey everyone, welcome to The Dental A Team Podcast. I'm your host, Kiera Dent, and I have this crazy idea that maybe I could combine a doctor and a team member's perspective, because let's face it, dentistry can be a challenging profession with those two perspectives. I've been a dental assistant, treatment coordinator, scheduler, biller, office manager, regional manager, practice owner, and I have a team of traveling consultants, where we have traveled to over 165 different offices, coaching teams. Yep, we don't just understand you, we are you. Our mission is to positively impact the world of dental, and I believe that this podcast is the greatest way I can help elevate teams, grow VIP experiences, reduce stress and create A Teams. Welcome to The Dental A Team podcast.

0:00:51.6 KD: Hello, Dental A Team listeners, this is Kiera. And you guys, today is an epic day, I hope you are ready for it, I've got the one and only Morgan on the podcast today, he is the owner of HDA Accounting. I'm pretty sure that's how we say it. I love HDA. If I mess up their name, go ahead, Morgan. You can correct me.

0:01:09.5 Morgan Hamon: All good, HDA Accounting Group. That's us.

0:01:11.4 KD: I love you guys's reports 'cause you're so in sync with us, so any time I go into a practice and they tell me that they work with you, I feel like it's the best day because I know I can read the reports, I can see, you guys are very in sync with our same type of, how much we spend on payroll, how much we do on these areas, so I just love, love, love what you guys do. And we're gonna take a totally different pivot, guys, beyond taxes and CPA. Morgan's got some fun things, but Morgan, just fill the listeners in if they haven't met you, they haven't heard of HDA Accounting, just kind of what you guys do. I know you're very niche to dentists, 'cause I tried to get you to work with me, but you're more niche to dentists. That's how much I like you guys.

0:01:51.2 MH: We're very disciplined in staying within our niche, and it is very specific. So we're a CPA firm, we're based out of Denver, we work exclusively with dentists that own and operate their dental practice, like period, dot, like full stop, no other type of doctor, no other type of industry. And we... Exactly, like you said, our mission is to give them timely, focused feedback on how their practice is doing every month, so they can be as successful as possible, and then hopefully once they've made those financial rewards that they want, then we can help them hang on to as much as that as they can through tax planning.

0:02:33.7 KD: I love it.

0:02:34.0 MH: That's our mission. That's who we work with and what we do.

0:02:36.8 KD: I love it. And you guys are doing a great job. And if you guys didn't catch Morgan's podcast when he was last on the podcast, weren't you a fighter jet pilot? Did I remember that right?

0:02:45.1 MH: Back in the day I was a Navy pilot for 11 years. I flew F-18s, carrier-based. Did that, which was wonderful, I really enjoyed it. Ultimately, I had to grow up and get a real job, so I'm a CPA now, which I also enjoy.

0:03:04.2 KD: Do you miss the adrenaline rush a little bit or does tax give you the same type of rush? I mean...

0:03:08.3 MH: I think I miss my buddies the most, like that camaraderie in the ready room, and the flying I miss... I miss a lot of it, but not all of it.

0:03:20.4 KD: Yeah, I bet.

0:03:21.8 MH: Some of it was a little stressful, but no, no regrets. It's been fantastic, and a lot of that operational experience I gained, I use that in my firm today. I do owe much of the success I enjoy to that experience and what I learned in the Navy, so it's been a good journey that I'm still on, so.

0:03:42.8 KD: That's awesome. Do you still fly planes, or?

0:03:45.0 MH: I do.

0:03:46.3 KD: You do, great.

0:03:46.8 MH: I do, I'm still... I have a small plane.

0:03:49.2 KD: A Cessna?

0:03:51.1 MH: It's not quite an F-18, it's not quite an F-18, it's a Cirrus, but it's still a lot of fun. I still enjoy it.

0:03:56.2 KD: So if accounting doesn't work out for you, you'll become Dental A Team's, private pilot that... We've talked about these options. We've talked about it for years. It's on my goal board, so...

0:04:05.3 MH: When I left the Navy, a lot of us all transitioned out at the same time, and almost all of them went to Southwest Airlines, where they still are, but I just thought being an airline pilot was just not for me, and so a handful of us went back to grad school, and just went private industry and I wouldn't... No regrets, I wouldn't have it any other way.

0:04:29.3 KD: Well, I mean, if the day ever comes that you want to be Dental A Team's private pilot, we'll then deliver tax reports and their monthly reports to them.

0:04:37.6 MH: We'll go visit some offices.

0:04:39.9 KD: I think it'd be great. But Morgan, I was talking to you pre-show and we were talking about some of the things you guys are seeing. And I'm excited because as an accounting firm, you are gonna go into a topic that I think is hot topic right now, that most accounting firms won't talk about. They usually want to talk about tax strategy, and honestly, I've had several podcasts on tax strategy, I bring lots of cool people on to talk about it, but we're gonna actually dive into... You mentioned dropping insurances, and I think we should hands down talk about this, because a lot of practices are looking to do it based on the reimbursement percentages, inflation's going up, insurance plans have not followed the inflation pattern to reimburse on the rate inflation's happening. So let's talk about it from your angle, from an accounting side.

0:05:27.3 MH: Yeah, so where that comes in for, like in my lane, is practice profit. So if you're gonna go start a dental practice, take out a loan, go through the... Undertake that journey, there has to be that appropriate financial work. And we measure that as profit margin, and if profit margin is low, it's one of two things or a combination of both.

0:05:52.4 KD: Okay, I'm gonna pause right there, though. What do you guys say is a healthy profit margin, 'cause it's all over the map, so I'm super curious.

0:05:57.8 MH: Yes, it is, so it depends on the composition of the office, and it really is impacted by associates, so if it is a solo doc practice, no associate, and they have reasonable revenue, which in my opinion is like 50K a month and up, industry standard profit margin, 35% to 40% is what I want to see.

0:06:18.0 KD: Is that including doctor pay or not including doctor pay?

0:06:20.7 MH: No, that is always before doctor pay.

0:06:23.6 KD: Okay, perfect.

0:06:24.0 MH: Before owner pay, I should say. If associates are in the mix, then we have to talk about, Well, how many? What's their schedule? Is the owner... Are they still doing their thing or is that absentee-owned, and so then it comes... It definitely comes down from there, but that's okay. If there's a larger pool of money and you get a smaller percentage of more money, you still have more income at the end of the year. So I think maybe for this discussion, we focus on the solo doc owner-operator practice, 35%, 40% is where we want it, and we definitely see it more than that all the time, but if it's less than that, that's a problem.

0:07:00.9 MH: There's no such thing as too much profit, there's definitely such a thing as not enough profit. And so if profit margin is low and we're trying to solve that, Oh, well, they could be over-spending, that's what everyone's sort of default assumption, like, Where am I over-spending? Well, it's either an expense problem that could be the case or it's a revenue problem, so they could either be not collecting money, that's why we want to see what their AR looks like, so if profit margin is low, the doctors feel like, Yeah, I'm working really hard, but the money doesn't seem like it's there, and we know we're watching the expenses closely, and the AR is squeaky clean.

0:07:37.3 MH: Then the next question is, Are we charging enough, and have we raised fees? And the follow-on to that is what is the reimbursement rate. So that progression is kinda where that comes up with me, 'cause we were saying like with the profit margin... How do we get this profit margin up? We've done all these other things. Okay, have we evaluated our fee schedule? Okay, I haven't done that in five years. Definitely, you need to get that done.

0:08:04.6 KD: How often do you recommend updating that fee schedule? I know this is a hot topic people ask.

0:08:09.4 MH: Without a doubt, every year, every single year.

0:08:11.8 KD: And what percentage do you usually recommend of annual?

0:08:15.3 MH: I think it should at least be cost of living or cost of inflation for where you live, which those numbers are frankly getting a little scary right now 'cause...

0:08:26.4 KD: Totally.

0:08:27.0 MH: It's big. You know, in the past, and I do that with our firm, 'cause I'd rather bump it a percent or two than just put it off, have your practice erode, and then you gotta do this big jump that just is even harder. So, every year. But for the practices that are dependent on insurance, that reimbursement rate comes in, and they say, Why, why am I doing this? So that is how this conversation ends up on my desk, and there's not an easy answer. And I've had... The question everybody wants to know is, Okay, well, I really want to drop this insurance, like what happens next? And it's difficult to quantify those results or project those results, and so when those discussions come up, I just share, I just share some experience that I've had with other doctors. I have a client that I know very well that is very successful, and they dropped Delta.

0:09:36.9 MH: And he shared with me, he was just ready to do it, it was time, and he shared with me he did not lose nearly as many patients as he feared he might, because the patients are coming to his office to see him, and they're loyal, so that was like a pleasant surprise. I've had other discussions where it's easier. We have a client in Baltimore, had a one particular insurance that was horrible, and it was like... And when she looked around, she said, You know, I am one of two offices that continue to take this insurance, and when all these other offices drop it, they're coming to my office and populating my schedule with all these low profits. So why am I doing this? And it was just one.

0:10:22.3 MH: So for her, that was very easy to just cut it and say like, This isn't... It's actually more risky to keep it. I've had other doctors share with me, and it's not quite apples to apples, but it's similar, so it's a client we have in North Carolina, like four offices, and they do Medicaid and want to get out of that, but again, it's like a big piece and so you don't want to just flip the switch, so they told me they're gonna gradually extract themselves from that by not accepting any new patients on that program, and then as soon as patients become non-compliant, they're just... They're gone, and just to kinda gradually wean off. So those are just some very recent conversations and what's on people's mind. It is a leap of faith, and at some point, I think of if it as, time on that schedule is valuable.

0:11:24.3 KD: For sure.

0:11:26.1 MH: And are you gonna populate your business with patients just for the sake of patients with a low reimbursement rate and sort of build in that low profit, whether... If you take the leap and you... And know that it'll... It's something you have to get through, but then as you then grow your practice, you're filling that valuable time with patients that are either on either fee-for-service or on another program that actually pays.

0:11:54.0 MH: Totally.

0:11:55.8 MH: But there is no... It's not an easy process. You really have to think about that for these offices, where it's like 50% Delta, like that is not an easy problem to solve. But in my opinion, you might know more about this, just because you're involved on the ground, like you know all the... With the inflation, was it 7% national and in some area... And keep in mind, that's an average, there are states where it's 10.

0:12:26.6 KD: Yes.

0:12:29.3 MH: And the reimbursement rates, in my understanding, not only are they not keeping up, but I've heard that they're actually reducing. I don't know if that's true, I haven't seen that, it's what I've heard. But that is just nuts. At some point, the choice, it'll always be difficult, but I think it might become easier to actually pull the trigger on that as time goes on, just 'cause it becomes so untenable.

0:12:51.9 KD: Hello, Dental A Team listeners. What would it take for you guys to just completely and utterly change your practice? Like truly, if you think about it, because for me, I know oftentimes, it's just having somebody right by my side pushing me along, holding me accountable, having somebody to spin ideas off of, and honestly, that's all it takes most of the time for us to go from good to great. Usually, it's taking the knowledge that we learn and actually executing it.

0:13:19.1 KD: That's why I would love to invite you to join our platinum virtual, where we do a coaching call, a Zoom team training, we invite you to our community and we just really dive deep with you, we're that partner right by you to help you go from good to great. So if you're wanting to join, take your practice to the next level, and you know it's time for you to implement, execute, and go to that next level, email us [email protected], and I would be so excited to welcome you as our newest platinum virtual member. Can't wait to see you there.

0:13:49.4 KD: Right, exactly. And you're right, I'm so glad we're actually having this conversation, 'cause I just actually had an inquiring client. They're looking to work with us and they said, Kiera, do you have any podcasts on how to successfully drop insurance? And I was like, I don't, and I should, I have a whole process of how to do it, but I don't have a podcast on it. So I'm super excited you're chatting about this, because I think it's something that's coming up so much more right now with offices not getting a high reimbursement rate.

0:14:19.6 KD: So dental insurance, I think when we dive into this a little bit more is they don't increase their amount of reimbursables every single year, it's like a thousand bucks, and they're starting to deny more and more, I can't... I was talking to someone the other day, I think it might have even been this inquiring client, and he said, Yeah, they're not even reimbursing for fillings, like I didn't even think that that was a thing. I've never heard of fillings being denied, how do you deny a filling? The build-ups on crowns, I think is absurd. I'm like, What do you want me to do, pop it back on a decayed tooth? It just is absurd what they're denying and saying isn't there.

0:14:57.7 KD: So I also have a little bit of family insider knowledge. I will not say his name, but I do have a brother-in-law who actually works on an insurance, on a dental insurance, and don't worry, he and I go the rounds with each other, because I'm like, dental insurance is junk. And he's like, No, it's not. It's so great. But yeah, I told him, I said, If you look at this, I don't think the insurance companies care as much about the dental portion of it because it's such a small portion of the business, and he did agree that really, if you look at an insurance company, they make the bulk of their money on medical claims, they don't make the bulk of their money on our MOs, DOs, and cleanings.

0:15:38.1 KD: And so I don't think there's a huge hot press for insurance companies to increase that amount of allowable on the insurance side. So when practices are looking at this, and I love, Morgan, that you've brought up like, Hey guys, if you're not making enough money, you've gotta do something, or to me, the reason I feel that it's 100% okay is because I feel like doctors, I get that you want to serve all patients. However, if you go out of business, you are serving nobody. And so you have to look at the profitability, otherwise you will be out of business in no time.

0:16:13.3 KD: Now, if you're a practice... I have an office, and he was in the Medicaid realm and there's Medicaid rules, so make sure you follow those, but I said, Hey, if you start to drop and not take as much Medicaid, you can still have free dental days to serve these populations. So don't think that just because you're dropping out of insurance means that you will no longer serve them anymore. But I really did love this. So I think, Morgan, to your point, it's almost becoming a no-brainer. So I tell practices, if you're thinking about dropping, get a membership plan in play, 'cause it's a really easy way to offer something to your patients, but also realize that patients don't get that much from insurance anyway.

0:16:52.3 KD: And I think patients are starting to wise up to, I don't really get that much with this insurance plan, that more and more and more patients are leaving their insurance plans and gonna membership plans with practices, like myself included. My husband works at the hospital and our insurance is junk, and I'm just like, Forget it. They told my husband at the dental benefits conference, I'm not an idiot when it comes to dental insurance, like I know my way around insurance. So I told my husband, I said, make sure our dentist is in network, ask for the names, la-la-la. He does it. At the benefits conference, they promised my husband that our dentist would be in network. He goes to the dentist, they bill the insurance, and it comes back that we are out of network. And I said, What the heck? Call them.

0:17:38.3 KD: So he called them, they're like, No, no, no, there's two dentists on at this place that are a part of it. So I was like, Did you get an exam? He said No, and I was like, Perfect. They could bill under these other doctors, we could be in network. So I called the office, turns out the dentist that the insurance company was saying that we were in network with, our dentist left the practice five years ago, so they're not even a participating dentist. And I think this is the... I don't use the word scam, but I think a lot of dental insurances are just doing yucky stuff right now that is becoming more and more and more palatable for practices to drop. But like you said, and I will say this over and over and over and over and over again, I have yet to hear a practice say, I wish I wouldn't have dropped.

0:18:23.6 KD: Not one, they all are so thankful they did it, it's just getting up to the edge of the diving board and jumping off and taking that leap of faith. But I will, complete transparency, you will not lose nearly as many patients as you think you will once you drop those insurances.

0:18:40.2 MH: Yeah, that is also what I've heard.

0:18:43.0 KD: So, what are you guys waiting for? I get that it's a process, and I would say my two cents on it are, you see the numbers of the profitability, but also when you're looking at dropping, let's make sure, I'm like, These patients are now gonna become a fee-for-service patient type. You can still bill their dental benefits for them, they can have... Or they can have a membership plan, don't double dip, that's not okay, don't do that, but I tell people before they do drop an insurance plan, make sure that your practice is a fee-for-service style practice, because you now need to retain them, they're not coming just because of their dental benefits, they're solely coming for you.

0:19:20.7 KD: So they're more of a free agent patient that can drift away easier unless you have a way to bring them into your practice. So something definitely to think about as you're dropping those plans.

0:19:32.6 MH: Excellent. Yeah, I hadn't thought of that aspect of it, but they're coming for the experience and how they feel about the office, not just because it's on a list.

0:19:43.4 KD: Exactly, which is another reason, in my opinion, to re-tether them with a membership plan, because now there's an incentive for them to come to you. They get the discount but it's a good way. Otherwise, I think of these patients, myself, I'm a free agent, and I'll tell you, the office I go to was driving me nuts. Every time I went in, they were trying to put me with a different hygienist, a different dentist and I was like, "Look, guys, I work with hundreds of dentists across the nation, I can be choosy of where I go. I come to my dentist in my hometown to get consistent care, but if I'm gonna have a different dentist, a different hygienist, there is no reason for me to keep coming back here." So I was a free agent patient, I can go to any dentist anywhere because I'm no longer tied to you for my dental benefits.

0:20:27.7 KD: So I really think as practices are looking to potentially drop, make sure that your practice is a place people will want to come, whether they have those dental benefits or not.

0:20:38.7 MH: And that exercise, that makes you better, 'cause then the competition is real and competition makes you better.

0:20:49.6 KD: Exactly, I love it. [chuckle] Which again, I think dental insurance has kind of made us lazy over the years because we've just had all these patients coming to us because it was on a list, but more and more are dropping. I will say, and Morgan, I don't know if you've seen this anywhere, I have one office, they're in Pittsburgh, no joke, they were gonna drop an insurance plan, and I was shocked. We had the whole plan, the doctor was back and forth, I don't want to lose any patients, it was probably five months of back and forth before we got the whole team on board, got it ready to go, I had the letters going out. The insurance, I am not kidding, came back, and it must have been that this practice was such a large participating provider, they came back with fee schedules as high as the office UCR or in-office fee...

0:21:38.9 MH: Wow.

0:21:39.8 KD: To not drop them as an insurance company. Because...

0:21:43.7 MH: Wow.

0:21:43.8 KD: And I have only seen that one time, but just know that we all decided, Well, there's no reason to drop because you're gonna pay us just as much as you would if they were fee-for-service patients, then why not? Basically, it's free marketing, but only one practice...

0:21:56.4 MH: They probably they never would have come forward with that had there not been the stick, so to speak. [laughter]

0:22:03.9 KD: Totally. Yeah, so I love that you talked about it, and I also love that you use the accounting side of profitability, because guys, I agree with you, Morgan, either cut your expenses or increase your production, but at sometimes you only have limited space, so we need to make sure each patient coming in.

0:22:22.3 MH: Yeah. There's only... Watching expenses is important, but you get to a point where you know what? There's only so bare bones you can go, there is a cost to be open and in business, and you have to grow or drive revenue and collections to get where you want to be. And I... You had said something earlier where the doctors, they want to serve the community and want to see patients and have that offering. And I always separate, and I do this with my team too, and they probably get tired of hearing me say it, but I said, "There's the practice of accounting, and there's the business of accounting, and they are not the same. And being savvy at the business side of your profession is what gives you that opportunity to practice your craft."

0:23:21.3 MH: And I think the same is true with dentistry. To be that clinician that you want to be and to be able to have your office and the infrastructure to do that, you have to run a good business, otherwise it won't, like you said, it won't be there. So managing, kinda... And we start talking about HR challenges and insurance and all that, that is the business side of things, which is really important and puts us all in the position to be the practitioner or clinician that we want to be.

0:23:55.6 KD: Yeah, and I would ask, Morgan, since this is... You guys are an accounting company, what are the main KPIs, if you will, that you guys like to watch? You listed a ton of, which, guys, if you go back and listen to what Morgan said, you were like, "If you don't have a healthy AR... " You drilled into what creates profit that I hope you guys picked up on. What other KPIs or things do you guys like to watch?

0:24:20.6 MH: So we already talked about the big one, profit margin.

0:24:23.4 KD: The big one. [chuckle]

0:24:24.2 MH: But that's how we quantify how our... If the business is working for us. So everything else kind of below that falls into the profit improvement. One metric that I put this on our report about a year-and-a-half ago, and that was a revenue per operatory, which is a great metric, 'cause you want to know how are we doing compared to other offices. You want to know peer to peer. Well, you can't look at revenue for that. Not everybody wants a $3 million size office. You can't look at profit margin, if someone has an associate, their margin is gonna be way different and it could still be good, but if you break it down to revenue per operatory, I think that gives a pretty objective measure across the board on productivity. And so...

0:25:09.8 KD: So here's my itching mind. What is a good hygiene revenue? What is a good doctor...

0:25:15.5 MH: I don't... So this is the whole office, so we don't have visibility into what exactly is hygiene production and doctor... But for the overall office, our client average, and it's been pretty steady for a long time, it's about 21k, 21000 per month per op. And that's just a good sort of weather vane, kind of a gauge, if we are cranking along at 25K or 30K per op, we know right then and there we run a pretty tight ship. Scheduling is good, we're productive.

0:25:53.6 MH: If we see... I think the highest I've seen is like 39K per op, and they are bursting at the seams, so the high number sounds great, but you know what, there's no more, we can't grow. On the other side, I had a very interesting conversation, when we first started, now about six months in, we had enough time, we had enough data to really start using that metric. And I had a client start up, he has, office was plumbed for six ops. He had like three outfitted, and he's feeling a lot of pressure. I gotta get these other ops outfitted. And I said, Look, you're generating $10,000 per op per month, like it's not even half, like let's fill the capacity you already have.

0:26:37.2 MH: And of course, we want to be... We don't want him to get behind and then not have him, you know... But you don't need to go spend a ton of money on outfitting these ops right now. So revenue per op is a good one. We always calculate the breakeven. You gotta know what's the cost for being open, and that drives, in my opinion, an informed decision on how much money you should keep in your bank account, because you don't want...

0:27:02.6 KD: Ooh, that's a good question. What do you guys recommend? Are you three-monthers, six-monthers?

0:27:06.9 MH: So that's been... It's changed over the last two years.

0:27:11.6 KD: Right, that's why I want to know.

0:27:11.7 MH: Prior to the pandemic, for sure, without a doubt, one to one-and-a-half times breakeven was not only our recommendation, and I think a pretty good amount, but it's what everybody did. I could measure it. We could see it, right? Post-pandemic it's still right about 2.5 is what we're seeing. Two-and-a-half times. And that's pretty conservative, but let's face it, this has been a crazy couple of years, and people just sleep a little better with more money in the bank.

0:27:45.1 KD: Well, and right now, cash is trash, but not when it makes you sleep better at night. Because while, yes, it's losing, but...

0:27:51.9 MH: It's two-and-a-half times and so... Will that come down? I honestly, I don't know, but it's been pegged at two-and-a-half times for about... Over a year.

0:28:03.4 KD: Interesting.

0:28:04.6 MH: At the height of the pandemic, it was about three times. I think part of that is 'cause breakeven was coming down, people [0:28:11.0] ____ payroll in that, but now people want a little more money in the bank.

0:28:14.2 KD: I'm the wuss over here that does like five times, 'cause I'm like, well, what if I go down? I'm such a baby, but hey guys, that's how I sleep at night, so if it makes you sleep at night, go for it, there's an ROI on your sleep as well.

0:28:26.1 MH: Business run on money, and you cannot get short. And so anything... But I would say the bare minimum, no matter what, less than one to one, is that's stressful.

0:28:39.3 KD: And I'd say, I don't know how you do it, Morgan, but for me, at least, and what I like to recommend is have an account that you build up that bare minimum, like know the number. So let's just do easy math. $50,000. If I'm doing my math, I'd go 3, 'cause 2.5 is harder for me, so I'd probably do... If I'm doing $50,000 a month, then I'd want $150,000. Is that math correct? And so what I'd say is every month on that profit, just take a small chunk of that and start putting it into that fund to build that savings back up for me, knowing that my goal is to get it to $150,000.

0:29:13.5 MH: And then once you're there, 'cause this is a common question, particularly with new owners, they get to the point where they get... They get to where they want to be, they have enough cash, and the cash is building and they say, Morgan, like how do I pay myself? How I do take some of this money home? And that could be a whole different discussion, but let's take a start-up or someone just buys a practice, you can easily take a profit distribution, you just take it straight home. And we want to see lots of profit distributions, and regardless of your tax classification, whether you're on W-2 salary, if you're an S-corp, the bulk of your profit will always come home, be a profit distribution.

0:29:56.0 MH: We want to see lots of those. That's a normal part of... A normal healthy part of business ownership. But it should be structured, and this is what I tell people, and it's also what I do in my business, is that you set that no lower than cash. You know, if it's 150, it's 150. If you like to live on the edge and you're gonna go 50K, it's up to the business owner. Whatever that is, set it, and then whether they want to do this monthly or quarterly, they can decide, but you can only distribute money you actually have, so that's gonna be after debt service, and look at the cash in the bank.

0:30:37.1 MH: And let's just say we go with your example. It's 150, and we go in, it's at the end of the month, and there's 165. Distribute 15, take it right down to 150, take it home and feel good about it. We're not leaving the practice short cash, you've earned it, so take it home. If it's more than that, those checks get pretty big, great.

0:31:01.8 KD: That's a happy day.

0:31:02.0 MH: You know, that's why we do this, why you own a business. But conversely, if it's less than that, you have to be judicious, and you have to say, Well, I need a certain amount to pay the bills. But don't take more than that, you've got to preserve that cash, that cash reserve.

0:31:17.3 KD: I do think the best piece of advice I was ever given when I started my business was, Don't lose money. And I loved that, because you can be risky and take risks, but let's not spend money we don't have per se, and like pay ourselves and live these lavish lifestyles. I think there's so much beauty when you can discipline yourself, because you sleep better at night, and there's a lot of this talk of like, But I deserve this. It's like, Well, yes, but also you have to make sure you keep your generator going.

0:31:48.8 MH: You deserve this. Oh, boy, Kiera, we could have a whole... We could have a whole podcast on just business ownership.

0:31:56.2 KD: We should. That should be our next one, Morgan, because I'm fascinated... I had a URL called business intrigue for [0:32:03.3] ____, I let it go, but I'm still intrigued by business and business owners, and what we think.

0:32:08.1 MH: Employees deserve a paycheck, business owners do not deserve anything. We have to create it.

0:32:16.9 KD: I would agree, and I will say to team members who are listening to this, you want your doctors to take home a healthy paycheck. You want them to be profitable, because when they're profitable and they're not stressed, everybody in the practice runs easier. Money stresses practices out so much. The lack of money stresses them out so much. So team members, I always say, yes, I want my doctor to be taking home a nice healthy paycheck, because that means I'm being paid, that means our team's being paid, that means we have supplies, the lights are on, I don't have to stress about my job. But when that doctor is stressed and they're not taking home a paycheck, that's when things get real tight in the practice and everybody's on edge.

0:32:56.0 KD: So I do like that metric a lot, those are good metrics. I like it, Morgan. Alright, so if people like your style... I love what you guys do, I love that you think about profit, I love that you look at great metrics, that revenue... Guys, he gave you so many good gems, I hope you wrote them down and go back and listen to it. So many good quality pieces. If you're trying to figure out your profit... I know when I first started a business, I didn't know what the heck profit was or how to figure it out, like, Do I pay myself? Do I not pay myself? Are taxes part of my profit?" I had no clue what any of this meant, I just knew I had a lot of bills to pay and didn't really know how to turn the levers on those numbers to get to what I needed to be.

0:33:39.2 KD: So Morgan, if people are in that same boat, and they'd love to chat with you, you guys are... You only work with dentists. You even told me you'd love to work with me, but you only work with dentists, how do they connect with you? How do they chat with you?

0:33:50.7 MH: So our website, hdagroupdental.com, there you can read about us, see some samples, see what we do, there's all kinds of places on there, you can book an appointment whenever you like. I still do most of those personally, and my business partner Courtney is also doing those as well. Or if they want to just shoot me an email, it's pretty easy, [email protected]. We can set an appointment, learn more about the practice, talk more about what we do. So it's all still very personal and that's, again, chances are, it'll be with me, I do those personally.

0:34:28.0 KD: Sounds awesome, Morgan, and if you just want to hear about his glory days working on that Navy ship flying planes, ask him about that. You got some fun stories from there, so... Morgan, I appreciate you. I love what you guys do for our clients, we were talking about a mutual client before the podcast, so just love... I feel very confident with clients who work with you guys. Knowing those numbers are accurate makes my life as a consultant is so much easier when offices have squeaky clean books and we can see really where the true profit is, so super, appreciate you being on here today, I really do.

0:34:57.2 MH: It was my pleasure, Kiera. I always love our visits and... Yeah, look forward to next time.

0:35:02.2 KD: I know, business ownership, guys. Get ready, tune in.

0:35:04.7 MH: Yeah, that's the next one.

0:35:06.1 KD: Awesome. Alright, guys. Well, as always, thank you all for listening, and I'll catch you next time on The Dental A Team Podcast.

0:35:14.4 KD: And that wraps it up for another episode of The Dental A Team Podcast. Thank you so much for listening and we'll talk to you next time.