Dr. Michael DiTolla: Steve, for those readers who haven’t heard of Pacific Dental Services, how would you describe the services that your company provides to dentists?
Stephen Thorne: Pacific Dental Services is a B2B business. We’re really the backbone of a well-run, well-distributed group of high-performing, decentralized dental practices. PDS provides a full scope of business services to dentists: accounting, real estate, payroll, specialty systems, services and capital, to name a few.
MD: That sounds pretty much A to Z. Just as a little background for our readers, our dads went to dental school together. Then I went to dental school, and I know your brother went to dental school, as well. You did not go to dental school, but you ended up in dentistry anyway. Was that by design? Or did your career path just happen to unfold into this profession?
ST: What I do now is the service business. And how I got started in dentistry was by helping my father out in his dental practice. It was 1989, and my dad needed some help putting in a computer system. He also needed help with billing, collections and other things. It wasn’t planned. It just evolved from helping my dad out for a short period of time 22 years ago.
MD: How long did that evolution take? Were you helping in his practice for a couple weeks, a couple months, a couple years?
ST: I worked for my father for a couple years and helped him develop a total of five practices. I discovered there was a real business need there, and that I could help more dentists with the business services in their practices to help them get started.
I branched out in 1993 and started Pacific Dental Services in 1994. The first practice we affiliated with was in Costa Mesa, California, in June 1994.
MD: Did your dad already have five practices when you came onboard? Or was he expanding as you were there, giving you the opportunity to see what it takes to open a dental office from scratch?
ST: When I started working for my dad in 1989, he only had one practice. Between the two of us — I was helping run the business side and he was running the clinical side — we opened four more practices.
MD: That’s pretty amazing. There aren’t many dentists, I’d say less than 2 or 3 percent of dentists in the U.S., who have the opportunity to open a second practice — let alone four more in addition to that first one! That just sounds like an amazing education on what it takes to start a dental practice.
ST: I learned from the ground up. I started working as a receptionist and pulling charts. I was on the old pegboard system; that’s probably around the time you started practicing dentistry. I helped clean rooms. I helped sterilize instruments. I worked in a dental lab. I owned my own lab for many years. Getting my hands wet at the very base level of dentistry really helped me understand the operations of a dental office.
MD: It sounds like, short of spending four years getting your dental degree, that’s about the best education you could have gotten. Not to just observe, but to actually work in all the different positions in a dental office. And to work in and then own a dental lab, as well, so that you could see the other side of what goes out of an office and how that affects quality and profitability in the office.
When you started PDS in 1994, did you know there was definitely a need for something like this in the dental market? Was it just a matter of finding dentists you could work with? Or was it something where you said: If this doesn’t work out, I can always go back and do something else?
ST: No, it was definitely the former. I knew there was a need from the time I spent in my dad’s practice and from talking to so many dentists out there, including my dad’s friends who asked for my help — I did some consulting work back then, too, with other dentists. Working through the practice broker network of these dentists who needed help, I realized there was a real opportunity.
When I started PDS in 1994, this business model was relatively new. It wasn’t well received by dentists, except for those who got involved early. We’ve had to work our way through this the past 15 years. For the most part, however, the business model is fairly well accepted and understood, and the roles and responsibilities are clear. It’s been a big growth segment.
MD: I would imagine that you are met with a lot less suspicion from dentists today than you may have been met with back in 1994. Is that true?
ST: That is absolutely true.
MD: PDS has a well-established track record now and so many affiliated offices. How many offices does PDS currently work with?
ST: We’re approaching 250 practices.
MD: I don’t think you can get to 250 practices if you’re not doing things correctly, treating people right and empowering dentists to have success with your system.
ST: Our turnover at what we call the Owner Dentist level is extremely low.
MD: And what criteria does PDS use to find prospective dentists? Do you go out and look for them, or do they find you? How does the process work?
ST: It works both ways. We go out and look for them and they come to us. We actively recruit in the dental schools and local markets.
We have fairly rigid criteria we’re looking for, the different talents and skill sets. After doing this for 20 years, I’ve sort of figured out what will make a dentist be fairly successful in his or her practice. We try to use all that experience in our assessment and screening.
More and more, we’re getting dentists in their mid-30s to mid-40s who are searching us out. And they are just tired or stressed out from operating their practice, or they see the opportunity in the business model.
More and more, we’re getting dentists in their mid-30s to mid-40s who are searching us out. And they are just tired or stressed out from operating their practice, or they see the opportunity in the business model and say: “Look, I can work with an organization like PDS. They can handle all the business stuff. I can run the practice, which I’m good at. And, together, we win! Together it’s a better fit.” That’s a pretty cool development that’s starting to take place.
MD: That is a cool thing. That’s really the main reason I wanted to interview you. It’s kind of become my mission to help dentists: Help dentists lower their remakes, increase the longevity of their restorations and consistently produce esthetic restorations they can be proud of.
We tend to focus on helping the dentists who work with Glidewell Laboratories, and I can only share with them what’s worked for me as a dentist with an average set of hands. I’ve had to come up with systems for preparing teeth and systems for taking impressions to get good restorative results. But once you get past the clinical skills, you’ve still got to take care of the whole business side of things.
Knowing what PDS does, and talking to some of the dentists who are affiliated with your company, makes me really excited to share this story with other dentists. There may be dentists reading this article who have been out of school for 15 years, who are right around 40 years old and think: “Well, I don’t feel like I’ve made a mistake. I think I picked the right career, but things just aren’t going the way I wanted.” You talk to dentists who hate hiring and firing. They hate the business aspect. Before a service like PDS was available, I don’t know what those dentists did. Maybe they retired or sold their practice and got into real estate. So, I think it’s so great that PDS is able to step in and help those dentists who have dedicated so much time and money to this career, and show them there’s another way to do it, where they can concentrate on the clinical and make more money when they turn some of this stuff over to PDS.
ST: I think our results speak for themselves. Our average Owner Dentist is approaching $400,000 in income and works slightly more than 32 hours per week. These Owner Dentists tend to spend about one to two hours per week on administrative time; maybe reviewing finances or something like that.
What’s really cool about this, for me, too, after doing this for 22 years, is that the clinical side is getting more and more fun. We’re able to provide an environment in our infrastructure systems so that the dentist can just get better and better clinically.
We have a saying at PDS: Clinicians Leading Clinicians™ in Clinical Excellence. We’re trying to position our company as a true leader of modern dentistry. We are really positioning the practices and the clinicians as leaders in fast, easy, efficient and great clinical environments for patients. And we’re the world’s leader in CEREC® (Sirona Dental Systems). PDS affiliate dentists have done more than 250,000 CEREC restorations. Affiliate dentists are doing a lot of implant work — doing a lot of great dentistry. I think we’re now the world’s leader in laser therapy for periodontal disease. The results have been, from a clinical perspective, absolutely fantastic.
When you have this many dentists pushing each other to improve their skills, it can weed out those dentists with no desire to improve. But it also allows the dentists who want to improve their clinical skills to really step up to a whole new level than they might if they were practicing alone. Isolation is the biggest downside for a dentist in a solo practice. The solo practitioner is so isolated. Who do they go to or where do they go when they need help? In our organization, BOOM, there are 500 different dentists they can pick up the phone and talk to, who they can email, and with whom they can share a blog. There are many times they’ll actually get in the car and drive to personally help each other out.
MD: It’s funny: The solo practitioner model is the one that has existed for so long. And I think it’s the one that a lot of us who went to dental school thought of when we thought of owning our practice. But it is lonely. I don’t know that there is any other word for it. It’s lonely, in the sense that you don’t have somebody else to bounce things off of. And you’re right, there is sort of a friendly competition that takes place when you put a few dentists together. But it’s really in the spirit of cooperation that everybody gets better.
I do triathlons, for example. So, as part of the swim technique, you do these master swim classes, where there are eight of you swimming together. You push one another to get better because you swim faster together than you would alone. It’s an informal competition.
That informal competition certainly applies to dentistry, as well. I can understand how with a disruptive technology like CEREC, this in-office CAD/CAM dentistry, that one dentist is going to learn it a little better than another dentist. But he is going to share that knowledge and get that other dentist excited, and they’re going to kind of spur each other on. I completely understand what you mean when you talk about this cooperative effort between the dentists that, in the end, gives the patient a better clinical result.
From a lab standpoint, we get more digital impressions from PDS practices than we do from anybody else. You guys are No. 1 by a long shot. We get lots of digital impressions — mainly for monolithic BruxZir® (Glidewell Laboratories) restorations that you send via CEREC Connect to the lab. So we can see that you are quite obviously using these units a lot. And I’m sure that of the 250,000 crowns made, most of those were probably IPS e.max® (Ivoclar Vivadent) done in office. That’s fantastic. In fact, your CEREC purchase is almost legendary. How many machines did you buy?
ST: Oh, shoot, I have no idea what number we’re up to. From what I understand, there’s at least one machine in every practice. There might be a few old docs out there who have not adopted CEREC, but for the most part our dentists have seen the light. When you get people like yourself and Dr. Gordon Christensen talking about digital dentistry, and about CEREC specifically, it’s pretty powerful.
I was recently at Glidewell Laboratories, and I saw your investment in digital infrastructure and technology. Realistically, when you look into the future of dentistry, only a portion of restorations will be done using in-office CEREC. We don’t know what that percentage will be, but there will be a percentage of restorations done that way — single units and maybe 2-unit restorations.
However, for the foreseeable future, when you’re doing multiple-unit cases or a full arch or any large cases, they have to be done in a laboratory setting like yours. It’s great. So we’re a big fan of CEREC Connect. And our dentists tell me that the fit with CEREC Connect is off the charts.
MD: It is. It’s really good. In fact, I think the only better fit you get is with the restorations you guys make in office. Here I am practicing in a dental laboratory but, to be completely honest, I just don’t think there’s anything better than same-day dentistry. I don’t think anything good happens during the two weeks the patient wears a temporary. In fact, I can list five or six bad things that happen! So I think this is where it’s all heading. And patients are the big winners in all this because they aren’t going to have to wear plastic on their tooth that keeps falling off for two weeks in order to get a definitive restoration. Same-day treatment is always going to be in the patient’s best interest.
You mentioned that you are able to tell if a dentist is going to fit into the PDS organization pretty quickly. Can you tell this through an interview, or do you actually have to watch him or her practice to get an idea of who is going to fit in with you guys?
ST: Oh, no. The Owner Dentists do all the final hiring. So the way it works is, we’ll do some phone interviews and some talent assessments, from which we can figure out a lot. There’s even an online clinical assessment that we’ll do, and we have a dentist that does all the Q&A for quality assurance.
After those steps, Owner Dentists try to do a working interview with the dentist. That working interview takes place over one to two days. Then they can get an idea of how the dentist works under pressure. Some dentists make the potential hire assist them for the day. Others will actually go and assist a potential associate to see how they perform.
What we operate are large, multi-specialty group practices. Through numerous studies, we know that patients really like it when all their services are under one roof — oral surgery, ortho, endo, pedo, hygiene— so they don’t have to move around offices. We’ve tried very hard to integrate all those specialties under one roof for each practice. And the associate plays a vital role. Because, what we still believe and what we coach on is the “gatekeeper model.” We believe that most patients still access dental care through their general dentist. The general dentist then moves the patient to wherever they need to be. A healthy patient may stay with the dentist and his or her hygienist. Patients with poor oral health will move out to various specialties. At PDS, the associate dentist, the new dentist, is extremely important to our organization.
MD: It sounds like most of the practices you get involved with are dental practices that have already been in existence for say 10 to 20 years, and the dentist is interested in getting some help from you guys. Do you ever start practices from scratch, or is that something you might do with one of the Owner Dentists if he or she decides they’d like to expand and have a second practice?
ST: It’s actually the opposite, to be honest. We focus on what we call “new” offices. That’s kind of our specialty. So what we do for dentists is get out in front of the curve. We find the best real estate and locations and markets, sometimes two years before that real estate becomes available.
Then, we try to match a dentist with the real estate. We actually focus on the development. I can’t think of an instance in which a dentist sells his or her old practice. PDS actually focuses on the de novo-style practice.
MD: Interesting. I guess part of the reason for that is maybe they chose a bad location and that’s a reason their practice is struggling. So, you guys want to find this “high traffic” area, where you can put a practice on a piece of real estate and be assured of a certain number of new patients. Is location really important to PDS?
Location is extremely important. We opened an office recently with a dentist in Scottsdale, Arizona, which has got to be one of the most competitive dental markets in the U.S. Lots of dentists practice in Scottsdale. The very first day we opened, we had 170 patients already booked out.
ST: Location is extremely important. We opened an office recently with a dentist in Scottsdale, Arizona, which has got to be one of the most competitive dental markets in the U.S. Lots of dentists practice in Scottsdale. The very first day we opened, we had 170 patients already booked out.
MD: Did you open it in the middle of the freeway?
ST: Exactly! Something’s going on there. Between my various companies, I’ve opened or helped open 275 practices.
MD: I don’t know if anybody keeps track of this, but that might be a record.
ST: It might be. There are others who are up there, too. I once held the record, but I don’t think I do anymore. Nevertheless, we’re pretty good at opening offices and getting them ramped up pretty quickly for dentists. In fact, we’ll open 41 or 42 new practices this year.
MD: Wow! Forty-two is significant! So, most of the time, I take it, you’re probably not going to an area like Scottsdale. The friends I talk to now that seem to be doing well seem to be located in rural parts of California — Blythe, Bakersfield, Modesto, Fresno, places like that. Is it kind of uncommon for you to go into a place like Scottsdale or Newport Beach? Do you tend to be more in the outlying suburbs? Are you allowed to talk about that?
ST: Well, I don’t mind talking about it. I’m sure our game plan is in the corporate offices of all my competitors. (It’s a friendly group; we all know each other pretty well.) At PDS, we stay very focused. Our target market is the middle to upper middle. We didn’t go into the ritzy area of Scottsdale; we went pretty far out, so that may have played into it. We stay away from upper income areas, and we are selective in lower income areas. We will do areas like Bakersfield, which has done very well. Again, the dentists have to be a good fit.
We recently opened practices in Southern California — in Lakewood, La Habra, Pasadena — and we’ve done extremely well in those areas. We’ve also done very well in various parts of Texas that you’ve probably never heard of. The same goes for Arizona, Colorado and mid-areas of central California, too.
MD: So Pacific Dental Services is in six or seven states at this point?
ST: We are getting ready to open in our sixth state, New Mexico. That will happen shortly.
MD: And is opening a dental practice in another state much different from opening a dental practice in California? Or is it the same formula based on the same values, and just kind of getting to know the local real estate a little bit better?
ST: There are definitely differences in each state’s laws and regulations, whether you’re looking at the laws that PDS has to comply with or the laws of what dental assistants and dental hygienists are allowed to do, their licensure and extended functions. Rules vary from state to state. And there are nuances in operating these offices. But in our target market — the middle to upper middle — it’s more nuances than major differences.
MD: Right. I noticed that I don’t see a lot of advertisements from PDS. That’s why I was wondering how you reach out and make yourself known. But you said that you go to dental schools, and I thought that was interesting. Many people go to dental school but don’t necessarily have a relative or a mentor who they are going to work with. They are probably a little bit daunted by the task of borrowing all that money and starting a practice from scratch, whereas you’ve started a couple hundred practices from scratch. When you said that you talk to dental students, is it more for associate positions? Or, if they can line up the financing, does PDS ever take a chance on a recent graduate as an Owner Dentist? Or does that not work out that well?
ST: We have a mantra in our organization: Hire owners. We’re looking for future owners. That being said, the odds of a dentist coming right out of dental school and being successful, day one, in a group-style model are very slim. I can’t think of one we’ve done. We have had some dentists who had a prior business background, so this is their second career. And these dentists became owners quickly — maybe within months. But for the typical student, who came from undergrad and went to dental school, they just do not yet have that leadership ability or the business knowledge. Frankly, they are still working on some of their clinical competencies and efficiencies.
MD: So they are potential associates who might be good Owner Dentists in five years, or something like that?
ST: Exactly. And what we’re trying to do is say: Look, in the large group practice model, which is where we’re kind of lumped, most of the large group practices have not invested — and this isn’t a knock on any of my competitors, by the way — in the infrastructure and technologies like we have at PDS. We are the world’s largest CEREC provider. We have a digital infrastructure that is second to none. We are the first large group practice to go to all-digital health records, all-digital patient records. I believe we are the first large group to be all-digital X-rays and all-digital panorex. We’re now beta-testing several 3-D cone beam machines. So we’ve really tried to step up not only the actual but also the image of a large group practice among the dentists entering the marketplace. We’ve very carefully positioned ourselves there.
MD: You guys are really, in a sense, the anti-large group practice — at least from my perspective, that of a dentist who graduated in 1988. The large group practices back then, the Western Dental’s and others, were places you’d go if you had no other option. Maybe you’d go for a year or two to improve your speed, but you’d get out of there as soon as possible to start building your career. So there has always kind of been this negative connotation associated with the large group practice.
I’ve always liked how none of the Pacific Dental practices are named Pacific Dental. They are all named for the communities in which they are located. In fact, if someone looked from the outside, I don’t think they would ever necessarily know it was a PDS practice, except for the fact that the practice has every piece of high-tech equipment known to man.
ST: We’ve been very focused on our positioning in the marketplace. We are actually calling it Private Practice +™. The “plus” is all about the modern dentistry, infrastructure, systems and support. But we view PDS as more on the private practice side. Yes, we have structure. Yes, we have systems. But we look at it as a very autonomous practice. The practices are locally branded. A local dentist owns it, and his or her name is on the door. Typically, that dentist will even put the names of his or her associates on the door, too. The dentist’s credentials are hanging in the office. Many dentists hang pictures of their family on the wall. What I’ve found, after doing this for so many years, is dentists want that. They want to feel like: This is mine. This is where I practice, and I own it. The dentists we affiliate with don’t just want a job. They’re looking for a fulfilling career, where they feel part of something bigger and better, an organization that’s going to help them be the best clinician. And this is true of most of my experience with dentists: Dentists want to be great clinicians. I know there’s a bell curve in clinical skill with 150,000 practicing dentists. But in my experience, I’ve found that most dentists want to be really good dentists. So we want to provide an environment where they can be as good as they want to be.
MD: And you guys do that. I think every dentist would love to have a practice where he or she is able to afford digital X-rays and a CEREC machine and a cone beam machine. Every dentist would love to have that stuff around, but sometimes they don’t have the cash flow or the patient flow to justify it. So it’s got to be a fantastic way to practice.
And I think you’re right: Dentists do want to do the best dentistry they can. But there are things that get in the way. I think it helps to have multiple dentists in one location, like you do in your centers, for reasons as simple as other people might be looking at your impressions! When I started working at the lab, all of a sudden I was forced to get better because I had hundreds of technicians looking at my impressions. For the first time, I couldn’t hide back in my office because they knew where I was and they knew I might be working on them soon. Being part of that group absolutely forced me to get better. So I agree that every dentist wants to be a good dentist. We want to put things in that are going to be long lasting for the patient. We want to put in a crown on tooth #9 that is going to blend in esthetically because being able to reduce enough and take a good shade and a good digital photograph is a skill. That’s what is fulfilling for dentists. It sounds like PDS is the perfect partner for dentists who want to pursue that kind of dream without having to worry so much about the business side of things.
ST: We try to do that in a very nice, structured format. We have a structured regional and national dental advisory board. Everyone on the board is a licensed dentist of the group. Every decision goes through a process. A lot of eyes look at it so we don’t make bad decisions. We try to make very focused, thoughtful decisions on technologies and about different supplies or whatever dentists want to use. We are very thoughtful about the approaches. It is helpful that we have so many specialists in the organization, too.
MD: I know you guys have had me come over a couple of times and do some programs with the dentists. You can just tell that the commitment is there. The dentists are at those continuing education courses voluntarily. The few times I’ve been over to PDS, it has been with a group of dentists where it’s definitely a different vibe than if you were to step onto the floor of the CDA meeting and interact with a group of dentists. The dentists at PDS are some of the most excited, intelligent dentists that you’ll meet. If you were looking for a group of dentists who love dentistry, and who would encourage their children to go into the profession, it would have to be the group of PDS dentists that I’ve met over the years.
ST: Thanks. I take that as a great compliment. I appreciate it.
MD: Really! I get the feeling that you guys are as concerned about the dentist’s happiness in life and his or her career as much as you are concerned about the success achieved in the practice. Is that true? I remember seeing a mission statement or some of your guiding principles on the wall at PDS headquarters.
ST: Absolutely. Maybe this goes back to some of the early education and training I received, but dentistry is a tough job, physically and mentally. You’re working on generally stressed out people, and the patient’s stress level reverberates from the patient to the dentist. You’re working in a hole the size of a silver dollar. People expect perfection. They don’t want to be in pain. So it’s a physically demanding job. It’s a stressful job. And I don’t think, as a whole, we put enough weight on that in order to create a balanced approach to the career and lifestyle of being a dentist. Think about how many dentists you and I know who are burnt out at age 45!
We had a dentist come aboard — he’s an owner who obviously got on quick — who is 72 years old. He just signed up at 72 years old, and he’s got the energy of a 30-year-old dentist! So it’s really cool to see. We do try to take a lifestyle approach all the way through retirement. And one of my jobs at the company is working with some of the veteran dentists who are starting to think about retirement. How are they going to bring on an associate? How much is the associate going to buy in for? If they have multiple offices, how many do they want to keep? Do they just want to get out and retire? Do they want to teach? Do they want to train? So, we try to coach them through that, too.
MD: Wow, that’s fantastic. So, as dentists reach the end of their careers, in addition to practicing, it sounds like there are some other opportunities they can take advantage of with PDS. That is fantastic.
ST: After 15 to 20 years of practice, my experience has been that dentists want to do something a little bit different. So we’ve got a lot of our affiliate dentists doing training and education, or they get involved in schools or the societies. And we’re really working with vendors, with manufacturers, and what they’re seeing in the real world. We’re trying to create all that for the dentists to help them achieve a lifelong career. Dentistry is a great field. I think that with a balanced approach, you can sustain it for 30 to 40 years.
MD: I agree. I know that in my day-to-day work, there’s just nothing better than that email you get from another dentist — in fact, I just got one the other day. The dentist said: “I was struggling with this or that, but then I saw that prep technique you do. I tried it and it’s really helped me out. I feel so much more confident when I do this type of crown prep or when I’m doing this and it is dropping into place.” I find that incredibly rewarding.
I hope this interview reaches at least one dentist who is struggling. Maybe it is the dentist who gets up in the morning and dreads going to the office. Perhaps it’s the dentist who wonders, what happened to the career I once loved? I hope this conversation excites at least one dentist — whether it be the idea of letting go of the business aspects of the practice, working 32 hours and making $400,000 as an Owner Dentist, having new technology in the office, or the comfort of knowing he or she is providing patients with the best possible dentistry. It has to be very rewarding for you to hear from some of these Owner Dentists who say eight to 10 years later: I was ready to walk away from this profession, but now I can’t wait to go to work.
ST: PDS dentists work very hard, and it can still be very stressful. But I think PDS can take a load off. I think, in this case, we win together. In this instance, two plus two is not four. I think two plus two can be eight or 10 in what we do. But it is hard work. It can be stressful at times. We have a lot of great dentists. I can’t say enough good things about these awesome dentists. They are true leaders and great clinicians.
MD: PDS Owner Dentists still have to be doing an awful lot of dentistry to make that kind of money, right?
ST: Yeah. The top 26 affiliate dentists each did more than $1.25 million in dentistry last year. So they are working. They are working very hard!
MD: The Owner Dentists don’t just come in and put their feet up on the desk while the associates go do all the work?
ST: No, no. Here’s a quote we live by at PDS: “The perfect choice for practicing dentists.” And those were very carefully chosen words. We want to affiliate with dentists who like to practice dentistry. Then we’re going to do everything we can to support them.
MD: That’s fantastic. So, if somebody does read this and gets motivated by what was said, what’s the best way for them to get in contact with Pacific Dental Services, if they happen to be in a state where the company exists?
ST: Yeah, or a state we want to get to. The best person to contact would be Ken Davis. Ken is the head of all PDS recruiting. Also, you can call us directly at our main line: 714-508-3600. Or dentists can also visit our website: pacificdentalservices.com.
MD: I encourage any dentist who feels like he or she is working really hard but not necessarily getting anywhere to take a look at PDS. Steve, I think it’s terrific what you guys are doing and how you’re able to help dentists attain a practice that’s not only fulfilling but can lead to a life that’s fulfilling as well. Thank you for your time today, I appreciate it.
ST: Thank you for the opportunity. I appreciate it, Michael.