Partners in Public Health

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-By John Boley

Dental Corporation is a leading provider of dental services in Australia and New Zealand. But rather than focusing on rummaging around in patients’ mouths, this innovative company interests itself in what goes on behind the scenes in successful private practices nationwide. The group is focused on partnering with leading general and specialist dental practices through what it describes as a “unique” business approach, a partnership model that allows its dentists to focus on dentistry while the corporation provides a comprehensive range of support services and assistance in growing their practice operations. Dentists who join Dental Corporation remain in full control of the day-to-day operation of their practices but get access to a team providing a full solution across a wide range of support services.

The company has been recognised among Australia’s most progressive organisations, winning 2011 Australian Business Awards for Enterprise and Innovation. Commenting on the win, Dr Ray Khouri (BDS), executive director and co-founder of Dental Corporation, said: “Dental Corporation has a unique vision for acquiring practices while still enabling the original owner to maintain control of the day-to-day running of the practice. These awards reinforce our commitment to providing effective business solutions to dentists and offering high quality dental care to patients.”

Another of the founders, executive chairman Mark Evans, told Business in Focus that dentistry is an interesting financial vehicle. He had 15 years experience in investment banking, stockbroking and then business management before being introduced five years ago to Ray. What became immediately apparent, he says, was that dentistry was “the ultimate cottage industry in many ways – it’s an industry (in Australia and New Zealand) worth six billion dollars a year, yet totally made up of a large number of small private businesses.” There is a large element of personal service involved, of course, but dentistry is quite different from most other medical services “because of the relatively large amount of investment needed to establish a private practice” – there is a lot of expensive equipment that other medical centres perhaps do not require – and that has grown substantially in the last ten years as technological advances in dentistry have taken place.

“We are primarily focussed on the larger multi-dentist practices – typically three to five dentists and hygienists in a practice, 10-15 staff in total, with a high IT requirement, complicated accounting functions with lots of small transactions in and out and also a high marketing and presentation requirement.” The days of just being able to hang out your shingle and wait for the waiting room to fill with patients has gone, Mark points out.

Dentists everywhere are trying to juggle the concepts of serving patients with increasingly technical dental techniques and trying to run a business efficiently. “So we came up with a partnership model,” Mark explains, “where they are free to run the day-to-day clinical part of the business and we manage the back office administration.”

The Dental Corporation model is unique, says Mark, in that it buys the practice outright then works with the principals on a long-term contract arrangement, rather than employing them. The practice principals are free to manage the clinical side of the practice, “working from the premises which we now own and sharing the profits with us. The dentist gets remunerated in three ways – direct from treating patients, as anywhere else in the industry, a share of the overall practice profits and part of the upfront proceeds of Dental Corporation buying the practice.”

Other operations that consolidate dental practices tend to directly employ the dentists, tell them what hours to work and how much to pay their staff, and effect a corporate model and branding. “We go the other way and are in partnership with the dentists in the way they run their practice. The dentists retain the ability to run their practice as they wish and always have done with support from experts in marketing, HR, IT, Operations and Finance if they need it. Targets are set in place and we have a very generous rewards system under our model to encourage them to continue to grow their practice.”

Gordon Towell, FAICD is director, strategy and development, for Dental Corporation. He explains that the company’s involvement with practices it buys is very “hands-off, but there is a relatively high level of engagement. They are running their own ship but we present them with some very compelling reasons why they should work with our marketing and operations teams.

“We put a lot of time and effort into improving the business of the businesses we take on board, ensuring we put in best practice in areas such as finance, procurement and IT. When we acquire a practice, we bring them here to Lane Cove and they undergo a one-day induction programme during which we show them the options they can take up.”

Where Dental Corporation is different is that it does not impose a standardised corporate identity on practices but instead allows the practice to continue to act independently, without the imposition of a common brand. Gordon says: “The practices we acquire are the best clinicians, but they have generally also built their practices up to be the best around and we want to retain that entrepreneurial spirit and allow them to run their business as they did before,” but with the advantages of back-of-house operations streamlining “that can take a good business and make it into a great business.”

Mark freely acknowledges that Dental Corporation is ‘cherry-picking’ the best practices. “We are quite selective – if we don’t think someone has the appetite or desire to continue to run the business at the level it was before we came along, they are not for us – and likewise we are not providing dentists with an exit strategy but an alternative way of running their business. We have never bought a practice that was for sale per se – it’s always been referrals. What we are taking ownership of is the assets of the practice and their ongoing maintenance. We provide those assets for the dentists to continue to run the clinical side of the practice.”

There are numerous other benefits, including an online purchasing portal showing more than 30,000 items (mainly consumables) from all major suppliers arranged by category and price and offering an average saving of 15-20 per cent, according to Gordon. “The portal has not only saved money on consumables for our practices but saved time by having all the products they order in one place with the ability to compare prices.”

The company has a team of regionally based practice consultants who ‘audit’ the practice when it signs up and indicate strengths, weaknesses and areas for improvement. “We have spent a lot of time finding the kind of person who is both authoritative and informed enough to make appropriate suggestions after a careful look at the practice,” says Gordon. “We have put a lot of effort into development training programmes including the Practice Manager’s Diploma – a one-year distance learning scheme managed from Lane Cove. But all programmes are tailored to individual practices. This is not a one-size-fits-all system.”

However, individual practices, however well run, can benefit from the company’s experience built up in areas such as HR, IT, patient communications and marketing. “We know what works and what doesn’t. Take marketing, for example – we know where you get the most bang for your buck.” That includes matters such as website design, where again Dental Corporation can facilitate a more professional but still cost-effective approach that doesn’t mean diminishing the individual practice’s brand.

Mark concedes the model means Dental Corporation lacks ‘executive powers’ over the practices it signs up, preferring to rely on the dentists’ own capabilities to run the clinical side of the business profitably and take optimum advantage of the cost-saving attributes of the behind-the-scenes services provided. “We take the view that the best person to make decisions over the day-to-day profitability of the business is the dentist, who is better placed at doing that than we would be from a ‘head office’ function in Sydney when we have practices all round the country. We have ‘outsourced’ the management to them.” There are, however, penalties if the profitability falls below a certain threshold, which in turn incentivises them.

A 58 per cent share in Dental Corporation is now owned by Fortis Group, “a great supporter of the business,” according to Mark. Most of their business is in India, much of it in hospitals and day care facilities, and the investment has promoted expansion beyond the borders, with a joint venture in Canada that will have more than 30 practices already signed up by the time of the unveiling next month (March). “We identified Canada from a number of overseas markets as having a very similar structure to Australia,” (albeit worth twice as much for a similar population, just in case you think it’s expensive enough here) and with a similar (Commonwealth) legal and regulatory framework. “We will consider other offshore markets as and when they arise.”

Dental Corporation today has about five per cent of the domestic market and is growing at the rate of around 40 practices per year. Mark believes an “achievable target might be in ten years’ time to have a turnover within the company of 1.2 billion dollars in a market which by then might be worth an overall 9 billion, so a market share of some 13 per cent.” But this is not about controlling the market. He does not believe they will ever see more than 20 per cent share and stresses that the concept is not volume driven or focussed on size but more a matter of attending to quality issues and providing top class patient care at economic cost.

Making Sense of Management

Management is the art, or science, of getting things done through people. Sounds fairly straightforward – except for the fact that people are not robots waiting to do our bidding. People have their own minds, motivations, and goals. So how do managers keep operations – and the people behind them – running as planned?

June 19, 2018, 10:29 AM AEST