Understanding Group Dentistry with Ian McNickle

Gary Takacs: Welcome to another episode of The Thriving Dentist Show. I’m Gary Takacs, your podcast co-host. I’m excited to be doing an interview today with my good friend, Ian McNickle. Hey, Ian, how are you?

Ian McNickle: I’m good, Gary. Good to see you.

Gary Takacs: Yeah, for our listeners’ benefit, Ian and I are on Zoom, so we can actually see each other, and we might pull some video clips out of here to publish as well. If you’re a regular listener to The Thriving Dentist Show, you know that we mix up the format of the Thriving Dentist Show.

And, to keep it interesting for our listeners, and one of the formats that we use is an interview format.

And if you’ve been listening in the last year, you might recognize the name, Ian McNickle. He’s been a guest before. In fact, you did a wonderful interview with us towards the end of 2024, and that episode went viral.

And we’re just going to continue the hit parade today. Before I get into the interview, though, I have a quick announcement to make. Coming up shortly after we publish this episode.

is our Reduce Insurance Dependents Annual Summit, Virtual Summit. This is our 5th Annual Summit.

It’s happening on Friday, October 24th. It’s from noon to 5.30 p.m. It’s five and a half hours.

It’s all done virtually, that’s Eastern Time, so go ahead and translate the times wherever you are.

But it’s noon to 5.30 Eastern Time. It’s our fifth annual summit. We started the first one in 2021. Each year, our attendance has doubled, so we’ve got a heavy lift to double it from 2024, but I’m anticipating that we will. Here’s the great news. We have a variety of content happening that day. We’ve got some keynote presentations, we have multiple panels.

All of the people who will be participating in that have something to do with helping you successfully resign from PPO plans. So, if that’s on your radar screen, and according to recent research, one-third of the dentists in the United States are considering resigning from a PPO plan before the end of the year.

If you’re in that one-third group, it would be time well spent. You’ll get 5 hours of CE. We have to take a couple breaks. The ADA mandates us to take a couple of breaks on a virtual webinar, that’s why it’s five and a half hours, but it’s five hours of content. Here’s the great news.

There is no tuition.

We are waiving your tuition as a courtesy of your listenership. You do have to register. Go to rid.academy, RID stands for Reducing Insurance Dependence Academy, and register, and we’ll look forward to seeing you on Friday, October 24th.

All right, with no further ado, Ian, let’s dive into our topic today.

Ian, there’ll be some listeners that don’t know who you are. Would you take a minute and give us kind of a highlight version of your background?

Ian McNickle: Oh, yeah, happy to, for sure.

Yeah, my story’s a little different, probably, than most folks, you know, in the dental industry. I started my career as a mechanical engineer. I worked in the high-tech industry for about 10 years in the Portland, Oregon area. Semiconductor manufacturing, pretty interesting, kind of a job to start my career with.

Towards the end of that 10 years, I decided I wanted to be an entrepreneur, so I got my MBA from the University of Washington up in Seattle, and about the 2005 – 6 timeframe, I quit my high-tech job, just kind of cold Turkey. I was like, I’m gonna be an entrepreneur, and I didn’t really know what I was gonna do, but I just quit my job, and…

And so, for the last 20 years, I’ve been building companies.

Gary Takacs: In a way, that kind of parallels maybe a lot of dentists, you know, because you go to dentists, go to school to learn how to do clinical dentistry.

Not necessarily learn how to run a business. Yeah. And some of them become accidental entrepreneurs, like you did.

Ian McNickle: Yeah, yeah, yeah, it was fun. I mean, I started, you know, some different companies over the years. How I got into the dental industry, I co-founded a dental marketing agency called WeO Media. Probably some of your listeners may know WeO Media. That’s why I got into the dental industry, and then, you know, about 5 years ago, I started researching and building a really innovative, kind of a dental group platform called Icon Dental Partners, and that’s what I’m doing full-time now, is running that company. It’s a blast. We’re having a lot of fun.

Gary Takacs: We’re going to talk more about what’s happening in the world of DSOs, DPOs. We’ll maybe introduce a new acronym for some of our listeners, but I’m considering you to be our group practice expert in helping educate our listeners about group practices, and I’d like to start from sharing my perspective, and maybe dispel some myths. You know, the truth is, among private practice dentists.

The truth is, there’s some really good ones, and you and I have certainly met many of those, haven’t we?

Ian McNickle:Yeah, sure, sure have.

Gary Takacs:And, to be fair, there’s some okay ones. And there’s some that are not so much. That’s true. I’m trying to be diplomatic and ploy.

Ian McNickle: Right, right.

Gary Takacs: I certainly feel like our listeners all fall into that first category. You know, they wouldn’t be listening to a podcast on their own time if they weren’t committed to really developing a great practice. So, our listeners are all the good ones. And if there are any ones that aren’t, you can stop listening, it’s okay.

But the good ones are listening. But, you know, group practices sometimes have a little bit of a stigma, among dentists. And I think largely it’s a stigma, maybe, of…

The unknown, you know?

No. But I think the truth is, just like there’s some… a range of quality of private practice, practice dentists.

I think there’s a range of quality among groups. I think there’s some good groups.

There’s some okay groups, and there’s some groups we should run away from.

We won’t name names here, ones to run away from, they can figure that out themselves. But there are some good groups.

Ian McNickle: Absolutely.

Gary Takacs: And Ian, could you start with, maybe explaining the difference, in the alphabet soup, between DSO and DPO? Because the difference is important.

Ian McNickle: Yeah, yeah, so if we think about, kind of, group dentistry, I mean, it really started.

Gary Takacs: basically back in the 90s, right? I mean, Heartland is the biggest… They’ve been around a long time since the 90s, and they kind of led the way, and there’s Aspen and PDS. There’s a lot of big boys that have been around for a long time.

Ian McNickle: Then… and they’re more of the traditional, I would say, you know, DSO model. Nothing good or bad about it, it’s just the structure. And so I’m going to kind of explain the structure of how the DSO DPOs are different.

The best way, I think, to think about it is on a historic timeline. And I kind of think, like, there’s 3 primary, I would say, periods of evolution in group dentistry, in my mind. At the beginning, kind of like this phase one is really the old-school kind of corporate dentistry model, where doctors were purely employees. They did not have ownership, they did not have a lot of control over much of the decision-making in the practice. And so, that’s… that’s really where the corporate dentistry model began, and a lot of the, kind of.

I’ll will or bad feelings that doctors have had towards groups have been because of that loss of autonomy, loss of decision-making, lack of financial upside. That kind of rubs doctors the wrong way, and I understand why, I agree. But that’s kind of the old-school kind of corporate model, we’ll call it, like, 1.0.

Gary Takacs: So the doctors in that model, the 1.0, a doctor sold his or her practice to a group.

Ian McNickle: Yeah, yeah, yeah. Sold it to a group, and then they were a peer employee, and they had no ownership at that point going forward. So that’s the older model, right? So then, about 10 years ago,

There was kind of this movement towards,

you know, what I would call, like, the group model 2.0. Still a DSO model, but doctors are allowed to have some ownership, you know, whether it’s at the practice level, the joint venture, regional DSO level, or at a high holding company level.

And there’s lots and lots of different ways to structure those kinds of groups. And in that model, you know, there’s… it’s a hybrid between kind of where we are today and where it was, where

Doctors have some level of ownership, they had more control than they used to be, but it’s still nothing like private practice, and so it’s still a fairly turn-off to a lot of doctors, especially probably a lot of your listeners who are pretty successful, or really trying to become a thriving dentist, right, no pun intended.

That’s maybe not super appealing to them.

So, the DPO model, so DSO stands for either Dental Support Organization or Dental Service Organization, it kind of goes by both.

Gary Takacs: Those terms are kind of bounced around interchangeably.

Ian McNickle: Yeah.

Yeah, DPO is Dental Partnership Organization, and it’s really more of a true partnership. There are some pretty significant differences in how

a lot of the DPOs operate. At a high level, I would just say the doctors have much more ownership upside, financial upside. They’ve got a lot more control clinically.

also over their… in some cases, over their staffing, in some cases over their schedules, although there’s a lot of groups that will say they’re a DPO, but they still operate kind of like DSO-like.

Gary Takacs: So maybe a DPO in name only, but, you know.

Ian McNickle: Yeah.

Gary Takacs: operational reality, it really is similar to what we always think of as a DSO.

Ian McNickle: Yeah, like, there’s one DPO in particular that I’m obviously not going to talk about specific groups, but, like, one of the better, larger ones out there that calls themselves a DPO, they, You know, they hire all the non-clinical staff to be on their payroll, and so they fully control anyone who’s not a doctor, an assistant, or a hygienist in a general dentistry practice is on their payroll, so they fully control them, right? Their work schedules, their pay, and they have to do what they want them to do. So they’ll standardize a lot of things in the practice.

And the doctors are not necessarily on board with these things, but because these people no longer report to the doctor. It creates a lot of tension between what the, kind of, the group wants to do versus maybe what the doctor wants to do in his or her private practice. And so.

Some people call that a DPO model. I would say that’s still quite corporate in that approach. There’s lots and lots of things like that, and we can talk all day if you want about some of these differences, but that’s one quick example of some of the nuanced differences.

Gary Takacs: Yeah.

You know, let’s back up a minute, Ian. There’ll be some of our listeners that might ask the question, you know, why would I want to…sell my practice to a DSO or partner with a DPO, why… Why would I want to do it? What are the benefits of that? And I can name some for sure, but I’d love to hear your perspective on that.

Ian McNickle: Yeah, I mean, so historically, you know, when doctors get towards the end of their career, they’ve thought about the transition, right?

Historically, you know, it was like, well, I’ll just sell… get a broker, and I’ll sell to another doctor. 

Gary Takacs: Yeah, that’s kind of time… time immemorial. That was a traditional way for a dentist to sell his or her practice. They’d… they’d get close to retirement age. They would sell their practice to another dentist as a job to essentially become their successor, usually through a broker, and then affect the transition that way.

Ian McNickle: Yeah, and that’s been the old, you know, traditional long term, that’s how it’s worked, right? And then, when DSOs became more prominent over the last 5-10 years, obviously that became a really viable option, and thousands of dentists have done that. They’ve sold to a DSO, usually later in their career.

And they think of it in terms of, like, well, you know, I’m gonna give up some autonomy, but I’ll just kind of hold… plug my nose here and just deal with it for the next 3 to 5 years, but I can get more money this way, so it’s worth the trade-off.

And some of them are happy with their decision, some of them regret the decision. I’ve talked to plenty in both camps. But it’s… it’s… that’s a huge difference between the DPO model, especially how we designed ICON. We’re really designed for those mid-career doctors, their 40s and 50s, who are, you know, really doing very well. Great revenue and profitability, no or very little debt. There’s no reason for them to want to sell, quote-unquote, their practice, right?

And so… and that’s the vast… that’s true for the vast majority of doctors in our group. They weren’t looking to sell, right? It was more about, once I explained our business model. It was very appealing to them to partner with us so we can take over a lot of those non-clinical headaches, HR, payroll, recruiting, IT, marketing, all that stuff, right? Paying the bills, doing the banking.

Right, so all that non-clinical stuff comes off of their plate, off of their team’s plate, so they can focus more time on taking care of patients and clinical skill development, but they’ve still got tremendous financial upside, and so it’s a really cool model. Now, there’s the devils in the details there. There’s lots of different ways, because a lot of groups will offer a similar story to that. But the execution and the details are really where the differences come.

Gary Takacs:  You know, let’s recognize, Ian, that if a dentist, if any of our listeners, as a practice owner, is practicing clinical dentistry 4 days a week, their work week isn’t over. Put down the handpiece. Say it’s Monday through Thursday. Their work week isn’t over. They have to pay bills. You know, they have to deal with HR. They have to deal with all the operational aspects of the practice, and this can be a way to, you know, put that… all those functions in the hands of experts that do those things well, allow you to put your head down and focus on clinical dentistry, and grow your practice. And really receive the benefits of that. I was first drawn into groups, and most of my career has been working with private practice dentists. I’ve been involved with groups for, you know, since the mid-1990s.

And one of the reasons why I was interested in it is that I’ve always been critical of the valuation model of what a practice is worth sold traditionally. And, you know, traditionally, a practice is worth a percentage of the average annual collections averaged over the last 3 years.

And I would say, my experience has been it’s been between 80% and 90%. You know, averaged, in the average over the last 3 years. And I’ve always been critical of that. So take a million dollar practice, just take… to make the math easy. Sure. You know, a practice that has a million dollars in average annual collections is where somewhere between 80% and 90%, 800 and $900,000. You have to pay the broker, that’s gonna be a 10% hit on that, so remember to factor that in there so you’re going to realize less than that.

So, but let’s use a higher number and say 90%. Well, it’s worth $900, you pay a broker 90, you know, you end up, netting, less than that. You know, you end up… Yeah, around $800 or something, right?

Ian McNickle: Right.

Gary Takacs: And, you know, that’s not chump change, Ian. You know, that’s a nice, contribute, you know, contribution towards your retirement, but is that really what a lifetime’s worth… is worth, you know, to a dentist? You know, blood, sweat, and tears?

Ian McNickle: Yeah.

Gary Takacs: for all those years, I think it’s worth more than that. And, you know, enter groups, and now groups value it differently. Part of it is because of the economy of scale. And I’ll just use wrong… broad numbers, and Ian, correct me if you feel differently, but it could be worth a multiple of that amount. In, you know, partnering with the right group. It could be worth a multiple of that, which could make all the difference in terms of being able to retire with the dignity and comfort a dentist deserves, instead of, you know, sort of a more austere retirement.

Ian McNickle: Yeah, yeah, I mean, there are, again, lots of ways to structure these deals, but historically, doctors got interested in DSOs, you know, because they would get some cash up front, typically a pretty big chunk of the percentage, like 70, 60, 70% of the cash up front, and then they would get 30-40% of their purchase price in some form of stock. Some of it’s holding company, a lot of times it’s joint ventures, or different levels like that. So there’s some upside, but doctors… largely viewed as, well, whatever cash I can get up front, that’s kind of what I’m going to get, and if I get something out of the stock, that’s kind of gravy. And a lot of them kind of thought that way. The reality is, you know, there is a wide variation in how these groups perform with their stock.

But generally, holding company stock at the top level, that’s going to be the most lucrative, and that’s generally the kind of stock you’re going to want. If you’re a doctor listening to this, and you’re considering a group, you would want holding company stock. That’s the… that’s going to have the most financial upside almost all the time.

The reason a lot of groups are backed by investors… so there’s well over 100 investor-backed groups now in our country. And the reason that these investors flow into the dental industry is because there’s a lot of money to be made. And so, as you mentioned, Gary, you know, we value practices on a multiple of the practice EBITA, earnings before interest, taxes, depreciation, and amortization. It’s an accounting acronym. It basically means the cash flow in the business after expenses have been paid. It’s different from net profit.

because those items, you know, interest and taxes and so forth, those things will factor into a net profit calculation, but not the cash flow. And so the EBITA is really a better way to look at things in terms of the cash flow and the business. And a practice, a private practice would be valued 4 to 5, maybe even 6 times their EBITA, and so depending on their margins. A practice could get, you know, yeah, 80% to 100% of… they could get 120, 130% of collections in a group model, or even more sometimes. So the potential for the initial purchase price is usually higher with a group.

But what’s more exciting about it is what can happen with the stock, and so… and this is something that I explain to doctors, and I teach courses on this stuff, but…

Group platforms are typically valued between 10… right now, between 10 and 12 times. Before COVID, when multiples were higher, it was up, like, 14, 15 times. But let’s just say, for sake of argument, somewhere between 10 and 15 times EBITA is what groups are worth.

And private practices are worth, you know. 4, 5, 6, right? So, every time a group partners with or acquires a practice. They are doubling or tripling their money on that acquisition, right? So…That is… that is a tremendous amount of upside. I mean, imagine if we’re in the rental home business, right? And you and I, Gary, we’re gonna start a business, we go buy 10 rental homes, and we paid a million dollars each for these rental homes. We spent $10 million, we got 10 homes, we got renters, they’re paying the bills, and it’s all good. Well, what if, like.

Just magically, after we bought those homes, they were immediately worth $2 million, and we still had renters paying. That would be a heck of a great business model, and we would be buying as many homes as we possibly could if that was the case, right?

That’s not the case, but that’s actually how it works with dental groups. So every time we buy a practice, it’s instantly worth 2 or 3 times more on that platform. The reason for that is, you have to look at in terms of, like, what an investor can put… where they can put their money. And so, there are multiples that are published by industry. What I mean by that is, every industry has kind of a range of EBITA multiples that an investor would pay for their company. So on the low end of the spectrum, you’ve got, like oil and gas, railroad, automobile manufacturers. These are companies that are hugely capital intensive, a lot of geopolitical risks, you know, low margins, typically, and it’s just they’re a difficult business. Those typically range, a lot of them, 3 to 8 times EBITA multiple. On the other end of the spectrum, you’ve got, like, software companies and apps and beverage companies, where these kinds of companies, once they achieve scale, you’re covering your overhead. Every additional user, or every additional case of Coca-Cola sold, is massively profitable, and so those kind of companies are, like, 20 to 25 times EBITDA on their multiples.

If you look at in the middle, most companies land in the middle, so…Companies that are between 10 to 15 times, a lot of those are what we call multi-site retail model. Think about restaurants, think about hotels, where you’ve got a physical location, you’ve got to have staff working there, people coming in, customers coming in, right? That’s a physical multi-site retail model. Well, that’s dentistry, that’s chiropractic, that’s med spas, that’s, you know, there’s a lot of kind of multi-site retail healthcare models, and all of them are kind of valued in this 10 to 12 to 15 times. So, from an investor’s perspective, I’m looking at the opportunity to invest in a dental group. It’s like, where can I put my money, where I can put in 50 million bucks, and they’re going to want to get, you know, 3 to 5 times that amount out in 3 to 5 years. And so, they’re looking at industries that are stable, that’s dentistry, that have high margins, that’s dentistry, that are not fully consolidated. There is an article that just came out this week in Becker’s, that said the industry is about 16% consolidated now into groups. And I’ve seen different numbers from different reports, but that’s one that I just saw this week. And so.

Yeah, it’s kind of 1 out of 6 doctors in the country are already in a group. That means 5 of the 6 are still not, right? So there’s still a lot of people who haven’t joined. But this…

Gary Takacs: No, it’d be.

Ian McNickle: opportunity.

Gary Takacs: That would be different, say, to stay in healthcare for just a minute than, say, optometry.

Ian McNickle: Yeah.

Gary Takacs: Optometry, that number is, A number I saw recently was high 80%, almost 90% of optometry.

Yeah, think about the last time you saw an independent optometrist.

Right?

Ian McNickle: Yeah.

Gary Takacs: You know, very different. You know, and I was remiss in not introducing you in the very beginning as the CEO of Icon Dental Partners, so I’m doing a mid-interview introduction.

Ian McNickle: There we go, that’s fine.

Gary Takacs: And is the CEO of Icon Dental Partners. You know, we didn’t talk about this ahead of time, but is it okay if I put you on the spot?

Ian McNickle: Sure.

Gary Takacs: Alright, I, I, I, I…I’ve had the… and I… true disclosure, I, I’m involved with Icon Dental Partners. I’m part of the executive team. My, specific title is VP of Practice Optimization.

And I am absolutely thrilled. I was one of the very early team members to join the team back in 2022. We had a great meeting together, you and I, along with Dr. Jeremy Dixon, our co-founder in Portland in 2022. And I’m very excited about what you’re doing. But where I want to put you on the spot is, talk about what’s different about Icon.

Ian McNickle: Hmm, yeah. Quite a few things. So we have a pretty different origin story, you know, compared to a lot of groups. And nothing wrong with that. I mean, most groups are started, you know, by a doctor, and they…get some locations together, maybe they get some doctor partners, they eventually get some bank financing, they take it as far as they can, and then eventually they have to get investors and kind of take it to the next level. And so it’s kind of like building it on the fly as you go. And that’s how almost every group that you can name and think of, that’s kind of how almost all of them started and grew.

We took a very different approach, because Jeremy had built a group himself from 2005 to 15. He’d already done it for 10 years. I had built multiple companies, so I’ve been an entrepreneur now for 20 years, and so…We took a very different approach to designing icons, so I spent about 18 months, and I interviewed over 200 doctors, general dentists and specialists, and I asked them a bunch of questions around, You know, what would appeal to you about joining a group? What kind of things would you like to delegate? What stresses you out about private practice? What are your frustrations? But then the flip side of that coin, you know, what horror stories have you heard about groups? Why would you not want to join a group? So I spent a ton of time talking to doctors to understand what they wanted.

And so, the premise that Jeremy and I started with was the number one problem we need to solve is keeping our doctors happy. How do we recruit and retain doctors long-term? And so everything in our business model is based on that. Whereas most of these investor models are based on how do I maximize the shareholder value for me, the investor, our model is, how do I keep my doctors happy and get more of them, right? To stick around and join us, right? And so, as a result of that philosophy, so many things in our model are just really different in how we do things.

I’ll give you just a few kinds of quick examples. So, one of the things that we did was, you know, a lot of doctors will say, oh yeah, you know, I want clinical autonomy, and then they join a group, and the group says, sure, you can have clinical autonomy, and as long as you use this lab, or this supply company, or this implant system, or whatever, and that’s not autonomy, right?

Gary Takacs: And so… That was in name only.

Ian McNickle: Right, right, yeah.

Gary Takacs: But in actuality.

Ian McNickle: read the fine print. Right. And so, when we launched, so I started, you know, ICON was, again, kind of an interesting approach. We operated for a few years as a management support organization, really an MSO. With the idea that we had about 20 practices that we officially launched with, so in July of 2024, we actually launched our platform as a DPO, but we’ve been around for 3 years prior to that, researching, building, and I really spent a lot of time on it to develop and fine-tune the business model to get it exactly right before we launched.

And so we did a lot of things that were… I had my 20 co-founding practices, I had all these doctors, were partnered with us, and I could say, hey. here’s a problem, here’s a solution, what do you guys think? And so they would be a really great sounding board for me to really kind of innovate the model as we went. And so, a lot of things we did, like, that we built into the model, the doctors, you know, have true clinical autonomy. It’s very clearly defined in our legal documents, because all of our doctors kind of kind of co-wrote, essentially, the documents with us, right? So, the doctors have full control over their schedules for themselves and their team members, they have full control over all staffing decisions, hiring and firing, setting of their pay, setting of their benefits.

They have a tremendous amount of control over those types of things. And so… and that’s… our goal is to make it look and feel and operate as much like private practice as possible, but still getting the synergies and benefits of a larger platform. So it really is a kind of have-your-cake-and-eat-it-to situation.

Gary Takacs: But, you know, to the public, or your patients, nothing looks different.

Ian McNickle: No, nothing looks different. They have no idea that you’re a part of ICON, and there’s no reason for them to know, because you’re still…

Gary Takacs: and name, we’ve chosen, and other groups do this as well, but we’ve chosen not to brand ICON, you know, as a practice name to the public, like, say, Aspen Dental has. But instead, whatever the name of the practice is, it remains that name, you know, in your community. So, as far as the appearance, it’s the same.

Ian McNickle: Exactly, yeah, exactly. And that’s obviously by design. We’re partnering with… the doctors in our group are impressive. They are, you know, successful, they’re well-known in their communities, some of them are running study clubs, a lot of them lecture and teach on behalf of organizations or schools or whatever, so…it’s a… it’s an impressive group, and the last thing I would want to do is partner with a doctor who’s got a great reputation in their town and then change the branding. That’s… to me, that’s just, like, a terrible idea, and so we never, ever would want to do that.

You know, other things that we did in our model, though, that are pretty intriguing, I think, and good for the doctors, one of the things that came up frequently in my research was you know, hey, Ian, Icon sounds great, but here’s the thing, I’m really growing a lot right now, and I feel like if I join you today, I’m leaving all this money on the table. And that is a flaw in any group model that… so, like, we issue only holding company stock at Icon, which is the most lucrative, so that way the doctors can have the most financial upside. Which, so there’s a lot of benefits to holding company stock. The one downside to holding company stock is there’s a disconnect between individual practice performance and stock performance. So, you could have practice A, doctor’s killing it, EBITA’s growing, they’re doing amazing, practice B, doctor takes their foot off the gas, revenue, production drops, all that. Their stock is going to go up exactly the same amount, because it’s holding company, it’s based on the overall platform.

So that’s a problem. So what we did is we created a really cool way to reward doctors who grow their EBITA. They just get new stock every year they grow. And we did it in a really clever way to do it so that doctors don’t get killed on taxes when they get this additional stock. So, we’ve solved a bunch of problems that exist in the traditional group model that are much better for doctors, because again, my thesis was, how do I keep my doctors happy, recruit, and retain them long-term? Not trying to maximize shareholder value. Now, the irony is by doing what we’re doing, we are going to maximize… we’re going to get phenomenal financial results with this model, because if you can… and this is where a lot of these kind of corporate investor groups get it wrong, is they focus on well, how do we get more profitable? Well, we gotta have everybody on the same supply company so we can negotiate that down, and we gotta… one lab so we can negotiate that down, and that’s… they just standardize and negotiate, and that’s kind of their only trick in their playbook, and it completely ignores how most… if you look at anybody who’s read business books, right, Jim Collins, like, there’s a million of these gurus out there. 

What do they talk about? Do they talk about cost cutting? No. They talk about culture, people, process, product, right? And so, if you focus on keeping the doctors happy, supporting them, empowering them, giving them tools, giving them options for… the cool thing, like, how we operate is our doctors have so much autonomy that there’s a tremendous amount of variety in what they’re doing. And so, our operations team, as you know, Gary, we can look across the platform and say, oh, wow. What is this doctor over here doing? They’re killing it, that’s incredible. Let’s find out exactly what they’re doing, and then share that information with all their other doctors, because they’re all business partners, right? And so all these doctors are helping each other, collaborating, at not just a clinical level, but a deeper level, at a business level, because why wouldn’t you help each other? You’re all business partners at the holding company.

So it creates some really cool synergies that we’ve done to make this a place that doctors really want to be. I love it, I love our model.

Gary Takacs: You know, you mentioned earlier a potential risk of the holding company stock. Is that you may have a practice, you know, in the group that isn’t performing up to the other standards. But you, you know, you did address that by… in terms of operationally, by bringing on this guy that can help with practice optimization.

Ian McNickle: Yeah, yeah.

Gary Takacs: Wait a minute, wait a minute. That’s me.

Ian McNickle: That’s you.

Gary Takacs: You know, and I want to emphasize the culture part of it. You know, recruiting today, can we agree that staffing a dental practice with team members, associate doctors, office managers, whatever, hygienists, whatever, is a challenge today?

Ian McNickle:  Yeah.

Gary Takacs: I think we’d be sticking our head in the sand if we didn’t recognize that. However, we have some recruiting power.

Ian McNickle: Yes. 

Gary Takacs: In terms of not only in our team, but in terms of methodology, to fill open positions really much quicker than a dentist might be able to do on his or her own.

Ian McNickle: Absolutely.

Gary Takacs: And we’ve had some really great recruiting of associate doctors. In other words, solo doctor practices that have the opportunity to grow. And they have the space to grow, they need an associate doctor there, and have had a lot of success recruiting where previously dentists on their own might have limited success with that.

Ian McNickle: Yeah, yeah, I mean, across… we got, you know, dozens of practices across the country at ICON, and across the entire platform, at any given time, we only have one or two job openings across the platform for doctors, because our HR and recruiting team, what we call people and culture, is their department. They are just really, really effective at kind of casting this net of they’ll… generate a bunch of potential candidates, they will do the initial interviews and screening, they’ll do the background checks, they’ll… they’ll kind of do all that work, which is a huge amount of time.

And then they’ll present those candidates, whether it’s a hygienist, an associate doctor, an office manager, whoever, to the doctor, and then the doctor does the final interviews, thumbs up, thumbs down. The hiring is always the doctor’s decision, but we do all the work to get them the good candidates. And so, yeah, the doctors love it. It saves them a ton of time, it just… it solves one of their biggest headaches, along with a lot of other stuff that the support team does as well.

Gary Takacs: You know, can I take… I’m gonna call her out by name, because I appreciate the amazing work that her and her team does. But normally, what a company might call an HR director. That’s Ashley Brooker. What’s her title, Ian? I think the title says something about…

Ian McNickle: Yeah, VP of People and Culture.

Gary Takacs: VP of people and culture. Yeah.

Ian McNickle: She’s awesome.

Gary Takacs: She and her team are amazing at really helping us build a company where it’s all about people and culture.

Yeah.

Ian, there’s a lot of lip service in groups on being, you know, doctor-centric or doctor-led. However, I think when you get out the magnifying glass, a lot of groups fail in their organizational structure to back that up.

Ian McNickle: Yeah, true.

Gary Takacs: Am I… am I speaking the truth?

Ian McNickle: Yeah, no, it’s true, especially when investors get involved.

Gary Takacs: Yeah, I can say Dr. Lead.

But if there’s an investor involved, and the investor has the majority of the board seats, then that isn’t quite true then, is it?

Ian McNickle: Yeah, yeah, I mean, and hopefully they partner with an investor that is going to align with that philosophy and not muck it up, but it happens. Obviously, a lot of them get mucked up. Yeah.

Gary Takacs: Well, I know I’m going behind the curtain a little bit here, but talk a little bit about the current board structure in Icon Dental Partners.

Ian McNickle: Yeah, I mean, our board… Yeah, I mean, our board and our ownership structure are both, I think, very revealing in terms of what our priorities are, and who are we trying to keep happy and reward? And so.

When I started the company, obviously, I owned the company, I controlled the board and all of that, and when we decided, you know, again, the problem Jeremy and I set out to solve was, you know, how do we recruit and retain good doctors, great doctors, keep them happy long-term, right? A lot of that has to do with control, because I love, and our doctors love, the business model that we’ve developed and evolved over time.

And we are privately held, so one thing, I’ll get to the board here in a minute, but I think it’s important for your listeners to understand, like, if you’re looking at a group, you really want to understand what does the ownership structure look like. Generally, when you have an investor, which most groups do, that are our size or bigger. You’re gonna have the investors owning, like, 50% of the holding company, doctors about 40%, management about 10%. And we thought about going down that route as well.

And ultimately, we talked with investors, we decided, you know, we can do this better without them, and so we’re just working directly with banks. So our financing is all entirely bank financed, and because of our really intelligent financial structure, banks are happy to give us tons and tons of money. So…we… the 50% of ownership at the holding company that was allocated originally for investors, I gave all of it to the doctors. So at ICON, the doctors literally own 90% of the holding company. That is unprecedented when you get to companies, you know, groups of our scale. It just doesn’t really happen.

And so… so that’s the first thing to understand, is we’re privately held, we don’t have investors, and so that allows us to have tremendous control over how we want to optimize and run the business and put our doctors first. The related piece to that is the board, like you alluded to, so I voluntarily gave up control of the board, and we said, okay, we’re going to expand the board up to a total of 9 positions, me and the other 8 would be for doctors.

And so, we currently have 6 people on the board, we’re about to probably add a 7-person here really soon, and they’re all doctors except for me. And so, the idea is, if we bring on investors someday, which I am sure we will at some point in… down the road, I don’t know, in 2 years, 4 years, who knows? But some point in the future, we’ll probably bring on investors.

When that happens, I want my doctors to feel very comfortable that, you know, they trust me or they wouldn’t be part of ICON, but still, brand new doctors who haven’t joined Icon, they don’t know me, and so they’re like, well, you know, how do we know you’re not just going to sell us out to some investor? If some investor comes in Ian, and gives you a sweetheart deal, how do we know you’re not going to just sell us down the river, right? It’s a very valid and good question.

So, that’s one of the main reasons I put the doctors in control of the board, and the board has to approve any deal with investors, so I have no power to do that.

Gary Takacs: The simple answer to that question is, you can’t. 

Ian McNickle: I can’t. I cannot. The doctors on the board who represent the greater overall population of the doctors in our group, they have to approve anything that gets done with investors, and so there’s no way we’re going to agree to a deal with investors that changes all the secret sauce that we’ve built into our model that our doctors love. That would be stupid for us to let investors change that, and so we won’t.

Gary Takacs: You know, as you and I, back to our beginning meetings, you know, back in 2022, and you were describing how this was designed. You really had me at hello.

Because it really was… and, you know, certainly, Dr. Dixon’s experience weighed in the design. It’s really designed.

Gary Takacs:  You know, to benefit our partners.

Gary Takacs: You know, so we talked a little bit earlier about a more traditional, you know, situation of transition for senior doctors, but the truth is that the right group, the right DPO, could be appropriate at almost every stage of career. For sure. Can you talk about why a younger doc… say maybe a doctor under age 40, might consider.

Ian McNickle: Yeah, I mean, you raise a good point, because our model is a partnership model, it takes a lot of the day-to-day stressors out of the doctors’ lives, and our team handles all that stuff, so they can really focus on clinical, right? And patients. And so. If you are a younger doctor out of school, a lot of times you have a ton of debt, right? Almost always you’re going to come up with a ton of debt, and buying a practice on top of your student loan debt is a bridge too far for the vast majority of doctors.

So, a lot of times, they’ll join a group or join a private practice, and they’ll work for years to try to pay down that debt to the point where maybe they could buy a practice, if that was the case. In fact, what they’re interested… now, a lot of younger doctors are not interested in really ever owning a practice.

But what we decided to do in our model was we want to treat all doctors the same. Like, if you’re a doctor, and you’re contributing, and you would like ownership in the Icon Holding Company, you can have it. So…the associate doctors, they have an opportunity at ICON to buy in if they want to do, like, a payroll deferment and just kind of save up money gradually over time and use that to buy stock. They can buy the exact same holding company stock as the owner doctors who sold their practice, and so…it allows everybody to buy into what they can afford, right? So if I’m a 30-something-year-old, and I know I can’t afford to buy a practice for a long time, well, what if you could take $1,000 or $2,000 a month out of your paycheck. Start stocking it into an escrow account, and then use that to buy shares at the holding company, that’s going to be a tremendous opportunity to generate, you know, significant wealth long-term, because it’s like a 401 , right? You want to start saving early and let that compound interest… well, this is kind of a similar situation. You want to try to get stock earlier in a company’s existence so that it grows over time.

And so. whether you’re a younger doctor, or a mid-career, or a doctor closer to the end of your career, the partnership model has really got something to offer everybody. Now, in our model, we’re partnering with doctors that are going to work at least 5 more years, but frankly, as you know, like, one of our doctors I recently partnered with, he’s in his early 70s, but the guy’s fit, passionate, loves dentistry. He’s like, Ian, I got… I got no hobbies outside of dentistry. If I had retired, I’d be bored, I’d be back in the chair, like, I want to keep practicing, and so…

Gary Takacs: I do this as long as I can, as long as I’m providing the quality of care that I insist on. I want to keep going. We’ve got owner doctors from their mid-30s to their early 70s. I mean, and it is everybody in between. So it’s like, as long as you.

Ian McNickle: Are okay with kind of working for 5 more years, or more if you want.

Cool! Welcome aboard, right? Like, we’d love to talk with those folks.

Gary Takacs: Yeah, yeah. Well, and I am absolutely thrilled with the work that you are doing with Icon Dental Partners. I’m thrilled to be part of the executive team. You really have designed an innovative model. I’d like to invite our listeners, if you’re interested in learning more, a couple of places. I’ll put these links in the show notes, but, you recently produced a video, a longer format video about some of the details about how ICON is structured and why it may make sense. We’ll put a link to that video in the show notes. You’re also welcome to visit icondentalPartners.com , the website. Feel welcome to visit there. There’s a why Icon page, it’s right there, you can click there, but we’ll put a link in the show notes.

If you’re alright with it, too, and the other thing we can do is provide a scheduling link to your calendar. If any of our listeners would like to talk to you directly, feel this may be of interest to them, we’ll put your, scheduling link in the show notes, so they can schedule a one-on-one call with you to kind of just, you know, think of it as a discovery call. Learn more about Icon, Discover if it might be a good fit. Are you okay with that?

Ian McNickle: Absolutely, I’d love to talk with your listeners. If they have any questions, happy to chat.

Gary Takacs: Yeah. Well, I really appreciate you being available for this interview, and, kind of our resident podcast expert on groups, you know, the truth is, I’ll bring it back full circle, groups, can be, useful, in terms of you know, individually, in terms of you partnering with a group, it can give you leverage that you can’t quite do on your own. And financially, it can mean the difference between, you know, being able to retire, you know, with the resources that you deserve, instead of trying to, you know, push that big boulder up the hill by yourself.

You know, there’s a lot of challenges. Sadly, our association, the ADA, says, the American Dental Association says that only 3% of dentists at age 65 can retire without reducing their lifestyle. And I’m on a mission to change that. That’s sad to me. That’s very sad. Dentists deserve better than that.

And, I think, groups, and the right group could make all the difference in the world in terms of where you fall on that statistic. You know, you think about what a dentist has gone through, to, to become a practice owner. You know, first of all, they have to, they have to excel in undergraduate to get into dental school. Yeah. They’ve got to survive dental school, which.

Ian McNickle: Yes.

Gary Takacs: Isn’t a given. They have to pass the boards, they have to make it through the early stages of their career to get to a point where they become a practice owner. There’s a lot of speed bumps along the way.

Ian McNickle: For sure.

Gary Takacs: And then once you have a practice, in a way, the learning is just beginning, you know, in terms of how to master, become a practice owner. But you’ve really put together an innovative model, and I’m excited to be part of it.

And, really appreciate the time that you’re spending with our listeners to help better unpack this, better understand it.

Ian McNickle: Yeah.

Gary Takacs: I’ll just ask one more… is there anything else you’d like to share before we, before we wrap up today?

Ian McNickle: Yeah, just that I, you know, appreciate you giving me the time today, and I agree, like, when we met initially, you and I met years ago, it was an instant alignment of values. You know, you said some things to me that I was like, well, I was sold on you pretty quick, too, because you have this track record where, you know, you’ve been in dentistry for over 40 years now, even though you’re only, like. 45 years old, I think, so…

Gary Takacs:  I did start…young.

Ian McNickle: You started young, yeah.

You know, you said you teach your clients about having a work-life balance, about having the resources you want when you retire to achieve and live the lifestyle you want to achieve, but not in a greedy way, just in a healthy way. And I was like, that’s perfect. That’s exactly what we’re trying to do for these doctors, is give them less stress. Have it be a more enjoyable ride along the way as you’re going… I mean, we all spend a huge amount of time at work, right? Dentists have a high suicide rate, they have a high divorce rate, it is a stressful, lonely, crappy job sometimes. And so…

Gary Takacs: It can be.

Ian McNickle: It can be, right? And some doctors are super happy, and some are not. And so, to the degree we can effectively implement this business model, we can change, you know, change people’s lives, I think, honestly. And a lot of our doctors are much happier as a result of that. So, you and I are very much aligned in what we’re trying to do for the profession. I think that’s why we hit it off so quickly.

Gary Takacs: Well, we’re certainly kindred spirits in that, you know, for sure. I happen to believe, with every ounce of my DNA, that dentistry rocks, say at ROX is we have the ability to change people’s lives every day. Could be something we do clinically, or it could be something we do behaviorally. Yeah. But I also believe that, you know, looking, having an open-mindedness of taking a look at this may be something that might match up very well with our listeners. 

You know, our listeners really are exceptional, and that’s why they’re spending their own time on self-improvement, and I think there might be a very good fit. So I would invite our listeners to, you know, click that link with the video, the longer-form video. It’s about 40 minutes or so, but it goes through all kinds of details. You’ll want to take notes. But also, you may want to schedule a one-on-one meeting with Ian to talk about how this might fit your plans and your goals. On that note, Ian, I want to take a minute and thank you. 

Thanks for the privilege of your time today. Thanks for sharing your wisdom with our listeners. We’ll look at bringing you back periodically to bring updates and share what’s going on with ICON. Also want to take a minute and thank our listeners. You know, here at the Thriving Dentist Show, we appreciate each and every one of you. 

Thank you so much for the privilege of your time, and we look forward to connecting with you on the next Thriving Dentist Show.