An interview with Dr. Howard Farran

 Dear all,

One thing whcih I admire of Dr. Howard Farran is his passion for punctuility and the ability to take quick decisions. I feel that has been one of his reasons fro success.

So read on and note that the interview is open for discussion. 

If you would not have become a dentist what would you have been?

I would say a journalist, or involved in media somehow. Actually, I’m already doing it. I have a huge interest in reporting what I see and sharing it with others. There’s a show on television hosted by Anthony Bourdain that reminds me a lot of what I’m doing. Bourdain travels around the world and shows all the different foods that people eat. I find it absolutely amazing. There are seven billion people around the world, and everyone is the same. They all need food, water, clothing and shelter. They all have religion, government, politics and sports. I love being able to share what I see in my own travels, regarding dentistry. Seeing all the slight differences in how they develop their dentistry under different constraints of money, whether they have insurance, whether the government subsidizes it, their access to capital. I love telling people about these things.
 
How do you take feedback from patients?
When I was 18 I thought that to become successful the hardest part would be learning math. Now that I am 50 years old, looking back, I realize that was the easiest part of life. The hardest part of life is dealing with humans. The human brain weighs about three pounds, has more than one trillion circuits, and it is affected by genetics, diet and chemicals. People are so complex. Remember, you’re not working at a restaurant where everyone is happy to see you. You work in a dental office. Your patients are scared and emotional. It’s going to cost a lot of money, and you’re going to hurt them. Try to be compassionate. Listen to them.

After the economic meltdown, did you downsize?
No. We followed what Michael Dell (founder, chairman and CEO of Dell, Inc.) did in previous recessions. Dell said that during a recession, you need to double or triple or quadruple your advertising to replace all your current customers who now don’t have money to buy anything. What my practice did during this economic downturn was double our marketing efforts. We did direct mail, a Facebook page, Twitter accounts and Google ads. We did everything we could because we knew it would eventually pass.

How to maintain quality while taking care of overheads?
About 50 percent of Americans only shop based on price. The other half is not as price sensitive and is willing to pay extra for something with more bells and whistles. Let’s use cars as an example – there is the low-cost Honda Accord and the higher cost Acura RL. About half of the population will go for the Accord. These are the people who shop on price. The other half of the population wants the Acura. These are the people who are not as concerned with price.

These same two markets exist in dentistry. But what I see dentists doing wrong is they have low-cost prices but are doing high-cost procedures. If I’m building an Acura but am only charging for an Accord, I’m going to have high overhead. Serve your market.

The low-cost market wants low-cost extractions, dentures, partials, silver fillings and removable. If your folks are willing to spend a higher cost, then you’re going to charge more, and your overhead will go down.

The second variable is time. We only manage three things: people, time and money and we routinely see dentists with 50 percent overhead scheduling 45 minutes to do a crown and dentists with the average (64 percent overhead) spending an hour and a half to do the exact same crown. You need to build the technology and the capital and take continuing education courses so you can do dentistry faster so it can cut down on your overhead.

Class practice or mass practice. What do you prefer?
The bottom line is demographics, demographics, demographics. I see dentists all the time go listen to some famous dentist lecture in New York City or New Delhi or the richest part of town, and then they try to go back to their small town practices and implement the same thing, and it just doesn’t work. Demographics don’t lie. If you’re in an area where the population is mostly in the bottom economic half, you need to focus on the bottom economic half. The biggest companies always are the ones that are tops in cost leadership; they have the lowest prices. Southwest Airlines is the lowest cost airline, they’re the biggest. Wal-Mart is the lowest cost distributor, they’re the biggest. Ikea is the lowest cost furniture producer around the world and is number-one in furniture. If you want to become a major success, I would aim toward the middle class.

Your comments on GDP’s doing orthodontics.
Farran: If you want to be a community dentist and treat your village, you need to learn how to do all kinds of specialties. Now if you’re in a major market that has 5,000 or more people, if you absolutely have an interest and love and want to do a specialty whether it be periodontal treatment, root canals or orthodontics, then do it. You’re going to practice for 40 years. Have fun. Do what you enjoy. If you want to do orthodontics, go for it. If you’re busy and you don’t need to do orthodontics, and there’s an orthodontist next door who you like, then refer. When my four boys were little, if I put them in the sand box with nothing in there they’d leave and go find something else to do, but if I put them in the sand box with shovels and Tonka trucks to play with, they’d stay in there forever. So just have fun and do what you enjoy.

Dear all,  

There are many questions on all aspects of clinical practice and pls read the views of Dr. Howard Farran on each of them.

Not just read but also try and implement his suggestions in day to day practice. 

How you been ever sued by a patient?

I have never been sued by a patient. The main reason, if not the only reason I have never been sued by a patient, is because if they want their money back, I refund the money. A lot of dentists won’t refund the money because of their ego and pride and the patient feels the only way they’ll get it back is to go sue them. So give more refunds, you’ll have fewer lawsuits.
 
Do you do treatments & afterwards the patient could pay in installments?
No. I am not a bank. I am not a credit card company. I am a dentist. If you want to make payments, then use your credit card. If you want a loan, then go to a bank. I am not a banker.
 
When & how will you retire from dentistry?
About five seconds after I die.
 
Your plans after retiring from dentistry
Retire to what? I’m going to quit doing what I love so I can sit on the couch and watch TV? If I really wanted to travel the world, I should do it while I’m a dentist and still making money and meeting dentists around the world. I have no idea what I would retire to.
 
How should a dentist plan his retirement?
A dentist should seek professional advice. We have many courses on Dentaltown. Doug Carlsen is a great read. Doug Henderson is a great read. For every nickel you want to live off, you’re going to need a dollar. Every nickel per year is going to cost you a dollar. The average retirement plan is earning about five percent. So that means for every dollar that I want to retire off of, I have to have 20 dollars in the bank. So if the average dentist makes $100,000 a year, they’re going to need $2 million to make $100,000 per year. And I’ll tell you what, the best way to make that $100,000 a year? Stay healthy in mind, body, spirit and soul, and keep working.
 
Lab offshoring. Your comments
Competition is what is good for the consumer. When you need a car, you want a dozen different major car companies all trying to make you the best car for the lowest price. I’m old enough to remember before there were any foreign cars in the United States from Germany or Japan. Every weekend a third of the households were out on the driveway fixing up their cars. Then slowly these very small Volkswagen Beatles started coming in, and everybody laughed at them, but what did it do? GM lost half its market. Japan and Germany raised the quality of cars in the United States. I think offshore labs have brought a massive increase in competition in the United States as well.

We continue with the interview of Dr. Howard Farran

•         How was the idea of DENTAL TOWN born?

In the late 90s, I turned my focus on running my practice as best as I could – and in doing so, I decided to obtain a Master of Business Administration degree at Arizona State University.

The only reason I got my MBA is because I learned all my business knowledge from my father. My father was a massively successful businessman but he did it all on pure instinct. I always wondered how much my dad taught me was reality vs. false. I always wondered if the lessons he taught me even had the right terminology. I was just wondering if I was running my practice the right way. I was a businessman, naturally, but I had no formal instruction. So I wanted to see if there were things I could formally learn that would augment what I’d already knew.

It was toward the end of my coursework when it came time for me to fulfill a final thesis assignment. The Internet was a relative infant but it caught my full attention. My chosen thesis topic was “How the Internet Would Affect Dentistry."

I really focused my thesis on commerce vs. community. What I saw on the commerce side was that dentists were pretty much all solo practicing individuals. They might practice in the same medical building as five other dentists and will have never gone to lunch with any of them in their whole lifetime. The moment a sales rep came into the office to sell something is when the shy introvert scientist dentist would ask, ‘What is my neighbor using?’ Those salespeople were actually a form of community. Back then, everyone saw the Internet affecting dentistry by merely selling supplies, but I was thinking, “OK, you’re the only dentist in a small town of 2,000, you have a six-year-old girl with a big abscess and you don’t know whether to do a root canal or pull the tooth or whether you should put in a space maintainer or start her on ortho, etc.” I thought “What if these dentists could all get into the same Web site and talk to each other?"

I worked very hard for 10 years as a dentist. I paid off my debt. I had saved up a ton of cash and I took all my money and borrowed everything I could on my practice and my house and I hired 19 programmers to program 40 hours a week, 50 weeks a year to get a wWebsite going with all the functionality that I wanted. And in March 1999, Dentaltown.com went live.

When I conceived this whole thing, I knew that it would serve a huge need for some. I was realizing how fun that was because everyone was just talking in the way humans like to talk – straight to the point, no punches held and I thought this is the way dentists need to get their information. This was the way dentists needed to talk.

•         The difficulties you faced in print edition of DENTAL TOWN.

There is still a cultural human reality that dentists like to get in their easy chairs and get a beverage and some popcorn and read magazines. I would get dental journal after dental journal after dental journal, and I was an extremely motivated dentist, but the articles just didn’t interest me. They were usually too fundamental in nature, like they’d talk about cancer in rats and weird diseases that you’d never see in your lifetime. I never really read a dental journal and changed the way I practiced dentistry. The message boards on Dentaltown.com had massive amounts of content that I thought we could break down and say, "This is really what you need to know about." You can go online and read any newspaper, magazine or book you wanted, but the human side of you wants to go out on your porch swing and read a book or a magazine.

At the same time I was pondering a print version of Dentaltown.com, I came across the history of Sesame Street. I was inspired by this group of grad students who wanted to develop an educational program for children, but kept getting shot down by supporters because "kids would rather watch Bugs Bunny."

These grad students went back and took classes of 25 five-year-olds and they started playing them the top five cartoons, and they were able to factually establish that at any given 30-second interval, only 30 percent of the children were actually paying attention to the TV while the other 70 percent were walking around or playing with their toys. They took that data back to the advertisers and said, "Do you buy into this data that only 30 percent of the kids are looking at any given 30-second interval?" and the advertisers agreed, “You’re right, we’re still going to advertise our cereals and toys and things we want these kids to tell their moms to buy.” So the grad students asked the advertisers for funding if they could get 30 percent of the kids to watch. And the advertisers said, “Yes.” The grad students wound up getting more than 70 percent of the kids to watch at any given 30-second interval.

I was so charged up by this notion of measured content that I started to seriously pursue development of a magazine. The book would take the content of 100,000 questions and answers in a month and publish the top three discussions that most dental colleagues are interested in. While other magazines relied on editors who weren’t dentists and who used their gut feelings in trying to figure out what dentists needed to be reading about, Dentaltown Magazine armed the editor with data from the message boards and showed, "This subject on CPR – no one cares about, but the subject on TMJ, everybody’s going nuts over!" For the first time in dental history, the editor was connected to his or her readers. Actual measured content opened up a whole new format. This publishing model has been a revolution in dentistry.

Dentaltown Magazine has grown leaps and bounds since we started publishing it. Its success has even led to spin-offs such as Orthotown Magazine, which uses the same publishing model as Dentaltown Magazine – but for orthodontic specialists.

•         The difficulties you faced in http://www.dentaltown.com.

Launching Dentaltown in 1999, looking back, was at least five5 years ahead of its time. When Dentaltown was launched, not even one percent of dentists could tell you their e–mail address. The hardest thing about Dentaltown was trying to get a new behavior into dentists, and that was getting them on the Internet. The answering service and the ATM machine were two of the biggest job destroyers in my lifetime. When the ATM machine came out would sit outside of a bank and do transactions, 168 hours in a week and not take breaks or need health care or lunches or whatever, a lot of bank tellers were let go. When the answering machine came out, literally hundreds of thousands of receptionists lost their job because now the CEO didn’t need someone answering his phone, someone could just  leave a message. Well dentists and physicians and lawyers still all have a receptionist because they are dealing with the public transaction. So back in 1999 when I started, there was almost nothing alluring to the Internet that a dentist’s receptionist didn’t already do. If the dentists needed a book, his assistant would get it. If he needed to go to a dental convention, his receptionist would make plane tickets and hotel reservations, he didn’t have to go onto Priceline.com. So for many dentists the only thing that made them eventually get on the Internet was to actually talk to other dentists about dentistry.

 Dr. Howard Farran on PRACTICE MANAGEMENT:

• Some tips to identify delinquent patients.

When you go to a McDonalds, you order the hamburger, then they ask you to pay two dollars for the hamburger, then they give you the hamburger. Businesses that extend credit are insane – that’s why we have banks and credit cards and finance companies. There is no banking skills taught to a dentist in dental school. With Visa, MasterCard, AMEX – why in the world would you need to identify a delinquent patient? You’re not a bank; you are a dentist. If a person needs dental services then they need to pay you cash, or they need to arrange their own credit and come in and do that. You are a dentist, not a banker. You have no training to identify delinquent patients and you shouldn’t be doing banking.

• Male dentist – female staff. Any particular hints to manage female staff.

I would say that in watching dental offices for 25 years, you see what doI’ve watched what the most successful dentists do more of, and what do the least successful dentists do less of.? For instance, dentists who advertise have much bigger practices than dentists who don’t. Dentists who utilize technology are much more successful than those who don’t. As far as management, I think that the dentist is the most expensive person in the office and they have the capability of producing the most revenue by doing dentistry, root canal, fillings and crowns. The most successful dental offices don’t manage any of their female staff; they get an office manager whose skills are excellent in HR, in job descriptions, in performance evaluations, and start every day with a team huddle, and then wire everyone up to Motorola office walkie-talkies, and then finish the day with a wind-up recap of the day. I just don’t see any reason in the world that the dentist should be doing any of that – the dentists should be in the operatory doing dentistry. So get an office manager.

• How do you scold female staff!!!

Scolding people is not effective. All relationships are built on love, trust and respect. I think that you have to have effective communications, you have job descriptions, you have regular, quarterly employee evaluations. Again, while you are obsessed about dentistry during a root canal or pulling four wisdom teeth for an hour, you should have an office manager who excels as a people person, as a leader. I would compare it to sports coaches. Yes there are some sports coaches who are known to scream and yell and to have a lot of drama, but those are usually male coaches with male staff. I think it would be incredibly unprofessional to have a male dentists doing this with female staff. Again I would get a female office manager, and if they are really, really good there should be no drama, no scolding, no yelling, screaming – your office should run like a Swiss clock.

• Common mistake made by new comers.

Newcomers are going to make a lot of mistakes and basically it takes about 10 years for the average dental student to have successful dental skills and a successful office. Dentists are book smart, they all went to college, they know how to read books. But the most successful dentists are a combination of book smart and street smart. Street smartStreet-smart people learn information a lot more cheaply. You see some dentists, and if they want to learn anything they need to go spend $5,000 at some weekend course half way around the country. Then you see the street- smart people just get online and pay 18 dollars and take an online CE course on Dentaltown and watch it with all of their staff. That’s a bargain. You are going to learn every lesson one way; you are either going to learn it the hard way or the easy way. All leaders are readers and getting on dentaltown.com when you get out of school, reading the most posts, taking the most online CE, doing all that stuff at the beginning, you’ll learn everything the easy way, which is by learning from other people’s mistakes. If you decide that you don’t have a time to take a lot of CE and spend a lot of time reading and talking to other dentists, then you will learn every lesson the hard way, which is also the expensive way, and might involve some lawsuits or more. All leaders are readers. Be street smart. Learn the most information for the lowest cost.

• What should be the profit margin in a general dental practice?

Most dentists don’t understand what a profit margin is. They include their wages in the profit margin, which is not generally true. For a true profit margin, to know what you are actually being, what you are earning from doing dentistry, you would be paid what other employee dentists in your area are. Like in Phoenix, Arizona, the average associate dentists who works as an employee earns 25 percent% of their production. So in my dental office, when I do dentistry I pay myself 25 percent% of production because that is the true value of a dentist in Arizona doing dentistry. Profit is owning a business from having money or capital employed in a dental business. And I would say the profit margin for a dental office, I see that the really healthy ones are running somewhere between a wide spectrum of eight and 16 percent%.

• What percentage of the professional receipts could be the auxiliary staff salary ?
•
Again, I see two markets. In the United States, there are 117 towns that have more than 100,000 people, and staff salaries are usually anywhere from 25-27 percent%. Now that is being the total cost of having that staff in there, whether that’s health insurance, 401K, uniforms, whatever – all the money it takes to pay those people to work in your office. It’s a much lower cost structure in the rural cities, so in the 19,033 towns in America under 100,000, that percentage of labor is 20 percent%. When you ask, how much to do you pay your hygienists to work there – in a very high cost setting like San Francisco or New York, that can be as high as $50 per hour, whereas in very small town rural cities in the south, that can be as little as $12-$14 per hour.Dr

Dr. Howard Farran continues to answer questions on DENTAL PRACTICE MANAGEMENT 

• After how many years of practice should a strong retirement kit be ready ?

I am not an opponent of retirement plan, I think that right now, around the world, CDs are paying one or two percent interest, so if a dentist wants to live off of 100,000 dollars per year, he is going to have to have 10 million dollars of CDs to retire. What I see, every dentist who thought he was going to retire at 65 realized that if they just stayed on and worked two or three days a week, their paycheck would be a lot more money than their retirement account. I think it’s a healthier lifestyle, I think there is no reason you should throw in the towel and sit on the couch and be sedate and watch TV and play golf. I think it’s very, very healthy for you to have to get up and shower and eat breakfast and go to work and interact with people. So what I would focus on is that business is not a sprint, it’s a marathon. And I’d start asking yourself, why do you want to retire? Some dentists will tell me that they hate root canals so bad they cannot wait ‘til they retire to never have to do a root canal again. And I’m like, why don’t you just quit doing root canals? I mean there are endodontists. Or why don’t you take a bunch of courses on endo and buy some new technology and maybe it will be easier?. If it’s the stress, then figure out why your office is so stressful. Bring in an office manager, tell her that the reason you want to quit is because of the staff struggling or office drama or turmoil or whatever. But what I would focus on is to keep altering your dental office until you didn’t want to retire. And then set a goal that when you get older, you’ll work one hour less and make one dollar more. So let’s say you want to retire at 65 and you’re making $100,00 a year, why don’t next year you try to do it in 39 hours and make $101,000, the next year try to do it in 38 hours and $102,000. Just slowly, slowly taper off is my advice.

• Have you ever been duped by an employee/patient ?

Sure! People are complex. People are – Ssome people think 3% of people are sociopaths. People have depression. People make imperfect decisions. It reminds me of the poem Anyway by Mother Theresa: People are crazy, but treat them kind anyway. People lie, cheat and steal, but be nice to people anyway.

• What precautions you take before you hire an employee ?
•
I think one of the biggest precautions that we take is that, number one, people are so complex so we want to call references and background checksGoogle them to check on their background. Another thing that we do with employees thatwho handle money is we do a credit check. A lot of dentists have listened to me over the years and done this and I get e-mails where they will do a credit check and they are literally bankrupt, and desperate people do desperate things like steal your money, embezzle from you. So yeah, I would get references, I’d call their last employer and I’d if necessary do a financial background check because you certainly don’t want people desperate working for you, especially when they are around money.

• How can a dentist use social media to promote his practice ?

I think the biggest player is Facebook. And you have your Facebook personal page, but I think your dental office should have a Facebook personal fan page and a Twitter account and a Pinterest account and a LinkedIn account, and whenever something fun happens in your office – you havegot an exciting case, maybe one of your staff had a historic event like a marriage or had a baby – then I would post that. I think when you make a human emotional connection with someone it helps facilitate love, trust and respect, and they are more likely to trade with you.

Dr. Howard Farran continues to answer questions ….

 • In spite of our best efforts the professional receipts may not increase

True. Absolutely. There are no guarantees in life. No body said life was going to be easy; they just said it can be very interesting, it can be very challenging. Again, if several new dentists move into your area, that can massively hurt. And how do you have a successful dental office when a tornado came through town and leveled your office? Natural disasters, death in the family – yeah, there’s no guarantees that your receipts will increase.

• Advantages of group practice

Advantages of a group practice areis professional the mostmostly. I mean Iit is so much fun to be able to walk back to your private office and show another dentist the X-ray and the study models. I just can’t tell you how much that would depress me if I weren’t working with two associates. I think Dentaltown.com has really provided a lot of solo practicing dentists a great service by letting them hook up with many other dentists.

• Advantages of solo practice

The advantage of a solo practice is that you only have one Pope, you have a dictator, you can do it your way. When you have a group practice, it’s just like a marriage. So I would say what is the advantage of being a single bachelor and what is the advantage of being married? Being married is nice, you have a friend you can show dentistry and you can talk about root canals, fillings and crowns, it’s great, you can brainstorm with your partner. So all of the complexities of being in a relationship are very nice. But the disadvantages are, sometimes there is drama with your partner. Sometimes there is a lot of bending and giving. It’s so easy as the only owner, you can have it your way, you can make this hamburger with our without the cheese – it’s your call. It’s always going to be tough when you always have to negotiate every decision you have to make with someone else.

• At times inspite of your best efforts you may not find the best staff. What is to be done?

I would say that in my 50 years of life, when has any sports team been done with their best staff? It seems like every body whoteam that wins the World Cup in soccer shows up next year with and a third of the new players are new. Everybody Every team that wins the Super bowl football team, there’s at least a 25 percent % turnover. So I just don’t know when you are ever going to have the best staff. And just when you thought your staff was perfect, someone can die, someone can move, someone can decide they want to go back to school. I think that staff is the hardest part about business, it’s the most important part. You only manage three3 things: people, time and money. And business only has three functions: you make something, sell something and watch the numbers. If you get an A on the right people, everything else will fall in line. If you get a C or D in the people, you are never going to catch up. So I would never put your guard down that you have the best people. In fact, I’m sitting here with my Editor Bend Lund right now and yesterday an editor from overseas sent me an e-mail and wanted to know if she could meet me. I don’t even have an opening for an editor, but I swear I sure as hell am going to meet her. I mean for all I know, Ben will be ran over by a car tomorrow, or our business will grow so much that he’ll raise his hand and say, “I need help.” So I think the best sports teams in the world usually have two or three or four full-time employees as scouts, looking at all the up and coming talent. And they want to know – I know in the most competitive industry I’ve ever seen, the NFL, those coaches hire enough stats to have their summary of every single person in college football that’s a starter. So when they decide they need a quarterback, they know every single one of them. And some scout has gone out there and looked and watched them play their game. So man, HR is the hardest – and I want to also tell you one thing: – I don’t even think I’m that good at it. The only thing I’m good at in HR is to know how important it is. But in my dental office, I have an office manager named Sandy Wilkinson and she is far better in tune and connected with those staff than when I did it my self, and the last decision I would ever make would be to fire my office manager and do that myself.