S6 E07: Smart Finances for Dentists

[00:00:00] Wright: Being a dentist is an investment both mentally, physically, and financially. And today we are talking about the financial portion of that investment from student loans to buying your own practice. I'm Dr. Ane Wright.

[00:00:14] Ioannidou: And I'm Dr. FA. And I'm not stressed at all.  

[00:00:18] Wright: Must be nice. Oh my God.  

[00:00:20] Ioannidou: Oh gosh. These are very, very important. 

Yeah. Topics, right. And, uh, specifically the financial planning is really crucial at the beginning, the middle, and at the end of the career of our careers. Right. So I think I'm really glad that we have financial experts Yeah. That are joining us today to talk about how to make smart and strategic decisions at every stage of our dental career. 

So let's get started. 

[00:00:54] Announcer: From the 糖心logo, this is Dental Sound Bites created for dentists by dentists. Ready? Let's dive right into real talk on dentistry's daily winds and sticky situations. 

[00:01:11] Wright: Well, hello. Hello everyone. I'm super excited to get started. I'm excited for today's episode because we are talking about the dollars and the decisions associated with being a dentist. And as someone who just purchased a practice, I really can't wait to jump in. So I'm excited to share, um, this conversation for everybody that's tuning in today is just as much for me as it is for you.  

[00:01:34] Ioannidou: Yeah, I know. It's exciting for us and exciting for the listeners. I'm sure. So, hello everybody. This is super timely and very important for dentists at every stage of their career and at any type of career they follow. Right? Can be private parts, can be academics, can be anything. 

Yeah. So we have brought. Experts here with us today to talk about several financial planning elements and options of the dental profession from the student loans, oh gosh. Uh, to buying a practice even more stressful and managing one practice. What about managing a practice that's even, you know, I don't even want to, it reminds me of my old times, like 25 years ago when I was a solo private practitioner. 

So much good advice for our listeners to think about.  

[00:02:25] Wright: And you know, our last. Finance episode we hosted was all the way back in season one. So this topic really is long of Adue, like you said. It's very timely, especially with a lot of things that's happening, um, during the time that we're recording this. 

So please welcome our special guest to Dental Sound Bites, Dr. Michael Jerkins.  

[00:02:44] Jerkins: Awesome. Thank you guys for having me.  

[00:02:46] Ioannidou: Hello. Hello.  

[00:02:46] Jerkins: I'm very excited to be here. Hello. Um, and this is great. This is awesome. These topics are fun. As a a fellow doctor, we talk to a lot of people that have lots of questions on this, so, um, excited to jump in. 

[00:03:01] Ioannidou: Yeah, we are, we are excited. Thank you. Michael, can I call you Michael and you can call me Effy. You can call me whatever you want.  

I always joke, we are all doctors here, so let's cut a doctor.  

[00:03:12] Wright: Yeah, let's do it.  

[00:03:13] Jerkins: That sounds great.  

[00:03:14] Ioannidou: You, your story is very interesting because you combine skills, uh, from the physician perspective and the entrepreneur perspective, so. 

Tell us a little bit about your background and how everything came together and what exactly you are doing and how Sure. How, how you can help us.  

[00:03:31] Jerkins: That's right, that's right. I'll try to keep it short. Um, but so just, just for background, I am the president co-founder of Panacea Financial. We provide financial services to doctors only. 

Um, all the topics you talked about already, Dr. Wright, that we. We help with. But so, um, like many folks training to be a doctor, we go through lots of stress, but financial stress and I, uh, was very similar. So several hundred thousand dollars in student loans, uh, also, uh, which was, this part was great, but still financially stressful, getting married and having a child in medical school, that was, that was a lot. 

Um, and then. For me, I moved to residency with no money, um, and live month to month was drowning in credit card debt. And I was like, you know what? This is pretty crazy that during the day I'm trusted with like people's health and people's lives, but you know, at home I'm treated a little bit like an adolescent by the financial institutions. 

And I actually tested this out. I said, Hey, I'm gonna go engage with a bank and to see if I can get a couple thousand dollars loan. To pay for. We had an issue with our car and actually our basement flooded all within a week, which was awesome, but so I said, Hey, I'm gonna be a grownup. I'm not gonna, I'm gonna like go to the bank and I'm gonna try to get a loan. 

Well, what I found out was they all were going to decline me or ask me to get a grownup to co-sign. Uh, 'cause I guess I wasn't trustworthy, which again, is pretty crazy. On one hand, I'm very trustworthy. On the other hand, I guess I'm not, and that's because on paper as a doctor, even though I was not. Tech technically full of training, yet done with training. 

I had several hundred thousand dollars of debt, limited credit history, not very much money. And I'm in my thirties and like, what are you doing? So on Excel, I looked horrible. But all of us listening know. That's the dumbest way to think about it. So essentially we identified a problem that our colleagues across Veterinarian Dental and um. 

Um, the physician space had, which is we go through lots of predictable pain points financially and career wise, and no one was really looking out for us and, and understanding this. So we set out to, uh, find a solution and it was a long, hard road of. Lots of twists and turns, but, um, you know, now we've, uh, helped thousands of doctors across the country this year. 

We'll, we'll surpass a billion dollars in financing to doctors and their practices, um, and helped out a lot of folks in our community.  

[00:06:00] Wright: Wow. What an introduction. I can already tell. This is gonna be a great episode. Let's just say that.  

[00:06:04] Ioannidou: Be great. But you know, I just want to make a note here. It's impressive. 

Uh, actually, it's not, not impressive. It's shocking that the more you acquire, uh, academic skills. And the more, uh, um, achievements you have academically, the less attractive you are for financial I institution.  

[00:06:26] Jerkins: Yes,  

[00:06:26] Ioannidou: there is an inverse correlation here, right?  

[00:06:29] Wright: It's that ex, that Excel spreadsheet that he talked about who just looked bad on paper.  

[00:06:33] Ioannidou: Right? 

[00:06:35] Jerkins: So what I learned, right? I was an outsider, right? I was just someone that said, Hey, this doesn't make any sense. I wanna dig in. What I found was essentially you have 4,000 some odd banks that have done the same thing. For a hundred years because it worked. So they don't have to innovate because they've made money. 

So to come along and say, Hey actually guys, there's a group of us out here where this model doesn't really work. They're not gonna listen 'cause they don't need to. They continue to do well and have their structures and it's time tested and I get that. But I said, Hey, like we need something specific to this group. 

'cause off the shelf. Products and off the shelf way of thinking, is it gonna work for doctors?  

[00:07:13] Wright: Oh my gosh, I So we have something in common. I totally feel you, even from your introduction, because I gave birth to my first son while I was in dental school. I was a senior in dental school. I was like going through boards. 

It was just. Way too much going on, which has definitely become my life. And now, you know, as I said earlier, as someone who just bought a practice, I'm ready to dig into this conversation. But before we jump into like all of the nitty gritty, I do wanna talk about entrepreneurship because, um, like I said, I'm, I'm a new practice owner. 

Um, and your background is very impressive. It's non-traditional in such a good way. So can you walk us through how. Someone goes to medical school, but then they end up starting a financial business.  

[00:07:58] Jerkins: Yeah. It's a weird journey. First of all, congrats on the practice. It's a huge accomplishment.  

[00:08:02] Ioannidou: Thank you. 

[00:08:03] Jerkins: Yeah, it's, it's interesting, like I think doctors, um, we generally undersell our abilities to do interesting nonclinical work. I mean, I think by. The, and my, this is my opinion, but my opinion is, you know, we go, uh, and, and emulate what our mentors did in our training, right? And most people doing interesting nonclinical work aren't in the dental school's teaching, right? 

So you're not really exposed to a lot of these types of mentors that are doing this type of thing. Um, but when you actually get that exposure and when you venture out like, um, this sounds really self-important, but we can learn pretty much anything. I think I really do mean that the currency we don't have enough of. 

Is it the iq? It's time. So if you give us enough time on a topic and we had that protected time, or we had the dedication or ability or whatever it is, like we can figure things out. And I a hundred percent, uh, am very passionate and, and, uh, believe that.  

[00:09:05] Ioannidou: Oh, I agree. Completely agree. I mean, if you give me time, I can get, I was thinking if I had time. 

I would definitely get another degree. I mean, we, this is, this is is what we, right. I mean, I think that this is naturally, we are very curious people. We like to learn. Uh, so yeah, I would love to become a lawyer now or go to journalist school or something. I would, but I, I thought about an MBA, right? Uh, this I will do for sure. 

This is on my to-do list.  

[00:09:33] Jerkins: I love that.  

[00:09:34] Ioannidou: Today is my birthday, so I'm 56 years old. Yay.  

[00:09:39] Jerkins: Happy birthday.  

[00:09:40] Ioannidou: Thank you. So I'm 56 years old. One of my friends said today, oh, you look 46. And I'm like, and I feel 26.  

[00:09:47] Jerkins: That's amazing.  

[00:09:47] Wright: Yeah. Okay.  

[00:09:50] Jerkins: Teach us your secrets.  

[00:09:51] Ioannidou: So. Let's get more degrees. 

[00:09:52] Jerkins: I know. I think that that, that we're trained, right? 

To gather data, analyze data, come up with a plan, and understand how the plan worked. Like that's what we do every day with all of our patients. Yeah. So those same skills can be applied in a myriad of other ways where I think the reverse isn't necessarily true.  

[00:10:12] Ioannidou: No, a hundred percent. And I know that, uh, we are talking about, uh, a topic that is very close to our's heart. 

But I'm going to take the, uh, initiative here and just jump a little bit into the, uh, practice ownership that we touched upon already. So we have data from the a DA, uh, health Policy Institute that, uh, I mean they're doing fantastic work and they have put data together that shows that even now. Although certainly the dental market has. 

Changed. Shifted. Yeah. Some, mm-hmm. You know, shifted and changed some, some, uh, still the new graduates, uh, are thinking about, uh, becoming practice owners, right? Uh, some of them become practice owners a little bit later in their career, but it's still in the picture. It's not it, you know, like exhibit A. So, so, uh, say that the dentist wants to buy a practice, um, where and how can they start? 

Michael and then Arne, what, what does someone needs to know, and is it something that you do like spontaneously? Do you, what skills do you need to acquire? How do you make this decision? How do you financially get organized?  

[00:11:26] Jerkins: Yeah, it's interesting. So first of all, Dr. Wright is truly the expert. I've actually physically never bought a practice, but we've helped hundreds and hundreds of people do it. 

So, um, what I would say is. The student debt is way different than it was 10 years ago than it was 20 years ago. So the financial realities of practice ownership now, even in this country, are very different than they were. And, and that's not even mentioning the consolidation and, uh, and that piece, but what I would say, what I, and I loved the study, um, that the Ada a, uh, put out and, and when I look at it, it actually lines up a lot with our conversations we're having, which is, um. 

It seems like dentist's final form, if you will, is eventually becoming a practice owner of some degree. Maybe not starting out that way in the first one to three to four years. Um, even though some do, obviously, but learning the clinical skills, maybe paying down some debt, saving some money, and then saying, Hey, I kinda understand this. 

I kind of got my clinical skills down. I now want to become an owner now. Lemme just pause there for a second, is there's different paths to ownership, right? I mean, first of all, you can buy an existing practice. You can also starve one, which is the hardest. But you can also, and this is more and more popular now of become a part owner or a minority owner in a large group or an existing group. 

And what we're finding is that actually is a very popular route now because people might not want. The, um, responsibility of running a business. They might have spent three or four years at a large group or DSO or corporate practice and said, Hey, there's an opportunity I have to buy 10% of a private practice and then work as an associate and continue to buy more and then have more responsibilities and kind of ease into it that way. 

That's a reality we see and help. Folks with all the time as a way to kind of dip their toe, build wealth, gain independence and, and that type of thing. The biggest thing really is when someone is approaching a lender, let's say. Let's say you. Uh, and the earlier you can talk to a team, the better, right? 

You don't want to be, I have a practice already picked out. I've already refinanced my student loans, bought a boat, and now I actually want to buy this practice too.  

And we're like, Hey, actually maybe let's talk about some of those decisions you made already. Um, so the earlier the better. And that means really defining your goals, understanding your goals, and then developing a team around it. 

So that's having. A CPA. That's great having a financial planner that actually has experience with Dennis because they all wanna pretend like they do, but. They don't. So you really want to understand that and then engaging a lender,  

[00:14:03] Wright: Michael?  

[00:14:04] Jerkins: Yes.  

[00:14:04] Wright: Can I, can I just jump in really quickly  

[00:14:06] Jerkins: Please?  

[00:14:06] Wright: Can you go back to the point, um, about the earlier the better? 

[00:14:11] Jerkins: Yes.  

[00:14:11] Wright: That's something that I struggled with because, so I knew I wanted to be a practice owner. I didn't know how I would get there, um, just because of my background. And I was an associate at a corporate, you know, DSO large group practice for my first eight years. So. I just practiced. I've been practicing for eight years. 

Right. So even as an associate, you mean, because a lot of associates don't even know that they should have a CPA because they feel like since they're not the owner, they, they don't need to have those relationships built. So can you talk a little bit about that too?  

[00:14:44] Jerkins: Absolutely. Totally love that. Yes. Thank you. 

Um, the earlier the better because you can get the guidance. So here's how practically that looks, right? So let's say you're employed at a large group and it's year. Four or five and you kind of aren't sure where you're gonna be, maybe in the next year or two, you feel comfortable clinically. Um, I would do a couple of things. 

One is again, find a very good dental financial planner that just even having an initial talk with, don't even have to pay them a single dollar, um, and just have a get to know you. Here's high level, um, are, are my, my thoughts on a financial, you know. Where I want to be in five years and they can start to put some pieces together. 

Obviously they're gonna want your business and they're gonna do some things, so you need to interview other clients and things like that. But on the, on the practice side, if you say, Hey, I'm not even sure if I want to be an owner, who do I even talk to? Honestly like. That's, people call us all the time and talk to our team about this. 

We have people that we talk to that aren't practice owners for five years, and it's more of, Hey, I think I want to do this. What do I need to do to prepare? What should I think about? And we go through the checklist with you, check in with you, guide you. Like that avoids a lot of potential pitfalls because, um, you know, again, let's take that example of you. 

You're eight years in, you have a practice that you really love. Um, you engage with a lender and the lender's gonna start asking you basic questions. And it's really great to have been prepared already. And so what I mean by that is what is your debt to income ratio every month? Meaning the. Debts you pay per month versus the income you have per month. 

Obviously we want a lower debt level, which requires some planning, right? I mean, that's, you can't do that overnight. And then the second thing is understanding liquidity. So how much, um, liquidity do you have compared to the price that you're gonna buy this practice or start a practice? That means having some money saved up. 

That takes time. No one's graduating dental school with a bunch of liquidity. That just doesn't happen, right? Most of us. So that takes some planning and understanding and goal setting. And then on that piece too. Um, and this is the theme with basically you're underwritten as an individual first and then a business second, right? 

So they're, of course, they're gonna wanna look at the practice, but first they're gonna look at you. And the other piece is credit score. So you'd be surprised how many people we talked to have not checked their credit score maybe ever, and they're not doing anything bad or making bad decisions, but there are things maybe they forgot about that was a bill from four years ago and they moved from undergrad and now that's dinging their credit score. 

Or maybe, actually, I hope this doesn't happen, but maybe there's fraud and someone stole their identity and took out a bunch of loans and then they don't find out about that till it's too late.  

[00:17:40] Wright: This is great.  

[00:17:40] Jerkins: But especially if there's a practice you're wanting to buy and it's a time sensitive deal and there's multiple potential buyers, like anything that delays you being the person potentially to do it could kill the deal. 

Right. So then last second, you're trying to scrape together a way to, to, to make your credit score better or secure some liquidity or a lower debt. So all of that requires lots of planning and. And I think earlier, the better.  

[00:18:03] Wright: Time.  

[00:18:05] Jerkins: Time. That's a, that's a theme. That's a, that's the theme, right? I love it. 

[00:18:08] Wright: Yes. So we're really talking about time in this  

episode. Not money.  

[00:18:12] Jerkins: Time is money. Wow.  

[00:18:13] Ioannidou: Oh, a hundred percent. Time is important, but I have hard time to believe that nowadays, you know, with, uh, the instant, uh, online, uh, connection that we have with our credit cards and our financial institutions, uh, you know, credit. 

Credit score is offered almost monthly. At least it's offered to me. I mean, and I'm sure to most of us, right? Yes. Like many credit cards have this kind of bonus membership or whatever me, uh, of a bonus benefits. Right? And  

[00:18:44] Wright: like they almost just feed it to you without you even having to add  

[00:18:47] Ioannidou: Yes. Without, I don't wanna know. Leave me. I don't need it anymore. I'm done with that. 

I love, I love that. So, but, but it's, it's over. So I, I, I have to say that. Perhaps earlier in our life, we underestimate the significance of this and maybe we tend to be, uh, we choose to live in a denial and not to follow through this because I'm sure that the younger, uh, young graduates do have the opportunity to be a little bit more attentive on financial status, right?  

[00:19:18] Jerkins: Yes. And, and that's what we, we commonly see. Um, and I'm not gonna act like I didn't make bad financial choices, so I'm not, I'm not standing on a Hello High horse. Okay. I'm right here with you, but, well, so, but, um, you know, some things we see is like, there's this, there's this, uh. 

There's this mindset and there's a good psychological principle I won't bore us all with, but essentially us doctors go through a lot, right? So we see all our colleagues at our same age, from undergrad starting families living their life, making money, and we're like still studying hours and hours on end and making no money and wrecking up debt. 

So finally, when we get our first paycheck, it's this, I deserve this, which you do  

[00:20:00] Ioannidou: deserve the bmw.  

[00:20:01] Jerkins: Totally do.  

[00:20:02] Ioannidou: Go get it.  

[00:20:03] Jerkins: You totally do deserve it. But, but let's, again, going back to the goals. Let's think step back for a minute. And, um, so what we see is people do the, they get the BMW, they get the big house. 

They may be refinanced their loans and they didn't have to their student loans to a higher monthly payment. And then by. That, that, that again goes back to debt to income ratio. That means their debt to income ratio is gonna be too high and someone's gonna say, Hey, I don't know if you actually can get into ownership right now. 

You have great clinical skills. Um, clearly you're competent. But financially, when we look at you as an individual, um, you maybe could have made different choices those first, you know, five, six years out of school.  

No, I completely that this is, this is really, uh, really very helpful. I have a question, but then maybe we can, I can ask it later because I have a  

[00:20:53] Wright: No, no, no. Go, go for it. Okay. So let's do it.  

[00:20:55] Ioannidou: I have, I have a, um, you know, it's a discussion that I had the other day with in another panel, but, uh, I wonder, Michael. If you see different, uh, behaviors and, and choices and decisions, uh, or decision making processes, um. W between, uh, men and women, ma uh, male female graduates. 

And, um, and I'm thinking, and I'll tell you why I am asking this question. I'm asking this question because, you know, again, this, that's not a DA data, but data from the American University, American Association of University women shows that, um, women carry most of the student loans. So graduating, my hypothesis is graduating with more. 

And again, I haven't looked, uh, at, tested this hypothesis, but what I'm thinking is, uh, I assume that if you carry more debt right, and you enter the workforce with more debt, uh, you might be a little bit more limited in your choices. I don't know. And then, you know, when kids come. And the question is imposed to, oh, stay home versus, uh, you know, social stereotypes of stay home versus, uh, keep working. 

How can you afford to stay home if you carry loans? You know, I mean, it, it's just all these things are in my mind and I wanted to get your. Uh, opinion on that, on that?  

[00:22:23] Jerkins: Sure. No, I, what's interesting, um, is that same, uh, health policy data that talked, we mentioned already on ownership, also looks at the male female, um, distribution of practice ownership as well, and. 

And I don't have it in front of me. But what's really encouraging was that um, there are differences. Of course, there has been historically in practice ownership, but it's actually getting better and it's not changing based on age as well, which I thought was interesting. It's continued to follow the trend, which is the later in our career we are the more likely we're gonna be owners. 

Um, but backing up on the student loan piece, it is absolutely true that, um. Um, underrepresented minorities, especially people who are first generation doctors, have more student debt than others. The other big important piece here is if you look at dentists, physicians, I'll take those two groups. Um, it's something like 60 to 70% of everyone who goes into dental or medical school comes from the richest quintile families in this country. 

So. You already then now have, although the average student loans are quite high, it's actually concentrated in about 75% of the students. Right. You got a quarter and that don't have any, and then you've got some that come from the richest quintile. They'll pay 'em off, they'll be fine. Maybe they're the ones, you know, their parents aren't paying the bill. 

But, um, it does change your risk tolerance if you know you have that stability in the background. Totally, totally agree. Um, and that's why I think this message is important is because in my opinion, the student loans are the scariest piece. It's the elephant in the room. Everyone's mind's on it. It's, I mean, I was there so. 

I think one thing, I don't know if I'm jumping around too much, but I think what's important to know is that you can absolutely be a practice owner with student debt. That's just a simple fact.  

[00:24:22] Ioannidou: Exhibit B.  

[00:24:25] Wright: Exactly. I, I'm literally the example, so I, okay. True story. So I'm writing down, I'm like, I wanna paint a picture for you. 

You literally, you've already painted the picture and I was gonna like paint my situation. I'm like first generation in my family, every little thing, everything that you have just described. And I do have student debt still. And then I actually took the opposite route of getting my house. Like I'm like the first person in my house. 

My family likes to own a home, like have a mortgage too. So I was like, I want a house. Me and my husband did that, and then I, I wasn't even thinking about private practice ownership. I was gonna partner in with the DSO that I was working for. You know, at the time. And so most people, they say, uh, or most people, like in the financial space, they say, you know, get your practice first before like you buy a house. 

But I'm like, first of all, I was like 30 when I graduated from dental school, so I was like a very non-traditional dental student to begin with. So it's like I'm up against time. Every aspect, so it's like I have to make some decisions. I need to own a home. I also wanted a practice, and so the home came first, but I still was able to buy my practice. 

Now, I will say, in full disclosure, I do believe that my choices were limited, but the practice that I have now. I love. It's, it's so, it's so charming. Like it, it was not charming when I bought it. It was definitely not what I thought that I would end up with. I wanted this beautiful Taj Mahal practice, but I'm able to build this practice and it, it literally has like my entire personality on it. 

So I feel like people just need to understand that there are. So many options for you if you're not in a rush. And I could have easily been in a rush with all of my situation. I had a lot of stuff happening in my life, you know? So anyway, like this is not about me, but I just wanted to like, support.  

[00:26:13] Ioannidou: No, but this is, this is, this is great. 

This is great because you put a very realistic dimension to the, you know, it's like your, your  

[00:26:20] Wright: experience,  

[00:26:22] Ioannidou: experience and financial reality, right? Check you out, you under this, uh, uh, this, uh, um, adventure. With, uh, a certain background and, and, uh, uh, I put another, I will give you a counter experience. Yeah. I enter, I graduated residency with zero debt, not because I'm wealthy. 

Oh gosh. Because I'm wealthy. I'm not independently wealthy. Don't get excited. Uh, but because I come from, uh, first of all, I, I, uh, did, um, my dental, uh, I, I completed my dental studies in, uh, Greece, where education's free. So that's easy. That's a lot easier. That's, there goes that, that's right. Okay. Education. 

Education is a, it's a, it's a right and not a privilege, so it was, it was free. Uh uh. Then I came here for residency. My parents picked the bill. Sacrifice a lot to pick this bill. Uh, they did pick the bill. So I graduated residency with zero debt. So I had the luxury to choose academia. Mm. Because I could afford to choose academia. 

Wow. Right. So I'm just giving you a different perspective. This financial decisions that people, career decisions that people, uh, young graduates make and sometimes even dual degree graduates make. Right. The MD PhD or MD PhD. Uh, uh, graduates that might be shining stars in, uh, academic, uh, uh, environment, in an academic environment, but financial restrictions prevent them from following this just a different direction because I thought at the beginning in the introduction I spoke about how your help Michael. 

It is applicable to different types of dental careers, not necessarily private practice. So someone that wants to entertain the possibility of ademi academic career. Also, these people need to have, um, the, make the decisions based on financial, um, help.  

[00:28:23] Wright: Stability. Yeah. Oh my gosh.  

[00:28:25] Jerkins: It, it's a sad reality, but yeah, it's a sad, it is absolutely true. 

It doesn't, this doesn't happen by accident and, um, and I can, you know, I've spoken at a lot of dental schools and dental residencies and alumni groups and you know, as we all know, it's not necessarily a big focus in school to go over these topics and, and I get it, right. They're trying to make sure we're really good clinicians and that's the job. 

Go out and make sure you can be good clinicians, um, provide care, um, and then you guys will figure it out. Financially, and that's largely true, but there's still a lot of things we could optimize that would've been really nice to know. Um, and I would also say one thing about the house piece is, um, I, at and, and, uh, Marco might up, I don't remember the, the data, uh, specifically, but it was something like dental. 

Graduates in their first, I'm gonna say five to 10 years, 8% of those, I think it was five years, 8% of those become practice owners. Right. But then it gradually goes up as time as people go on their career, as we mentioned. But like you said, most people are gonna buy a house if they have opportunity in that first five years. 

Right. Um, and that's okay, as long as it's not the Taj Mall.  

[00:29:37] Wright: Yeah, I know, right? Yeah.  

[00:29:38] Jerkins: Yeah. And you can be reasonable. And I think that's okay. And quite frankly, in some ways might build your credit up, having a mortgage payment and, um, and maybe you do get settled in a community where you now have roots and that actually looks good for a practice that you wanna buy. 

So it's not necessarily a, a disqualifier, I just think it has to be within reason. Right. And the, um. You know, there's some rules of thumb out there essentially of how much you should pay for a house. And um, and as long as the dentists, I think, right outta school, understand that a home purchase totally, totally reasonable. 

[00:30:10] Ioannidou: We will be right back.  

[00:30:14] Announcer Ad: Are you ready to start, grow, or buy into a practice or group? Panacea Financial can help. Panacea Financial is endorsed by a DA member Advantage and offers thousands in savings to a DA members looking for practice financing. Doctor founded an expert driven panacea. Financial offers, concierge level service, and. 

Finance options designed exclusively for dentists with competitive pricing and experienced advice. Go to panacea financial.com/ada today to get started on your practice ownership goals. Panacea Financial is a division of Primus member FDIC. Laurel Road is committed to serving the financial needs of dentists, which includes helping you find the best path forward for your student loans. 

Laurel Road now offers free 30 minute consultations with one of their grad fin student loan specialists. Get the facts and develop a personalized plan by scheduling your consultation today@laurelroad.com slash ada. Laurel Road and grad FIN are Brands of KeyBank National Association.  

[00:31:22] Wright: Welcome back to Dental Sound Bites. 

Today we're talking about the dollars and decisions of being a dentist with Dr. Michael Jerkins, president and co-founder of Panacea Financial.  

[00:31:32] Ioannidou: So what are the most common questions since you, you brought up the, the, the house. What are the, the most common questions you get about, uh, practice ownership? Uh, and the, the, the, the, the mode of financing, uh, practice ownership. 

[00:31:47] Jerkins: Yeah. So I think, um, two things. One is like, what does it look like? What are my options? Right? So like Dr. Wright, you can buy one. Right. I already mentioned this. You could start one, which is a lot harder, but we do see, and we help plenty of people do that. Um, and then third is the, the buy-in piece. And maybe it is a DSO or maybe it's at, um, a smaller group practice that you're an associate at and the dentist wants to sell. 

The patients love you and you slowly, there's a succession plan. You buy small incremental ownership over time. Um. I think tho just educating people on those possibilities is helpful because we find a lot of dentists are at practices. They, and, and once they learn about this minority piece, minority buy-in piece, they start to talk to the owner and they're like, Hey, actually this is a great idea. 

I don't wanna sell to PE or I don't wanna sell to someone. I don't know. I'd rather have someone that our patients know and love that we can start to slowly transition over. Um, and then. It's the, uh, it's the student loans, which I, I can talk about all day ad nauseum. Um, and then it's the, the actual financing methods. 

So there's really kind of three ways to finance a practice, uh, ownership path. One is through a program called SBA, which is a government program that is, um, probably the easiest necessarily to qualify for, but has higher interest rates, more fees, more paperwork, and is probably the slowest of this process, but we see it at plenty of time. 

So SBA is definitely one another is going to your corner bank that's in the community that you might have known before and say, Hey, I want a loan for a business. What I will say. Is most of the time they don't have specialty knowledge. They don't, they're gonna look at a dental practice like they would a restaurant, like very different businesses. 

Um, but that, that is there and typically they don't have a hundred percent financing options and ways to do some interesting ways for especially startups. And then lastly, which is where Panacea is, is a specialty lender. Someone who has specific. Healthcare practice, finance expertise and groups. So, um, and they have up to a hundred percent financing. 

They have the lowest rates, typically the lowest fees, all of that stuff. And if they're worth their weight, they offer you abilities longitudinally to see you successful instead of just, Hey, here's a loan. See you later. Go talk to someone else. Now that I got my money, um. For panacea, at least we view it as a relationship, right? 

So we're a doctor founded company, very mission driven, mission oriented, and our mission is to make doctors' lives better. And that doesn't mean just giving someone money to buy a practice or start a practice. That means giving 'em the tools they need to succeed as an owner, which is not just a transactional deal. 

Um. And then I could talk about student loans, but the biggest thing I, can I just plug that real quick? The student loans piece, please. Yeah. Student loans are interesting, right? And I think we'll talk about it, but obviously big changes here recently. But what I want to emphasize with, even with the changes from the recent, um, uh, bill is income driven, plans are alive and well. 

So what that means is if you go back to what I said earlier about debt to income, and let's say you have $500,000 of student loans, that debt to income isn't calculated. If you're on a, if you're on an income driven plan, it's not based on your total balance. The income driven plan, it's based on your income. 

So that could be a lot lower monthly payment that you have that then when you go to the bank. That debt to income looks a lot better and they think, okay, you can handle more debt because you have a lot less you're paying on a month to month basis. The mistake we see is that people refi too quickly and they, and I get why, like it's, look, I wanna get outta this government program. 

It's really squirrely. And I'm like, feel like I can't keep up with what's happening And no one answers the phone. Get all that squirrely, but. You're giving up income driven repayment, and it's kind of that prioritization Back to what you said, Dr. Wright, like, what do I want to do? I wanna be a practice owner. 

Okay. I'm gonna try to shore up liquidity, lower my debt, my monthly debt payments, and get some experience so that I can, I'll, I'll, I'll refi later maybe. Or I'll buy the bigger house later, but that might get in the way of your ability to, um, get financing for your practice ownership dreams.  

[00:36:07] Wright: Hmm. This is so good. 

So, so, uh, Dr. Efy talked about the questions that come up, some common questions. What are some most. Uncommon or surprising things that you get asked, and then I'm gonna tag on an extra piece to that. What are the questions that people need to ask but they're not asking?  

[00:36:26] Jerkins: Ah, that's great. As far as surprising questions. 

Ooh, I like this. Yes, this is a fun, because  

[00:36:29] Wright: I, I didn't know what to ask. I'm gonna be honest with you. Like I had to reach out to people to be like, Hey, I'm talking to the lender, like. Tell me what to ask. So if you could talk about that, I think that would be great.  

[00:36:39] Jerkins: Totally. Like it is surprising if someone comes to us already with specific practices in mind, most of the time they are getting that from a practice consultant or practice broker who's presenting this to them. 

It's very rare we have someone necessarily come in de novo, no help, says, Hey, I gotta practice. Here's the plan, here's how I'm gonna execute. Can you do it? So I think it's more common to say, Hey, I don't know really what to ask. Can you guys help me? And we then get them connected with a consultant, with a broker, with someone who can provide the wraparound services, especially a CPA, an attorney. 

All this whole transaction needs a team like I I talked about how smart we are. We are very smart. But, um, there's this as, uh, one of my former bosses say, uh, says sometimes we have a mismatched, uh, confidence to competence ratio. And so, uh, it's okay.  

[00:37:30] Ioannidou: Oh, sometimes,  

[00:37:32] Jerkins: sometimes  

[00:37:33] Wright: Uhhuh. I know. It's like, okay, I'm just gonna chuckle right there. 

[00:37:38] Jerkins: So a team is needed for the transaction is all I'm trying to say. Now, what should people be asking, um, that they probably aren't asking? Um, I think a big thing is around business planning, um, and understanding a business plan. And it might seem cumbersome. Um, I think to some, because they say, Hey, I'm a great dentist. 

Gotta a practice in mind. I think I'm gonna be able to buy it. But we, we really, what we really want to know is how can we make sure you understand like the business plan, do you understand the line on an expenses? It's not a test, it's not like you're gonna fail it and you don't get a loan. It's more like, Hey, how can we help you understand this? 

Again, positioning it so you can succeed not just next year, but four or five, six years down the road. Um. And you'd be surprised that there are lenders out there that simply just want to get the deal done and get you your money, and they go on to the next person. And for us, we, it's a little more in depth, it's a little more relational and designed for longer term success. 

But the business plan and the line item expenses on the p and l are probably what people should be asking, especially when they're acquiring a practice that already has one. So being able to understand what they're getting. So that they can understand what they want to do with it.  

[00:38:52] Wright: I have one more.  

[00:38:53] Jerkins: Love it.  

[00:38:53] Wright: Eff you can ask the next question after this, if that's okay. Asking for myself and for all of my friends who wanna go on this journey as well. Um. What does it look like when, uh, a lender or how can we know, um, when a lender just wants to get the deal done as oppo? I know you said relational. Yeah. Uh, yeah. 

I know you guys don't do this. So tell us what, tell us the difference.  

[00:39:17] Jerkins: I'm very biased, obviously.  

[00:39:18] Wright: Yes, of course.  

[00:39:19] Jerkins: Yeah, so, so. Um, again, like if you get the deal done, let's say you're a dentist and you bought a practice and you worked with someone who helped you get the loan. If you can't pick up the phone and call that person in six months and they know who you are and they'd be able to answer your question, then it's not a good fit. 

Um, and by design, again, I go back to the banks have been around for 4,000. Mm-hmm. Oh, 4,000 years seems like that. There's 4,000 of them that have been around for hundreds of years and uh, I guess they have been around for thousands of years, kind of, um, is they, they, they have a model that works and it's like, Hey, we get people on this, um, you know, conveyor belt of loans and we move on to the next one. 

But the other thing I would ask. Is this question, if I'm very successful and I wanna open up a second, third, or fourth practice, can you help me? And most of them actually will not. If you ask them that, you know why? It's because they have caps on how much they will lend to you cumulatively. Even if you're super successful on the first 1, 2, 3, and you're cash flowing, amazing, they have limits. 

They're gonna say, no, actually you've reached your limit. And it stinks because you have a successful model. You might have, uh, an acquisition target, and now you can't get that because that lender actually wasn't built to scale with you. They were built for the one or twosies, you know, practice, which is great for a lot of people, but. 

That's another litmus test that I always encourage people to ask.  

[00:40:45] Wright: Yeah. 'cause I have expansion on my mind already, but we'll talk about that later.  

[00:40:49] Jerkins: There you go, please.  

[00:40:51] Wright: Sorry. Okay.  

[00:40:53] Ioannidou: I will go back to what we discussed earlier about, um. Uh, the student loans, uh, and the student loan consideration. And, and we have advice. 

We have invited, uh, Alex, uh, Mala from, uh, Laurel Road to explain the latest on the student loan landscape.  

[00:41:12] Wright: So just a quick note for our listeners, that this segment of the podcast was recorded hours before the budget bill was officially approved. So just keep that in mind as you take a listen.  

[00:41:24] Macielak: Thanks so much for having me. 

My name is Alex Mala. I'm the Director of Business Development at Laurel Road. Um, Laurel Road's been working with the a DA for almost 10 years to help members, um, reduce the cost of their student loan debt, uh, by utilizing federal repayment options effectively, or refinancing their loans to lower interest rates. 

So there's a lot of change, um, happening as we speak in the student loan landscape. There is likely to be a consolidation of, um, federal income driven repayment options. So right now. Folks who've graduated and have federal student loans, um, they have a number of different, um, income driven repayment options at their disposal. 

So this bill, if it passes in its current form, would consolidate that into one income driven option. So in a way, um, simplifies repayment for people and that they don't have all of these options, but could be a negative if, you know, one of those options was, uh, a materially better fit for. You know, you, uh, versus what, what the, uh, new consolidated program is. 

Um, so that's one big change. And then the other, for those who are still in school, is an expected cap on. Federal lending, um, on a per borrower basis. So, um, currently, um, folks going to school, uh, undergrad, graduate, doctorate, um, you have virtually unlimited, um, federal loans at your disposal. You can borrow as much as the school says that it costs. 

Um, this new bill proposes to cap, um, the annual federal lending limit per person. So, um, once you hit that cap, and that's a number that we would expect folks who are right now taking all federal loans, probably a third, a quarter of your total student loan portfolio is gonna wind up being, um, you're probably gonna have to go to a private lender, uh, to get that last bit. 

Whereas currently, um, you'd be able to take it all in federal loans. If you are a dentist who's already graduated, you have your loans, um, these federal changes are gonna impact you, um, through the repayment options that are available on the federal side. So, uh, like I said, you're gonna go from having. 

Half dozen, eight different, um, income driven repayment programs that you could enroll in. That's where it is today. Uh, if and when this bill passes, you'll have one income driven option at your disposal. So, like I said, simplifies things, um, you know, but could also, um, be a negative for, for some folks who are using one specific program for a specific reason that's no longer available. 

And then the refinance market. We'll still exist. Um, so what we do at Laurel Road, we refinance, um, loans. We, you can come to us once you've graduated, we'll pay off your existing loans. We'll give you a new loan at a, at a presumably lower interest rate that will still exist. Um, it's. Oftentimes a very good fit for dentists. 

Once you're a little bit more established in your career, um, you know, things that we're looking at to approve you for a refinance loan or your income, your credit score, um, you know, what, where you went to school, um, your debt to income ratio, so generally. Um, those factors tend to improve as you progress in your career. 

So we see plenty of dentists who will use federal income driven repayment their first couple years outta school, um, have lower payments during that time, kind of find their financial footing. And then once you're earning a bit more, you've paid down some of the debt. Maybe you've paid down credit card debt, your credit scores improved, then look to refinance at that time. 

Um, so that, that will still be available to dentists, um, and something we expect a lot of folks to take advantage of as these federal programs consolidate. I think if there's one takeaway today, it's understand there are plenty of options out there, be it through these federal repayment programs or through private loan refinancing. 

To learn more about our partnership with the aada and, and offerings available to members, you can visit us@laurelroad.com slash ada.  

[00:45:33] Wright: I really enjoyed that segment. Thank you so much for your insights, Alex.  

[00:45:37] Ioannidou: Yeah, exactly. And, and you know, given the new, uh, the, the, the changes and the, the new, uh, financial, the, uh, scenery around us, what do you, what, how do you interpret all this? 

The, the, the bill, the new bill. Past, uh, the, uh, issues with have, with the new provisions, loan provisions. How, what's your, what's the bottom line, Michael, to help, uh, graduates, uh, make sense of all this?  

[00:46:07] Jerkins: Yeah, the bottom line is that there are income driven repayment plans still available, um, which, um, does simplify things, but it gives you that flexibility to be able to, like he said, make some, um, financial decisions right after school that you still can pay that lower monthly payment. 

Absolutely. Um, the unfortunate thing, of course that was paired with it is the cap on. Loans, federal loans to students and professionals, especially in dental, medical, and vet school. And, and, and the problem. And I could like go on this huge ramp. I'm trying not to, but the problem is like, it's not as though. 

Well, a couple things. Love it. One is, I love it. It doesn't actually do anything to lower the cost of going to dental school. It just says, Hey, the federal government's not gonna pay for it, but guess what? The private sector will come in and pay for it. So the dental school, medical school, vet school's still gonna get the money. 

So what is the incentive to actually have a sustainable lower cost of education? It didn't really accomplish that, in my opinion, and the problem is. Then if you have all these private loans, 'cause you met your cap and then you went to orthodontics residency or peds dentist or whatever it is, you're just loading up on more private loans that don't have income driven plans, that don't have public service loan forgiveness, if that's an option for you. 

And so now this benefit from the federal government is kind of watered down because now you're balancing a huge amount of private loans with your federal loans. And that can lead to all sorts of downstream financial implications as a society where we choose to practice and how we choose to practice. 

That is, um, that is my probably most condensed, uh, talking points on this bill that I've done thus far. But, um. I, I just, the other thing I just want to emphasize over and over is that we do have income driven plans available that's not going away. Um, the, the, the people coming behind us are the ones that are gonna be having a hard time with these caps, and I hope that we can come up with some creative solutions so they're not saddled with high interest private student loans that are gonna put them in a lot. 

Worse footing to make good financial choices, right out of training. It's, it's a, hopefully we, we come up with a better system. I know there's a lot of people working on it right now, including the A DA.  

[00:48:31] Wright: I read today that there was an advocacy update, an email came out, um, from the a DA, and I'm so glad to to have this content because I know that the a DA is still so concerned about just student loan provisions that are regressive. 

These are, um, eliminating grad plus loans and capping lifetime financial aid amounts for undergraduate and professionals. Students. Um, we understand also through this update that there's limited loan repayment options and those options are going to create barriers for current dental students, future dental students, um, that's gonna cause the workforce issues, um, to be exacerbated, uh, especially in rural and underserved areas. 

[00:49:17] Ioannidou: But can I ask you just the fact that there, there, there will be a limitation in the loan repayment option. Isn't, isn't this, uh, a barrier? Yeah. And I'm going back, circling back to what we discussed at the beginning, a barrier for, uh, first gen. Yeah. For, uh, underrepresented for. Um, you know, certain socioeconomic status, uh, um, applicants that are looking into going to dental, medical, um, careers. 

[00:49:51] Wright: Yeah. And considering we have workforce issues.  

[00:49:54] Jerkins: Yes, yes. Well, and the thing, it's interesting, so, um, number one, yes, absolutely for certain people, the plan that would've been better for them is now outlawed. Right. So Save was a great plan. A lot of people loved, they're trying to figure out what the heck they're supposed to do now that that's not, um, legal technically anymore, and they have a period of time to find a new plan. 

But the good thing about Save that actually continued to the new plan RAP, was that any, um, interest that you did not pay that month is subsidized by the government. So that is a good thing. I will just try to like somewhat silver lining. Um, that, that is helpful, especially for those people who are early in their career or in training, still having to make payments. 

They're definitely not gonna touch their, all their interest for that month. That uncover uncovered interest will be subsidized by the government and the new plan, but there's no doubt about it. Um. It will hurt some people, and not to get into the weeds, but the, essentially the way they calculate the new RAP plan will result in higher monthly payments than it would've for IBR or save. 

That is absolutely just true in the math.  

[00:51:00] Wright: There's so much more that we have to cover. So then maybe we're gonna have to do a part two because, uh, yeah, we have to. Um, part two, we've covered a lot as it relates to dollars and decisions that dentists face. And so thank you so much, Michael, for, um, being here. 

Can you tell us, just summarize really quickly, like what's your biggest takeaway tip for us all? You know, keeping people like me, my situation in mind, and for our seasoned doctors who are making, you know. Big scary decisions.  

[00:51:27] Jerkins: I would say. Number one is that practice ownership is alive and well, and there are paths that you can do this sustainably and successfully. 

Number one, even with the student debt environment that we're in today. The second thing I would say is know your goals and surround yourself with experts as soon as humanly possible. And again, you don't have to pay these people necessarily anything at first, but they're gonna give you time for free, I guarantee you, at first, to just give you advice. 

And I'll say this all the time, ask for references and talk to them on the phone. Actually talk to their references before someone says they're an expert. And then the last thing, I say this all the time to everybody at every career stage is know your value. We have tremendous value, and in my opinion, we actually under-represent that value in all sorts of ways. 

We engage with the world and don't understand the type of leverage we have to. Actually advocate for ourselves. And that is why I think a lot of the larger groups, corporations, PE, can take advantage of the doctors and dentists individually is because we don't actually understand our worth. So, um, we have a lot of power. 

[00:52:35] Wright: Yes. Preach, please preach over here. I'm sorry, I was trying to keep quiet.  

[00:52:42] Jerkins: No, I love it. It's, it's, I feel very passionate about that and that's why Panacea partly exists, right? Is we saw a problem, no one was gonna fix it. So who tried to fix it? Someone within the community said, Hey, we'll figure this out. 

And. Um, it's tough to make that sell outside of being in, in the doctorate community, no one feels sorry for us, right? It's like, oh, I feel so sorry for you dentist with all the student debt. Like, no, no one says that. But we know all the struggles we have and actually it is really tough. It's really tough. 

And not only that, to your point. Because it's tough. That leads to the workforce issues. Oh yeah. That leads to the maldistribution that leads to access. We might not all be doctors, but we're all patients, right? So we want our doctors to have the most possible success they can because that actually helps rest of society so good. 

[00:53:31] Announcer: On the next Dental Sound Bites.  

[00:53:34] Wright: Dental misinformation is spreading fast across social media and it's challenging evidence-based care.  

[00:53:40] Ioannidou: On the next episode of Dental Sound Bites, we will explore how dental professionals can talk to their patients and effectively counter false claims with science, empathy, and clinical authority. 

Thank you so much, Michael. It was so nice meeting you. And so, um, it's an, it's an amazing, very useful episode for everybody, for, uh, the junior dentist, uh, mid-career unit, practicing every Yeah. Mid-career senior. Don't regret decisions you made. There is always future. Yeah.  

[00:54:15] Jerkins: Yes. This was fun. Thank you guys for the invite. 

Honored to be here. Um, this was great. Loved it.  

[00:54:20] Ioannidou: Thank you. Thank you. Thank you.  

[00:54:21] Wright: Yeah. Well tell all of our listeners where they can follow you and reach out if they want to connect with you to learn more.  

[00:54:28] Jerkins: Absolutely. So panacea financial.com/ada or panacea financial.com. We have plenty of ways to get ahold of us. 

We're on Instagram, uh, TikTok, all the socials that people use these days. Um, lots of good infos, lots of white papers, and our blog is very robust on lots of dental topics and practice ownership topics. So, um, we also have a podcast, actually, the podcast for doctors by doctors. We have a lot of interesting conversations. 

Um, so there's lots of ways to. Um, interact with us.  

[00:54:58] Wright: Love it.  

[00:54:59] Ioannidou: To our listeners, we are going to link all the resources and information mentioned in this episode about, uh, panacea Financial, uh, in our show notes on the ada.org/podcast. 

[00:55:13] Wright: If you liked this episode and found it interesting, which I really hope you did, please share it with a friend. 

Then be sure to subscribe wherever you are listening so that you can continue getting the latest episode.  

[00:55:24] Ioannidou: And don't forget, rate the episode, write a review, and follow us on any social platform you are.  

[00:55:31] Wright: There you go.  

[00:55:32] Ioannidou: Bye-bye.  

[00:55:34] Wright: Goodnight everybody.  

[00:55:37] Announcer: Thank you for joining us. Dental Sound Bites is an 糖心logo podcast. 

You can also find this show resources and more on the aada member app and online at ada.org/podcast.