Kiera Dent (00:00.774)
Hello, Dental Team listeners. This is Kira and I have my dear friend Morgan Hammond back on the podcast with HDA Accounting because I need to solve another CPA consultant debacle that I’m hearing come through. So Morgan, you are my H, you’re my accountant, CPA that I go to all the time. Welcome back to the show. How are you today?
Morgan Hamon (00:21.195)
I’m doing great, appreciate you having me. Always enjoy our visits, Kira.
Kiera Dent (00:24.942)
that I didn’t do in our last podcast we did together. I wanted to get into this topic because it’s a pretty spicy one as well. And anytime I get the ear of an accountant CPA, I’m like, Morgan, I have all these questions for you because on a podcast you and I did, we talked about competing agendas from your advisory board. So as an owner as a business owner,
You need an advisory board. You need a financial advisor. You need a CPA who’s really great and knows the industry, which is why I love HDA. You guys are truly like the dental CPAs that I believe are phenomenal. You need a consultant, a coach, a guide. You need your legal team. You need your HR team, and then you need your team. And all of them have a different mode of a different agenda and a different objective, but none of them are wrong. Like we talked about 401ks.
And we talked about owner pay and the difference between a CPA’s objective and a financial advisor’s objective. And our job is to hear it as owners and figure out what makes the most sense. So Morgan, are you open for another debate? I’m ready for it. Well, okay, so Morgan, it’s end of year time and we’ve had some people reach out to Dental A team to want to work with us as a consultant. They know their practices are struggling. They know that they need the help.
Morgan Hamon (01:27.439)
I can do that.
Kiera Dent (01:43.19)
they go to their CPA, which I feel is like the banker, you know, we go to the CPA and say, Can I hire this consultant? And I’ve had three in the last month come back to me and say, there’s, you know, my CPA told me I can’t afford you. And when I talked to you about this, I wondered, like, do you agree with this or not from a CPA perspective? And I remember your face was like flabbergasted of no. So I wanted to talk about this because I feel like it’s a common misnomer.
I have my own opinions, but obviously I’m going to be biased on it. So I wanted to bring that to a CPA and accountant that I think is phenomenal working with dentists. You, like you said, you work with over 800 dentists across the nation. Why would this be the case? What are your thoughts about it? I won’t be biased everybody. I’m here to bring in an expert to find out kind of the thought process behind it and what your take is on that.
Morgan Hamon (02:33.711)
Yeah, well, when I hear that, I’d be curious to know like which type of accountants these folks have. Now, just important to note, just in the CPA world, CPA industry, most accounting firms are tax oriented. They mainly want to do a tax return and maybe some tax planning, but the books exist.
solely for that purpose and that’s why in those type of firms the books are always out of date. It’s usually farmed out to the back room and it’s varying quality because those books are only being used to plug into a tax return. If we’re asking those folks for advice such as hiring a consultant and they don’t really know the industry, I just think that’s hitting the easy button for the accountant. Just eliminate…
Kiera Dent (03:08.846)
Thanks for watching!
Morgan Hamon (03:30.831)
costs and now I can show that I helped you save money. I think that’s very short sighted. Our monthly report, and we’ve talked about this before, we prepare P&Ls and balance sheets, but what we really talk about is our practice profitability analysis. That’s all in the title, it’s profit. That’s why we own businesses is to have robust profit. If we look at profit, let’s just talk about the profit equation. All right, that is net income.
over total revenue. And net income is total revenue less operating expenses. So if you look at that, there’s only two variables there, operating expenses and total revenue. If you’re trying to improve profit, I think there’s a default tendency, most people wanna dive right into operating expenses. Where can I cut overhead? Sort of the easy go-to. And I think that’s where these accounts are going. They’re going to the easy button. How do we just cut expenses? And then I could say, I helped you well.
always important to watch where your money is going. But if we really want to improve profit, I think we have to focus on the revenue side of the profit equation. I’ll share with you, Kira, if we’re diagnosing a low profit margin in a practice.
Kiera Dent (04:32.814)
Morgan Hamon (04:47.291)
More often than not, it’s not an overspending problem, it’s an under collecting problem, which is why we asked to see your AR reports. We don’t know what’s in there. So I think to improve profit, to achieve the doctor’s goals, to have a successful practice that has the appropriate financial rewards of what they had in mind when they undertook that journey, we have to focus on revenue, which means have appropriate fees.
Kiera Dent (04:51.863)
Kiera Dent (04:55.246)
Morgan Hamon (05:14.603)
fee structures, schedule properly, you know, have basically the schedule full of patients, which means we have to market and we have to have the appropriate advisors to help us get all that done. So I’m of the opinion when I look at expense items such as marketing and consulting, those are investments. You know, we’re, yeah, we are trading a little bit of margin for future, for future success. I will now, you’ll never hear me say.
Kiera Dent (05:35.412)
Morgan Hamon (05:43.795)
well, let’s, you know, let’s to help save money. Let’s draw some arbitrary red line like a marketing, you know, for example, you know, if it’s a startup, we better be seeing 15% marketing. I view those as wise investments to help grow. What are you spending to help grow? You don’t know what you don’t know when it comes to operationally in the practice. Keir, I can diagnose low profit, but I…
Kiera Dent (05:52.712)
Kiera Dent (06:10.702)
Thanks for watching!
Morgan Hamon (06:11.455)
I can’t go in and operate, I can’t fix it. I don’t know how to do an insurance claim. I don’t know how to tell the team to do that, you do. So I don’t know, I think that’s just hitting the easy button on advice. It’s sort of the easy go-to if you’re ever looking at, okay, well, if I need to feel like I helped this client, let’s go pick apart the P&L and we’ll go beat up our Shiner up on supplies. Well, that may or may not be the problem and we really gotta look at, you know, is revenue appropriate and how do we grow? So.
Kiera Dent (06:17.26)
Kiera Dent (06:34.155)
Morgan Hamon (06:41.98)
That’s my long answer to your question, again, on my high horse. I think a true advisor, when you’re looking at improving profit, you gotta look at the full equation, and I think the revenue side of the equation is more important than the expense side, personally. The question is, what’s the value of the whole thing? Because what we know about it.
Kiera Dent (06:55.306)
which I am, I’m grateful to hear that because for me, I’ve always thought when I look at this and I look at agreed these expenses are there, but if I hire someone who literally has the tools to add more to my production, add more to my collections, I look at some of these offices and like, Kira, we don’t know if we could afford you. I’m like,
Let me just pull up your 90 days, over 90 days. And if there’s even remotely a couple grand in there, you better believe we’re paying for ourselves very quickly and easily just by increasing your collection percentage. So having something like to hear that you believe it’s an investment as a CPA, because agreed like it is going to be a cost. Like there’s no doubt about it. You’re, you’re hiring consultants, but also if that consultant truly has a track record where they’re tactical and they can like improve your systems and they can literally like put money on.
Morgan Hamon (07:21.889)
Kiera Dent (07:47.162)
the scorecard like I, every time I tell people I’m like, if we can’t put one more crown on your schedule, which is what our cost is for our virtual or two or three for our in person, you should fire us as consultants. But yet we can hit the billing and we can figure out your AR and we can make sure those processes are there. We can look at your overhead and make sure like through affiliate relationships, we oftentimes can get things so much cheaper for you. Just because we have so many people and cut that cost for you.
Not to mention if we can increase your case acceptance by one or two percentage points, that’s gonna help there. And then also helping you hire the right team members so you’re not having team turnover. And then getting all these different pieces into play, like block scheduling and having a more productive schedule. So of course I came in a little bit spicy when I heard these clients and I thought, maybe I’m not seeing something because of course, Morgan as a CPA and Kira as a consultant would have competing agendas on this. Like.
Morgan Hamon (08:19.085)
Kiera Dent (08:43.294)
My agenda is no, I’m coming in because a CPA should love me. I’m going to make this client way more money, more profit. So you look like a million bucks. Um, which is also why financial advisors love consultants. Cause they’re like, yes, you put money on their books. You help them collect more. You reduce their overhead. Cause you increase the production because you know how to do it. So I was quite surprised and just curious, is it because there may be not with a dental specific CPA? Is it that you understand? Cause you’re like, well, these are your problems.
Morgan Hamon (08:47.724)
Kiera Dent (09:11.842)
Go talk to Keira because she can fix those problems. Or was there something maybe I was missing from a financial standpoint that would help educate me on it better as well?
Morgan Hamon (09:21.439)
I think we’re on the same page. And I will tell you, if I’m on a call with a client and the profit margin is lower, then I think it should be. Again, more often than not, we’re talking about collection challenges. And the other thing that doctors need to do is, and you can tell me if you’ve helped with this too, they’ve got to look at their fee schedule. They’ve got to make sure they’re charging enough.
Kiera Dent (09:47.502)
Morgan Hamon (09:50.911)
I’ve asked doctors before, when was the last time you adjusted fees? And they say, I can’t remember. Okay. Well, I guarantee you your overhead costs more, your people cost more. You have to adjust. So you have to charge what you’re worth and then collect it. And I think that’s a much more productive endeavor than going and nitpicking the P&L.
Kiera Dent (09:55.674)
Oh, mercy. Let’s do it every year at a minimum.
Kiera Dent (10:02.755)
Kiera Dent (10:15.794)
Right, and also like a CPA, I think about myself, sure I can sit here and quote unquote have profit, but if I’m lost and I don’t know what direction to go because I’ve never run a business before, but the thing we’re going to cut is a coach or help that could actually get me where it needs to go. To me, I feel like it’s a small pain for a very large gain. Again, you have to weigh it out because I don’t believe that all consultants, all CPAs, all financial advisors are created equal.
But if people have good track records like Morgan, your reports, I will recommend you guys as a CPA for as long as your reports are amazing. If they ever go down, I will have a convo with you first and then we will refer someone else. Because I have the best in the business, but I will refer you guys because I know that with clean books and clean reporting, people can make smarter decisions. So while you might not be the like friend from church CPA that’s probably gonna charge them way less.
Morgan Hamon (10:53.706)
They’re not changing. Yeah, this is my baby.
Morgan Hamon (11:05.857)
Kiera Dent (11:12.062)
I’m going to recommend you guys because I know with better reporting and better accounting, you’re going to have better financials to make better decisions. And so I really just felt like why would CPAs recommend that? But to hear that it could potentially be the easy button, you’re right, just like consultants come in and usually they’re like, we’re going to cut your overhead and we’re going to slice and dice the P&L. Where mine is, I’m not going to fire people. That’s like losing people is probably not going to benefit you, but improving your systems, improving your collection processes, getting the things like…
at the front of the problem rather than reactively fixing it is going to help you in the long run be more sustainable.
Morgan Hamon (11:47.051)
Yeah, I agree. And let’s talk about staff costs. For example, if staff costs are high, the first question I asked the doctor is they just give me your gut level feel. Are you overstaffed, just right or understaffed? Almost all the time they’ll tell me, well, I think I’m staffed about right. I don’t know how I could get by with anyone less, but your staff costs are high. Well, that right there tells me we got a revenue issue. We got to generate more revenue.
Kiera Dent (12:15.906)
Morgan Hamon (12:16.011)
So it’s not, it’s like you said, it’s not, it’s not giving someone their walking papers. We have to practice needs to grow and you might need help growing.
Kiera Dent (12:20.32)
Mm hmm. Yeah. So I just thought it was such a I wanted to bring you on and I appreciate that because I really do think make sure I think my biggest piece that I’ve learned from our conversations today from you Morgan is look to see what is the lens that person’s coming from like what is their objective? What are they trying to do? Like a CPA is trying to show profit because if they’re not doing good books and they’re not doing these pieces, you’re probably gonna fire them and think they’re junk and they’re not good for you.
Financial advisor is supposed to guide you to your financial success long-term. A consultant is there to teach you how to be a more profitable business with ease, reduce stress, and have your team rockin’ and rolling. At least that’s not only team. Other consultants can do different things. Legal is meant to make sure that you are compliant, so if you ever get sued, you’re gonna go to bat and it’s going to be really well taken care of and buttoned up. HR, same thing, to make sure whatever happens with your employees are there. But this person over here might be telling you something different from this person.
Morgan Hamon (13:12.927)
Kiera Dent (13:20.754)
and making sure that, again, you look at their objective as to why they would be saying that. And for me, I always look, if they’re telling me it’s because, like for example, a CPA telling me I can’t afford it, well, does that person telling me I can’t afford it have the tools to help me afford it? And if not, who does? Because like you said, it’s an investment, not a liability.
Morgan Hamon (13:41.355)
Yeah, I agree 100%. It’d be like saying I can’t afford to hire a hygienist. Well, are you gonna do cleaning?
Kiera Dent (13:47.094)
Well, let’s talk. They are a producer. Right. Just like team costs. I hear often like, Kira, we couldn’t afford that office manager. And I’m like, hold on, hold on. How many hours are you spending on these things versus how much would it cost for you to produce? Could we actually afford to do that? Have you maybe produce one or two more hours and offset the cost? I can’t afford a hygienist. Well, if you got the patient base, you better believe this person should pay for themselves.
I can’t afford this treatment coordinator. Well, if they’re a good treatment coordinator, they’re gonna put money on the books to help you increase. It’s probably worth a three month run to see if they’re actually as good as they say they are and if they can bring that revenue to you.
Morgan Hamon (14:25.183)
And that’s why it’s important to look at your cost structure as a percentage of revenue and not dollar amounts.
Kiera Dent (14:31.098)
which is brilliant. Okay, quick fire. I’m just gonna ask you a couple quick questions as we wrap this up today. Morgan, I didn’t prepare you for any of this and I’m making it up on the spot. So get ready. It’s a game for you and me. If you had a dentist looking for a CPA, what would be the number one thing that you would recommend that they should have in a CPA when they’re selecting a CPA?
Morgan Hamon (14:38.125)
Morgan Hamon (14:54.191)
I think you need to make sure the accounting firm is not a tax mill. There are a lot of accounts, I mean that’s what they do. And the reason is, I think there’s a misperception in the accounting world that with bookkeeping, the monthly accounting, that’s unprofitable, it’s somehow beneath them, I didn’t go to school for all these years to do bookkeeping. I think there’s that mentality. So you need to be with somebody where the financial accounting is something that takes seriously because you can use that data all year to make informed decisions. So step one.
Make sure it’s not a tax mill, but then also make sure that they know the industry. Because we’re here to advise our clients to have, like I kind of break it down like this, Kira. First, let’s help our clients make as much money as they possibly can. And then we’ll go to work on the taxes to keep as much of that as you can. And you got to have both of those. So I would say make sure your accountant is capable of both of those and not just doing a tax return at the end of the day.
Kiera Dent (15:40.779)
Kiera Dent (15:52.154)
Oh, I’m so glad you said that. Let’s have them make as much as they can and then keep as much as they can. Because I feel like so many people, so many CPAs I hear of are like, so tax focused. And to me, I think a CPA who’s tax focused is like an insurance driven treatment coordinator where they just care about the insurance and maxing insurance out versus let’s get the treatment done and maximize the treatment. It just depends on the different type of CPA and their perspective. Okay, rapid fire number two. What do you feel?
Morgan Hamon (16:16.721)
Kiera Dent (16:21.042)
If I could only know one number in my business, the only one, like you guys have a whole, like a smorgasbord of numbers, what’s the number one number that an owner needs to know, like off the top of their head all the time? Profit margin. What do you recommend is an ideal profit margin?
Morgan Hamon (16:26.287)
Morgan Hamon (16:32.636)
Morgan Hamon (16:36.591)
So if you’re a single doctor, owner-operator practice, no associates, 35 to 40%, 35 being minimum. And like I tell our clients, if it’s more than that, we’ll help you celebrate, help you keep it up. If it’s less than that, we’ll diagnose it, we’ll tell you why. But it needs to be 35 to 40% of every dollar you collect should be there for the owner, his profit.
Kiera Dent (16:59.262)
I love it. If they have an associate, what’s the profit margin?
Morgan Hamon (17:03.231)
It depends. So I’ll give you a specific example. So let’s say it’s a practice where the doctor is just looking to grow. So the owner, I’m sorry, I should say the owner. The owner is looking to grow. So the owner is gonna keep their full schedule. They’re adding an associate who’s also gonna do a full schedule, because we’re just gonna make the practice bigger. So both doctors are shoulder to shoulder and still just produce as much as they can. In that case, your associate costs
Kiera Dent (17:04.827)
What would be the range? I won’t make you get into all the specifics. What’s your range?
Morgan Hamon (17:33.851)
even if they’re getting paid 30%, 32% of net production, which hopefully is the arrangement, that’s going to average out being maybe 13%, 14% of total collections. So if that doctor was able to put up like a 40%, 45% margin, less the associate, that brings the target range down to 30%, 35%, where I think it’s a really healthy profit margin if that’s the scenario. If it’s a part-timer like a…
associate that’s not that good, like really slow, or chewing up all this chair time and not really producing, then unfortunately it’s gonna be less than that. But in that scenario I just described, it’s 30 to 35. If it’s a practice where the doctor says, I’m out, I’m not gonna see any patients, I’m just gonna run the practice, have a number of associates, it’s 10 to 20, with 15 being the baseline.
Kiera Dent (18:21.175)
I’m gonna go.
Kiera Dent (18:31.323)
Awesome. Okay, last rapid fire question for you, Morgan. If you had only an opportunity to eat one food for the rest of your life, what would be Morgan’s food of choice? A genre, you’re allowed to have a genre, and then I’m going probably for specific. Mexican food. Are you going for tacos? Are you just gonna have tacos for the rest of your life?
Morgan Hamon (18:44.207)
specific food or genre of food? Mexican food, I have it every night.
Morgan Hamon (18:53.543)
tacos, Mexican bowls, tamales, guac.
Kiera Dent (18:57.104)
I just wanted to know like the personal side of Morgan. So Morgan.
Morgan Hamon (19:00.699)
I like spicy food. My kids have told me, like, dad, you cannot give us an opinion if the food is spicy. Your spice meter is broken. I like it hot.
Kiera Dent (19:10.902)
I like it. So you’re a Ghost Pepper kind of guy beyond Ghost Pepper, like those things that make you cry.
Morgan Hamon (19:17.524)
Not that hot, but I like some heat. The hot green chili, there’s always a jar in my fridge.
Kiera Dent (19:19.858)
Okay, all right. I love it. Well, Morgan, thank you for getting on and solving the like CPA consultant. Like, why would this be the conversation? And for all of you, if you feel like your CPA might be guiding you just for the tax mill or maybe just guiding you not to see things as investments, or you just feel like maybe something’s off, I usually feel like something might be off. And so if you’re just looking for better numbers, cleaner metrics, Morgan, how can people get in touch with you? Because I think you truly do.
fabulous job at dental specific accounting for our clients.
Morgan Hamon (19:53.551)
I appreciate that. Anybody can go to our website, hdagroupdental.com. There you can see samples of our report, kind of see what we do. There’s several places where you can schedule initial consultation. I still do most of those personally. My business partner Courtney does the other, so you’re always going to be talking to an owner. So the website’s a good way to get in touch with us. Or if you just want to email me, morgan at hdagroupdental.com. I’ll send you a link, give you an introductory video.
So you can just see right away how we do things and we’ll set up a time to talk, learn more about the practice and see if it’s a good fit.
Kiera Dent (20:29.03)
Awesome. Well, Morgan, thank you again. It was so fun to podcast with you guys go check them out. I think HDA is truly the best dental specific CPAs out there. I love lots of CPAs in the dental world. But Morgan, I just think your reports, your accounting, your timeliness is second to none. So go check them out. Morgan. Thanks for being here today. I really appreciate you.
Morgan Hamon (20:49.476)
My pleasure, Kara. Appreciate having me.
Kiera Dent (20:52.266)
All right, for all of you listening, thanks for listening and I’ll catch you next time on the Dental 18 Podcast.