This month Mohamed from Shift teamed up with Bill Kimball from Xero to discuss how dental clinics can use technology to improve profitability. In this 35-minute webinar, Mohamed shares how Shift helps dentists streamline their financial reporting and improve profitability.
PLEASE NOTE: The following is an AI-generated transcript of the webinar. While it has been edited for clarity in some places, it is not 100% accurate. Please watch the webinar for the full content.
Bill Kimball, Xero: Mohammed, it's awesome to be with you today. I'm excited to be learning a little bit more about how you and the team at Shift Accounting are using technology to impact dental and medical practices that you work with. Specifically today, we're going to be seeing how technology can really help streamline financial reporting and improve your profitability.
Mohamed Ismail, Shift Accounting: My name is Mohammed Ismail. I am the founder and CEO of Shift Accounting. I started Shift Accounting in 2014. I’ve been in accounting for 10 years. I was lucky to have my first client to be a dentist. I really enjoyed the work. I saw a need for automation and making practices more efficient. And I guess that's why I started Shift Accounting. We work with practices all sizes from a solo practitioner all the way to regional multi-practice groups. We currently have clients across Alberta and B.C., sometimes we have the pleasure of visiting them in their offices but the majority of the work is delivered online thanks to technology.
Bill: My name is Bill Kimball. I've spent my entire career working in the small business space, in the accounting space. Currently at Xero as Director for Growth across western Canada. [Mohamed and I] got to know each other a few years back. I do a lot of work with some of our most early-adopting cloud accounting firms and have been super impressed with what your team has been doing. So, I’m really excited to go into a bit more detail and then walk through what the secret sauce is.
Mohamed: Thank you.
Bill: So, I think one of the questions that I have right off the bat is really what it looks like. What differentiates a high growth dental or medical practice from the rest of the pack? How do you see that?
Mohamed: There are a number of factors for our successful clinics, right? But the majority of the I would say the main criteria is for success. I would say for you, if you want to put it into a playbook, you need to have a good location. Location is important. Marketing internal and external is also very important. I mean, this goes without saying, but having good clinical skills as a dentist, as a health care provider is important. Having the ability to communicate with patients and tell them exactly what treatment they need and how they go about it is also important. But one of the factors that, , I think is not discussed as often is being a good CEO. , running a clinic is running like a business. Successful owners need to have a full understanding of their patients, their staff, understand their numbers and have that visibility of the practice. A lot of dentists and health care providers, they wait until the year end. , the tax accountant would prepare a notice to reader–this is primarily for the CRA. And that's how they're seeing, , the house of their practice. Once a year, they'll get this nice package from their tax accountant that shows him how the year , , what happened in the year. So, to be a successful practice, you need visibility of your practice. You cannot wait until the end of the year to see that that data.
Bill: What do you think gets overlooked so often?
Mohamed: One of the challenges is that there are so many data points for a medical practice. And bringing it all together, , up to this point was not easy. OK. So, when you look when you look at that, the key data points for a dental office or a medical practice.
You have your production data. So, a lot of dentists know their production because they're using a patient management system that tells them their production. Other KPIs is within the practice–the expense side or overhead, they don't know that information because that information comes from their accountant or bookkeeper. A lot of people, when you talk to them have no idea about their overhead. If you don't have good processes, cash flow. I mean, it would be very hard to understand cash flow. And the one thing that needs to bring all this together is really good reporting. Right now, the buzzword in the dental industry is eBay. Right. Because you have the buyers these days are evaluating practice performance based on eBay. Right. And for simplicity, you can see production minus expenses gives you your eBay de, which is earnings before interest, tax, depreciation and amortization. A lot of people now are starting to think about it with their practice because buyers are coming and offering anywhere between three to six times eBay for a single practice. Smaller groups that are getting offers anywhere from six to eight times eBay. Right. So now become eBay. That became is becoming an important thing to pay attention to. And now whether you're selling your practice or not. But this is what the industry benchmark for four practices is. And you need to watch that number. You need to understand that number to be able to grow and if you go into a healthy, profitable practice.
Bill: So why between production expense, cash reporting, like why are so many practices having challenges surfacing in that data?
Mohamed: So, there is obviously no one [reason]. You're looking at multiple systems that don't talk to each other. Right, let's take another business a foot for a second. You're not a dental practice. Let's say a small business. They would probably use an accounting system. They would use a module in that accounting system. They'll use the AP if they have inventory that use that inventory system. So, most of their business is running in one or two systems right now. When you think about a medical practice, they have their patient’s records sitting in a different system. Their accounting is in a different system. They might have a completely different system to do something else. And these systems don't communicate with each other. Right. So, you have that technology gap that is bridging all these systems together to make one comprehensive report or comprehensive environment for reporting and understanding with the businesses is going through.
That's one–technology is one. But let’s go over the common options for bookkeeping for a medical or dental practice. Why am I switching to bookkeeping? Because bookkeeping is the cornerstone, and the foundation for financial health. That's where it all starts. You need really good books to understand your profitability. When it comes to a dental office, some people will use their office manager to do their bookkeeping. Now, that creates two risks, or two challenges. One is that person is not an accountant, so most likely the information that would be generated is going to be subpar. The second challenge is that person is handling the money that’s come into the practice and also handling the books. So, that creates a risk in internal control and embezzlement.
The second option here is you have bookkeepers who traditionally are engaged to pay bills, process payroll–so there is scope is very limited. And they're not looking at the practice holistically and they're not providing that advice to help clinics grow and become more profitable. The last option is the tax accountants. So, the tax account are very qualified, well trusted individuals that can provide that advice can help the practices grow. But the challenge is that a lot of dentists will only see their tax accountant once a year. OK. Here in the conversation that they have with their clients is primarily focused on tax planning and tax strategies.
And it’s not focused on growing the business and providing that that advice and not because they don't know it's because they don't have the information to do that. Right. You need current information to be able to provide that advice. OK. So, this is even with these three options, you still have a challenge in in in in the way information flow. Are you following right now or do I need to go back in detail? Yeah.
Bill: No, I gotcha. I mean, you referenced the technology gap and you talk about the importance of the bookkeeping piece. So, I guess a for a practice, you're a typical practice. What does that flow look like or walk me through those different bits and pieces if they don't actually flow together that well currently?
Mohamed: OK. So I think I think the best thing is to transition to the next slide. Let's just see how the information flows. With each clinic, I mean, they have their PMA system. The front desk staff would be recording payments from insurance payments from the patients. Typically, there's a lot of transactions. So, it's a lot of manual entry that happens on that PMA system. And that would take care of the revenue side. Now, when it comes to the expense side, the probably an office manager or somebody in the office with pay bills, with a credit card or maybe manual checks. Typically, offices don't have a good AP system. When they're starting, they're starting small. So, you say, kind of parenting by credit card. All right. Manual checks. But the challenge is they don't have a good visibility of the expenses because the PMA system is not really an accounting system. Right. And they don't have a way to look at their expenses. Right. So, they need to send that information to an accountant or a bookkeeper. So, have a good handle on what's going on in the revenue. They don't see the expense side.
This is really that's really where they're interacting. On a day-to-day basis. Everything happens in the patient management system just from the revenue side, not the expense side. So now when you look at the accountant or bookkeeper obviously they're running a completely different system. And what is going on with that bookkeeper or accountant is waiting for bank statements to be printed, mailed, e-mailed, or faxed to them. They're waiting for the office to send month end reports when they're ready. So, the accountant or bookkeeper will then once the bank statements are ready, they'll just manually go and key in all these line items.
Try to communicate with the office to figure out what's going on with these expenses that are they're not familiar with. The problem with that approach is, number one, if that bookkeeper is looking, it is booking entries from the bank statement just completely cash bases without cross referencing the day and documents that come from the patient management system. You might be missing accounts receivable portion of the accounts receivable. An example here, a lot of the money comes in from insurance companies, but insurance companies make mistakes. So, if you're only looking at your bank statement to book revenue, you might miss some critical are that did not make it to the bank statement. So, you need to flag the office to say, OK, what's going on here? You guys said $10,000 should be coming in, but there’s only eight thousand. And now we have to go back and chase it from the insurance. Or maybe a check wasn't deposited.
So, you can see that both systems operate independently. There's a lot of manual data entry, and accountants and bookkeepers will do quarterly statements or annual statements just because it's a painful process. And most like most of the time, they actually don't get the information on time from the dentist or the doctors because they're just too busy.
Bill: It really seems like you have the clinic and the accountant or a bookkeeper operating in two totally separate silos. That's kind of the way you're applying that currently.
Mohamed: Oh, absolutely right. And in end, it's very painful. I sympathize with the bookkeepers and accountants who they're in in the business of chasing–I’m waiting for the bank statements to be know emailed. I'm waiting for this report and waiting for that report. So, it becomes a very frustrating process. People are busy. So, the response rate is very slow at sometimes. So, it does make sense to just say, we're just gonna do the books every quarter. But at the end of the year no when we'll do it that way.
So, with this technology gap that exists. You can see that there's too much time wasted between and waiting for the statements to come in and waiting for something to happen. There's a lot of manual processes involved. So–the data, there's there's a huge risk of human error. If the office is lucky and they have financial statements, it could be once every three months or four months, or annually. So, you can see that there's lack of analysis and advice to help that practice grow and become more profitable. Because they're not seeing the full picture of their practice.
Bill: Well, you talked about operating. We talked about it a few minutes ago, you're talking about operating as a CEO. And to me, that's having access to information like it appears like there's just so many different areas for inefficiency to creep in. If you're kind of operating without a full picture, which because those two are completely separate, seems like it would be happening more often than not.
Mohamed: Absolutely. I mean again, if you're if you're the CEO, you don't have a full picture. How am I spending, my overspending on my staff wage? I mean, is the business profitable? How's my cash flow? Your patient management system is not going to give you that information. So, how are you getting that information? And you need it in a timely manner, you can't wait every four months to see this. Because you need to know that that information almost like on a monthly basis. So you can make strategic decisions.
Bill: So how are you and the team at shift really kind of turning this workflow on its head? What are you doing differently?
Mohamed: All right. So. So this is this is where technology is a game changer, right? So this is a visual solution that we use with our clients right now. OK, so let's kind of walk through what happened. So you still have the point of sale and the patient management system still operates the same way so that nothing changes there. Right. But now when we introduce a Hub Doc and Xero, it really changes the process of what we do in the type of information that we're collecting from our clients. OK. So, remember, in the in the previous example, as I said, like the accountant, a bookkeeper is probably not going to do anything until the month is done. Wait for the reports or every quarter. Now, we actually ask the clinics at the end of each day. They have to print the day and report and upload that report directly to Hub Doc. Hub Doc is that document management system that the OCR technology would read that document. OK, pull up the numbers and then it could publish it directly to zero or it just could sit there depending on the process that people want to use. Xero is the accounting system, and it does connect to the bank accounts and the credit cards and it automatically download these transactions on a daily basis. So now you have a bookkeeping process that nothing happens until the month end because you're waiting for the statements and all the documents to come in. Now, you can do bookkeeping on a daily basis. So, an example would be, let's say a clinic finishes the day, sends their day and report to have doc, my team would come in the next day. Look at that day and report. And let's say it's ten thousand dollars. Well, we better see $10,000 dollars coming in to pulling that information from the bank account. And now we can cross-reference between what the patient management system is reporting and what the bank is reporting. And do they actually match or no. And if they don't match we can flag that issue back to the office to go and kind of double check what happened. Why there's a discrepancy in payment. So, the team now is dealing with exceptions. Rather than dealing with everything. Because you can see again, there's tons of data. There's a lot of transactions that happen in an office. But with this technology, it really now we're focused on just the exceptions and we can flag them with the office right away rather than a month later or two months or when people have it wherever we forgot about that issue.
Bill: So rather than looking at this on a quarterly or annual basis, you're being able to use all this technology to tie that key and Max, back into the core accounting solution to be able to have some of this real time that you're talking about.
Mohamed: Absolutely. What we do with our clients–we do that their bookkeeping on a daily basis. Sometimes, obviously, like if we don't get a report from the clinic, we'll wait two or three days. We'll flag the clinic and say, “hey, guys, we haven't seen the reports yet.” But it's not it's not once a month. It's daily, a few times a week, and it streamlines the process for us. And the client is happy because they know that somebody is looking at their accounts few times a week.
Bill: That's super powerful. So, I guess by having them walk through what we just walked through, tell me more about the comparison of what it looks like in the previous workflow, which was totally siloed compared to this. What does it mean for someone's practice? And then how does that change your dynamic or the relationship that you might have with that practice in terms of even some of the value that you and your team can deliver?
Mohamed: Right. So I kind of did that before and after shot here. Dentists, they love before and after pictures. So, before implementing these tools and technology, the bookkeeping process would be, as I said, once every two months to once a quarter. Right now, as I said, bookkeeping can happen a daily basis.
If we're having this conversation, I would say five years ago, I'd say, Bill, we're very efficient. We have a driver and staff that goes around the clinics and pick up all the bills and delivers it to us at the end of the month. Now you have Hub Doc as a document management system. Everything could be uploaded there. We can pick up that document. The tax accountants can actually want to see the source documents. They can go in and pick up these documents as well. So from reporting perspective now because the work with the workflow is streamlined. You get timely reports to understand the operation and make critical decisions. So you can see how we went from quarterly or annual reports or no reports to having the ability to generate reports on a monthly basis that are timely and actionable.
Bill: And so, I'm just trying to think through this here. I mean, to me, another before and after from the accounting processes, when you talk about errors. There's so many different points of potential failure of the kind of flawed process breaking down, even just from a documentation standpoint of everything that needs to be able to be retained. When we talk about what a delivery person delivering that to you, that's that is painful.
Mohamed: Absolutely. Look, nobody likes to sit down and really crunch numbers. I mean, and I think, Xero and Hub Doc for us is that really is a game changer, because as I said, we honestly don't do any data entry anymore.
Mohamed: The team compares the data that's coming from the patient management system with the data that zero is already pulling from the bank accounts and credit card and just make sure that these two reconciled. Because we do move the human process. And now the machines are doing a lot of the work. It's more efficient and improves the data integrity.
Bill: So what kind of reporting improvements are we talking about here?
Mohamed: So, when we come to reports, because I feel like as a CEO of an identity, organization, or a clinic or a medical practice, you need a holistic report. Because if we only look at the patient side, it doesn't tell you the whole picture. And if we look at the practice management software does not tell you the whole picture. So, you need a comprehensive report that you're looking at both sides. From a financial perspective, obviously, you need to see your production or your direct cost, your overhead. And that will come down to your net profit or eBay. So, you need to know that. You need to see your performance on a monthly basis. How are you doing with wages? How is there an order? Why on marketing? Because you get to see how much you're spending on marketing and then you need to tie back to I spent X amount of dollars this month in marketing. How many new patients I did I get. And this is the data that you can see from your patient management software. And now when you put the two together, you can see a correlation between all these items. Right. So, is there an Y in marketing? Great. I'm I see new patients that. So let's keep doing it. If I'm spending all this money, but I don't see the results. Right, you can obviously that's something that you need to figure out some different method. It would be really nice to know that like next week versus six months later. How? Absolutely.
Bill: Absolutely right. So, now you have the financial information. What?
Mohamed: We also put a budget or a target for that office and we compare the actual performance to their target. What I mean by that, let's say let's say I have a three million dollar production, annual production a year for an office. We want to know, are we going to hit that three million dollar at the end of the year or no? But we want to know it on a monthly basis. So, we can identify if we are any closer to that goal or further and if we're close to the goal. Good job, everybody. Keep doing what you're doing. But if we're further from that goal, we want to know about it today so we can make decisions that will help us get there closer today. So, looking at your production but by provider is great. You need to compare that now to the target. OK. Because if I don't have a target for my providers or my expenses, I don't know how I'm doing. And then that all starts with having a solid plan in the beginning of the year and monitoring your plan on a monthly basis and also taking action.
Bill: Yes. So, it really seems like the technology allows you to use your two year term. The CEO, the practice to really now be able to take that step back and to help. Work on the business versus just working in the business.
Mohamed: Absolutely, 100 percent. And, I do sympathize with doctors, dentists. I mean, they are in different circumstances where their time is absolutely valued chair time. That's your value in seeing patients. So, you need to rely on other data sources and other people to get that information.
Not like a CEO of an oil and gas company where you have, you're sitting there, you're looking at the vision and you're having your nice lunches, right. I mean it's a different it's a different it's a different setup.
Bill: That totally makes sense. So, what kind of examples do you have?
Mohamed: Look, having the data, it's great, but it's not the full picture. We can give you all the data you want, right. And report in every KPI under the sun. So that's great, you need that. I mean, you need a number of KPI is you need every everything. But number two, you need to take action. So the example that I want to share here is, we have a client that, when we when you look at this client, I mean–let me kind of set up the picture for this example. It's an office that generates about three million dollars a year in production. It's not bad. And it's about 70/30 split between dental revenue versus hygiene. So you can say, OK, a very healthy split between, the dental and the hygiene. When you look at the profitability of the practice, it's doing good. There's no alarms. Let's put it this way. OK. So when we set up the key performance indicators for the team and the targets that we want to see for this practice, we noticed that their hygiene production per hour is constantly down. Right. It's not hitting what we were expecting for them. And then when you see that, over a span of three, four months, it's like, OK, well, this is something that does not make sense here. The wages and salaries are slightly high, but not, nothing too alarming. So, you can see these little warning signs. And sometimes the picture doesn't develop until you can see it, you can sit down and say, OK, I am not meeting these targets by, let's say, 20 percent or 30 percent. OK, on a month to month basis. OK, that's fine. Maybe we had a bad month. But when you see it over a six-month span, you start to realize we have a missed opportunity here. And in this example, the missed opportunity was almost three hundred thousand dollars. When you when you annualize that opportunity and without looking at the numbers on a monthly basis, without looking at a trend, it would have been very hard to spot that opportunity.
So, again, that's great. Opportunity was spotted because of all these lovely tools and reports and whatnot. And the second key thing here is what are we going to do about it? Right now, I'm not the CEO of the dental clinic. I mean, that is where I think the leadership role comes in to look at these opportunities and efficiencies and then take that information from these reports and go to the team, implement them, figure out what's going on and keep enhancing that process.
Bill: But you are unique. You were at least able to help spot that right. And take that back as a hey, you're cured here, something that's is now looking to be more of a trend versus just a single thing that happened month on month.
Mohamed: Absolutely right. We put all these reports together. We give it to the client. We provide them with our feedback, what our view of what's going on. And then a good CEO, a good leader would take that information. Go back to the team and try to figure that figure, that piece out.
Bill: And this is what I think has been so cool. Knowing you over the years is really seen how you've been really challenging the typical definition of what it looks like to work with an accountant, bookkeeper.
Mohamed: I mean, at the end of the day, it's typically a very reactive relationship and being able to surface this type of data. That's significant advice that equated to real dollars.
Bill: Absolutely, appreciate it. Well, listen, this is this has been fantastic. I think one of the questions that I'm faced with is, hey, at the end of the day, are you running your practice as profitably as you could or are you using technology to help deliver that impact with any closing remarks or dark thoughts on your bottom in?
Mohamed: We're happy to come and kind of assess what's going on with your current accounting process. Well, number one I am a designated accountant, but I actually don't do anything with the taxes. So that relationship that a dentist or a medical office have with a tax accountant, that relationship stays the same. What we do is we would come in and kind of understand your workflow in terms of accounting and bookkeeping. We will implement accounting tools or technology stack to optimize the delivery of financial reports and financial systems. And then we can set up the targets. The KPI is the budget for Foreign Office. And then at year end, we work with the tax accountant to kind of give them that information that they need for tax purposes. So our goal is to really help dentists and medical providers really understand what's going on in the practice, help them grow their business and alleviate that stress, the stress of not knowing. I don't know if I'm making money. I don't know what's going on with my practice. We eliminate that stress or reduce it sounds like in many respects kind of complement the work that's already happening. But just tie it together, right?
Bill: Absolutely. Absolutely. Well, listen, hey, this has been a lot of fun. And thanks for thanks for helping me be part of it.
Mohamed: Appreciate it. Well, thank you. Thank you for this webinar. Hope this has value for everybody here for sure. Thanks, Mark. OK. Take care.