Dr. Marc B. Cooper President/Founder

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1 Dr. Marc B. Cooper President/Founder

2 The Ascendency of Managed Group Practice

3 Ground Rules Since the future has yet to happen, many possibilities exist. This is how I see the future of dentistry: This is not the truth. Not asking you to believe me. You need to think for yourself. You are responsible. You are the chooser. Every choice has a consequence.

4 When it comes to the future, there are three kinds of people: those who let it happen, those who make it happen, and those who wonder what happened. John M. Richardson Jr. Professor of International Development American University

5 "A newspaper is better than a magazine. A seashore is a better place than a street. At first it is better to run than to walk. You may have to try several times. It takes some skill, but it is easy to learn. Even young children can enjoy it. Once successful, complications are minimal. Birds seldom get too close. Rain, however, soaks in very fast. Too many people doing the same thing can also cause problems. One needs lots of room. If there are no complications it can be very peaceful. A rock will serve as an anchor. If things break loose from it, however, you will not get a second chance.

6 KITE "A newspaper is better than a magazine. A seashore is a better place than a street. At first it is better to run than to walk. You may have to try several times. It takes some skill, but it is easy to learn. Even young children can enjoy it. Once successful, complications are minimal. Birds seldom get too close. Rain, however, soaks in very fast. Too many people doing the same thing can also cause problems. One needs lots of room. If there are no complications it can be very peaceful. A rock will serve as an anchor. If things break loose from it, however, you will not get a second chance.

7 Context Decisive

8

9 STEP I LEARNING GROUP STEP I LEARNING GROUP Evidence of Context Shift o Midlevel Providers o Loss of Individual State Licensing o Multi-site, Multi-provider Practices o Itinerant Specialists o Managing by Risk and not Disease o Rapid Growth of MSOs - DSOs o Consolidations and Acquisitions o New Dental Schools o New 3 rd Parties o Corporate Competitors

10 STEP I LEARNING GROUP

11

12 Context Context Context determines what Decisive succeeds & what fails

13 Run Rate 92% 76% 69% Hope Most Likely The ADA and Health Policy Resources Center (HPRC)

14 90% Strictly Fee of Service Solo Practice Divisional Practices Managed Group Practices Corporate Other Forms 20% 10% Growth of Managed Group Practice to Divisional Practice was 20 to 1 (ADA and NADP)

15 STEP I LEARNING GROUP The ADA recently reported that nearly 73% of all dental patients last year had some type of 3 rd party, meaning, 73% of the available dental patient market either has insurance or is on Medicaid. Furthermore, 92% of all dentists are contracted with several major PPO plans as participating as in-network dentist. That leaves only 8% out there that are true fee for service practices. Even among the 8% fee for service, even those practices see a good majority of insured patients. The facts are clear, our society has become accustomed to purchasing dental insurance and insurance is here to stay. The American Dental Associations 2012

16 STEP Dental I LEARNING Insurance U.S. GROUP 90% PPO Insurance 74% 40% NADP

17 Only 20% of new dentists entered into some sort of dental practice ownership structure upon graduation in 2006 vs. 26% in Between 1989 and 2006 the number of dentists who work as employees has increased from 50% to 75%.

18

19 Couldn t Be Better Dental Economics, March 2013

20 Change James Collins, Jerry Porras, Jeanie Daniel Duck, Richard Pascal Harvard Business Press, 1998

21 Change Where is the majority of your membership on this curve?

22 Adoption Curve

23 Adoption Curve Managed Group Practices 17% Tipping Point 15% - 18% Malcolm Gladwell The Tipping Point

24 Context/System Change

25 Purchaser PASSIVE Provider DRIVER Patient DECISION Payer/Plan PASSIVE

26 Purchaser PASSIVE Provider DRIVER Patient DECISION MAKER Payer/Plan PASSIVE

27 Purchaser PASSIVE Provider DRIVER 80 / 20 Rule Patient DECISION MAKER Payer/Plan PASSIVE Solo Group

28 Purchaser DRIVER Provider PASSIVE Patient PASSIVE Payer/Plan DECISION MAKER

29 Purchaser DRIVER Provider PASSIVE 80 / 20 Rule Patient PASSIVE Payer/Plan DECISION MAKER Solo Group

30

31 Consolidation Throughout the System o Providers/Dentists o Insurance / 3rd Parties o Vendors o Strange Bedfellows

32

33 The intention of consolidation is to: o Increase Top Line Revenue - Production o Decrease Costs Fixed and Variable Expenses o Increase P/E ratio o Increase EBITDA o Enhance Marketing o Economies Scale (Contracting/Purchasing/Staffing)

34 Consolidation will only work when linked to Collaboration CONSOLIDATION Structural COLLABORATION Relational

35 STEP I LEARNING GROUP STEP I LEARNING GROUP Domains of Thinking Dentist Individual I/Me Dental School

36 STEP I LEARNING GROUP Dentist Individual I/Me Relationship You and Me Dental School Associate or Beginning Practice

37 STEP I LEARNING GROUP Dentist Individual I/Me Relationship You and Me Group Us Dental School Associate or Beginning Practice Practice Owner

38 STEP I LEARNING GROUP Dentist Individual I/Me Relationship You and Me Group Us Dental School Associate or Beginning Practice Practice Owner Organization We Senior Executive Board Director

39 STEP I LEARNING GROUP Dentist Individual I/Me Dental School Past Future Relationship You and Me Group Us Organization We Associate or Beginning Practice Practice Owner Senior Executive Board Director

40

41 CONCIERGE PRACTICE

42 DIVISIONAL PRACTICE

43 MULTI- PROVIDER PRACTICE

44 MULTI- PROVIDER MULTI- LOCATION

45 DSO Internally Managed

46 Regional MSO DSO

47 National National MSO DSO Regional

48 Global National National MSO DSO Regional

49 Dr. Marc B. Cooper MasteryCompany.com

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