It’s 2020. A new year, a new decade, and a great time to get your dental practice on track for its most successful period yet. To make that happen, however, you’ve got to have a plan and the sooner you get that plan in place, the better. Ultimately, the day will come when it’s time to put your dental office for sale and the time to start building value for that transition is now. In the meantime, you can enjoy the rewards that your increased success will bring.
There are different ways to measure success. It can be in increased overall production revenue (a good measure for a young or mid-career doctor). It can be in increased production per hour, leading to having to work fewer hours (this might be better for an older doctor who is looking to work less but maintain a steady income). Whichever measure you use, the following steps will work for any doctor who wants to increase earnings for their practice.
Step One: Make a Production Plan
First things first, you’ve got to have a specific plan that includes your ultimate goal and the steps along the path to reach it. For instance, if you want to reach $1.5 million in production, that will require you to bring in $31,250 each week (based on 48 work weeks in the year—you can, of course, adjust that for more or less time off). Breaking it down even further, if you work 40 hours each of those 48 weeks, this will mean you need to be producing around $721.25 each hour you work.
Next, how do you do this? First, you should set daily production goals and work with your scheduling coordinator to arrange appointments that will enable you to meet those goals. Their job is not just to keep the chairs filled but to do so in a way that maximizes your production per hour. This means that they need to be trained on each procedure you perform, how long it takes, and what it’s value is in production. It’s like a jigsaw puzzle, figuring out which piece goes where to create the overall picture. If all your scheduling coordinator is doing is fitting patients into open spots on the calendar, you don’t end up with the picture you want, just a jumble of pieces. But when they know how to look for the right spot to schedule the right procedure, the vision of your production goals will come into view.
Second, you should have a designated treatment coordinator who is effective at presenting the treatment plans for all of the producers in your practice, and they should be able to meet, at a minimum, an 85% acceptance rate. Determining and providing clinical treatment is your skill. This is differentfrom being able to help patients understand the importance of accepting the treatment plan. You want the best person for each job. This team member should be able to spend as much time as necessary sitting face to face with your patients, to answer questions, resolve concerns, and address any perceived barriers to acceptance of the plan. Your treatment coordinator should also follow up with patients after the initial presentation as part of their regular responsibilities. This is how you get more patients accepting treatment, scheduling the next appointment, and boosting your production.
Related to increased reliance on your staff is raising your overall customer service standards. When your patients feel seen, heard, and well cared for in every aspect of their experience with your office, that boosts your reputation and increases your word of mouth referrals (and, remember, when you put your dental office for sale, most of the value falls into the nebulous category of “goodwill,” and you will be well served by being able to demonstrate the goodwill you have built through superior customer service). You can become known as the best doctor in town when your patients feel that they are cared for. This leads us to the next step.
Step Two: Remember the Patient’s Needs
Too often when patients are presented with treatment options, the plans are presented on an assumption of what the doctor or office believes the patient can afford. This is the wrong approach. It assumes the best option to present to the patient is the one the doctor is betting the patient is most likely to accept. This puts the doctor’s interest (in getting the patient to accept further treatment) above the patient’s (in getting the best treatment for them). Your office should be presenting all available options to the patient and letting them choose for themselves.
This approach, however, involves a little more time and patient education (which is why it’s best to have a designated treatment coordinator, who can put in that time). Your treatment coordinator should present all available treatment options and address the patient’s immediate needs, their long-term needs, and any other treatment options that the patient may have asked about. When patient’s understand what is available and how the options do or do not address their needs and desires, they are more likely to accept further treatment. Its empowering them to make a choice in their best interest, rather than have only one option dictated to them.
As stated, however, this requires time and education. Patients have to be informed about what the treatment options are, what they entail, and what clinical issues they will address (and what they won’t). When patients are shown what is happening in their mouths (with x-rays or other images), and when they learn about the conditions you’ve diagnosed (perhaps through videos), they have a much better understanding of why you are recommending a course of treatment. When they know what you know and they understand its importance, leading to a higher acceptance rate.
Step Three: Review Your Production Reports for Indicators of Problem Areas
Do you know how much money is owed to your practice right now? If not, you should be reviewing your practice reports carefully, looking at things such as your accounts receivables and outstanding insurance claims. You should know how much is owed, and from who, in order to better be able to collect and perhaps make changes to resolve any consistent problems in these areas. You also need to review your production, new patient flow, and patient retention for any recurring issues that need to be addressed.
If you have associates or other doctors working in your office, you should review these reports for their production, as well as your hygienists. If your software allows for production forecast results, use that tool to identify slow periods in production that may lead to shortfalls. As noted above, a key to increasing production is maintaining a consistent level across all providers each hour of each day of every week throughout the year.
Reviewing these reports with your team members will also help them to understand how each part of the practice impacts the others. That is, the success of each person in your office helps the other team members do their job better. Think of rowers on a crew team: maximum efficiency comes from precise, coordinated effort. One person out of sync will slow everyone down and require them to work harder to make up the shortfall.
Additionally, having this kind of detailed sense of your office’s production, and having all of your team members working together, will be a great aid when you put your dental office for sale. Prospective buyers will pay more for a fine-tuned machine than they will for something that needs work.
Step Four: Reduce Your Overhead
If your practice is doing well in an overall sense, you may not have felt the need to look too closely at your overhead costs. If it isn’t broken, don’t fix it, right? Sometimes, however, we don’t know something is broken until we examine it.
What is reasonable overhead for your practice is going to be determined by a number of factors that are specific to your practice. That said, a good rule of thumb are the industry standards. Use these as guides and review your costs and see how close you are. If you are too far off these benchmarks, look at those expenses to see what’s happening and how they can be reigned in.
For the dental industry, the standard is about 55% of your collections. That means you keep 55 cents in profit for every dollar you make. To break it down further, here is about where you should be with specific overhead categories:
- Payroll: 20%
- Laboratory: 10%
- Rent: 5%
- Dental supplies: 5%
- Payroll taxes and benefits: 3%
- Office supplies: 2%
- Miscellaneous: 10%
If your overhead is out of bounds with these standards, make the necessary changes to reign it in. You can then take the money you’ve saved on overhead expenses and reinvest it in things that you may have thought you couldn’t afford, such as technology that will increase your productivity and attract patients.
If You are Thinking of Putting Your Dental Office for Sale, We Can Help!
Here at ddsmatch Southwest, we are dental practice transition specialists with an expertise in counseling doctors on how best to position their dental office for sale. We’ve developed a Practice Optimizer to help doctors plan and prepare for their future. If you are considering transitioning your dental practice in the next five years, contact us today and find out what we can do for you.