The Miracle of 1
I must have struck a cord last month, because some of you, not all of you (I know who you are) must have gone out and started telling other dentists about BEST for Dentistry. BEST truly is a successful strategy that you decided to share with your friends. Along with more doctors joining BEST, I also got a bunch of emails asking about overhead, how much is “better” pricing, and debt. I guess I am a little surprised at how many doctors are finding themselves in a position of financial crisis or as I like to call it: Financial captivity. BEST (www.bestfordentistry.com) is your unsurpassed, first place to begin, but I wanted to take the time and talk about or expand on how little changes can actually reverse poor trends and results in just a matter of months.
Did you realize that, even in a $500,000/year practice, if you raised your fees just 1% per year that over a thirty-year career, without even considering the investment returns, you will make an additional $2,556,370? The problem is that more and more offices are dependent on managed care patients to make ends meet. If , like most doctors, a larger and larger share of your practice is insurance dependent, you will find that raising your fees does little to actually alter your reimbursement. So what worked a decade ago will not work today. You still need to raise your fees every January and June a couple of percentage points but the increase will just effect the fee for service patients. The trend today is for most offices to have somewhere around 60-80% of their patients having some form of dental insurance. The ADA says that only 7% of dental offices nationwide are not participating as an in network provider for some insurance plans.
Another way to look at this 1% would be in collections. Same thing works here. A 1% increase in collections over a 30-year period in a $500,000/year practice yields an additional $2,556,370. The old 98% benchmark for collections went out the door when we stopped being the bank and carrying an accounts receivable while waiting for the patient to pay. Today the benchmark should be in the 103-110%, if you encourage paying in advance of treatment and use outside financing companies. Start the mantra and begin to brainwash your staff to see the importance of 1% more. The ripple effect means fewer upset patients, more direct referrals, and less cost for staff chasing your money when you do financial arrangements right the first time.
Consider this: The average savings for using the BEST Alliance Partner is 27%. Figure that savings amount over a 30-year career and you could probably retire debt free, with a huge accumulation of cash to fund an incredible retirement 10 years earlier than most dentists.
How about doing “1” more per day? The strategy of same day service will easily let you add one more procedure per day. If your crowns are $1,000 then you would add about $200,000 per year by doing one more per day. Even a single, simple extraction or one cleaning more per day will add $20,000+ additional per year to your bottom line.
Statistically, you will spend 50% of your income paying off debt over a lifetime. So consider what it would mean to pay off “1” interest laden debt every year while not making the same mistake and going back into debt to purchase things that don’t yield a significant ROI (Return on Investment). Paying cash for cars, toys, and equipment will quickly build a multi-million dollar war chest over the lifetime of your career.
Hiring “1” more staff person at the right time (when your production is $20,000-$25,000 per employee per month) means an increase in production of about four times what their salary would be. Do the math: You pay them $4,000 a month and you produce an extra $16,000 a month. That is an investment that should yield a 4 to 1 return. How long would you like to give someone a one dollar bill and get four back? Unless you’re asleep at the wheel, that would be all day long.
Success in life and success in business tend to turn on the simple things. Remember that adding just “1” or subtracting just “1” can mean the difference in economic freedom or a life fraught with stress and a mediocre business model.
This is how you Summit.
Michael Abernathy, DDS
PS — Contact me and let me send you a “growth analysis sheet” to fill in and I will be glad to give you over an hour of my time to identify any blockages that I see along with how to fix them, so that you can make 2016 a year to remember.