REASONABLE ASSUMPTION OR UNINTENDED RESULTS?
We have spoken about secret myths and bucket lists that most dentists harbor. One of them is the desire to have an associate and/or partner along with multiple locations. I want to take a moment and discuss why average practices don’t, and will never, have the option to do this unless they drastically change their mind set and results. Worse, being successful will be the only thing that saves the independent practice of dentistry. So, to recap:
- Most practices are not poised to successfully bring an additional doctor on.
- Every independent dental practice will have to learn how to bring another doctor on to secure their survival in an ever changing dental economy.
This means we find ourselves between a rock and a hard place with no way to ignore the threat of Corporations and insurance companies and still maintain an independent dental practice. To survive, we must take what corporations do well (effective marketing, extended hours, mix of services, convenient location, etc.) and add what independent practices do well and develop a hybrid to create the best of both worlds.
In transitions, average practices tend to always end up with unintended results caused by not identifying the very things that make them average. When it comes to sustained growth, great business models, controlled overhead, and competitive dental strategies, average practices have to see that:
- It’s OK to have a low average number of new patients (25-30/month) as long as you can double it when you bring in another doctor. It kind of assumes that you have the understanding and skill set to attract any number of new patients you need. Along with the knowledge you have to be willing to make the commitment in dollars to do whatever it takes in a very competitive marketing arena.
- It’s OK to have an average production number ($800,000/year) if you have the skills to double it within 6 months of hiring the new doctor. I generally find that you ought to currently be producing over $1,200,000 per year before considering a transition. If you had the systems and protocols of a practice poised for growth, you probably would already be producing a lot more than an average practice. Hiring another doctor without the skill set of established systems and highly trained and motivated staff just means a very rocky and costly temporary arrangement that is doomed to fail. The good news is that we can help you with all of this.
- It’s OK to have an average overhead (67%-75%) as long as you can lower it below 63% prior to hiring another doctor.
- Finally, it’s OK to be average as long as you have had at least 15% growth in the last 24 months. In other words, that average production of $800K a year is not a plateau, but just a sign post on the way to more production each year.
There is the opposite of this because it is not OK to consider a transition until you can clean up a few things. It is NOT OK if:
- You are burned out and ready to quit.
- You have stopped growing and learning.
- You are not embracing change and making the necessary course corrections that really good businesses make to stay relevant to their clients.
- You are not excited and committed to additional growth. It is that very commitment and engagement that you will have to model for your staff to make this transition work.
- You have not involved the entire staff during the selection and integration process of another doctor during the transition.
“Why would I consider a transition?” is probably the most important question you should ask yourself and your staff. I see this as having a very black and white answer and should be considered with some definitive certainty.
- It is the best and probably the only way to preserve the independent practice of dentistry.
- It is the only way to sustain growth. All of us will limit out by our own horse power. If we are truly inspiring our patients, you could not help but outgrow your current schedule, facility, and staff. Success is growth, and if you have stopped growing it is long overdue that you address the causes.
- Adding capacity whether it is staff or facility is the natural progression of a successful business model. If you don’t really need to add a doctor or hygienist or OP, you probably are not growing and are not competitive in the market place. You will be the first to go.
Setting these goals and moving towards a transition demand that you know yourself and make reasonable assumptions so that you never get unintended results. That is how you Summit.
Michael Abernathy, DDS
PS – You might want to consider my book THE ROADMAP to Wealth & Security. It is a complete guide to dental transitions. Just click on the link, then scroll down the page until you see the book. If you read the book and still have questions, just call me.