In any type of business, most owners fail to really identify problems. Instead, they tend to look at the “symptoms” of problems. For example, in a dental office an owner might say they have a collections problem (their symptom), rather than identifying the actual financial arrangements with the patient (the real problem). They need more new patients (the symptom), but the real problem is patients don’t like the office and don’t come back or refer their friends and neighbors. We as a group need to take the time to sit back and look at our challenges in a different way. As we talk about this new way of looking at your business, we need to start with the end in mind.
Buried deep in the basics of business is a common word that describes an essential tenet necessary to achieve success. “Capacity” is the upper limit of which something can contain or obtain. The term itself creates the word picture of some level or point at which some process or business is limited. It cannot exceed its capacity. In a dental sense, there are many areas where, due to being at or approaching this finite limit, you will stunt both practice growth and profitability. You literally lose your momentum and timing. For our purposes I want to borrow a concept from a 1984 book called The Goal by Eliyahu M. Goldratt. The premise of the book is that to grow and thrive, you must identify any “bottleneck” in your production system and restructure your organization to work around it or fix it. This causes you to focus on the actual problem instead of what I consider just symptoms. In other words, capacity limits are most likely caused by some bottleneck in your office. Stay with me. I know this paragraph was a little dry, but the concept of capacity along with identifying bottlenecks is the fastest way to increase profit, decrease overhead, and ensure a consistent steady growth in your practice of 15% to 20% a year regardless of the economy.
Strangely, I don’t find many references in dental articles, books, or even lectures that mention “capacity” when talking about areas that limit success in the dental world we live in. It is rare to hear of anyone “working on their bottlenecks”. What I would like to do is list a few bottlenecks and capacity killers along with the proper way of looking for and at the ripple effect of not dealing with these areas continuously. It is in the solving of the capacity issues that you will find less stress and a powerful tool in order to guarantee your future success.
Physical capacity bottlenecks: Keep in mind that I am not trying to list every single blockage in each category. I am trying to help you look at your business in an entirely different way than most doctors do. When we think “physical” we think of the brick-and-mortar things that we need in order to work on patients. Like it or not, each one of these blockages destabilize the foundation for a successful practice.
Let’s take an office that has only 4-6 ops. Pretty average number of ops, but if we have a doctor that has a historical increase in growth (new patients, production, etc.) 4 or even 6 ops will become a bottleneck to continued growth and profitability. Symptoms of a “physical capacity blockage” might be the inability to schedule new patient appointments within 4-10 days of the initial phone call (this is the goal and ideal). Instead, it takes a month or so to get them in for just a normal new patient cleaning and exam. This is a growth killer. On one side, the doctor feels busy because patients are trying to get into the office. On the other side, not being able to get them scheduled in a timely manner creates negative marketing because patients think you don’t want direct referrals and more new patients. It will also make your cancellations and no-show’s skyrocket. It is a subtle killer of growth and consistent financial success. Well run businesses should always be growing. A growth plateau is a sign of physical capacity bottleneck. These same doctors tell me that they do recognize that the office needs another op or two, but they feel they can’t afford to do this. Ideal production per op should be in the $25,000-$30,000/month range. Figure out the cost for the expansion and then assume that whatever your production per month per op is, each new op will generate at least that much in each future month. Sort of like marketing: You spend a dollar, and your ROI should be at least three to one and probably more. With that math in hand, you really can’t give me a good reason to not invest the money to expand or move.
Staff capacity blockage or bottleneck: Most dental offices don’t take the time to look at this particular bottleneck with the mind of a businessperson. They tend to be over-staffed and under- producing. The symptoms show up as an increased cost for your team. Ideal cost for all employees would be in the 25%-28% range of your monthly collections. Just to be clear, as I give you symptoms of the problem, take the time to reflect on whether you even know or follow these numbers. If not, you will never be able to address or fix a blockage you don’t actively measure. What gets measured gets done. This will be applicable to any bottleneck.
Before you wander off or lose your concentration, understand that these benchmarks and symptoms are key to your ability to manage and lead a successful dental office. In this case, you should ideally be collecting about $20,000-$25,000/month/employee. The math is easy, just divide the number of full-time employees (it can be a fraction like 6.2 to account for the part-timers) and see what you get. If it is in the $14,000 range (a bad symptom), your overhead will be high and, until you embrace that percentage benchmark, you are personally never going to be taking much home.
Let’s look at one more example of a staff capacity blockage. You have an average number of new patients per month of about 25 to 30. That would be about 360/year, but you only have one hygienist (bad symptom of a bottleneck). This will be a huge blockage showing up as low production in hygiene (not 33% of the total collections like it should be), hard to get new patients an appointment within 4-10 days, lots of cancellations and no-shows, few direct referrals, and very few patients coming back into the office through hygiene. Each of these are horrible statistics, but they are really only symptoms of a staff blockage. Fact: The average hygienist can only see about 650 patients a year if they see the patient twice per year, still see the new patients, and do a little scaling and root planing. That means in our example of having 360 new patients per year, you should be hiring an additional hygienist every two years. If you are not, you are losing more patients than you are retaining. A statistic that is pretty hard to swallow, but a very common one, nevertheless. The challenge is that few practices look at this area, and if they do, they don’t act quickly to remedy the cause. Look for and find the blockage and then quickly eliminate the bottleneck.
Case acceptance blockage: With the average dental office having below a 60% case acceptance rate (gigantic symptom of a huge problem), this bottleneck is imperative to identify and fix. The symptoms can be having a very busy schedule, with not much production and a high overhead (ideal overhead would be at least 63% or less or in the mid to high 50% range if the practice has been around 5 years or more). This is created by doctors that are approval addicted and very nonassertive in telling patients what they actually need. It could be the overly assertive doctor that overwhelms patients with their huge treatment plans. It is also attributable to not partnering with your team to stage treatment planing in a way that helps people want what they actually need. Finally, it could come down to poor financial arrangements to help patients afford what they need. While I am not going into how to do case presentation to get over a 90% “yes” rate, you need to understand how endemic this blockage is in dentistry. If you want to research and get some help with this, simply go to www.summitpracticesolutions.com/blog where you can key word search and read almost 800 articles that address this in detail. Take advantage of this free source to turn your results around.
Leadership and Culture blockages: This one can be tough to identify. It’s tough because it is so obvious to anyone outside the practice but almost invisible the owner doctor. Many of these owners have a great self-image for no apparent reason. It will usually show up as something else, but if we take a deep dive, it always comes back to a lack of leadership and not having a Purpose Driven, Doctor Led, Staff Owned culture (read about this by getting your free copy of The Super General Dental Practice at www.supergeneralpractice.com).
The huge gap between great leadership and poor management comes down to having a group of people who comply with the rules and regulations of your office (a general sign of poor leadership), that are driven by the carrot and stick attitude of a micro-managing boss, as opposed to a vision driven, committed team, who put the success of the practice above their individual needs. This transformational leadership will always produce committed and long-term employees that love their profession and infect their clients with the same enthusiasm that they have. For the most part, the symptoms can show up as high staff turnover, difficulty finding team members, poor overall results in every category, and a doctor that is pretty clueless to the obvious facts. This is the most difficult blockage or bottleneck to overcome because it is so hard for the owner to accept the need for accountability or complicity with the staff, and then stop and make a 180 degree turn in almost every aspect of their practice.
Time capacity blockage or bottle neck: I find that commitment is often something someone says while their actions indicate something altogether different. In chasing success in dentistry, there are an unlimited number of things you can do to improve your practice results. The challenge comes in knowing your time constraints and limitations. Too often, we “commit” to some action or strategy only to be foiled by our lack of time to actually do the thing we set a goal to do. If you are like me, my life is pretty well ordered. I mean, most of my days and weeks are filled with commitments other than my business. Like you, I try to hit a balance between work and family, and business and play, while constantly juggling the other things or people that require my attention or attendance. We all have this. Point is, if you are serious about change, better results, and an above average financial future, you must order your time and commitments. If I decide to do something different or something in addition to what I am already doing, I have to understand that if I am going to pick up something else, I need to lay down something to make room for the time it will take for me to perform this new action. You can’t just add things to your schedule without understanding the ripple effect that making this commitment has on everything else. Too many of us are overwhelmed, underpaid, not appreciated, and there comes a point when you are no longer in control of either your practice or your life. Time is finite, and what you do with it will determine how far you go in life. As a dentist, you have the intelligence to master anything you want. You just can’t master everything you want. So be careful and choose wisely. Over committing and underperforming will always result in poor and sometimes unexpected results.
So, we come full circle. Take the time to analyze your practice for bottlenecks and blockages. Understand how not dealing with these fundamental business principles will doom everything else to limited success or downright failure. Start with the bottlenecks, simplify your culture, and find the results you have been looking for.
Michael Abernathy DDS
[email protected]
972.523.4660 cell