Most of us when faced with a challenge or competition tend to psych ourselves up by demeaning our adversary. Nowhere is this more common than on Facebook and nothing is more frequent than dentists dismissing the onslaught of DSO’s and large multi-office corporations in the face of our new dental economy. To set the record straight, I will agree with many complaints about the shortcomings of a system of non-dentists from a corporate business background running a dental practice as if we were selling commodities. On the other hand, I tend to look at trends in the marketplace to adapt to the reality of what our patients are demanding. Consumer’s shop, they are fickle, more nomadic today than ever, and they buy what they want to buy where they want to buy it at a price they sense they can afford.
Where is the balance of reality in our perception of what is ideal? Is it possible to salvage the future of the independent dental practice in light of the number of multi-doctor offices increasing 20% a year and solo practices decreasing by 7% a year? Do you have your eyes wide open and your situational awareness cranked up enough to adapt to an ever-changing dental climate? Please accept the fact that these changes are not new. These challenges have been faced by generations of dentists in the past and they have persevered. But will you be one of the success stories or one of the doctors that never reached the level of success in business that you always thought you would be able to attain? I for one believe in the independent practice of dentistry being the gold standard for care. With that said, I also believe that the dentist who clings to the traditional practice of dentistry will be the last to change and the first to fall. Our future will belong to those of you that accept and embrace the change, adapt to this new healthcare environment, and act quickly to take the crucial steps that allow you to compete in the market place.
The myth of thinking that DSOs and large multi-office corporations are doing it all wrong is short sighted. Their track record has been spotty at best, but the few DSO’s and corporations that do it right will be here forever. Their biggest asset is a culture that adapts and changes when they get it wrong. Our biggest hurdle is putting our heads in the sand and thinking that this will all blow over while we cling to an outdated business plan that died decades ago. The successful independent practices of the future will have 6-8 ops, at least two doctors, twice the number of hygiene hours as doctor hours, consumer hours that include every weekend, a wider range of services in one location and a wider range of ages being treated in that location.
In every competition, the wise participant assesses their adversary and assumes that they got to the playing field doing something well. It is this “something” that each of us need to ferret out in order to add to what we do well while minimizing those things we struggle with. Following this train of thought, I want to make a short list of the things that I see DSO’s/corporations doing well. These are the things each of us should consider adding to our own game plan, and we need to do it quickly. These are the things that successful DSO’s/corporations do well:
They pick the best location in town: Great visibility, high traffic count, LED signage, new up-to- date facility, and located exactly where women will be. Our businesses are handicapped without a great location. Invisibility in the market place will put you at a huge disadvantage. If you don’t believe this, open an office on the third floor of a professional building with no signage, poor parking, and 10 more dentists in the same building and see how you fare. Location is the number one startup box you need to be able to check off. In fact, consider that if you have been in the same location for the last 10-15 years, you probably need to move. Time changes everything: Demographics, race distribution, and income numbers, quality of the location, traffic and shopping patterns. What was good yesterday may be a huge handicap today. The competition knows this and their offices are impressive. They make a statement and in the consumer’s eye they are “remarkable” when their office is compared to the run of the mill dental practice.
They understand the business of dentistry: They know their numbers and follow them every day. Decisions are made on facts, not feelings. This is where we need to learn something. We need to stop thinking like a dentist and begin assessing our practices as actual business owners. The competition knows how many new patients they get daily, where they come from, profits, losses, ROI, etc. They run their practices as businesses and are quick to make changes if something is not working.
They have mastered and adequately funded a consistent marketing outreach: They plan for the future and follow a consistently successful marketing program in every office they open. They budget for marketing as an investment, not an expense. Each of us should also look at marketing spending as an investment that should produce at least a 3 to 1 return. I spend a dollar and get three back. While that sounds pretty good to me, our competition usually beats that return. They fund their marketing in advance and use it to control the profits in the office. Any new office upon opening should expect to spend $50,000 to $60,000 within the first 6 to 9 months on historically successful marketing outreaches that have proven to work with the type of demographics and location where you have chosen to open your office. (NOTE: Historically successful marketing outreach does not mean what some marketing guru wants to sell you.) This will continue or perhaps even increase until your collections allow you to spend the same or greater amount and that should settle out at about 3% to 5% or more every month. Your competition has marketed in varying locations and they know the game. They don’t buy the silly marketing tactics that we dentists typically chase. They know they have to be “remarkable” to compete in the marketplace. They understand that marketing is basically telling your story well. Good offices that do marketing well have become experts at listening to their clients and giving them more of what they want and less of what they don’t want.
They deliver dentistry for the whole family: There was a time when the public was OK with going to one office for the kids, another for oral surgery, and once again another one for their root canals, etc. Not anymore. The fickle mindset of the consumer has once again changed and they are looking for offices with: consumer hours that fit the schedule of their busy family; address their already stretched and stressed family budget; accommodates the whole family (all ages – even kids); and provides most or all of the “used to be” specialty treatment procedures. That’s why specialists are gobbled up by these DSO’s and why more and more dentists are doing the ortho, implants, pedo, and “specialty” services once reserved for the specialist and boutique practice.
They understand how to play the insurance game: Two facts you need to digest and then decide what you are going to do about them. The first is that patients with dental insurance want to use and maximize those benefits. In other words, 75% of the people you will see have dental insurance and they will look to find a great dentist that is in-network to maximize their benefits. This isn’t good. But it absolutely is a fact. I would love to be back in the “good old days” and have nothing but fee for-service-patients, but this has become more and more of a challenge. Fee-for-service practices will always be out there, even though they are currently only about 6% of all dental offices. But at some point, there will be some doctors, some locations and some practices that may need to take a hybrid approach and go in-network for some insurance companies. DSO’s and corporations that do well have figured out how to become a Tarzan in a managed care jungle and still maintain an acceptable level of profitability. We have consulting clients with great practices that are in-network with all the major insurance companies and still maintain an overhead below 60%. STOP! I will bet that a percentage of you reading this just had a passing thought or justification: That these practices don’t do good dentistry. In fact, as you are thinking like a dentist, you also said to yourself that “they are doing it wrong”. Stop thinking like a dentist and start studying those offices that “do it right” and change your attitude and trajectory and act on improving your own game. Follow the trends, guard your core values, and monitor what your patients want.
They embrace “consumerism”: Nearly every article I write harps on this so I won’t do it now. You have to start giving patients what they want, when they want it, at a price they can afford. Don’t compromise on the results. But do listen to what you patients want. Great practices that have embraced their consumer’s mindset know that their number one job is to get patients to show up, pay for their treatment, and refer everyone they know. This simple statement should be the culmination of well thought out cultures and protocols executed in a way that inspires your patients. Do this and you will have arrived at the secret formula that every successful practice understands and embraces.
They constantly try to improve their team: At first blush this may sound a little cut throat, but in practice you will see great teams that are committed to your vision, raise the bar on their performance and, while you continue to look for better employees to partner with, you should realize that the team you have is becoming the team you always thought you would work with. Nothing short of this will guarantee success in the future. Your team has to have an ownership mentality. Constantly look for those exceptional people that could fill out your team. Never get caught hiring from desperation. It takes engagement and time to assemble the best group of people to surround yourself with.
They have multiple doctors and hygienists: Regardless of how you might define success, we should all want loyal patients that tell everyone they know about our offices. If you truly are inspiring those patients that you see day in and day out, you could not help but grow at a consistent 15% or more every year. Growth will dictate that you add more facility capacity as well as additional doctor and hygiene hours. If you are not growing, you are not meeting your patient’s needs. Simple and sad, but true. Look at your practice and see if the public agrees that you are the dentist they want and should see. Growth as well as the symptoms of growth exist to tell you when you are doing things right.
They only open practices in areas where the ratio of dentist to population is at least 1 dentist per 1,750 people or greater: Here is where “thinking like a dentist” mentality raises its ugly head when you tell yourself: “Yea but _______________!” If you are in an area with a population of less than about 1:2,000 ratio, consider a move. If you are telling yourself that this is a great place to live but the ratio gets as low as 1:1,750 don’t open a practice there. This is the number one reason even talented dentists with great offices struggle to maintain consistent growth. You are in the wrong location.
They only open offices in areas with household incomes of $60,000 or greater: Like it or not, there are locations where income levels create almost an untenable obstacle for growth. Annual incomes below $35,000 mean they can’t afford most comprehensive dentistry. Incomes of over $85,000 means most came from middle class families that have always gone to the dentist, have always flossed, probably went to college, and will likely not need any dentistry. Age also tends to affect or result in lower incomes to the point that if the average age is less than 30 they won’t need, or even if they did, could not afford comprehensive dentistry. Everything matters, but age, income, education, and competition are the foundational building blocks that either support a super general dental practice or bring it down to just average.
They know that their patients will only drive 18 minutes for dental services: Before you text and email me about all the patients that fly from Europe or hitchhike 6 hours to come to your office, don’t. We all have those. But growth will hinge on those potential clients that are close to your office. You will notice that this did not say 5-mile radius of your office. That’s because there could be different demographics within that circle, or some geographic impediment like a river or interstate that people will not cross to seek dental services. You could even live in a densely populated area with a lot of traffic and 18 minutes is 5 blocks. Know your patients, know your demographics, and make plans subject to those limitations to make sure you harvest the number of new patients it takes to ensure consistent growth.
They do at least 7 root canals a month: Once again the majority of offices that we see rarely do root canals. I get calls all the time where some doctor is struggling to grow and they don’t see kids, don’t do endo, no oral surgery, no implants, no dentures. They just want to do crowns and a few fillings. At this moment Captain Obvious should pop up. Of course you are struggling since you have no clue as to what a dentist does nor what your patients want.
They always offer Clear Correctors of some type: This service is popular with a wide range of patient ages as well as very profitable. Is it any surprise that almost every successful dental practice has added this service to their treatment mix? This could be the one thing that broadens your appeal in the marketplace. For whatever reason, DSO’s and large multi-office corporate groups all have this on their menu.
Their phones are answered 24/7: For the most part, they are answered by a dedicated, well trained answering service or even better, by a staff member. Almost every office we see falls short on optimizing after hour calls. This one thing could add two or three patients a week to your workload. While there are hundreds of things you could do, this alone makes you remarkable in the consumer’s eyes. You were there for them when they needed you. A service business (Dentistry) lives and dies by being there when the service is needed and the client calls. Don’t fall short on expert phone techniques 24/7.
Sorry for the length of this, but sometimes the message takes time to cover and I hope you find it worth your while. Knowledge is only potential power. It is only worth your time if you apply it. Reading or just taking courses that does not translate into action is a waste of time. Become accountable and don’t buy into the myths perpetrated by the “herd mentality” we find on Facebook and other publications. Study, verify, and apply. That is how you Summit.
Michael Abernathy, DDS