I wrote an article not too long ago about how dentists have this phantom list of things they want to accomplish in their career. The number one item was having an associate followed closely by wanting to open a second office. I just got off the phone with a doctor who wanted that very thing. His age was right, physicality of his office would work, and he had the right attitude and was planning this at a time that would benefit his eventual exit strategy. So far, everything is good. Next, I asked him to send some numbers: Fill out our Growth Analysis spreadsheet, send a copy of one week’s schedule, and a copy of a current year to date Profit and Loss Statement. Boom. It was back to me in a day or so. I like this guy. He knows what he wants and he follows up his wishes with quick action. So far, so good.
I began to do an analysis of any blockages or concerns that I saw in his office numbers and bam, not so good any more. Like most offices, the desire to have an associate just because you are tired, burned out, not meeting your practice goals, tired of managing or just wanting to share your debt with another producer does not make your office ready to invite another doctor into your office. In his case it was out of the question. Not even in the ballpark of possibilities. So here are a few items you need to check off your list before you consider the strategy of an associate in your practice.
- Direct Referrals: You need to be in the realm of at least 50% of your new patients coming from existing patients’ direct referrals. This is the best indicator that you have your house in order.
- New Patients: You can’t just be average (25-30 new patients per month) when considering adding a doctor. You will need to have at least 40-50+ for yourself and understand marketing enough to at least double (80-100) it before or just after the new doctor comes to work. Be realistic in your self-evaluation and seek help if you think you might fall short.
- Physical capacity: Assuming that you can get the right number of new patients in, you need to make sure that you have enough facility. I would count on needing two chairs per dentist and an additional swing chair when there are two dentists (5 doctor chairs total). You also need one chair per hygienist, and you will eventually need two hygienists per dentist (another 4 chairs). The question here is whether your capacity will hold you back and if you actually expand to fill the need in a timely fashion.
- Hygienists: Don’t think about adding a doctor without at least two hygienists working for you and the ability to work your recall and marketing to create the need for at least one more when the new doctor begins. You need that hygiene hub to be pouring out patients. As a benchmark, you need about two new patients per day per hygienist for your practice to be ready for an associate and then up that as you add another hygienist. That would mean about 32 new patients per month per hygienist.
- Hours or schedule: This is where the rubber meets the road. You have to question the sensibility of not being open every Friday and Saturday. This is a great way to expand your capacity as well as create convenience for your patients and provide increased new patient demand. Embrace consumer hours and convenience for your patients. Patients get to decide where they spend their money and time when it comes to services and products. Don’t forget there are a lot of dentists out there for them to choose from. Don’t become the donor practice in your town or area.
- Production of the office: I wouldn’t consider adding an associate unless the entire office is currently collecting at least $120,000 per month ($40,000 by the hygienists and $80,000 by the doctor). Achieving at least this amount is paramount in understanding productivity and a success model that will insure that your production and overhead improve after the associate begins to work.
- Production per employee: Near $20,000-$25,000 per employee per month. Average offices are typically at about $14,000 per month and have poor overheads and are under-producing. Adding an associate does not fix problems. It magnifies them. Try to add a dentist to a practice culture that can’t produce at least $20K-$25K per employee and you are just asking for failure and financial ruin.
- Production per Op: Needs to approach $25,000-$30,000 per op per month. Seeing and hitting this mark assures an excellent profit margin.
- Case acceptance: Don’t get caught up in only having the average of 60-65% case acceptance. You should be shooting for close to 90%. Low case acceptance, just like lack of direct referrals, is a symptom of something broken. Fix it before you bring someone else in.
- Overhead: Don’t even think about an associate unless you are below 63% overhead. The average practice’s overhead will be 67%-75%. If you are working in your practice and you take out about 25%-30% in pay each year, there is no profit in your practice. That percentage is just the cost of paying a doctor for the work they did. It is your earned income, but not any profit. You need an office that can create income and spin off profit before adding another dentist.
I know it sounds like I am down on most practices bringing in an associate, but making the mistake that 90% of the offices make in doing so is not a good reason to proceed. Please: Engage brain before acting. This is how you Summit. I would like to encourage each and every doctor to consider a strategy of practice growth that will meet our benchmarks and allow you to grow by adding doctors and hygienists. I believe that if you don’t become a practice that can hit these prerequisites of growth, you will not be able to compete with large corporations in this new dental climate change we find ourselves in.
Michael Abernathy, DDS
PS — I just wanted to thank all of the doctors who are currently using the Ops Tracker for the kind emails you sent. I am so glad that the Ops Tracker is helping you communicate better, stay on time, and actually understand where everyone is each minute of the day. Here is a link to a very short video of the Ops Tracker: https://youtu.be/hY7wIypA4Wc