For me, strolling through these axioms we are calling Michaelisms has allowed me to remember when each was formulated. Each one coming from a failure or challenge I faced over the last 50 years. In doing so, I realized that we hadn’t spoken about the very first one, that in reality was not a Michaelism. It came directly from Max, my partner in starting Summit Practice Solutions to help dentists achieve lasting practice success and satisfaction. So today, we cover a Maxism.
This statement is simple in structure but captures the foundation of why we formed Summit Practice Solutions so many years ago. PRODUCE MORE, COLLECT ALL, KEEP HALF. Broken down, this short statement holds the first steps of every system and protocol we have created. It was through the lens of this statement that clarity in purpose evolved in helping each and every client strive to have the best business model possible. Sound planning. Strong production. Purpose driven culture. Consistent growth. Financial sense that has bested every recession and economic up and down that the last 50 years has pushed on us.
Let me expand slightly on each part of this statement.
Produce More. Practice growth is the natural result of practice health. For most of us, growth is a quantitative measurement that we use KPIs to represent. Production, collections, new patients, referrals, etc. If you go back you can read about each of these in the fifth article in this series entitled: Michaelisms That Form the Cornerstone of Understanding Dental Practices. If you go to www.summitpracticesolutions.com/blog we have a search function with access to over 750 articles on every topic you could imagine. If we take the Dental Practice Success for Dummies approach, there is a good chance that if you produce more you are going to be happier and more likely financially secure. But it goes further than that. Average practices never produce more. Struggling practices wish they could produce more. In reality, good leaders, great clinicians, doctors with people skills, and super systems and a great team make it possible to produce more. In fact, if you are not growing by 15% to 20% every year, there is room for improvement. The strange thing about “productive” offices is that don’t chase money. They are dedicated to “serving” their patients while every day, every month, and every year improving their people, clinical, and business skills. They have an attitude of need to be better tomorrow than they are today. They don’t see money as a destination. They embrace the joy of the journey along with the setbacks and successes. The takeaway here is that “producing more” is far different than just chasing the almighty dollar.
Collect it All. Here is a pet peeve of mine. If I ask you how you are doing, most of you tell me some number you produced last year or some possible number you hope to hit this year. Yes, production is a quantitative measurement, and you can’t manage what you don’t measure, but in the business of dentistry production is only relevant if you collect 100% of what you produce. The only thing that matters is your net. What did you collect? When you claim production is the amount before adjustments, it means absolutely nothing. Like the doc who says they produced $1,000,000 but after adjustments he collected $700,000. Production without an explanation of what it means has no meaning in the business of dentistry. In my offices, we considered good collection to be 100% plus. Other offices consider good to be a 95% or 97% collection rate. Are you kidding? In a million dollar practice they left $50,000 to $30,000 on the table because every one percent in a million-dollar office is $10,000. In dentistry it is all about the net collections. In the beginning when we started Summit, we were surprised at what doctors considered acceptable. Most didn’t have a benchmark to shoot for, and when asked, none of them actually knew their collections. That’s pretty much a wake-up call for us, and a high challenge to help dentists look at their dental office as a business.
Keep half. I just read an article on nationwide overhead averages in different categories. In 2024 the average general dental practice’s numbers are a median GP revenue of $770,700, median overhead $578,025, median income $192,675, Profit Margin of 25%, Overhead of 75%. This is horrendous. This is mediocre production, with overspending, poor collections, and no consistent growth. I know you’re thinking: “Sure, but in the old days it was easier.” Nope. It is still possible to have practice overhead in the 50% to 60% range if you have been practicing for at least 5 years. The reason I say 5 years is that if you bought a practice or started one from scratch it takes about 5 years to pay off the equipment and/or the build out loans. I understand that it is “common place” to see offices with few new patients, no referrals, poor collections, and below average recall systems. Just because it is commonplace, it is not “common sense”. Common sense would mean each year you are improving. New patient numbers go up, case acceptance increases, you add more services, you outgrow your facility, and you need to add team members and doctors. Over and over success can be quantified by growth and profit. If you set your sights on average, you are going to have a 75% overhead. Instead, shoot for somewhere in the 50%-59% range and become remarkable as a dental practice and business model.
Michael Abernathy DDS
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