Dr. Michael Gradeless
I have already described my first office in a previous issue. Remember the green plaid wallpaper, royal blue vinyl reception chairs, a closed cone X-Ray machine, and a short walk through the furnace room for anyone wanting to use the restroom? My taste isn't really that bad, or maybe it was because that is the practice I bought. Being frugal and spotting potential at a bargain price is not a bad thing, but here is the mistake I made. I decided that for the time being, I would not change anything! Obviously the people working there knew more about running a dental practice than I did, so whatever they were doing must be the best way of doing things. The selling doctor worked two evenings a week so I did too. The selling doctor earned a good income with his existing fee schedule so I kept that, even though I had debt to service.
Simultaneous to awarding a dental degree, most dental schools seem to perform an extraction of the spine. Suddenly faced with education loans and practice purchase loans, the new dentist suddenly becomes everything to everybody. If you want evening and Saturday appointments, the new dentist will do that. Do you want to take a year to pay? The new dentist needs the work. If the PPO will send you new patients and you are not busy enough, why not sign up?
To avoid being the "spineless dentist," examine the issues of your practice from both a managerial perspective and your personal wants. Consider the hours you want to work as a dentist. You have complete freedom to choose the hours you will work. If you are a morning person, go in early and get home early. If you love to sleep late, you can do so and work evening hours. Do you really care which days you work? The most important factor is to work when you want to work! When you examine work hours from a managerial perspective, you may be surprised — I know I was. I had a total of 4 hours a week of evening hours. I worked until 7 pm on Tuesdays and Thursdays. After 12 years of working this schedule we ran a survey and found that over 50 percent of our cancellations and no-shows were in those four hours.
Here is the truth. The most valuable time we have is our free time. If someone doesn't value dental care enough to arrange it into their work schedule, they are unlikely to give up their free time for dental care.
Most of us become spineless because we are nice people and we like to say yes. Financial arrangements will only work well in your practice if you decide exactly what you will offer. There are some very deserving people that need a lot of dentistry. If you say yes to all of them you will find yourself struggling to pay the bills while your accounts receivable looks very healthy. Make some hard and fast rules regarding which options you will offer to which patients, based on their credit scores and your current accounts receivable and payable. Sometimes you may only offer outside credit financing like Care Credit, and some accounts you may carry yourself. While you decide ahead of time and make hard and fast rules, you can also decide when to bend your own rules.
Before you make any decisions regarding PPO's, run a cash flow projection. Look carefully at your expense and income projections and determine the profitability of these procedures. If they are not very profitable, you cannot and will not make it up on volume. Volume pricing does not work in dental practice because you are the only producer that matters. Do you want to practice high volume and low profit?
This last question is a component of the real question. How do you want to practice? What do you want your practice to look like? If these were truly good deals, you would see many successful dental practices working evenings and weekends, accepting multiple insurance contracts, and carrying large accounts receivable. You have the power to choose the structure of your dental practice.
Dr. Michael Gradeless, a 1980 graduate of Indiana University, practices preventive dentistry in Indianapolis with an emphasis on cosmetics and implants. He is an adjunct faculty member at Indiana University where he teaches the Pride Institute university curriculum of dental management. He is also the editor for the Indiana Dental Association. Contact him at (317) 841-3130 or email: [email protected].
