A new series created by
Alan Stuart Markoff, DDS, MBA
In last month's opening article of this series, I discussed the "fine line" between the "practice" of dentistry and the "business" of dentistry. I suggested that it is not only possible for these two seemingly diverse approaches to exist side by side, but the degree to which they do coexist is a distinct barometer of success.
I urged you all to keep excellent records, and I urged that you not only be "in touch" with your numbers, but also know how to tweak these numbers in order to establish a healthy "bottom line" to your practice/business.
Additionally, I suggested that the first article was an introductory piece, and that the four categories of significant overhead—laboratory, salaries, rent, and dental supplies—could and do merit an in-depth discussion.
Laboratory
I want to start this discussion with my last statement relative to laboratory expense: "Name another aspect of medicine that pays for its patients' laboratory work."
I continue to profess that our need to do this is an outdated mindset that our profession cannot shuck. By so doing, not only do we do a disservice to our patients, but to ourselves as well. I understand that my position on this topic is somewhat controversial. So, sit back, tighten your seatbelts, and open your minds.
I sense it is generally regarded as a truth that our success in practice is essentially related to our percent of overhead expense. Fifty percent is fabulous. Higher numbers, such as 55 to 60 percent are doable, and frequently yield a profit. Beyond that, there are difficulties with cash flow and take-home dollars.
With these numbers in mind, and since we are concentrating on laboratory in this article, please understand that this is a category that can be completely eliminated. Depending on the thrust of your practice, that can represent anywhere from 8 to 14 percent of your overhead. Is this found money, or what?
My point, relative to laboratory expense, is that many dentists choose a lab because of price. As I mentioned in the first article, if you are doing managed care (cost) dentistry, it is very difficult—if not impossible—to choose excellence and consistency over price. For those of you in fee-for-service dentistry, the choice of a laboratory partner is also frequently based upon price.
I surmise that almost all of you realize that when a laboratory case has to be redone, the profit is non-existent. Some labs do not charge for remakes, but many do. Even if they don't charge, you must consider chair-time, supplies, and the inner lining of your intestinal tract, and—most importantly—the patient's perception of you.
So, how do you introduce this concept? Invite the patient to pay the laboratory fee. This is about patient education. This is about salesmanship. Keep your normal fee the same, and add on the laboratory fee.
Cosmetic dentistry is the "hot" item in our profession today. I see "cosmetic" signs all over town. Everyone is suddenly a "cosmetic" dentist. Like plastic surgery, cosmetic dentistry is not an insurance item. It is an "I want" rather than an "I need" item. If you are going to place outstanding cosmetic dentistry, you better have an extraordinary laboratory as a partner.
If you pursue this approach, you cannot be dictated by laboratory prices. You must pursue excellence. When you place extraordinary dentistry in a patient, and they leave with warm feelings of satisfaction and feel good about themselves, have you not indulged in the highest form of internal marketing?
Our primary role, as professionals, is as teacher/educator. Why not educate relative to the merits of quality and the need to select the entire team? Do you want to query the patient with: "I can order a $50 veneer or a $200 veneer. Which would you prefer"?
The point is: why engage in this game at all? Why not select a fee that truly represents your overhead factors, your labor, your skill level, and the quality of the end product? Then present the case, adding a fee for the laboratory aspect. In this scenario, the total fee is divided into two fees. Psychologically, this is easier for the patient to assimilate.
Know your approximate laboratory fees prior to quoting the fee, be it a single unit or a full arch. Estimate the lab fee just a bit higher than you anticipate it to be and, when you are finished, present a statement that is lower than the patient expects.
How would you present this to the patient? "Mr./Mrs. Patient: My fee for this crown/case isU., plus laboratory fees ofU. The approximate laboratory fee for your case isU."
We are all practicing in a different era. Almost all of the ground rules have changed. Marketing is a significant aspect of our professional lives, especially when it comes to cosmetics. Where are the dollars going to come from to compete in this arena? Why can't this money come from patient-paid laboratory fees?
Continuing education has become very expensive. Not only has tuition skyrocketed, but time away from the practice has become extraordinarily expensive. Yet, to be an exquisite dentist—to learn and understand, and to own all of the ramifications of outstanding anterior dentistry—continuing education is a must. So, too, is an exceptional laboratory.
All of this meshes together, because if you do not have exceptional skills, the outstanding labs will not accept you as a client. When beautiful dentistry comes back to you—and fits with precision—not only do you look good, but you also feel good. There is a sense of pride within the entire team, and the patient is ecstatic. Is there a better marketing tool?
Is the $50 veneer the equal of the $200 veneer? I have not witnessed that phenomenon yet. If you desire interproximal contacts that are close to perfect, incisal edge position where it should be (because you enclosed an incisal edge guide), palatal contours that allow for smooth transition into anterior and cuspal guidance, light deflection patterns that cause them to look like "real" teeth, then do you really believe that the technician who does your anterior porcelain work for $50 per unit is even going to think about these aspects?
This entire concept of the patient being responsible for the laboratory aspect of the case is about partnering both with your patient and the best laboratory you can find. It is definitely an expansion of your thought processes. You have the opportunity to choose, for you and the patient, the very best laboratory based on skill level, not on price! When you do this, everyone wins.
Put a pencil to your laboratory expense for the last 12 months. Think about what it would be like, from a "business" perspective, to have that money in your account. Could you not divide it up into retirement fund dollars—for you and your team—for staff bonuses, for marketing, and for continuing education?
If you desire this type of in-depth relationship with your laboratory technician, you must earn it. You must show him/her the quality of your tooth preparations, impressions, and your efforts to provide them with every aid that will ensure the successful completion of any case.
Is this kind of relationship about money? Absolutely not! It's about mutual respect; yours for the technician, and the technician's for you, and both of you for the patient. And, it's about the "business of the business of dentistry."
This is not an easy concept. Not only does the doctor have to embrace it, but so does the entire team. The rewards so outnumber the downside. There is a learning curve. It does take salesmanship (your enthusiasm for the concept). So start slowly. Do a small case, and build up to a routine.
Put your case findings on paper for the patient, whether it be a few crowns and/or a large case. Quote your fees and then, on a separate line, add the approximate laboratory fees. You will realize universal reception to this approach.
Many years ago, I was working for the Houston Oilers of the National Football League. I was not the team dentist, rather I handled all of the activities on the field prior to home games. For this, I was paid the staggering fee of $10 per game. I was fortunate to be there during the tenure of head coach Bum Phillips. One day, I was standing next to Phillips when a reporter inquired about standout running back Earl Campbell, and just how good he was.
Phillips, in his inimitable style, responded: "He may not be the best running back I've ever seen, but he is certainly on a short list."
This concept of usual fee plus laboratory fees is not for everyone. This is a choice. If you aspire to be on the "short list" of truly outstanding dentists, this is a concept to consider. You must really desire to be on that list. Once you embrace and incorporate this concept into your restorative practice, you will become a better business person. Your bottom line will increase, you will feel better about yourself as a dentist, and you, your team, and your patients will reap the rewards of this unique approach to your profession.
For those of you who do not aspire to be on the "short list," the concept will still work. Think compromise. Think less remakes. Think less stress. Think an intact gastrointestinal tract. Think a more solid bottom line. Think like a business person.
