Here are three ideas, not daydreams, for reaching financial goals without an overwhelming sacrifice.
John A. Wilde, DDS
I have some ideas I`d like to share with younger dentists who desire extraordinary profitability in their developing offices. I`d also like to discuss these concepts with doctors nearing the end of their careers, who wish to reduce chair hours, but avoid income reduction.
But I`d especially like to visit with my true peers - mid-career dentists. They love their profession, but they have grown weary of giving injections and cutting teeth. They desire the freedom to expand and diversify the scope of their lives beyond clinical-dental practice without financial sacrifice.
There seems to be a tyranny inherent within every service industry - the limitation that those who directly service others must be compensated only for the use of their hands. I contend that dentists can enhance their income, as other business people and entrepre-neurs do, by using their brains, as well as their fingers. I also contend that it is possible to significantly increase revenue by working smarter, not harder.
For the ideas I am going to share to result in meaningful change and improved quality of life, the reader must believe my assertions. For this reason, factual data from my own office will be used to illustrate my points. I`ve been a wet-fingered dentist for 25 years and have little patience or interest in abstract dental theory. But I have great enthusiasm for the lessons shared by those who regularly treat patients and have accomplished what they teach.
I`ve illustrated my actual W-2 income and the total number of eight-hour days I spent treating patients during each of the last four years. My office is incorporated and the dates of our corporate year vary from calendar year to calendar year, allowing us some flexibility in shifting income between tax periods.
I also personally own the office space where I practice, and rent it to my corporation. Rent amounts can be adjusted to remove or allow income to remain within the corporation.
The use of retained corporate earnings - up to $150,000 - allows me great latitude on when I take income from (or leave income) in the corporation, based on taxes and other concerns.
My point is not to detail the potential benefits of incorporation, but to illustrate my ability to vary taxable income from year to year, as best suits my financial situation. Averaging the results of four years will even out these deliberate salary shifts and present an accurate, long-term picture.
It is uncomfortable to reveal such personal data, but I feel documentation is essential for the assertions I make to have credibility. The intention of such candor is to share facts, not to brag. I know of many offices that dwarf my dental income.
I practice in the rural community of Keokuk, Iowa (population 13,000) along with seven other dentists. The town and my practice are blue collar. We do perhaps 10 veneers per year and, by my choice, no implants. We have a family-oriented, bread-and-butter dental practice, as do the great majority of general dentists in private practice.
In this article, I`d like to share three key features. They allow me to work fewer days than the average practitioner without sacrificing too much income.
Associates Please Customers
The pros and cons of associateships are a complex subject. This discussion will be restricted to how associate dentists impact the ability of the owner-dentist to work fewer hours without sacrificing income. I have had one or two associates working with me for the last 15 years. Having other dentists in the office is essential to achieving my goal of a higher net income, while working fewer hours.
Two doctors treating patients within the same office facility significantly reduce overhead percentage. Without entering into a detailed discussion of fixed and variable expenses, let me state that our office overhead, without considering any salaries (owner or associate), averages approximately 46 percent.
Consider these two hypothetical scenarios: a solo office collects $400,000 with a typical 65 percent overhead to yield a net of ($400,000 x 35% profit =) $140,000.
Across the street, a second office has two dentists who combine to collect $700,000 and have a 45 percent overhead for a net of ($700,000 x 55% profit =) $385,000, to share between them. Other factors being equal, in which office would you choose to be involved?
In these times of accelerating overhead, pressure to reduce fees, unmanageable student debt, and escalating supply and equipment costs, few offices can continue to afford the inefficient luxury of treating patients 32 hours a week, 48 weeks a year.
Look to other successful consumer-oriented businesses for examples of efficiency. No Wal-Mart or McDonald`s are open during such limited hours or closed evenings and Saturdays - peak convenience hours for consumers. Expanded hours available in multiple-dentist settings enhance practice viability by attracting more, new patients with lower overhead.
Such high-tech items as air-abrasion units, lasers, or intraoral cameras are more affordable when used 60 hours per week in multi-dentist offices, and provide group practices with additional advantages over solo offices.
Pragmatically, having an associate dentist in my office is essential to providing the staff with full-time employment, as well as allowing patients to be seen when they desire (evenings and Saturdays) or need emergency treatment. It also is an imperative to allow the 40-plus hours a week of very profitable hygiene our office enjoys - the second portion of our fewer-hours, greater-net puzzle.
While I can only touch upon the multifaceted subject of hygiene profitability within this forum, let me clearly state: The days when dental offices could afford the luxury of a hygiene program that wasn`t profitable - if such times ever existed - are gone.
Our office has practiced expanded hygiene (featuring two fully-equipped treatment rooms and a full-time assistant, dedicated to hygiene) for 12 years. Our hygienist is paid on a commission basis, so the harder she chooses to work, the greater her income. This system motivates hygienists to be more productive, just as it does dentists.
During our last corporate year, our hygienist produced an average of $117 per hour, $936 per eight-hour day, or $18,720 for a 20-day month.
The frequent contention between hygienists and dentists is unbecoming, unprofessional, unhealthy, unpleasant, and unprofitable. Cutting through the cross-accusations and heated verbiage surrounding this issue, I believe the root-source of all such distress centers on a lack of money.
By creating an efficient and profitable hygiene department, more patients receive care. Your office also can comfortably afford to have the highest paid hygienist in the area and still enjoy a well-deserved profit (our hygiene overhead approximates the 46 percent total office expense ratio), derived from the dentist`s managerial ability to create such a system.
Focus on Business
Most dentistry is intended to be a for-profit business, not a hobby shop or charity center. An owner-dentist ignoring this reality, for whatever reason, doesn`t alter the fact. Let me briefly examine how a focused dental business operates.
Central to our office profitability is frequent staff meetings. There really is only one topic: How can doctor and staff be happier, and how can we treat patients more efficiently and professionally, leading to a more profitable practice? We have a two-hour meeting of the entire dental team once a month. We also have one-hour monthly meetings for only hygiene and front-office staff members. Every year, we have a one-day meeting at a non-office site to refocus our efforts. Especially in multiple-provider offices, teamwork and excellent communication are absolute essentials.
Freed from the pressure of 30-plus hours a week of patient treatment, I am able to consistently focus on leadership and office profitability. In the earlier years of my practice, I saw patients 40 or more hours a week.
My business focus was sporadic, at best, and consisted mainly of reacting to management disasters, such as collections in the 80 percent range, or too frequent openings in a provider`s schedule. It takes a great deal of time and effort to correct such major problems, and vital productivity is lost in the process.
To achieve perpetual growth in any business, the focus and mission of the enterprise must be concise and unwavering.
The information I have shared with you creates a skeletal view of how I perceive the future of dentistry: multiple dental offices (as foreshadowed by consolidation in grocery stores, department stores, medicine - virtually every industry except dentistry), with increased efficiency and reduced overhead percentages being the result.
This type of organization has the potential to achieve profitability flowing from every department - especially the critical hygiene department - and proactive dentist leadership with a laser-sharp focus on sound business principles.
The office features I have described have a primary benefit, not of increasing income - my working more hours would enhance profitability and increase office net income substantially - but of creating freedom and choices for the business owner, without sacrificing financial return.
Money is a necessity in the culture we inhabit, but it is the things money can do that proves essential to happiness. Too many skilled professionals suffer great distress in the office, feeling they must trade pain at work to be able to purchase joy outside the office. The wise choose is not to accept pain.
P.T. Barnum, genius and circus owner, said money is a terrible master, but a wonderful servant. Enhanced profit allows the choice of reduced hours, to enjoy better working conditions and to suffer less personal frustrations. In the efficient, profitable office, money serves - not controls - and enhances our ability and freedom to make decisions based not on stark necessity, but the creation of bliss.
Dr. Wilde is the author of three dental books, including his most recent book, How Dentistry Can Be a Joyous Path to Financial Freedom. The books can be ordered by calling 319-524-8811 or faxing (319) 524-9785. Dr. Wilde is available to discuss questions or concerns, evenings or weekends, by calling (217) 847-2816.
Learning from data - piles of it!
Our office is totally computerized with nine terminals. The vast amount of data available from our computers is reformatted by hand on special forms we have created. Staff members generate many pages of office monitors. These forms monitor our progress in every area of our dental business.
Monitors disclose undesirable trends, such as a decline in collection percentage or new-patient flow. As a result, we can quickly and efficiently correct such problems before office performance is damaged.
Another reason to monitor data so painstakingly is the essential truth that measured behavior improves. If an area in your practice currently is performing poorly, devising and implementing monitors to measure the activity of each individual involved with these troubled systems will improve performance.
All data is shared with the entire dental team at each staff meeting. I believe we are a team, and the fortunes of all staff (including dentists) are tied to the overall success of our office. Withholding information is counterproductive because all staff should be aware of the facts behind any dentist`s concerns. As informed staff, they are ideally motivated to take action.
For example, monitors might reveal that, while 30 new patients were seen in January 1996, only 20 were seen in January 1997. Further examination shows this to be the third, straight month of a downtrend in new-patient flow, compared to the preceding year. While the office may still be very busy, staff can see from these facts that it is time to develop an action plan to improve the situation.