Its not production!

It`s hard to believe that Jan. 1, 2000, marked the 15th year of the Levin Group. In that time, I have had the privilege of working with dentists and dental practices in the United States and six other countries. I am thankful that we`ve had the opportunity to work with both dentists and their teams. They represent two of the most ethical and nicest groups of people to be found in any industry.

Roger P. Levin, DDS, MBA

It`s hard to believe that Jan. 1, 2000, marked the 15th year of the Levin Group. In that time, I have had the privilege of working with dentists and dental practices in the United States and six other countries. I am thankful that we`ve had the opportunity to work with both dentists and their teams. They represent two of the most ethical and nicest groups of people to be found in any industry.

What we`ve learned

What have I learned in 15 years? If there was one overriding theme, it`s that production alone is not the key to success. I have never counted them, but I know that a large number of practices have high production and very low profitability. In 1985, I didn`t see as clearly as I do today and I didn`t know it was possible to buy your growth. Anyone can spend enough money to get the right size of building in the right location with the right technology and create a high level of production. Unfortunately, production is not profit. High-level production does not always translate into high profit for the practice, which is why all of your systems, financial management, and purchasing decisions need to be based on a profitability model.

Many people measure day-to-day success in the practice by how much they`ve produced. Perhaps the reason is that this is the most obvious and easily available statistic to evaluate. At the end of each day, month, or year, it`s easy to look at the total production and use that to determine success. The problem is that profitability often is far lower than it should be, causing doctors to run into some significant debt and an inability to fund retirement. Low profitability also causes poor decision-making, and it becomes difficult to properly invest in the future of the practice and team.

I recently worked with a dentist who had lost a valuable staff member. This staff member had been with the practice for eight years and all she wanted was 50 cents more an hour. The doctor ended up paying the new person $2 more per hour because of a staff shortage in the area. When I asked him why he decided not to meet the 50 cents per hour request of the previous staff member, he said that his overhead was very high and he was trying to lower it wherever he could.

Profitability is the secret

After 15 years of working with dental practices, it is evident that production alone is not the main factor. Most practices have tremendous opportunities to increase profitability, while properly investing in the future direction of the practice.

There will be many ways to lower and control overhead in the future. Simply look at the explosion of Internet companies. Get on the Internet as soon as you finish reading this column - or have your kids do it for you - and look at the mountain of available information. You will find that you may well be able to reduce overhead costs by as much as 2.5 percent via information, pricing, savings, etc. Be careful - the word "Internet" does not always mean savings! This is where good business decision-making comes into play.

Conclusion

While it is beyond the scope of this column to look at all of the avenues of profitability, it is fascinating how often our clients are able to achieve control of their overhead by making a few quick and smart changes.

Go back and take a thorough look at your office. Are you productive ... or are you profitable?

Roger P. Levin, DDS, MBA, president and CEO of The Levin Group and the Levin Advanced Learning Institute, provides worldwide leadership in dental management for general dentists and specialists. Contact The Levin Group at (410) 654-1234.

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