Roger P. Levin, DDS, MBA
Levin Group consulted to a 12-year-old general practice that had reached a plateau at approximately $685,000 a year (growing less than 3 percent a year over the last four years). The doctor was frustrated that his practice could not grow despite a large number of active and new patients. He had three children who were nearly teenagers and he was anticipating college tuitions. He was concerned that he had not saved enough money to pay for college and fund his retirement. He declared that he did not want to reduce his lifestyle, but rather wanted to increase his income.
Levin Group analysis
The analysis revealed that although higher-level services were added to the practice based on continuing-education attendance, the practice had not made any significant strategic modifications in a five-year period.
Levin Group solutions
Using a strategic evaluation of the practice known as a S.W.O.T. analysis (strengths, weaknesses, opportunities, and threats), Levin Group was able to identify three key opportunities to immediately boost practice income in addition to creating documented systems in all areas of the practice. These solutions included:
(1) The practice had a 50 percent dependency rate on insurance and PPO participation. Levin Group analysis exposed the fact that the two worst-paying plans represented only 12 percent of practice production and the doctor exited from these plans. Had this been the only measure taken, the practice could have suffered a 12 percent decrease in production over the next 12 months. However, a system was developed to increase the utilization of chair time by revising the entire schedule. This allowed the practice to charge full fees in the same amount of time, and in the same number of time-units that had previously been used in these two low-paying insurance-participation plans.
(2) The dentist was made aware that his average production per patient was below average and steps were taken to increase it. A 30 percent increase in average patient production was established as a target goal. Using Levin Group's systems, this is a relatively easy goal to accomplish when the five phases of a new-patient and recare patient exam are carefully followed. Comprehensive care can significantly enhance production and profit by diagnosing all patient needs and identifying elective services that may be beneficial to patients. For example, incorporation of proven fee-for-service treatment options such as the oral antibiotic Arestin® (OraPharma, Warminster, Pa.) as an adjunct to soft-tissue treatment is beneficial to the patient as well as the practice. To make this happen, a comprehensive exam checklist must be established and case presentation skills must be taught.
(3) The financial coordinator was instructed in how to present financial options on all treatment plans by incorporating third-party financing services such as CareCredit, Dental Fee Plan, and HelpCard. Collection at the time of service was managed through solid systems and well-designed scripts. Up until that point, the financial coordinator had been acting as a front desk coordinator with multiple responsibilities. Her training was negligible in the area of presenting financial options for cases and working out financial arrangements. After intensive training, she increased the number of closes for case presentation by more than 300 percent.
Results
At the 12-month point following these practice modifications, the practice had grown from $685,000 to $895,000 a year in revenue. With a controlled overhead of 62.7 percent, the doctor was able to increase his net income significantly. This created a financial flow that allowed the doctor to accumulate funds for college tuition for all three children, while at the same time continuing a strong retirement funding program.
Summary
Many dentists do not realize that a small increase in income can have a dramatic effect on lifestyle and the number of years the doctor must practice until financial independence is achieved. This case study clearly demonstrates that a slight adjustment in practice systems and strategic direction can make an enormous difference in the financial picture for both the doctor and the practice.
Roger P. Levin, DDS, MBA, is founder and CEO of Levin Group, Inc., the leading dental management consulting firm specializing in implementing documented business systems into dental practices. Levin Group is dedicated to improving the lives of dentists through proven dental practice management and marketing consulting programs that help practices reach higher levels of success and profitability. Levin Group can be contacted at (888) 973-0000 or at www.levingroup.com.
