Practice success in this new economic environment

Nov. 1, 2011
Things have changed! We are in a global economic transition that is impacting all businesses including dental businesses.

Dr. Michael Kesner

For more on this topic, go to www.dentaleconomics.com and search using the following key words: practice success, new economic environment, opportunity, growth, Dr. Michael Kesner.

Things have changed! We are in a global economic transition that is impacting all businesses including dental businesses. Our patients are more cautious about spending money on dental treatment. People are worried about the impact this economy is having on their financial well-being.

Practically every time we turn on the news, the top story is about our economic problems. No wonder everyone is worried about what the future holds.

The bad news is that most dentists’ practice revenues and personal incomes have either remained flat or declined. The good news is that it does not have to be this way.

Many dental consultants are saying, “Hang in there and try to make the best of it” or “Don’t expect much growth in your practice.” Other consultants are saying, “Do more large cases.”

But in my practice very few patients need that much treatment, or can afford it if they do.

So what do you do?

I have a totally different outlook on practice! In my experience, you can have substantial growth in this economy.

Before I tell you how, let’s first take a look at what has changed.

Historically, dental expenditures in the United States have increased an average of 5.5% per year since 1960. We have gone from a total consumer spending in dentistry of $2 billion a year in 1960 to $102 billion a year in 2008. In 2009, total expenditures dropped by only 0.1%, but out-of-pocket expenditures dropped by 5.5%.

Many dentists are experiencing this financial drop, especially in out-of-pocket treatments such as cosmetic procedures and large cases. Some areas of the country have been hit worse than others.

There are two different responses you can have to this new economic climate.

One is to “hunker down” and hope these problems blow over and things get back to the way they used to be. I do not think this is going to happen anytime soon.

Another response is to make dramatic changes in the way you practice the business of dentistry. Do this and you will not only grow in this economic downturn but you can even set new revenue records. Believe it or not, all of my procedures are up … even cosmetics!

The important point to realize is that since we are in an economic transition, what worked in the past will not work today. In fact, if you still practice dentistry the same way you did just two years ago, then your practice is probably declining and will continue to do so.

I am going to make a bold statement that I have not heard anyone else say in dentistry today: Right now is one of the greatest opportunities in dentistry!

Now, before you think I am crazy and stop reading, please hear me out.

Despite our nation’s history of economic transitions — the 1929 Great Depression, the 1982 prime interest rate of 21.5%, the dot.com bubble of 2000, the 2009 market crash — there are always a small group of businesses that thrive and set records. While everyone else is “running for cover,” this minority of people see and understand the economic transition and then turn the crisis into an opportunity.

The reason this is an opportunity is because the dentists with the best business principles will grow and thrive. You have an opportunity now to grow your practice by leaps and bounds!

Here is how you do it.

You have to do what everyone else is not doing. Drastically change the way that you practice the business of dentistry. And why not? If what you are doing now is not producing the results that you want, then why keep doing it?

The right changes in the right areas of your practice will produce big results in the success of your practice. “Business as usual” just does not work anymore.

There are two ways you can grow your practice — incremental or breakthrough.

Incremental growth means small consistent changes over time with small moves in efficiency, effectiveness, and productivity. This approach uses traditional business principles that hopefully will produce small, steady gains that add up to an increase through the years.

In other words, if your practice growth increases 7% a year, it will double in 10 years. If it grows 10% a year, then it will double in seven years.

Incremental growth is the method most dentists implement in their practices. This is because it is believed to be a low-risk approach. The rationale is that these principles worked in the past; therefore, they should work in the future.

But this is not necessarily true in the current economic environment.

Incremental growth is effective as long as the external environment remains stable. This would be the case if there were no government changes in the Middle East, no oil price increases or shortages, no across-the-board wage cuts, no economic recessions or depressions, no financial bailouts, or no major stock market drops.

We see these events happening on almost a weekly basis.

Breakthrough growth, by contrast, is a discontinuous and nongradual change. This approach implements large shifts in efficiency, effectiveness, and productivity that result in large shifts in revenue, production, and profit.

Breakthrough growth is a way to remain competitive in unstable environments, and it does not adhere to traditional business rules or principles. This approach takes more courage than incremental growth because it is believed to be high risk.

I believe breakthrough growth actually carries less risk than incremental growth in the present economic environment.

Which do you think has higher risk — implementing slow-moving traditional practice methods and strategies that are proving not to be very effective in this economic climate, or implementing proven practice breakthrough methods and strategies that will result in rapid practice growth and income?

I grew my dental practice from $675,000 to $5 million in only seven years. This year we will do around $7 million.

Many dentists opt for incremental growth because they are not entrepreneurial and they have more risk-averse personalities. Although this seems to be the safest strategy, it is often just the opposite strategy that you should take.

I believe that taking advantage of the current opportunities available to you on “the road less traveled” is much less risky than continuing on the same path and hoping for a different result.

What you believe and think about the business of dentistry will either hold you back or set you free. When you change what you believe and think about the business of dentistry, and then act on those changes, your success will change.

When I get a dentist and a team to make this transition and practice differently, the practice’s revenue increases and stress decreases. Many of the dentists that adopted this approach have revenue increases of 20% to 95% over last year. This is breakthrough growth!

Last year, I started a scratch practice with an associate dentist. This practice went from zero to more than $200,000 per month production in the fourth full month after it opened.

Breakthrough growth happens when you have the right combination of systems, marketing, efficiency, team bonuses, increased case acceptance, and increased capacity to do more dentistry.

When you implement these strategies in your practice, you will have breakthrough growth. Do this and you will make the income you deserve and build the practice of your dreams.

If I did it, you can, too.

Words of warning. Don’t try to do this by yourself because it will not work. I find that most dentists are do-it-yourselfers. Get help from someone who has “been there, done that.” If you could do this by yourself, you already would have.

I think this economic downturn is here to stay for a while; it may even get worse. That’s the bad news. The good news is that you do not have to participate in this economic downturn. You can make changes in the way you practice the business of dentistry and make the income you desire.

Take advantage of this economic opportunity to increase your income while decreasing your stress. Create breakthrough growth and build the practice of your dreams.

Dr. Mike Kesner is a practicing dentist and author of Multi-Million Dollar Dental Practice — How to net $1 million per year … even in this recession. He is founder and CEO of Quantum Leap Success in Dentistry, a consulting company that helps dentists build the practices of their dreams in 24 months or less. Contact him at [email protected].

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