For more on this topic, go to www.dentaleconomics.com and search using the following key words: economic changes, economic growth, overhead, changing times.
Whether economic changes are real or not, the media and politicians are feeding a frenzy of worry, concern, and even fear. Ben Bernanke, chairman of the Federal Reserve Board, said the "readjustment" may last two years. Your patients are starting to pull in, your team is watching cautiously, and even dentists are looking concerned.
We have had at least 10 years of economic growth, and being a dentist has been anything but difficult. We have exceeded physicians in net return, and we enjoy much time off. Any dentist can make a decent living in a growth economy. You may have become complacent about systems and allowed your overhead to creep up, knowing you can always produce more.
In good times, a $1 million practice ($83K a month) could have a 75% overhead (the national average) with six team members, and although the dentist wants to see things improve, he or she lacks the urgency to make changes because life continues well. Without any changes, this exceptional practice with a high overhead would be challenged to weather three months of $60K production, because the overhead would then be at 100% and the doctor's net would drop to zero. Imagine the impact!
During changing times, dentistry moves down the list of priorities. Without sales skills and solid systems in place, patients will easily revert to a mindset of "just fix the worst one," and your practice will become a member of the Crown of the Year Club. Your team starts to believe this is the standard. If this is the case, you have failed to be a real leader and keep your overhead low, especially during changing times.
Being a leader requires having a strong vision of where you are headed. This vision needs to be clearly communicated and owned by your team. A true leader continues to make the bold decisions necessary to keep the practice healthy and viable. Your team looks to you for enthusiasm and confidence.
At Blatchford Coaching, we work with our doctors and teams to help them know and own their numbers so their overhead is in the 50% to 60% range — not the out-of-control 75% or 80% range. To keep the fears at bay, you must have confidence that you are in control and are following a plan. You must always make your retirement contributions even in changing times. You must always pay your bills on time, and operate your home and office on a budget that is not a diet but a road map for wise choices. Your team knows the numbers, and they are accountable to have meaningful conversations with your guests about their dreams and wishes for continued healthy smiles.
If you are teetering on the edge of high overhead and the wind starts to blow, you have no wiggle room. It is easy to have a whole team in a depressed state, creating a spiraling vortex. The book, The Secret shares the laws of attraction. If you are in a funk because you failed to prepare, you will share that depressed conversation and bring others into it. For example, why would you ever mention the stock market or a failed mortgage situation with patients or your team? These are inappropriate conversations and are like a flashing neon sign of how you are feeling.
Examine your financial plan regarding your reputation in the community. If during easy times, you became tightly niched in a modality that is optional, you may want to shift that reputation by widening your base. You don't want to be so exclusive that you are no longer viable. Being obstinate will make you unemployed.
You may not be able to afford your team of six during tough times. We have found in our coaching, with technology in place, you can operate a large practice with three or four solid team players. Your total team expenses should be at 20% or below.
If you have been an insurance provider, this is not the time to change that relationship. Continue to accept their insurance and shift the responsibility for collecting to the patient by collecting up front (by offering outside funding) and giving the completed insurance forms to the patient to send to their carrier.
Why not be prepared? If you reduce your overhead to 60% and the economy recovers, who wins? You and your team! Best of all, your patients, who want you to be successful, win too. If you need some direction and confidence to make the right choices, help is available now.
Dr. Bill Blatchford is a leading dental business coach who has worked with more than 2,000 offices to help dentists achieve more time off, more net, and more enjoyment. Become a member of Blatchford FILES, Dr. Blatchford's monthly CD on winning at dental business. The first two months are free. Call (541) 389-9088 or visit www.blatchford.com for more information.