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Multimillion Dollar Magic

Feb. 1, 2008
As a dentist who built, managed, and sold a multimillion-dollar dental practice, I am often asked “How did you do it?” and “What’s the magic formula?” Obviously, like any undertaking that results in a big payoff, it involved a complex set of plans and strategies that were implemented, followed, revised, and worked through over many years.
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by Joseph Iannello, DDS

As a dentist who built, managed, and sold a multimillion-dollar dental practice, I am often asked “How did you do it?” and “What’s the magic formula?” Obviously, like any undertaking that results in a big payoff, it involved a complex set of plans and strategies that were implemented, followed, revised, and worked through over many years.

As in most challenging endeavors, there is an underlying methodology that can be distilled to its most elementary form upon which all else revolves. To hit a baseball, “Keep your eye on the ball.” A successful golfer religiously obeys the dictum “Keep your head down,” and good endodontic treatment starts with “Establish adequate access.” So the grand plan to build a monster dental practice has what I refer to as the ISF Strategy.

ISF stands for Insurance, Staff, and Facility. These are the main chapters in the multimillion-dollar practice playbook. In fact, it is in that order – insurance, staff, and facility – that each one impacts the development of a huge dental practice. Let’s review each in their respective importance.

Insurance

Can’t live with it, can’t live without it. Actually, I love dental insurance, most specifically fee-for-service indemnity and PPO plans. Capitation is not evil; the concept where the insurer collected the premiums and shared risk and reward with the provider of care was not a bad idea. What made it not work was that the insurers parceled out such a miniscule portion of the premium, and expanded the number of services the dentist was required to provide without allowing adequate patient co-payments (so that the patient also shared in the risk).

Also, patients might switch carriers every year so that the patients a dentist brought to dental health at his or her expense would not be under that practitioner’s care for the ensuing years at less cost and greater profit to that practitioner.

What’s great about dental insurance is that it is not really insurance, but rather a benefit subsidy whereby a third party pays the doctor to provide professional services to someone. That someone is a customer who is more inclined to purchase your service when another party subsidizes a significant portion of its cost. Amazingly, other than medical services, where else in this economy does such a great deal for both customer and business exist? In fact, I find it humorous when certain factions dictate, “Access to quality, affordable health care is an inalienable right” and promote more insurance. If more rational individuals were to explore the philosophy of providing “access” to “inalienable rights,” why aren’t true survival needs such as food, water, shelter, and clothing all subsidized and insured by third parties? So I thank all employers and municipalities that continue to provide dollars to their employees to encourage them to seek dental care.

So, accept it for what it is – dental insurance is your friend. The path to a multimillion dollar dental practice is paved with volume: Patients x Fee = Revenue.

Knowing that each variable in that equation is directly proportional sets you up for high revenue numbers. The more patients directed to your practice by good-paying PPOs and indemnity plans multiplied by insurance fees and co-payments yields big numbers. Furthermore, the PPO Dentist Directory is some of the best and cheapest marketing you will ever get. It costs nothing to have your name, address, and phone number listed, and I know that patients use it to choose their dentist before they go through the Yellow Pages, Welcome Wagon, or local newspaper advertisements.

Staff

These people can make you or break you. Contrary to popular belief and particularly as you grow your multimillion-dollar business, patients are as inclined to come to your business due to the positive actions as they are disinclined to remain a patient due to the negative actions of your staff. The key factor with the greatest impact on patients can be summed up in one word: communication. This is the most important variable in determining smooth interaction between business owner and staff and between staff and patients.

A multimillion-dollar business, dental or otherwise, becomes limited if there are any obstacles in the way of open and honest communication. The owner’s senses and mind must be sharply tuned at all times to everything – sound, smell, feel, and taste – about the office and the people in it.

The most important question you ask your patient is, “Is there anything that concerns you?” All successful doctor-patient relationships start here. The most important question you ask your staff is, “What do you think?” All successful employer-employee relationships start here. A strong, confident staff that will go out of their way to help and support patients must be empowered and have a sense of ownership.

People are only empowered when they are allowed to think for themselves and you demonstrate enough confidence in them to actually ask them for their opinions. Your purpose is to guide them to a correct course of action based on information and experiences you’ve each had, but combined will allow for the most appropriate response to whatever challenge must be confronted.

Persuade your staff to take ownership of the problem by allowing them to take ownership of the solution.

Facility

Rule No. 1 is you must own your business real estate. I know this is not easy in expensive, urban areas, but if at all possible explore every option to have equity in your building. That equity is the bonus riches you will get at the end of your career in addition to the wealth you will accumulate as the owner of a multimillion-dollar practice.

Creating, designing, and decorating your facility could be the most fun aspect of owning a dental business. Just be careful to always keep the main purpose in mind. Be sure it is functional and comfortable, and as long as you have those factors in place, all else is gravy for your enjoyment and perhaps ego.

As long as the facility is clean, uncluttered, updated, and efficiently designed, patients will be comfortable and pleased. Even if you create a WOW! factor (Dental Economics®, May 2000, “If Disney Did Dental,” by Joseph Iannello, DDS), it will not assure you of busloads of patients. It provides an initial boost, you might even get significant media coverage, but do not forget that I and S are the most important legs of the “magic triad.”

Like all amazing magic, there is actually a simple explanation hidden beneath the surface. To create that magic, the trick must be practiced endlessly, manipulated diligently, and executed flawlessly.

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Joseph Iannello, DDS, is president of Bayview Group, a management consulting and financial firm for million-dollar-plus dental practices. Dr. Iannello can be reached via e-mail at [email protected].

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