Practice finance: Improving your (profit) margins
The dental industry is emerging from some downtimes stronger than ever. There are some simple steps to helping your practice become more successful during the coming years.
Joe Lamour, MBA
This last year in the dental industry has been one of the most dynamic we’ve seen. Stories of growth and success are happening all across the country as dentists improve their business acumen, positioning themselves to not only work in their businesses, but also on their businesses.
Having visited over 1,000 dental practices across the country during the last six years, it has become blatantly obvious to me why some dental practices are riding the wave and others are being buried by it.
Here I’ll outline the common strategies undertaken by offices that consistently capture healthy profit margins, create recession-proof practices, and have fun while doing it.
A quick disclaimer: none of these ideas are new. There are some things in life that just “are.” Take gravity. We can leverage our understanding of gravity in order to stay grounded or to fly. But the principle itself is pretty basic. Archimedes’ principle of buoyancy is the same. We can leverage what we know about it for our benefit, but the principle is pretty basic—some things will float and others will sink. It’s the same with the principle of reaping and sowing: people reap what they sow, plain and simple.
You shouldn’t view change as a threat. We are truly in a new order of dentistry. Let’s call it BC (before consolidation) and AC (after consolidation).
In the new order of dentistry, leadership skills and management philosophies must adapt. What do I mean by that? I’m glad you asked. Here are three areas that, if approached strategically and acted upon, will allow you to ride the largest wave this industry has ever seen.
Are you ready? Let’s go.
Invest in your people
Only a fraction of the dental offices I meet with annually invest in their largest asset and expense, which is human capital/staff. News flash: Having an engaged staff to create the best possible patient experience, that will go above and beyond for the greater good of your practice, and that is in step with your practice vision and values, will give them the confidence to act in a timely fashion to remove bottlenecks. You guessed it. This increases your profitability. Here are some examples of what investing in your staff looks like:
- In-office coaching—It can be as simple as one-day or one-week coaching, or one-year coaching.
- Outsourcing tasks—By outsourcing tasks, you allow your staff to focus on creating the best possible patient experience, and this often increases practice profitability. Popular outsourced tasks include marketing, insurance management, patient communication, and human resources.
- Employee retreats—Time spent with your team outside of your office builds trust. These bonds will flow into the office and create a more enjoyable work environment, which ultimately leads to a better patient experience.
I remember growing up and watching Neon Deion Sanders playing both football and baseball. I vividly remember my father saying, “Speed kills and it never takes a day off.” The same is true about your practice.
Before I go any further, let me define speed. I’m not referring to rushing from task to task, reducing time allotted for hygiene appointments, or cutting corners. On the contrary, I view speed as a team member being able to work at his or her highest level with the greatest contribution toward the practice’s shared cause without wondering if he or she is going to be reprimanded or second guessed by colleagues, or worse, the dentist. How can you leverage speed in practice? By slowing down!
Start with the basics. Create and refine the framework of your business. Start with your mission and vision statement. Spend some time on it. A good vision statement can set the course of your entire career. What core values will you adhere to in your mission and vision statement? Which core values will you hire on? Who are your customers? In the AC industry, not every warm body that walks through your door should become a patient. Don’t believe me? If you get these three foundational pieces right, you will build a practice that will not only be able to weather the AC landscape, but you will gain the speed necessary to win and thrive.
Which currency is your practice focusing on?
If you focus on cash, you’re done. The trick to growing your profit margins and increasing your cash flow is to become hyper-focused on relationship currency. Relationship currency or relationship capital changes the mindset from the dollar and shifts patients’ mindsets to things far greater than money, such as health, wellness, and self-confidence.
As 2017 comes to a close and we look forward to 2018, I encourage all doctors and offices to spend some time reflecting. Understand areas of strength and opportunity. From there, identify where you want to be this time next year, and begin working with your team to engineer the steps needed to ensure continued success.
Joe Lamour, MBA, is a business consulting specialist for Henry Schein Dental who is committed to assisting doctors build and grow the practice of their dreams. He is particularly passionate about working with start-up practices and doctors who want to own multiple locations. Joe has an MBA from Missouri State University and a professional sales and marketing degree from Kennesaw State University. Contact him at Joe.Lamour@Henryschein.com.