Preparing your practice for increased competition
In the last five years, I've written and lectured extensively on the subject of dental practices more closely emulating highly successful businesses in other fields.
By Roger P. Levin, DDS
In the last five years, I've written and lectured extensively on the subject of dental practices more closely emulating highly successful businesses in other fields. Never has this discussion been more relevant. In the last five years, competition has increased in dentistry. Seventy-five percent of dental practices have experienced production declines since the Great Recession. Many offices are in danger of continuing this trend if they do not come to terms with what it takes to grow a practice in the new dental economy.
The eight permanent game changers
In an October 2012 Dental Economics article, I wrote about the eight permanent game changers that are affecting dentistry:
- The Great Recession and uninspiring recovery
- Changes in consumer purchasing habits
- Opening of many new dental schools
- Higher dental school student loan debt
- Decrease in insurance reimbursements
- Expansion of national corporate dental centers
- Fewer associateship opportunities for new dentists
- Dentists practicing eight to 10 years longer
A heightened level of competition comes into play with each of these game changers. Whether it's an increase in the supply of dentists due to the opening of more dental schools in the next five years or a decreased demand for dental services, competition is building for dentists in nearly all areas. Even practices that weathered the recession reasonably well or continued to grow are finding that they're beginning to plateau or hit production declines.
Harvard Business School Professor Michael E. Porter, author of the acclaimed book, "Competitive Strategy: Techniques for Analyzing Industries and Competitors," makes it clear that all businesses have competition that will continually increase. His work is focused on identifying strategies that allow a business to continue to grow in the face of competition. This concept needs to be understood by dentists and specialists. It is not about hurting another practice. Rather, it is about attaining – and maintaining – a certain level of growth.
Strategies to offset competition
1. Become a well-run business.
Dental practices provide excellent clinical care. But are they genuinely well-run businesses? In the business world this matters very much, whether it's low-price businesses such as McDonald's and Walmart, or high-end ones such as Nordstrom and Neiman Marcus. These highly successful businesses understand their customers and provide products or services they know their customers want.
Nordstrom, for example, is legendary for its customer service. Customers remain loyal because they appreciate the lengths to which associates go to make them happy. This level of customer service is no accident. Employees are carefully trained with extensive scripting to ensure that the company maintains its reputation for customer service. While Nordstrom provides a different kind of customer service, the parallels to dental practices are clear. It is vitally important to satisfy the customer, or in the case of dental practices, the patient.
At first, it may seem curious, or even insulting, to compare how McDonald's runs its locations to how dental practices operate. In fact, there's a lesson to be learned from this fast food behemoth – the need for systems. McDonald's is an excellent example of serving tens of millions of customers every day and having an extremely high order accuracy rate as well as significant customer satisfaction. Loyal McDonald's customers know what they are getting, no matter which McDonald's location they go to. The company's systems ensure that every hamburger made at any location around the world each day is exactly the same. In the face of increasing competition, dental practices need the same kind of simple, repeatable systems that can be easily followed. I'm not suggesting we treat patients "like a number," but that we create repeatable systems for the regular interactions found in most dental practices.
These types of systems create extraordinary efficiency. Too many practices operate in an ad-hoc manner, allowing variation that creates inefficiency, reduced customer service, and eventually, less profitability. A basic definition of a well-run dental practice would be:
A systematized practice with scripting and checklists for the team so that they can easily repeat functions each day.
2. Add a strong internal marketing program for general practices, or a referral marketing program for specialty practices.
Marketing in dentistry has typically been either nonexistent or extremely sporadic and ineffective. Some practices move toward an expensive external advertising approach that can be effective and still fail to provide a favorable return on investment.
Conversely, internal marketing has an extremely high success rate when properly applied. The problem is that most practices use one or two tired strategies over and over and expect patients to refer. A scientific internal marketing program consists of a minimum of 15 strategies functioning together to reach patients in different ways. Strategies can range from:
- Certificates for free exams
- Asking for referrals
- Special attention to high-level referral sources
- A consistent, ongoing communications program with all patients to create increased bonding and loyalty
Sometimes successful marketing efforts can be negated by other factors. For example, a campaign may produce a flurry of calls. Many team members won't be prepared to handle the sudden influx of so many patients. When this happens, the patients don't make appointments, they don't show up for appointments, or they don't accept treatment at all.
None of this will happen when an office has effective systems, in particular a system with strong scripting to handle the increased patient flow that marketing can produce.
3. In the face of competition, improve customer service.
Think back to the Nordstrom example. Great customer service will always be appreciated. At a recent national convention of chief executive officers I attended, one of the speakers made the following statement: "There's always room for a business that ‘wows' its customers."
This is certainly a true statement – even more so in dentistry. In other industries, people seek a product or service because they want to enjoy it. Few people actually look forward to going to the dentist. For most people, spending money on a flat-screen television or a vacation is a great deal more satisfying than spending money on something they don't enjoy. Given this situation, it's essential to "wow" every patient and provide an outstanding experience. Make the patient experience personal, comfortable, and friendly.
Many practices meet patient expectations. Only those practices with excellent customer service exceed them. Patients need to be impressed by the customer service they receive every time they visit your office. When each interaction is exceptional, patients will:
- Return for treatment
- Accept elective treatment
- Convey positive aspects of the practice to friends and family
- Make referrals to the practice
Remember that customer service is a system. Like any other system, it must be properly documented, taught, and monitored. A well-trained team will deliver the kind of customer service that leads to a "wow" experience for every patient during every visit.
4. Ensure that every patient is "captured."
By captured, I mean:
- 98% of all patients who call the practice schedule an appointment
- 90% of all case presentations are accepted
- 98% of active patients are scheduled at all times
While there are other factors to be considered, the guiding principle is that once patients "touch" the practice, they will be guided into becoming lifetime patients. This means they will present regularly for hygiene appointments because they value the oral health the practice provides.
As an example, any patient who is one day overdue for treatment should be called that day – not when front desk team members can "get around to it." The longer patients are overdue, the more likely that they will become inactive. That's lost production. To make matters worse, the practice could lose an inactive patient's entire family as well, which means even further production decreases.
In the new dental economy, practices are facing increasing competition. Many practices aren't being proactive and, as a result, they unnecessarily continue to suffer production declines. To grow in this environment, dental practices must focus on becoming well-run businesses that provide superior customer service. They must market wisely and aggressively seek patient retention.
To learn more about preparing your practice for increased competition, attend Dr. Roger P. Levin's seminar Are You Moving Forward Or Backward? in Orlando on October 16.
References available upon request
To learn how to run a more profitable, efficient, and satisfying practice, come to an upcoming seminar by Dr. Roger P. Levin. Pick a seminar location that fits your schedule at www.levingroup.com/gpseminars.
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