by Roger P. Levin, DDS, MBA
Dental practices are not run like businesses. Many dentists do not act or react like business people because they did not learn the business of dentistry in dental school. In addition, there are very few business models or industry comparisons against which dentists can benchmark themselves. Without successful models to follow and business management expertise, most practices reach a certain point of either efficiency or inefficiency and remain there for the bulk of the doctor's career. However, if best practice models are followed, statistical evidence demonstrates that most practices could add $6 to $9 million of revenue over a 20-year period.
The concept of "best models" for any business was first widely publicized by noted management guru Dr. Peter Drucker. Without question, every business can benefit from proven methods that result in optimal performance with minimal stress or effort. Dentists work very hard to provide quality care for their patients while managing a busy practice and leading a dental team. Only through the proper management systems will a practice operate at its highest level of effectiveness and profitability. This article will highlight some of the ways to apply best models.
The three phases of a dental practice career
There are three phases that make up the career track of most dental practices:
In Phase I, most new practices have tremendous capacity. There is no particular reason to worry about systems; there is plenty of time available for patients. The problem is that bad habits quickly develop and there is a lack of focus on how the practice should operate.
In Phase II, dentists become busy and reach a plateau where the practice is at an artificial full capacity and further growth becomes difficult. Unfortunately, these plateaus are significantly below the real production potential of the practice. The practice is busy, but mostly because it is not running as efficiently as it could, and therefore, not maximizing production. Once a practice is running at what is perceived as full capacity, the dentist usually has little time to devote to devising management systems to work smarter, not harder.
Due to a limited education in business, most dentists do not fully understand how to implement effective practice-management systems. Therefore, they cannot make the changes necessary to help the practice reach its full potential.
In Phase II, the practice is in a plateau with slight periodic growth. This periodic growth does not come from better systems, but rather from fee increases or occasionally adding new services. This potential growth is diminished in a challenging economy.
Phase III — the coasting phase — is the last phase of a doctor's career. Unfortunately, many dentists will be practicing longer than anticipated. Levin Group data shows that more than 85 percent of dentists have lost as much as 24 percent of their net worth in the last 36 months due to the tight economy. Whether or not a dentist is extending his or her career, the reality is that the coasting phase can be anywhere from five to 15 years. In Phase III, the dentist is often no longer excited or necessarily happy about practicing dentistry. A boredom factor often sets in and the headaches and hassles of dealing with day-to-day business, a hectic and often chaotic schedule, and staff turnover become a reality. Rather than investing in practice management, continuing education, or new technology to solve these problems, the dentist simply continues to practice in order to reach financial independence without taking steps to help the practice reach its true potential.
What makes Phase III even worse is that many dentists begin to cut costs in order to save money for retirement. Without investing in the practice, the doctor has less reason to be excited about practicing dentistry. Spending five to 15 years in Phase III is often an unpleasant and numbing experience. At this point, dentists are working strictly to accrue enough income to retire. A practice with stagnant growth is a practice in decline; this is why Phase III is so dangerous.
Real practice potential
Please be advised that I am not stating that every dentist should simply strive to be as rich as possible without considering other factors. Every dentist has a different professional philosophy, work ethic, and quality of life goals. What I am proposing is that all dentists should strive to have their practices reach their ultimate goals and potential. At Levin Group, we have many conversations weekly with clients who are either frustrated in Phase II or who, sadly, have simply given up trying to make changes in Phase III. Achieving the goal of adding between $100,000 and $300,000 in practice revenue through the implementation of effective business methods is not particularly difficult, because most practices are well below their potential.
Levin Group research indicates that more than 95 percent of practices can grow by 30 percent simply by reorganizing how they work, adding the proper systems, and training the team in those systems.
When you think about it, this practice growth choice provides an incredible opportunity. Dentists cannot only regain the enjoyment of practicing dentistry, but can also expand their practices to reach higher levels of production and profitability, while providing exceptional patient care. What is amazing is that unlike most businesses, all of this can be accomplished without adding more work hours for the doctor or the team. Working with more than 500 dental practices each year, Levin Group has documented and added critical benefits to incorporating business methods into the practice. The goal is a much happier, highly motivated, and empowered dental team. Significant improvements in practice performance can be derived from the steps discussed below.
Real practice management
Leaders in the business world have researched many methods for building successful companies and management structures that are used by the best CEOs. The majority of these can be used in dental practices, but must be translated to our unique business environment.
The first technique to secure higher practice performance is scheduling. Our experience has been that all production increases should begin with the schedule. Too many doctors attempt to change their practices based on taking the newest clinical courses, only to find themselves disappointed 60 to 90 days later. The reason is that the schedule never left enough time for new procedures, which gradually pushed the practice back into its standard mode.
Consider that Levin Group data shows 81 percent of all dental appointments are still single-tooth treatments, a number that is down just 6 percent from 15 years ago. These numbers indicate that progress has not been made in scheduling more significant comprehensive procedures, despite all the technological advances that have occurred in dentistry over those 15 years, and despite the fact that many patients have multiple dental problems and are good candidates for elective services such as implants and cosmetic dentistry. When evaluating the overall potential for practice production, it should be understood that not changing the schedule would prevent the practice from improving performance.
Scheduling is simply time control where best models can be applied. Time needs to be allocated and blocked for highly productive appointments such as multiple-tooth appointments and multiple-service appointments. Blocking time for more significant procedures is important because patients who accept a large case are highly motivated and should have that case started within seven to 10 days. A delay beyond 10 days can cause the patient to experience "buyer's remorse" or lose the motivation that convinced him or her to accept treatment originally.
Unfortunately, the larger production appointments are often crowded out by the single-tooth appointments. By reorganizing the schedule to allow for higher-revenue procedures, it is easily possible to increase practice production by 30 percent or more. It should be noted that reorganizing the schedule in this fashion makes each day less stressful for the dentist and the dental team as the number of patients treated decreases and appointment time increases. A practice operating with less stress is almost always a more productive practice and has lower staff turnover. Without allowing the schedule to achieve optimal practice production, most dentists will work an average of six to eight years longer to reach financial independence. Only 3 percent of dentists can comfortably afford to retire by the age of 60.
The next important system in your practice is case presentation. While dentists do not think of themselves as salespeople, practices need to offer and successfully close high-quality treatment plans in order to reach their financial goals. Dentists who can convey the benefits of comprehensive and elective services to their patients have much higher case acceptance to fill the blocked schedule.
Selling is one of the most carefully considered, researched, and intensive areas of training in the business world. Dentists do not want to be perceived by patients as the stereotypical used car salesman, trying to close a deal at all costs. They must become skilled in presenting procedures ranging from whitening to implants in order to achieve higher production.
Practices must expand their service mix to include comprehensive and elective procedures in order to serve all of the patients' needs. In many instances, practices fall short of this important objective. Services such as periodontal probing are not consistently offered in more than 70 percent of practices, even though it is a leading indicator of potential periodontal problems, heart disease, and other major medical problems, and has reached epidemic proportions. Another example is sealants and adult fluoride. The use of these important preventive services is significantly below potential. There are also new services such as periodontal antibiotics and oral cancer brush biopsies that can be extremely beneficial, and even save lives, when used in a proper and routine manner. Cosmetics and implant dentistry also have tremendous future potential.
If a dental practice is not presenting a variety of comprehensive and elective treatment options to its patients, it is promoting a lose-lose situation. The patient loses by not having optimal or elective services performed, while the practice loses by not gaining the revenue streams that these services provide. One of the benefits of excellent practice management is that the patients who clearly need care will be more likely to accept treatment if they are properly educated and motivated.
Problems arise with patient education because many dentists approach case presentation from a highly technical standpoint. Unfortunately, the majority of Americans are not technical and do not understand how clinical dentistry is performed – nor do they care. People want dentistry that works and they trust their dentist to provide it. The case being presented must be discussed from the standpoint of benefits to the patient.
Levin Group recommends that practices identify the top three benefits of each service presented to patients and repeat each of these a minimum of three times in a case presentation.
Working with patients and following all case presentation protocols (which will be discussed in an upcoming Dental Economics article) can make a tremendous difference in practice production and filling the expanded schedule described above.
Dental hygiene is one of the most powerful areas in practice management and practice building. I have tremendous respect for hygienists. Unfortunately, many practices have production in the hygiene department that is not optimal. Given that the hygienist represents the second-largest production center in the practice, specific attention should be paid as to how to maximize performance. The first step is for doctors and dental hygienists to identify a series of ancillary hygiene services that can be provided to patients to improve the quality of patient care. These can include tooth whitening, early oral cancer detection, periodontal probing, soft-tissue therapy, powered toothbrushes, sealants, fluoride treatments, and periodontal antibiotics.
There are many other opportunities for hygienists to provide expanded care to patients. If the hygienist is able to educate and motivate patients about their oral health and possible restorative and elective treatment solutions, then patients will be more likely to accept additional doctor-level treatment when the dentist makes the official diagnosis and treatment recommendation. Using this model, patients get superior care and the entire practice production model expands. Levin Group data shows that many practices can expand the level of doctor production by $200,000 or more. This significant increase is directly linked to identifying more dentistry through the hygiene department and proactively educating and motivating patients to consider treatment options. Many practices can increase production from their hygiene department by implementing the model of 25 percent of practice production from hygiene. The 25 percent is attainable because the hygienist has an extensive amount of time to educate and motivate patients, while more than 90 percent of dentists spend less than 4.5 minutes in a hygiene check.
Patients and money
While we rarely use the word "money" in the dental practice, money is really what we are talking about. Practices that are comfortable and have effective systems in place to discuss fees and payment options (including financing) with patients get far superior financial results. Too many treatment plans are rejected simply because the patient is not offered what they feel is a comfortable way to pay for it. Once they leave the practice, patients lose motivation very quickly, and this often results in non-treatment.
While there is a series of financial options that can be offered to patients, it is critical to also include patient financing. Some Levin Group clients are increasing production by as much as $60,000 or more by offering patient financing. Dentists often fail to realize that most Americans are within 90 percent of their credit card limits and cannot fund dental treatment. Financial coordinators need to be intensively trained and effective in finalizing the financial arrangements, including dental insurance issues. Many cases are lost at the financial arrangements stage.
In most dental schools, dentists do not learn the business skills necessary to run their practice at optimal profitability. But just as there are successful management models for the best companies, there are best models available for dental practices as well. The critical components of dental practice-management success lie in the ability to develop, document, and implement systems through a clearly defined and statistically valid method in the key areas of your practice – scheduling, case presentation, dental hygiene, patient financing, customer service, new patients, etc. Implementing effective systems in these areas of the dental practice allows you to avoid "coasting" through the later years in the practice, and achieve financial independence at a reasonable age.