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Lean business principles for your practice

May 1, 2020
The concept of “lean business” came from a Toyota manufacturing production system popularized in 1990. The system maximizes value while minimizing waste.

It is time to take a fresh look at running our dental practices with lean business principles. The concept of “lean business” came from a Toyota manufacturing production system popularized in 1990. The system maximizes value while minimizing waste. In other words—and for our purposes in running a dental practice—time is money while we deliver the best treatment outcomes for our patients and maximize the profitability of our practices.

Another common meaning of “lean business” is in regard to any dental start-up. I often recommend even established practices look at themselves as dental start-ups with the mindset of being frugal in making the right choices for their practices. We have always made very measured and careful choices when it comes to investments in our group dental practices.

Here are four lean business principles that our practices have used to maintain a nearly 50% overhead while delivering exceptional treatment options to our patients:

Return on investment

Most dentists think only about what the return on investment (ROI) may be when investing in capital equipment, practice management services, and marketing. Very few dentists ever think about the ROI when it comes to learning new skills and services that they can provide their patients in an efficient manner, and how that added production can increase their profitability and new-patient flow.

Do you know the ROI on the procedures you currently perform on patients and whether or not they are profitable? Would you be surprised to learn that some of the most common services you do every day may be losing money?

What is your ROI of a three-surface composite restoration, a single crown, or a single-tooth implant? A typical ROI analysis will be based on cost of goods or services sold, gross profit, time to deliver, and sale price, which in dentistry is patient fees. Most service and product provider businesses will routinely perform analyses on every single item they sell so that they can identify what is losing money and what is making money. What can you do to advance your skills to improve the efficiency, profitability, and treatment of the dentistry you provide? ROI is a key lean business principle that you must take the time to determine.

Capacity

Capacity is another term that should come into play when discussing any investment in your practice. Do you currently have the physical and time capacity in your office to see more new patients and provide more treatment? Capacity will depend on how many treatment rooms you have. The one aspect of capacity very few dentists think about is the time element of new procedures you add to your treatment mix. If a procedure takes an hour, an hour and a half, or two hours or more to accomplish, that will have a more dramatic effect on office workflow and treatment room capacity than a short 5- to 30-minute procedure. 

The treatment fee for a procedure that uses up increased time and space capacity must be substantial in order to make it profitable. Many times, dentists will make an investment in technology or new services that significantly increases the time involved with no fee increase to offset the additional physical capacity need that ties up a treatment room from other uses. 

Invest in the right technology

There are more technology choices available today than ever before. The right choice of technology can rapidly improve your practice’s bottom line, provide better treatment outcomes, and grow your practice. The wrong choice of technology can complicate clinical care, result in poor treatment outcomes, waste your time and money, and bankrupt your practice.

When we look at new technology choices for our practices, I like to break it down into these two choices—integrative technology and nonintegrative technology.

Integrative technology is any procedure, material, or capital equipment that can be easily integrated into the present office structure and schedule quickly and efficiently. In other words, if I adopt something new for my practice, I don’t have to change the physical structure of my office or the personnel needed to adapt to the technology. It is up and running and profitable  in a very short period of time. Integrative technology can also be something that easily replaces an existing service in your office. A good example of this is replacing your existing phone system with an integrated system of hardware and software practice management systems that includes a phone system (e.g., Weave). Your phone works just like it did before, and now you have incredible capabilities for patient management—all for what you were probably paying before. That is integrated technology at its best.

Nonintegrative technology is any procedure, material, or capital equipment that is not easily integrated into the office. In addition to buying and implementing this technology, you will need to significantly change the way your office handles patient scheduling. You may need to change the physical structure of your office or undergo intensive training to make the technology successful. This takes time to implement and to become profitable. For clinicians who commit to nonintegrative technology, the results can be very rewarding. The economic danger presents when the clinician and team lose interest and commitment to making the technology work, at which point it becomes a large financial drain on the practice.

Invest in new skills-based patient services

New skills-based services that do not require any technology investment are essential for a number of reasons. Once you learn a new skill, you have it with you for the rest of your career. Skills-based services are easily integrated into your practice and office schedule, do not require technology upgrades (except more education to further the skills), and typically will have the highest ROI.

Great examples of skills-based services are Botox, dermal fillers, and solid-filler PDO thread lifts. Once learned, these skills are easy to integrate and have the highest ROI simply because there is no large capital investment up front, no monthly lease payment, and no need for constant software and hardware upgrades. 

Bottom line

Here is the most important dental practice lean business principle—your bottom line. It is so important for you to do your due diligence and invest the time and effort to understand your practice numbers, especially when it comes to practice profitability overall and with individual procedures. 

It is time for you to really study your practice when it comes to ROI, capacity, technology choices, and skills-based services so you can better understand your bottom line. Then put together a future plan to add services to your practice that will quickly and efficiently increase your bottom line now while delivering the best patient treatment possible.

LOUIS MALCMACHER, DDS, MAGD, is a practicing general dentist and an internationally known lecturer and author. Dr. Malcmacher is president of the American Academy of Facial Esthetics (AAFE). You can contact him at (800) 952-0521 or email [email protected]. Go to facialesthetics.org to find information about live patient Botox and dermal fillers training, solid-filler PDO thread lifts, frontline TMJ/orofacial pain training, dental sleep medicine, bruxism therapy, and medical insurance, and sign up for a free monthly e-newsletter.

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