The first critical year of your new practice
This is the second article in a two-part series. In the first part, Lisa Philp covered how to plan for success when opening a new practice, developing a business plan and setting goals.
by Lisa Philp
This is the second article in a two-part series. In the first part, Lisa Philp covered how to plan for success when opening a new practice, developing a business plan and setting goals. Now she focuses on some core issues to consider during the first year of your new practice.
Nobody said that starting a new practice was going to be easy. Once you open the doors, your first year can often be your most challenging. Running your own practice is not just about providing exceptional clinical services; it also requires you to face many business concerns. When you open a dental practice, you’ll need to address issues common to many new businesses, such as attracting new clients, managing your overhead, and implementing a new-hire training progam. By implementing best practices along with a solid business plan and a structured management system, you can set the foundation for long-term growth and success. These key considerations can help you set up your practice as an efficient business during the first critical year.
Build your equipment over time
One of your biggest early decisions relates to obtaining the necessary equipment and instruments, including the technologies - such as digital photography and practice-management software - that are integral to the success of your practice. Set up your facility according to your practice vision and build your equipment and technology over time.
For the average dentist to work four to 4.5 days a week, a minimum of 1,500 active patients are needed per year. One component of recent technology is the utilization of clinical work stations, which enables the dental team to bring appointments to completion and streamline the patient appointment process. As your practice grows, you will need to look at your operations and make critical financial decisions to add equipment based on your vision and goals for your practice.
The essentials to marketing your practice
Next, it is vital to construct a marketing plan and strategy to attract new patients. In the first two to three years of your practice, as much as 50 percent to 60 percent of your energy may be focused on marketing. It is critical that you know your target market - the consumers you are trying to reach to become your patients - and how you can distinguish yourself from the competition. Especially important in a competitive market is establishing your brand. Branding is a way to position your business in the mind of the consumer by creating an identifiable image of what you represent that also differentiates your business. Ask yourself how you would want your patients to describe your practice to their friends. That is your brand.
As a new practice, one of your major marketing objectives should focus on new-patient acquisition, followed by retention of existing patients. To execute this strategy, consider external and internal marketing. Whether it’s through advertising, self-promotion at community events, or joining professional alliances, remember that effective marketing is that which brings more business to your practice. Internal marketing builds your practice from within. For example, by providing an exceptional patient experience, you can create a “wow” feeling for your patients that not only keeps them coming back, but also encourages positive word-of-mouth referrals. If you look at practices across North America with healthy new-patient growth, the No. 1 source of those new patients is through internal word-of-mouth marketing by existing patients. Another way to promote your practice is to maintain good patient relations with proactive retention methods, such as scheduling follow-up appointments at the close of their visit or offering incentives to return through a loyalty program.
Create an exceptional patient experience
One of the core business principles every practice should implement is to create an exceptional experience for patients. This begins internally by making sure your team is trained to provide a friendly and inviting environment that properly represents you and your practice. The patient’s interaction with your team - whether it’s over the phone, in correspondence, or in person - gives your practice an opportunity to build a relationship that establishes loyalty, encourages repeat business, and even promotes referrals by word of mouth. Treat patients as guests when they enter your office - greet them by name and give them a warm welcome. An inviting waiting room stocked with current magazines and refreshments is another way to make patients feel relaxed and comfortable. Consider making the extra effort to acknowledge how special your patients are to you. For example, send them a birthday card with a replacement toothbrush, or keep them up to date with a newsletter. This makes a positive impression on your patients and helps build trust in your community by establishing your practice as one committed to excellence.
Evaluate the status of your business
Integral to any business is managing expenses. There are two main components: overhead and cash flow. Compare the costs you incur each month - such as rent, utilities, leased equipment, supplies, wages, and insurance premiums - against the revenue collected for the same time period. By calculating a break-even analysis, you can determine your break-even point - where total costs equal total revenue. Knowing your break-even point can help you evaluate the real-time status of your business and determine your profitability. It is extremely important to know how much revenue you should generate each month to meet your basic needs.
Put key systems in place
Having the right fundamentals in place from the beginning can increase the likelihood for long-term success. For example, to develop a first-rate team, start early and find out the industry standards and best practices so you can develop a winning training program. Look for scheduling protocols to maximize your time and effort without having to “reinvent the wheel.” Establish an efficient recall system that includes everything from prebooking, confirmation, and reminders, to making sure that patients never leave the office without scheduling their next appointment. Remember - everything you do in a new practice has an impact.
Another key system is your patients’ financial arrangements, which includes a firm payment policy. An outside patient payment program, such as CareCredit, can be a huge advocate in helping your business stay financially healthy right from the start. Third-party patient financing programs can provide your patients financial solutions for treatment, which is a key metric to case acceptance. Seventy-eight percent of patients were more likely to move forward with recommended treatment when given the opportunity to pay with CareCredit, according to a recent study by national research firm Hiner & Partners. You can market your business, bring in the patients, diagnose the work, plan and present the treatment - but if you don’t help them overcome cost concerns, you will have difficulty meeting your business goals.
Measure and monitor for success and growth
Now that you understand how important it is to know the status of your business and have key systems in place, be sure to implement performance indicators to measure and monitor your practice on a regular basis to make sure you stay on the right track. These practice metrics are the value drivers that can help you achieve success and growth, but it’s important that they are set up from the get-go.
From the start, monitor and track your active patient accounts at least monthly. You should know your new-patient flow, your case-acceptance percentage, the revenue per hour, your collection percentage, and even the amount of downtime - time you are not functioning at full capacity. Downtime can happen in three areas: during productive time, when you have the potential to handle more patients; during nonproductive time, due to no-shows and cancellations; and during unscheduled time - periods when no appointments are scheduled, which is common for new practices.
Knowing your capacity is often the most overlooked business practice. Determine what percentage of your practice capacity you’re filling every month, and establish benchmarks to determine how you’re going to improve. Keep a careful watch on how many procedures you’re able to handle and how many chairs you’re able to fill. As you track your percentage of capacity, you will have a good gauge on determining when to expand your team and your practice.
In the early years of your practice, it is imperative that you have the right systems in place to evaluate your business performance. As you continue to monitor and track your results, you will soon discover your own methods that will help you grow and become more profitable.
Lisa Philp is president of Transitions Group North America, a division of Benco Dental, a full-service coaching company for dentistry. She has coached hundreds of practices through success transitions, including the development of client programs approved under the PACE Program by the AGD. A Certified Management Consultant, Philp is a leading speaker for manufacturers, dental meetings, study clubs, laboratories, and professional associations. She teaches at the University of Toronto, Faculty of Dentistry, and is a guest lecturer at the University of Western Ontario and the University of Montreal. Her articles have been published in leading publications. For more information, visit www.doctorsmarketing.com.