You choose your overhead

Even in today's changing economy, a 55 percent overhead is possible. The overhead you presently have is a choice, either by deliberate decisions or nondecisions.

Bill Blatchford, DDS

Even in today's changing economy, a 55 percent overhead is possible. The overhead you presently have is a choice, either by deliberate decisions or nondecisions. Since you do have a choice in this, it's time to take responsibility for your high overhead. The irritation and frustration is yours. You have chosen your level of overhead and you can make a different choice.

It is sad to see practices producing $1.2 million, and the solo operator taking home $200,000, which is a 16 percent net. What that means is this busy, successful practitioner has to produce $84,000 a month before he or she sees a profit. In a 15-day work month, the first $5,600 produced each day pays the overhead. How do you feel when you get to keep $3,900 and were very busy doing it?

It's time for some tough love! No one else can save you but yourself. If you don't like what you have, make a better choice and enhance your leadership skills for a different result. Draw a line in the sand — then stand firm!

With a 55 percent overhead in a practice producing $1.2 million, the net is $540,000 vs. $200,000. Some doctors might say, "This is too much emphasis on money. Isn't $200,000 enough?" A high overhead reduces the choices for the owner. High overhead puts you on a treadmill of no return, and burnout is one of the negative results. It is not all about money, but rather about feeling rewarded emotionally and financially for your skill, care, and judgment.

The only way a greater net will happen in your practice is for you to want it badly enough to make the necessary choices. Do you want it ... or do you want to just talk about it? You decide. Two major items make all the difference in overhead staffing and laboratory expenses: 1) Choose to raise your lab percentage to 15 percent of your collection and 2) Lower the staff percentage to 20 percent. To increase your lab percentage, commit to mastering sales skills and diagnosing a better mix of treatment.

As your lab percentage increases, your production total also increases. This alone will reduce your staff percentage, but not to the level needed. Are you trying to fill every line in your appointment book? Do you have management layers in your dental staff? Are you chasing the large insurance model of multiple chairs, double-booking and scrambling? Do your staff numbers match the old insurance model?

The average American dentist's overhead is 73 percent. The lab expense is 8 percent and staff overhead is 30 percent. The average dentist's actions demonstrate a willingness to be "everything to everybody" ... and that dentist is paying dearly for this lack of vision. Are you average? Are you trying to please everyone?

Reducing the high cost of dental supplies seems to hit an emotional chord with some dentists. Get real! Dental supplies should total no more than 5 to 6 percent of your collections. Even if you were to save 20 percent, that still will result in only a 1 percent overhead reduction. Rather than looking to external co-ops to save on gloves, make the bold decisions within your own practice. Use a full-service dental supplier to handle all of your supplies and ordering, so you can concentrate on more important areas.

Sometimes, you need to spend money to reduce your overhead. Becoming accomplished at new techniques is a good example. The confidence you receive in delivering dental excellence will change the mix of treatment in your practice. Your investment will pay for itself and it can reduce your overhead by increasing your production.

Pick up your self-esteem and figure out who you are and where you are going. What standards and values are important to you? Make a commitment to be stronger in demonstrating your own standards and values. Are you a slave to insurance? Are you operating under the old paradigm that it takes multiple staff members in each position to serve your patients?

We are in a new age — a time to be bold. Dentistry has changed and your patients have become more sophisticated. Quit whining about your overhead and do something about it. Make a choice for a 55 percent overhead. Create a plan. Make the bold decisions. Aren't you worth it?

Dr. Bill Blatchford's Custom Coaching Program is now available anytime, anywhere. Utilizing 18 years of practice-management experience with over 1,100 offices, Dr. Blatchford's custom program involves minimal travel and maximum personal time with the coach, interaction with other doctors and tons of support. Leadership, systems, case presentation skills, communication, and profitability are emphasized. He can be reached at (800) 578-9155 or visit his Web site at www.blatchford.com.

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