Archive | June, 2016

Almost Overnight, Things Began to Transform!

30 Jun

I have worked with a number of different consulting companies through my 10 years as a dentist.  Some are the “big practice, big spend” types and are very flashy.  Others are the “mom and pop shop” run by people who aren’t dentist and who have never been dentists.  The problems I kept running into were that promises were made that were never fulfilled, and the systems recommended just didn’t make sense from a dental business pJimCraigteam.JPGerspective.  In fact, we found that it’s possible to almost go bankrupt with 250 new patients a month producing almost $4 million a year if the systems aren’t balanced correctly and the spending is too high.  About a year ago I was on the hunt for a new practice consultant and was referred to the Brady group by my accountants.  I went in skeptical, wondering if they could really understand my practice.  Almost overnight, things began to transform.  We reduced our overhead by a very large percentage, and we began to be much more selective about the things we were and were not willing to do in dentistry.  We set new standards and completely re-vamped our process.  While not perfect, I feel that we’re coming along and are on the right track.  This year we only have a fraction of our new patients and our production is down, but our overhead is WAY down (so we no longer have to produce 4 million a year just to stay afloat), our net is WAY up, I’m taking 7 weeks of vacation time this year, my staff is happy and the practice just feels a lot more fun to work in.  In short, I’m making more than I have in years and the stress level is much lower.  I recommend these processes and systems to anyone looking to reduce stress and increase the “fun” level of dentistry again!

Build It, and They Will Come!

22 Jun

The way you schedule can make or break your practice.  We are often asked – which comes first?  The right systems for case acceptance, or blocking the schedule for the ‘ideal’ day?  Some want to put off block scheduling until they get better case acceptance, but it never really seems to happen.  That’s because ‘reactive’ scheduling actually gets in the way of the systems that will support better communication and case acceptance.

I think of one of my favorite movies of all time when it comes to setting up your schedule for success – ‘Field of Dreams’ with Kevin Costner.  In the movie, Costner plays Ray, a farmer in Iowa.  One night Ray hears a voice coming from his corn field saying ‘Build it and they will come’. He interprets the message as a command to build a baseball diamond in his fields, despite ridicule from his neighbors and family.  Well, Ray builds it, and the Chicago White Sox come.

See, we often create a false sense  of security by filling the schedule with something. Anything. But if you make the commitment as a team to honor the blocks, something magical happens. Everyone is on the same page and is working toward creating the perfect day instead of just ‘filling’ the schedule.

Create the schedule you want, and they will come

How Many More Years do You Plan to Practice?

3 Jun

Screen Shot 2016-06-02 at 4.12.29 PM.pngIn our dental world of primarily ‘production-speak’, overheads continue to rise. At dental meetings it seems that the only numbers bantered around are production numbers. We all acknowledge that only net income matters, yet most of us don’t seem to remember that vital detail when it comes to running our practices and making overhead choices.

Latest research shows the average overhead in a general dental practice is hovering at 75%. WOW! In other words, you have to produce and collect 4 dollars for every dollar you get to claim as income. That’s before the tax man, etc. comes to visit. In effect, you work approximately 9 to 10 months for your overhead and taxes and 2 to 3 months for your spendable net. Sobering.

Obviously, decisions you make today profoundly affect your life for years to come. One such decision is the amount of overhead you choose to have in your practice. Yes, I said ‘choose’ to have, because every dentist chooses his/her overhead. Now, I understand that you may not intentionally choose high overhead, but the decisions you make today affect your overhead tomorrow. What choice have you made? High overhead model or low overhead model? It’s not too late to commit to a low overhead model.

Most dentists live by the rule that the best way to lower overhead and make more net income is to increase production which usually means working harder/faster/longer. Or, we often try to operate by cutting the wrong costs and fail to invest in proper practice and business principles. Working harder is a higher overhead choice because it increases costs in order to support that kind of system; more employees, more chairs, more patients, etc. are needed. Bad systems leave you no choice but to work harder. Is that what you want?

Another way of looking at this same issue is to follow the “busy” practice model.

Do you really believe (as sometimes we are taught) that raising your overhead is necessary to increase your production and net income? Do you accept as true the notions that you may well reach your net income goals simply by adding more patients, hygiene or staff to your practice? I hope not. Proponents of more volume fail to appreciate the finer points of overhead control. Adding more patients, staff, etc. may be part of the solution later on, but overhead control should always be addressed first, nevertheless; most skip that step onto the more attractive (and harder) road to increase production. Let’s take a hard look at dental math. The numbers don’t lie. I hope you are sitting down.

If your practice is ‘average’ and is burdened with 75% overhead, lowering the expenses by a mere 10% can produce astounding results. Here’s an example.

Let’s say you have a $500,000/year average dental practice operating for 30 years. At 75% overhead, your net income would be $125,000 each year. Lowering the overhead by 10% down to 65% would result in an increase of $50,000 net/year given the same production and collection. That increase calculated over the 30 years would mean an additional $1,500,000 of net income over your practice life. Again, given a 75% overhead you would have to produce 4 times that amount to receive those same dollars in net income . . ., an extra $6,000,000 of dentistry or $200,000/year for 30 years to accomplish the same result. That’s 4.8 months worth of work and collections each and every year.

What that means to you is that by choosing a measly 10% unnecessary amount of overhead for your practice, you will have to work an additional 12 years to support someone else! That’s more than one-third of your work life.

Or, if you continue to work the entire 30 years, you can pocket the extra $1.5 million. Both these first two calculations assume that you took the extra money and just put it under your mattress. What if you were to conservatively invest the ‘overage’ generated by this overhead reduction? Your work life would be cut by more than half!

A common overhead mistake is to be overstaffed as a result of using poor systems. Let’s say you have one extra employee being paid a salary (plus expenses) of $2500/month. Following the same formula as above, you will have to work an additional 7.2 years just for having the luxury of having one more employee when the crux of the issue would be to fix the less-than-efficient systems in your practice so as to painlessly solve the overhead problem.

Please don’t get caught in the trap believing that production is directly tied to the number of employees. It’s simply not true. A well run practice can collect $25K to $40K/month/employee. Fix the systems, fix the overhead.

Where are the money holes in your practice? Even in you think you want to ‘die at the chair’ because you enjoy dentistry so much, wouldn’t it be nice to at least have the choice as to when you retire? Plus, how do you know what the future will bring? How you’re your health be in your 50’, 60’s or 70’s? How long will you live? And wouldn’t having the choice to retire sooner be better than later?

Don’t let your higher than needed overhead force you to miss the best part of your life. If you feel tired and wish you had more flexibility in your life’s work schedule, look at your overhead. Get some specialized help if you need it.

How many extra years are you going to have to work simply because you have chosen high overhead? An extra 10% is in fact doubling your work load. Don’t you have a family member or someone else who could benefit from that extra time?  What about you?

Don’t let the magic pass you by.