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Beyond the Bite

The Official Blog of the Florida Dental Association

Tag: practice growth

Not as Busy as You Would Like? Try Looking Around the Dental “Neighborhood”

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By Dr. Rick Huot

According to the ADA Health Policy Institute’s recent research brief, statistics show that dental offices have been lagging behind other business entities to recover from the Great Recession that started in 2008. Except in rural and urban areas that have a numerical shortage of dentists, most dental practices are reporting flat earnings and are just keeping up with the increasing costs of running an efficient practice.

The measure of growth in a practice due to internally referred patients and patients obtained by external marketing is called organic growth, since it is “home grown” from the efforts that the present office has done all along.

Another “fast track” of achieving growth is to purchase an existing practice in your practice neighborhood, by either merging into the larger office, or purchasing the existing patient base and obtaining the services of the present dentist, and many, if not all, of the doctor’s staff members.

This is the first year that millennial dentists will outnumber baby boomer dentists, and many of the boomers are approaching their 70s, which is past the traditional retirement age of 65 for the majority of America’s workforce for the last generation. However, people (and dentists!) are living longer, and quite possibly need to work longer, as they are financially short of their retirement goals.

For a young dentist (Dr. Millennial), buying an existing practice from a nearby colleague (Dr. Boomer) is a win-win situation, and some of the immediate benefits include:

  1. Purchasing an existing patient base is a more efficient way of securing new patients. The patients that belong to Dr. Boomer are existing “vetted” patients with a track record of seeking care, and a desire to keep their doctor-patient relationship with a young dentist, knowing it won’t be long before they have to choose a new dentist. Retaining upwards of 90 percent of the patient base is not unusual in this type of practice purchase, especially if Dr. Boomer occasionally practices in the new office.
  2. Every dental practice has a core of outstanding staff members, and the ability to retain those staff members will give Dr. Boomer’s patients a “familiar face” to see when they come in for dental treatment.
  3. The small equipment and additional supplies purchased with Dr. Boomer’s practice will increase efficiency in terms of instrument turnaround, such as extra handpieces and instrument setups, and reduce the future need of high-cost items, such as extra digital sensors and computer workstations.
  4. Dr. Millennial has a ready-made “temp service” in Dr. Boomer, which keeps the practice open for longer periods of time during vacation times and in the case of a female dentist, maternity leave. Having the practice open for more days and longer times increases the profitability of a business, as fixed costs are already accounted for and variable costs are less.

For Dr. Boomer, this also is a win-win situation, as some of the benefits include:

  1. The ability to take time off without the worry of provider coverage, and paying the costs of running a practice at a time in life when we physically slow down.
  2. If Dr. Boomer becomes a solo independent contractor to Dr. Millennial, the pension laws for someone reaching 50 years of age dramatically allows the older doctor to get a direct tax deduction for a considerable amount of retirement funds ($215,000 for a defined benefit plan, and $54,000 employee contribution to a defined contribution plan not including the matching provision), while taking a reduced amount to live on, since the practice sale would have provided funds for living expenses.
  3. Since Dr. Boomer is now a self-employed solo dentist, a Subchapter S corporation would allow practice profits to “flow through” their normal tax return (1040), and could provide tax bracket benefits.

As with any financial and business transaction, all of these practice purchase sales should be done with competent financial and legal advice, and might include a transition specialist who could facilitate the merger.

So, Dr. Millennial, it is time to look “around the neighborhood” and find someone compatible to your practice and business philosophy. The decision you make may prove to be the most financially astute one you will make in your entire practice career!

 

Dr. Huot is a general dentist in Vero Beach and the founder of Beachside Dental Consultants Inc., a dental practice management consulting business. He is on the FDA Board of Trustees and can be reached at rhuot@bot.floridadental.org. 

The Key to Sustainable Practice Growth

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By Dr. Mark T. Murphy

When asked what would solve their lack of busyness problem, most dentists respond by saying they “need more new patients.” Although a steady increased stream of clients would help fill the hygiene and dental schedules in most practices, it is expensive and the most difficult to quickly achieve. Acquisition of new business requires either a strong social and public media blitz (tougher to effectively target market without spending a lot) or steady referral growth (which takes time). Fortunately, there are diamonds at our feet that we can take advantage of, but it requires a bit of a paradigm shift in thinking.

How we look at the problem sometimes is the problem. That’s why a shift in perspective sometimes is needed to move past a recurrent obstacle. By looking at the problem differently, we may be able to see solutions that were previously limited by our point of view. “More new patients” is not always the right answer.

The single biggest opportunity for sustainable growth in most practices is right under our nose. In the average practice that we have worked with or researched, a little more than 70 percent of the existing patients are leaving with a re-care appointment scheduled for a specific date and time. Most of us think we are better at that, but when you actually stop and measure it for one month, you will feel differently. It is easy to significantly increase the percentage and impact how full your hygiene schedule will be.

1. Measure: Just by measuring, your team will become more attentive to this behavior (prescheduling re-care) and the results will improve.

2. Track: By setting an improvement goal and tracking how many patients leave with a next hygiene appointment in real time (using notes on the day sheet, an excel spreadsheet or software like funktionaltracker.com), your future schedule will be more full.

3. Speak: Rehearsing verbal skills around this helps to get more patients to schedule. “Mrs. Jones, I know how you feel. Sometimes I don’t know what I am doing in six months, either. But, let’s do this: Let’s book something for now that looks like it might work. If you have to change it as it gets closer — no big deal. But, it is so much easier to trade a one-hour time slot for another one if you already have an appointment than if you don’t have one.”

4. Celebrate: Re-measure the result each month and share the success with your team. Reward them appropriately so they know how much you appreciate their effort. It is way less expensive to pre-book and stay busy than to try to fill an empty schedule a few days ahead of time.

The obvious part of this story is that it works! The bonus is that when you have more hygiene patients and a fuller schedule, you will de facto have more dentistry to do from that. Most practices range from 25-35 percent of their production from hygiene visits and the rest from restorative. So, for every dollar you find by pre-booking better, you should find $2-3 more of restorative need. Helping more patients have healthier mouths and getting to do more of the dentistry that is fulfilling drives these behaviors. Money never leads, it only follows.

 

Dr. Murphy is the principal of Funktional Tracker and lead faculty for Clinical Education at Microdental, and can be reached at mtmurphydds@gmail.com. He will be speaking at FDC2016 on Thursday, June 16 and Saturday, June 18. “Introduction to Treating Sleep Apnea in Your Practice: From Getting Started to Medical Billing” will be on Thursday at 9:30 a.m. and “Evidence-based Shade Communication in Restorative Dentistry” will be later that day at 2 p.m. On Saturday, he will present, “Improving Case Acceptance, Moving Past Insurance Entitlement,” at  10:45 a.m. during the New Dentist Program, “Success is your Future: The New Dentist Practical Guide for Success.”