Business Challenges Call for Business Solutions

Running a profitable practice while remaining focused on clinical excellence

Roger P. Levin, DDS

A dental practice faces challenges much like those faced by other types of businesses. However, unlike many other business owners and CEOs, dentists typically have no formal training in management or marketing. What’s more, they are the primary producers in their businesses. A dentist must spend most of his or her workday chairside, providing direct patient care. Time spent dealing with staff issues, administrative matters, financial management, and marketing—all of which are essential for success—directly reduces the practice’s production potential.

Saying that practice owners must “work smarter, not harder” may be a cliché, but it defines the central challenge posed by the demanding new dental economy. How can a doctor counter market pressures effectively while remaining focused on clinical excellence?

Real-World Solutions, Adapted to Dentistry

Fortunately, the methodologies that lead to greater success for dentists have already been invented, refined, proven, and adapted to the specific needs of dental practices. Countless very smart business leaders and managers have responded to demands for greater quality, efficiency, and service in diverse markets. Their practical solutions, which are modified skillfully by dental management experts, meet dentists’ needs perfectly.

Implementing these solutions does require extra effort initially on the part of practice owners. But for the three of every four dentists whose production numbers have declined since the Great Recession, it’s a small price to pay. And the rewards can be substantial; most practices have the potential to increase production by 30% to 50% in 2 to 3 years.

The First Steps Toward Fully Integrated Solutions

For long-term business success, dentists must commit to putting their offices on a new, more businesslike footing by implementing superior management systems to handle all administrative tasks. There are existing models for these step-by-step systems. Meanwhile, implementing the following specific recommendations will yield significant results for most practices with flat or declining revenues.

Do More With What You Already Have

This axiom of the business world should be a mantra for dentists today. In simple terms, it’s far easier, less time-consuming, and less costly to maximize the value of existing patients than it is to bring in and generate productivity with new patients.

To do more with the patients they currently have, practices should strive to have 98% of patients scheduled at all times. Reaching this target begins with modifying the front desk coordinator’s job description and the scheduling system. Any patient who is one day overdue for treatment receives a carefully scripted phone call—preferably to the patient’s cell phone—on that day for the purpose of making an appointment. These calls to overdue patients should be made from the front desk coordinator every day.

If this initial call fails to reach the patient, it marks the beginning of a 9-week, “three 3s” follow-up process—one call per week for 3 weeks, followed by an email every week for 3 weeks, and finally one letter a week for 3 weeks. The cost of losing a patient today is higher than ever before, so this follow-up process is not as extreme as it may seem at first. Also, patients will not feel that they’re being pressured as long as the language makes it clear that the practice is motivated by concern for the patient’s well-being. It is worth noting that, on average, patients respond to the 9-week follow-up in 4.5 weeks.

Reactivate Inactive Patients

Any patient who has not come to the practice for 18 months should be considered “inactive” and would not be counted if a practice valuation were performed. Inactive patients may or may not actually be lost to the practice. Many of those who stop making appointments have not switched to other dentists. They have simply assigned routine office visits a lower priority in response to financial pressures triggered by the Great Recession. They’re saving money, not rejecting you or your practice, and can often be returned to active status.

Offering an incentive, such as a free exam or hygiene visit, makes perfect sense as a way to persuade inactive patients to return. Some doctors initially reject this suggestion, feeling that it’s wrong to give away their services. The author urges these doctors to think of it as preserving a lifelong relationship with the patient, whose value over time will be about $12,500 on average. Compared with this figure, the cost of a free exam is incidental. True, some inactive patients may have far less potential production remaining, but this is a numbers game. If a clinician only reactivated one of every 10 patients who received a free exam, he or she would still come out ahead. And there’s more to it than mere production dollars.

If a practice loses a patient, it is also likely to lose members of that person’s family as patients. Practices also need to take referrals into consideration. By implementing effective patient referral strategies, clinicians can expect to receive one new patient referral per year from 40% to 60% of their current, active patients.

Encourage New Patients to Refer Their Families

A recent innovation the author has been recommending involves motivating new patients to refer all their family members to the practice. With the right systems in place, this can be achieved 80% of the time.

To make this strategy work, clinicians must establish a powerful new patient experience consisting of the initial phone call, first visit, and comprehensive exam with excellent scripting that builds value, confidence, and trust. With the new relationship already on a solid foundation and the patient duly impressed by the practice, it is an ideal time to persuade callers to refer family members.

Control Overhead

Every business, including a dental practice, needs to pay close attention to how it spends money. One of the challenges is that over 80% of dentists simply take home “whatever’s left” rather than establishing a regular salary. This makes it impossible for them to properly project revenue and expenses. Practices should monitor and analyze all financial activities, including comparing monthly expenses to a budget. This can only occur when personal income can be quantified as a predictable line item in the operating budget.

In most practices, there are only two explanations for the percentage of overhead being too high. The first is waste. Some waste can be simply identified by comparing practice monthly figures to regional and national averages. Other waste is difficult to identify because it comes in very small increments from a number of different places. The second reason for disproportionate overhead is that the practice is under-producing relative to its fixed expenses. Most practices can increase production without increasing fixed expenses.

Optimized Operations

Dental practices must now implement real world business systems for day-to-day operations. Practices that have the right systems in place, and implement key strategies such as those discussed here, can experience higher production, profit, and income.

About the Author

Roger P. Levin, DDS, is a third-generation general dentist and the chairman and chief executive officer of Levin Group, Inc. Readers who want more of Dr. Levin’s advice can attend one of his upcoming, all-new seminars; more information is available at www.levingroup.com/gpseminars. You can also connect with Levin Group on Facebook and Twitter (@Levin_Group) to learn strategies and share ideas.