For the independent private practice owner, like you, last week’s Report should have been a manifesto creator, at the very least. You are used to me giving you permission to do it all on your own terms but last week I really gave you structure for assessing where you are and challenging yourself to expect more from your current practice performance – in two ways…
Permission to be proud of and focus on PROFIT
And permission to make it as fun as possible!
That includes what you do, how you do it, why you do it, and celebrating the rewards you get from it. What else would be the point?
You aren’t a martyr nor are you supposed to be to your team or to your patients. If you need a refresher on the power and principles of capitalism, I’m happy to give them to you. However, I can’t imagine you being here if you weren’t fully embracing your role in the hierarchy of life.
Just know this: you’ll never get more than what you expect, believe you deserve, build a business to deliver, and exchange value to match.
None the less, you do not have to limit yourself – at all. The more you win, the more others win too. Understand this and you’ll avoid the joy versus profit dilemma.
Of course, it’s not as easy as just saying it; you do have to have a plan for it and that’s why I wrote the book specifically about this. If you want to stack the deck in your favor and you want more luck in your life with dentistry then don’t just give it a good read, give it a hard study and really challenge yourself to grow into your true potential.
At this point I don’t know how you could have possibly missed it, but just in case, it’s my gift to you…
Grab Your Free Copy of My New Book Right Here >>>
Let’s get serious for a moment about practice profitability. I am not talking about some crazy made up percentage based formula where you put all of your expenses in a little box and pre determine what your profit is supposed to be.
Sure, dentistry has some relatively formulaic expense ratios based on the type, style, and model of practice. Still, that doesn’t tell the full story and most of all that type of thinking puts you at a disadvantage. It’s more akin to ‘take what you can get’ instead of ‘create what you want.’
So, the question becomes how do you shift to being built for profit. It’s actually not that difficult. First, let’s look at it from a math perspective.
If you take all the bills that you know you have in a month, your overhead. Add these numbers up and then you divide it by your clinical days and then by your clinical hours each day. Now you know what your practice has to ‘produce’ every hour to breakeven.
Any hour or day below that and you lost money in your business today.
This is most certainly not rocket science. Yet, there are very few doctors who, if quizzed, would actually know this baseline number. More importantly than that, they would then not have an answer for these next two questions…
How much do you want to make?
And what are you doing to make that possible?
Let’s just take a very easy example and say you work sixteen clinical days per month and let’s say we target $1,000 a day which would give us $16,000 a month. That’s roughly (very roughly) $200,000 per year in this example.
So, for every $1,000 of profit per day your annual income goes up by $200,000. Now you get to decide how many $200,000’s you want in your income. Simply multiply and do the math.
My doctors want seven figures in income as a baseline – that might be their growth goal increasing from $400,000 to $600,000 to $800,000 or whatever.
However, you don’t get there in annual income in dentistry, but in daily collection numbers. So the more you break down the math to manageable details, the more you have control over the outcome that you want.
It gets even more exciting when you look past it as a production number and you focus on it as a collection and creation of opportunity number. Even if you are collecting your production or you have to account for insurance write-offs then you still have a clearly defined daily objective. You can still know exactly what you want your practice profit to be and you have a laser focused daily target. That should be exciting and empowering to you.
Some will choose to look at it as a stressful responsibility and others as an amazing opportunity to be in total control over their practice profitability.
There are two decisions that must be made in order for this to work…
1. That you are comfortable with and believe you deserve the profit and income that your practice will produce.
If you are uncomfortable with prosperity, this might not be the place for you. Though most every doctor I meet at first initially is always dealing with some level of deserve and belief discomfort; otherwise they would have already broken through to the next level.
2. That you accept complete responsibility for your own success in business and the practice profit is your single greatest responsibility of ownership (after all, it is what separates amateur hobbyists from professional entrepreneurs).
Your degree of acknowledgement of this will directly determine your ability (how easy or hard it is) to succeed and profit.
The good news though, you don’t have to do it alone. Of course, that’s the point of owning a business with a team and patients and system and everything else.
Which leads me to that other important question, question number two after knowing how much profit you now have reversed engineered into your day, week, month, and year.
What are you doing about it?
Here’s how profit is made and your daily target is brought to life: accountability of the performance of assets.
Are we making money on the:
Time
Procedures
People, both team and patients
It is not as easy as breaking apart the components and looking at them all separately but you do have to do that. Then you have to factor them altogether as well. Let’s just take a couple.
First, the big one, your time. Are you at the highest and best use of your time? You determined your required hourly value and now you must ask yourself while you are working, clinically, are you profitable?
You’ve heard of my Value Based Scheduling, which is way more than a scheduling structure though that is how we present it. It is actually a dynamically engineered practice optimization and profit system that incorporates in all of these key components into one.
Now, you have to have time to treatment plan, to diagnose, to create, maybe to do lab work and other things – none the less you have to have a truthful assessment about when you are ‘doing the dentistry’ (when you count yourself ‘on the field’), you have to be making a profit.
This is why doctors can’t be underutilized but that also means that time, space, treatment rooms, and most of all team members can’t be underutilized.
There’s a whole separate discussion about your non-clinical time. We’ll hit that after we’re done with this series. It’s very simple, if you don’t value your time you don’t value yourself and if you don’t value yourself you’ll never break through to the next income tier in life.
The next big profit busters are procedures and while this does directly impact your time, it is more than that. It could be factoring in the actual supply cost or the insurance write-offs or the speed and what’s required of the doctor or how many visits.
One of the things we always look at is more dentistry in fewer visits. This is, as usual, common sense however very few people actually do it. They end up with their schedule just being whatever it is instead of having dedicated and strict control over the way dentistry is placed, bundled, timed out, etc.
You can’t afford inefficiency nor the ‘expense’ of small visits and small procedures. Until you start weighting your procedures and production you will be at the mercy of the limitations of your time.
Next up (and I’m going to leave you hanging on this) is the people. Of course, most doctors see the team as their greatest “expense” – which is not. It’s an investment, not a an expense. Your mindset about how and why you pay your people is often a doctor’s greatest weakness and it could be holding back the entire culture of the practice.
You can’t look at what you are giving only, you have to look at what you are getting – the return on your investment. I see very smart doctors nickel and diming for a dollar here and a dollar there with team members. It’s the wrong mindset for growth.
Here’s the bottom line: the goal can’t be pay as little but get as much as possible. That’s small minded not business owner thinking.
Focus on improving the return on your investment with your team members by making them more valuable (which is your responsibility not theirs, at least not solely). Every team member can be a creator of profit if they are effectively utilized on the team. We’ll talk more about that next week.
For now, you’ve got some thinking to do, some exciting math ‘problems’ to solve, and some evaluation of your value of time. Done right, you’re going to discover some found money, some untapped potential, some immediate areas you can increase your profitability overnight.
Now that you’ve done that work, you’re ready to dive into my new book “Creating A Highly Profitable Dental Practice (That You’ll Actually Enjoy!)“ and get the advanced profit strategies. You’ll take yourself to a whole new level of success and satisfaction when you have profit and enjoyment at the same time. You’ll find all 7 leverages points to doing just that right here…
