The “Bottom Line” About a More Profitable Practice

Last week, I made a bold statement that the vast majority of doctors’ idea of how they make money, earn income, grow their profits in their practice, and ultimately create financial independence through wealth building is completely 180 degrees backwards.

I also said that it’s not their fault. They (possibly you), have been misled by other people who tell you that your profit is your bottom line at the end of your P and L statement and surprisingly somehow that number never matches up to what you actually expect to be your income and net profit.

Most also have been getting by simply hoping there’s money left at the end of the month after expenses and the modest salary a CPA is suppressing due to tax considerations.

Here’s the thing… without an intentional strategy and deliberate effort to get your money out of your practice, the practice will eat up all the profits.

Now, today, I’m not going into the necessary structure. The premise I implement with my doctors is that there is more to life than the dental business, there is the life and money business and the point of the dental business is to fund the other two.

Only one of those, by the way, leads to actual true financial ‘work by choice, not by necessity’ independence. The money does have to travel a long way to get there; better to be a straight shot than lots of turns and detours.

Instead, what I want to focus on today is my statement about where profit comes from: the top. Otherwise known as the practice revenue.

So many doctors (and it’s usually because of their CPA’s) always want to focus on how we can lower expenses and spend less money in order to get more profit. It just doesn’t work this way.

That’s why I say the goal is not to minimize overhead – or better stated as the investment you make in your practice every month in order to create the revenue that makes your life work, achieves your potential, and fulfills all of your goals.

I think in terms of maximizing overhead which allows you to scale capacity, leverage existing resources, and grow your practice into what your overhead is capable of achieving in terms of collections, production, and revenue.

By the way, this paradigm shift all by itself will create incredible opportunity, help you to see things vastly differently, and become a better business owner.

Yes, this has to do with abundance and prosperity and not a lack and scarcity mentality but it also includes specific tactics with how you make decisions.

As example: focusing on getting your expenses in certain categories into ranges of percentages instead of focusing on getting your profit to be a certain percentage.

One you grow and expand capability and opportunity. The other you suppress and contract capability and opportunity.

Which brings us back to making profit off the top, not the bottom.

Quickly, here are two specific principles that we talk about very often right here in the Weekly Report that lead to greater top line revenue – and top line profitability.

The first is the most important number you are responsible for in your practice…


If you are going to build bigger cases, if you are going to deliver more health to patients, if you are going to grow your practice in any way – the easiest number to expand is the total value (dollars) of diagnosis.

The reason is because it is the one that contains the most leverage. That means it is not restricted by capacity constraints or limited resources in your practice. Doing more dentistry per patient does not require more overhead.

Additionally, diagnosis is the origin of everything else… presented treatment, accepted treatment, scheduled treatment all the way to production. Simply put: your production will never be greater than your diagnosis. If you can increase your diagnosis, you have more opportunity to increase everything else down line.

Of course, this doesn’t negate your responsibility for improving all the other steps that come after diagnosis and having a complete patient experience.

The next principle I will give you is all the way on the other side of the spectrum and that is the schedule. We go from the very beginning to the very end.

This is very much like your “bottom line” as in it is the final result in terms of production. Once the dust settles from your patient experience the schedule is the after not the before; it is the effect not the cause.

Just that alone, once again, puts your mind in a different level of thinking. Realize that your practice is not at the mercy of the schedule.

Every doctor thinks that their schedule is the bottleneck to growth and therefore we can only increase our numbers by seeing more patients, moving faster, increasing hours, adding team members, and adding space (all very expensive “solutions”). Actually, you will only ever have marginal growth by trying to cram more in during a day.

Instead, we go to the top line of putting more value in a schedule; not more of anything else. You achieve this by not being reactive to the schedule and avoiding putting your collections at the mercy of what is in it.

That means bigger appointments, more production per patient, more pre-payments, and more comprehensive dentistry.

That means less pay on the day of treatment, less dependence of insurance, and fewer stages in pathways to health (treatment plans).

Here is something very interesting… all of this is very objective. It all comes down to process, protocol, systems, and ultimately the communication with patients. You are in control over what gets diagnosed, how it’s paid for, and how it’s delivered. Therefore, you have all the power to achieve predictable results and continue to grow your goals.

What’s better is your collections should fall in between diagnosis and scheduled treatment – not after. Which means collections and production do not have to be directly correlated in the same period of time.

When you break free from these capacity limitations holding your practice growth hostage, you increase your ability to expand top line revenue without expanding the expenses and overhead that make it possible.

And that’s where we get the profit from the top.

To see how close you are and to gain clarity from finite financials, here is a quick trick…

Take you practice overhead (your fixed and average variable break-even costs) for a month, add to that your monthly profit/income goal and then divide that by the number of clinical hours in a month.

This will give you your required hourly production value to achieve your desired profit. You can do the same thing for a day, week, or entire month. You can do it by procedure, if you like.

If your fee for that procedure or the hourly value is less than it needs to be for your desired income, then you will never be able to actually take money off the top because you will always be running behind playing catch up before the month is over.

This is also what gives you the ability to future-cast your cashflow by knowing exactly what is going to happen because you have reverse engineered these key metrics and extrapolated your top line number.

There’s a lot here to study and think through. Work on the numbers that build a bigger pie and know that you make your profit, not where everyone else looks at the bottom, but from the top.

We’ll move into exactly how to get the money out with a system for profit plus one very specific mindset shift that will dramatically accelerate your path to freedom – next week.