The Ultimate Litmus Test: Is Your Practice Growing Or Dying

Today, I bring you a harsh reality, one that most will choose to ignore and pretend that all is well back at the ranch even though there is simply no way to lie, fake, or deny the truth that I bring you today – the results of this one critical litmus test.

Before I share this with you, it’s important that you understand and embrace the fact that you could possibly be very healthy, and have a growing practice, you could pass the test that I will propose to you today and if you do, that IS good news, it is also not an excuse or reason to become complacent, to brag, or to dismiss the power in the strategy and philosophy that I will illustrate for you at the end of this week’s Profit Report.

Quite the opposite, because you pass the test you are in the power position, one of momentum and positive energy. It means that you are in a growth pattern and when you are growing that is the time to accelerate, the time to push on the gas pedal, the time to go above and beyond and get everything else in your practice aligned for maximum profitability.

If you fail the test then…have no fear…it only means you have opportunity for improvement. Most likely you are in a stagnant stage or in need of dramatic and immediate change to right the path to get things going back the way you wish.
It is my experience that most Dentists reading this will fall right smack dab in the middle, they will neither be doing great or doing poorly but just doing, coasting along and accepting that they don’t really know what the future will bring, that they have no actual predictability or control over just how profitable their practice is.

And that is no way to live and certainly no way to build a business, a successful practice that delivers any peace of mind.

So…drumroll please – there are three parts to the litmus test that determines what your life will be like one year from today, how much money you will make, how many new patients you will get, and how happy you will be and hard you will have to work to sustain it, 3, 6, 12, 18 months from now.

Remember the key rule of business and your dental practice – you live in the world of the TRAILING INDICATOR – what that means is you can’t see the damage of a slow month or a missed opportunity or of numbers that are off today until weeks and months later. You simply will not immediately realize the impact of a sluggish or low product schedule; and you can’t “busy” your way to success in dentistry, you can’t solve PROFIT problems with a VOLUME equation – nope – you can only delay the inevitable.

The three parts help to balance out a practice that may operate with a different style or theme or business model than another. I work with varying types of dentists preforming all ranges of clinical dentistry and who serve patients in different ways.

My star student and celebrity Dentist in Houston who performs high numbers than 97% of all Dentists in the world who have matching practice set-ups has no interest in seeing more than 6-10 new patients a month who qualify, wait in line, and pay a premium to be his patient.

One of the most prolific and profitable solo practices in all of North America in a small town far north of Toronto, my long time client and personal friend for years is grumpy if he isn’t seeing 80-100 new patients monthly… he is an empire builder, a different approach than International guru in Houston, both my clients, both follow my lifestyle practice blueprint model, both have different answers to this litmus test both wildly successful earning in excess of 7-figures quite easily per year doing what they want to do, how they want to do, serving patients in the way that matches their personal styles, interests, and philosophies.


Is your practice growing?

Simply equation: take your active patient base and run a report for all the hygiene visits or patients that should have come in last month, take the total number and then figure out the actual number or recall visits that you had – then you have your active patient number for last month. With this number ADD to it the number of NEW PATIENTS that you brought into your practice that received treatment and see if that number if larger than the year before, six months ago, and most importantly one month ago.

If you are up year to year, good for you, if you are up month over month good for you, this is positive sign and it means you have the possibility of momentum and can create what I call a referral based practice.

Again, total number of patients seen for standard recall/hygiene visits month to month, and the number that SHOULD have been in to your practice, added to that your new patient numbers so you can tell if your active patient count month to month is up or down.

You can’t look at “total patients” you have to look at “actual visits” – that’s the critical piece. It only matters who actually sits in your chair.


Is your practice healthy?

How many Referrals lead to New Patients LAST MONTH – this is the most underlying secretive number in your entire practice that will determine your long term sustainable success, this number is what matters if you are going to achieve any sense of predictable income.

There is and should be no need for external marketing in a truly mature and profitable practice.

I am a marketing master, you understand people fly to Nashville from all over the world to sit with me for $2,000-$3,000 per hour and get my advice and guidance and coaching on sales and marketing and patient experience and profitability.
I sell marketing.

And yet I am here to tell you that the magic of this, and the power of both what I do for your practice and what you should take empower your patients and people to do for you is create a referral culture and grow from THE INSIDE OUT.

If you are doing any sort of marketing at all you are simply disguising the fact that you do not have a healthy practice, if you are marketing to get new patients BECAUSE YOU NEED TO – you are misguided, misinformed, and on a course for disaster…you can’t handle the ups and downs and season the storm.

This is fact. True. Reality.

Trust me, my Dentist client doing 80-100 new patients per month is definitely marketing BECAUSE he is growing ambitiously, he is accelerating his progress, but he doesn’t NEED to market, no question, he is getting more REFERRALS per month than any dentist in North America, he does marketing to assist and accelerate growth, his referrals make his practice healthy.

Your test is simple, can you live off of your referrals?

Is your practice healthy? How many patients this month brought you new patients.

One of the fastest ways to determine this is run a report of all the last names in your database and see how many true “families” are your patients.

How many moms referred dads, husbands referred wives, parents referred kids, parents, siblings, relatives.

That is the true sign of success.

If you are not as healthy as you should be the simple problem is communication and relationship – I will address at the end of this.


Is your practice profitable?

Okay, now I’m about to strike some controversy here…of course I would guess you are making money, not losing money and thus profitable.

However that is child’s play, that does not determine your true profitability.
There are two ways.

First, take your total collections from last month and then back out all of your expenses and then determine how much is left.

Then if you haven’t already factored out of that your own personal salary, usually figured by number of hours you are in the office seeing patients.

Then you are left with your true profit number.

That number ought to be no less than 20% and in a healthy profitable practice it should be 30-35%.

Here’s where the litmus test comes into play – are you really getting paid what you are worth? Take your salary and divide it out by the number of hours you are “working” and I mean seriously working…not playing dentist, I mean seeing patients, planning cases, doing paperwork, training staff, going to continuing education, etc

All the hours of your life you put into the business, take that number and come up with your HOURLY WAGE – and you tell me if you are happy with that number, if you are profitable?

Once you create a fair wage for yourself OR your hired associate, then you are left with the net profit of your practice.

Remember this – you are a DENTIST and a BUSINESS OWNER, you should get paid as both, you have two incomes. One as a ‘doer’ one as an ‘investor’ and you can get rich, even achieve financial independence by having a HIGH SALARY – however you can’t truly get wealthy or really achieve lifestyle liberation unless you are maximizing BOTH of your incomes.

Most Dentists I work with we phase through 3 parts, first ramp up salary and income, second optimize and maximize profitability, then you are getting paid 2x at the highest level possible.


Then we transition to phase 3, where you move others in to do the “work” the Dentistry and you move to an Owner/Investor position and I guess, semi-retire or at least go to a WORK BY CHOICE position in your life.

That is true independence.


You are now left with 5 numbers that tell the story of your practice.

1st – actual, true active patient count, in last month plus new patients

2nd – legitimate referred new patients last month based on a percentage of overall active patient base

3rd – your personal hourly salary based on actual hours worked, not just seeing patients

4th – your net profit as the Practice Owner
Now…that’s a lot to take it, it should be overwhelming and give you some homework to go play around with.

Next week, I will bring this full circle and share with you the 5th and final piece to the equation and breakdown how to make a positive impact in each are of this litmus test.

This is about taking a global approach to your practice and managing it smartly with accurate thinking and real insight.

You can’t make good decisions without good, true, factual data.

In case you keep close tabs on me, I promised one other thing last week that will make all the difference…I will give it to you in one sentence and explain in here next week.

Do you see your practice from your patients point of view? From the experience the patient goes through, not the clinical dentistry approach or staff training or any other perception, the one that matters most is looked at the least…if you want to truly impact these numbers and WIN BIG in the litmus test of success, profit, and have a healthy and growing practice it will be done through the patients eyes.

To be continued – – –