Bigger Is Not Always Better

In 2016 I was approached by an accountant to look at a dental practice that was owned by one of his clients.

The accountant could not figure out a couple of things about the dental practice…

Firstly, considering the size of the dental practice, the accountant couldn’t figure out why it was not making a profit?

[The dental practice had five dental chairs and employed three dental hygienists and three dentists, as well as having a principal dentist]

The second question the accountant had for me was:

“Why do people who answer the telephone need to be taught how to answer the telephone? How hard can that be?”

Let’s look at the first question:

With such a great facility, and with great manpower, there certainly was a profitability question.

And in the case of this practice, the answer to the first question can be explained really quite simply.

Different practitioners work in different ways.

Some dentists and some hygienists prefer to work in different ways to other dentists and hygienists.

The sad thing is that in private dental practice, under ownership, some owners end up running charities for unproductive practitioners.

These owners allow the employed practitioners to use the practice’s facilities with no processes of review, including review about productions, hourly rates, diagnosed treatment, case acceptance, and case completion.

Just to name a few….

For each practitioner.

And when there are no processes of review, then there are no opportunities to stimulate results and improvements.

And so what happens is that the dental practice has no consistency.

And that is what I witnessed here first hand.

During the six months I worked with this practice their collections were below target for four of those months and then above target [slightly] on one month. And another month the figures were well exceeding target.

But not in that order.

Because the practice had no structure.

And the lack of structure created the erratic results.

And without structure there was no review.

People took vacation when it suited them, rather than when it suited the practice.

The dental exams in the hygiene rooms were not done at any specific time and were only done when it suited the dentists, not the patient and not the hygienist.

There were no daily goals and targets set for dentists and hygienists to achieve.

And when you don’t have something to aim at, you end up missing it one hundred percent of the time.

When the practice achieved its one stellar month of production, the big differentiating factor for that month compared to the months before [and afterwards] was that the principal dentist had done some significant treatment. And some extra hours.

Ask yourself this question:

If we separated the income generated by the principal dentist, and subtracted that from the total practice income, would the income from the remaining practitioners be sufficient to pay them their salaries and commissions, as well as pay all the staff salaries and all of the practice’s expenses?

And return a profit for the owner?

What I don’t like seeing….

What I don’t like seeing in these sorts of larger private dental practices is the situation where a significant chunk of the principal dentist’s production income is being used to prop up the underproduction of the employed practitioners.

With zero profit being made by the practice….

And that’s CHARITY.

Speaking pragmatically.

All too often I see dentists surrounding themselves with extra practitioners, creating an illusion of success, when there is no profit coming from having these people there.

And often the having of the extra people there creates significant headaches for the practice, in terms of human resources and management.

And the solution is?

All too often there is an obvious solution in creating the best way forward.

But sometimes that solution is not apparent to the owner of the dental practice.

On a different note, this year I was asked to help a dental practice where the owner wanted to bring on an associate dentist, with the view of a transitional sale down the track.

Interestingly, upon analysis, the operations of the practice presented an alternative path for the principal dentist which was a far more satisfying solution than the owners had initially believed was possible.

The difference is?

In the first practice, despite my analysis and recommendations, no actions were implemented.

In the second practice, the reaction of the owners to my advice was:

“Yeah, that’ll work. Let’s do it.”

Sometimes, some people can’t see the wood for the trees.

We all know the story of the two woodchoppers in a contest?

One chops wood all day long, and whenever he looks over at the other woodchopper, he sees him sitting and not chopping.

At the end of the contest, the woodchopper who had chopped wood all day long had chopped less wood than the woodchopper who was seen sitting.

And the reason this woodchopper had been sitting?

At regular intervals the second woodchopper decided that he needed to sharpen his axe.

What are you doing to sharpen your own axe?

As a business owner, are you simply chopping away?

Because that’s what you think you are meant to be doing?

Or are you taking time to get advice, and act on that advice?

Sometimes it’s not just the doing. It’s the preparation, and the analysis of the problem that is the best solution.

At the end of the day:

At the end of the day, being in business is not about who collects the most money.

Being in business is about net profit.

It’s about what you get to keep after paying the bills.

And what you get to put away for your future.

Anything that you do in business that reduces net profit is considered charity.

Unsolicited charity that continually drains away at profit is not clever, and needs to be terminated.

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