As a dental practice owner, there are many signs along the way that your practice is ready to grow, but how do you identify when it is time to bring on another provider. Sadly I have seen too many practice owners pull the trigger too early or too late on this idea, and for some, this is an uphill battle that is difficult to climb. Here are a few indicators to consider when taking the next step.
- Are you currently able to do all the work? If the answer is "yes" it is too early to bring on an associate. Many doctors believe that if they hire another dentist, they can attract more new patients. However, when you look at your practice in terms of supply and demand, having too much supply too early does not create in itself demand. If you are currently able to see all the new patients and do all the work for your practice in your current schedule (4 days) then it is time to market your practice at a higher level before you add a dentist.
- Are you booking major work out beyond 2 weeks? This could be an indicator it is time to bring in an associate, but before you do, take a close look at your no-show and cancellation record. Most offices I work with who are booked out for months are trying to compensate for a high cancellation and no-show rate. If this is the case, it's time to make some changes in the way you schedule patients from the get go. Download my free ebook on Scheduling here. If this is not the case, and you are already managing your no-show and cancellation rates below 12%, then it may be time to add a provider one to two days a week depending on the work load.
- Are you checking 3 or more hygienists each day? I know a lot of great doctors, but most cannot handle checking 3 hygienists per day and still being productive in their own chair. Three or more hygienists could indicate that there is a sufficient amount of patients coming to the office that warrants a second provider. If you have more than 50 new patients a month, and your hygienists are producing more than $1,000 a day, you are ready. The ideal ratio of doctors to hygienists is 1:2. However, if your hygienists produce between $600 to $800 per day and have all hour-long appointments, this is more of a time-management issue. If you operate more like the first example, is time to add a new part-time dentist. With limited space, this could require changing current schedule of your office operation, but your flexibility will only help you in the long run.
- Are you checking 1 to 2 hygienists each day? If so, you are not ready. There is not a sufficient amount of patients to warrant this move, unless you are having a hard time finding hygienists to meet you demand. If you are running with 2 full-time hygienists who are high producing and you have more than 75 new patients per month and have a high demand for more cleanings, you may have better luck in some cases hiring an associate who is willing to put the time in to making relationships with patients while you search for a new hygienist as well.
- Has your health or family situation changed? If you are being asked by your medical professional, or you are in a situation where you have to step back from your office, it may be time to hire an associate to take on the work you were doing, but you must expect a drastic change in how you are compensated. Paying an associate a percentage of net production or collections will result in less profits for the practice and a dip in your take-home pay. You must be prepared to take this decrease in pay and make appropriate changes to your lifestyle to manage your expenses. Easier said than done, but you don't want this to catch you by surprise.
- What is your current overhead expense? Most owner doctors run an overhead of operating expenses around 70%. However, most doctors do not know this because their CPA does not specialize in dental practices. Feel free to email me and I will send you a document you can send to your CPA to organize your expenses in an easy manner to find this out. Now follow the math. If you pay $.70 on every dollar the practice takes in to your operating expenses, how much could you pay an associate doctor? I see way too many associates with a negotiated rate of 35% of collections and in this scenario, there is not enough margin in the budget to pull it off. If this doctor hires an associate at 35%, they are spending 105% of their revenue in the doctor's chair to run the practice. Does that make sense? So, if you are a decent practice running your expenses at 60%, you have more wiggle room to offer a more competitive associate wage, but if your running your office at 75% or higher, it is time to hire a good consultant to help you get your expenses down before you commit yourself to scenario that will bleed rapidly.
- Are you adding services? If you have the space, this could be a good reason to add an associate who specializes in an area of dentistry that you don't currently offer. That said, you will want to negotiate the terms so that your team is not over extended and you are clear on how to handle supplies and collections. Proceed wisely.
Was this helpful? I hope you are able to see a path for you moving forward. I always welcome questions. If you are interested in joining me March 27 for my free webinar on Controlling Overhead, DM me for the details and I will pass them along to you.
