Q & A for the ADA's New Dentist
• First, some general advice you often give to new dentists.
I would suggest that dentists should choose to practice where they want to live when they retire. The reason for this thinking is that only about 6% of dentists can afford to retire in a manner to which they have grown accustomed, so they may have to keep working. And the reason they may have to keep working is that a similar percentage of dentists do not recognize the importance of practice management both from a macro and micro level, the ultimate result being a practice not realizing its full financial potential. Micro management is the day-to-day running of the office efficiently with a satisfied staff, and macro management is the dentist taking an ongoing and active role in understanding the financial aspects of the practice as a business, having a plan.
I would suggest that dentists should choose to practice where they want to live when they retire. The reason for this thinking is that only about 6% of dentists can afford to retire in a manner to which they have grown accustomed, so they may have to keep working. And the reason they may have to keep working is that a similar percentage of dentists do not recognize the importance of practice management both from a macro and micro level, the ultimate result being a practice not realizing its full financial potential. Micro management is the day-to-day running of the office efficiently with a satisfied staff, and macro management is the dentist taking an ongoing and active role in understanding the financial aspects of the practice as a business, having a plan.
• What are classic pitfalls of inefficiency in the dental office?
One common mistake in monitoring efficiency in the dental office is not relating your expenses to a percentage of your production. For example, there is a world of difference between staff wages and benefits at 20% of production vs. 36% of production. This is a measure of productivity; productivity is the “end game” of efficiency. Know your numbers!
• What common mistakes should new dentists avoid, and how?
A couple of answers:
Make sure your staff is happy. There is nothing like staff who are working for you because they love what they do and because they feel valued. Have staff meetings regularly. Define your ‘vision’ of your practice to your staff and have your staff define ‘their’ vision for you. Work collaboratively to realize your collective visions by establishing goals. Consider hiring a dental coach to facilitate this process.
New dentists should recognize that their practice is an investment, like any other investment and should realize a return (ROI) at least equal to and preferably greater than a passive investment into real estate or the stock market, for example. Before you purchase a new practice analyze it from an investment perspective, i.e. understand the numbers. If the numbers indicate a likelihood of a lower return than you can be guaranteed elsewhere, then why not just be an associate, invest your money passively and not worry about the management of a dental office? Why, because you want security and something to sell in the future. So, once the practice has been purchased, manage it actively, know your returns and recognize that your practice is a business and that practice management is also BUSINESS management.
• Is there a commonsense aspect of increasing productivity that dentist might already know — but not actually do? What would you recommend?
Most dentists already know and recognize that procedures per hour is an important dynamic to productivity, but few recognize that it is the most important clinical dynamic that is within their control. Further, there is no evidence that speed of procedures actually compromises quality of care. There are, “How to Do a 35 Minute Crown Prep” videos and literature out there, however, most dentists don’t take ownership of the fact that they may be part of the problem.
• Any other words of wisdom that you’d like to offer.
My parting comment is rather radical but worth considering and that is regarding one of the most missed opportunities in dentistry - the transition from one practice/one career to many practices/one career. By years 10 –15 you have already depreciated most of the value of your assets and you have built up a significant portion of your goodwill. You can only capture the goodwill value of your practice when you sell. Selling your practice more than once can be an excellent way to leverage your return on your investment into your practice.
Note: This does not necessarily mean you would have to move your family from your community as you could sell ½ of your practice or commute to a new area outside any restrictive covenant. Further, this strategy allows you to capture the value of your practice while it is “peaking” and not sell when you are retiring and typically have slowed down.
That’s it!
