Most dentists get into the business expecting to focus on oral health. Anyone who's ever run a dental practice knows, however, that running a successful office takes more skills than you learn in dental school. For many dental professionals, challenges arise around business management, business growth and business financing, says William Gowie, who specializes in accounting and finance management for more than 40 dental practices and is managing partner at Barsz Gowie Amon & Fultz, based in Media, Pennsylvania. “The big advice that I give to my dental practices is treat their practice as a small business," says Gowie. “Some dentists don't look at it that way. They just look at the work that they do and think that's what their income should be."
Scott Leune, DDS, says he regularly educates dentists on how to think like a business leader. “The foundational issue that dentists have is they are not CEOs," says Leune, who is CEO of Breakaway Seminars, which is based in San Antonio, Texas, and leads educational sessions and retreats aimed at improving practice management skills and profitability. “They choose not to give themselves the time and the information needed to become an effective CEO, and so the noise of their day pulls them away from things that actually influence growth." Leune speaks from his own experience. His career began in 2005 with one dental practice in San Antonio, and within four years he had three locations with 80 staff members and 10 associate dentists. In time, he bought and sold seven more dental practices. Now, in addition to leading seminars, his business also provides services to 18,00 dental offices, such as a call center, billing, insurance, marketing and more.
Both Leune and Gowie regularly counsel dentists on how to grow their practice and manage finances. Here's their advice.
We recommend to clients that they're acquiring other practices so that they're continuing to grow their practice outside of just referrals coming into their business.
—William Gowie, managing partner, Barsz Gowie Amon & Fultz
Understand the formula for growth.
Leune looks at revenue growth as a math formula: it depends on the patient flow multiplied by how much a dentist can diagnose multiplied by what percentage of the time a patient agrees to the treatment suggested. He says that every dentist office should scrutinize those three areas and determine how to improve the numbers.
Take the treatment portion of the equation, for example. Leune says that dentists often make a mistake when suggesting a procedure, such as a dental filling or bonding, and that is they don't communicate urgency. To increase the number of patients who agree to a treatment—which then increases revenue—urgency is key. “Nothing gets better over time. That crack will only get deeper until it breaks into the nerve or the bone and then we've got a huge problem on our hands," says Leune. But unless a dentist emphasizes the immediate need, a patient tends to see it as an “elective," and often put it off.
A little cost savings goes a long way.
Supply costs add up, but there are a number of ways a dentist can address those, says Leune. First, they need to make sure that they're purchasing supplies from the least expensive seller. They also need to consider brand name vs. generic. “Does it really matter if we buy the expensive cotton roll or the cheap cotton roll? Probably not," he says. And they need to implement budgeting and accountability. “In a typical practice, the person ordering the supplies is an unqualified person not being held to a budget and is ordering things without any sort of auditing," says Leune. “If a dental assistant wants purple gloves because we have purple scrubs, she'll buy the purple gloves even though they're three times the price and no one knows any different," he says. He encourages dentists to come up with a list of approved supplies to purchase and a weekly budget that limits spending. “Budgeting and accountability is a way to ensure that we don't buy those purple gloves," says Leune.
To bolster growth, consider purchasing other practices.
Dentists can market their business all day with the goal of drawing in more patients. But to expand more quickly, Gowie encourages his clients to consider buying another dentist's office. “We recommend to clients that they're acquiring other practices so that they're continuing to grow their practice outside of just referrals coming into their business," he says. Gowie says that he frequently sees older dentists selling their practices and younger dentists purchasing them and then updating their technology and systems, and, hopefully, growing the patient roster.
Invest in your own real estate.
If you're renting your office space, then you may be watching rent costs rise every year, beyond your control. Gowie encourages his dentist clients to consider purchasing the building they're in. “They lock themselves into their office and they have more control over their overhead expenses with that situation," he says. In cases where a business is growing, the predictability of a fixed cost means one less thing to worry about. Plus, it's an investment that they can sell down the line.
Have a business charge or credit card and a business line of credit.
In any business, unexpected costs and expenses come up—especially in a business that's growing. Equipment needs to be updated or replaced. Additional supplies need to be ordered. Gowie urges his clients to have a business charge or credit card as well as a business line of credit to deal with unforeseen circumstances and to help finance growth. “You just can't rely on everything to move smooth throughout the year. You have to be prepared for hiccups to come into play," he says. Plus, a business card can earn rewards that the dentist can reinvest in their business. Gowie says that the dentists he works with will often use the rewards to purchase supplies or cover travel expenses for the business.
Continue your education.
To continue to grow, both as a professional and as a business, education is key. Leune says it's important for dentists to attend business seminars to explore topics like financial management, growth, marketing, practice management and more. In addition, clinical education could also be vital to growth. Leune says that dentists who want to expand their practice should consider becoming experts in areas that are profitable and then center some of their marketing around that expertise. “I would look at the procedure base that's the most profitable and I would become an expert in those procedures," he says. “The type of education that gives you additional procedures will truly impact your profitability and your growth."
One thing business owners of all sizes learn is they don't have to do everything themselves. In the case of a dentist, accountants can help manage finances; call centers can help answer phones; marketing companies can lead advertising and public relations campaigns; and the dentist, even as he or she learns to act as a CEO, can focus on the reason they got into this business in the first place. “You want the doctors to really concentrate what they're good at and leave everything else to the experts," says Gowie.
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