Can you recall a moment when you looked in the mirror and wondered, “When will this merry-go-round stop?” While most dentists enjoy the clinical aspects of their work, the demands of practice management can erode the joy of owning a private practice. As a result, many dentists become narrowly focused on surviving each day, often neglecting long-term financial goals.
Building an Investment Grade Practice
According to the ADA, only four percent of dentists are able to retire and maintain their desired lifestyle. Sadly, this process often leads to frustration and burnout.
However, it doesn’t have to be this way. In my humble opinion, the top five percent of dentists are not exceptions when it comes to clinical excellence or compassion for their patients. The distinguishing factor is that they likely had a mentor who helped them navigate the complexities of business development. You can transform your practice from being merely “sellable” to having expertise in four key areas:
- Cultural North Star
- Business Assets & Value
- Practice Optimization
- Authentic Marketing
Building a Cultural North Star
Client surveys and discussions on doctor message boards within the dental industry reveal that even highly productive dentists struggle with leadership in our ever-changing times. The world of employee engagement is complex and filled with HR challenges. The current labor shortage exacerbates staffing issues and causes otherwise confident individuals to hesitate when faced with team-related problems.
However, there is a way out. By clarifying your core values and aligning your team with your standards, you can create a happy and productive workforce. Think about your all-time favorite employee:
- How did they behave?
- What do patients say about them?
- What do their teammates say about them?
Now, imagine if your entire team demonstrated the same level of dedication, knowledge, and relationship skills. It’s not difficult to envision that leading such a team would require significantly less energy. Strengthening your cultural north star is fundamental to developing this type of team. Start by rating yourself (1-5) in the following key areas of building a Cultural North Star:
- My team understands and exemplifies our values and philosophy of care.
- Our team holds each other accountable to our code of conduct.
- We have effective HR processes for attracting, hiring, training, and retaining top talent.
- We regularly survey the team to assess our employee net promoter score.
- We have a rewarding incentive program that recognizes top performers.
We invite you to answer these questions in a survey, which you can access here: https://www.surveymonkey.com/r/7Q3FHTB.
Continue reading to discover the remaining three areas of focus for building an Investment Grade Practice (IGP).
ASSET BUILDING
If you don’t know where you are going, well, you better enjoy the ride. Studies (https://www.sciencedaily.com/releases/2009/08/090820123927.htm and https://www.nbcnews.com/id/wbna32494981) show that if you put people in a circular room with no doors and no focal point, they cannot physically walk in a straight line. I suspect entrepreneurs with no end game in mind create mental circular loops with no outcome. Should I buy the building, keep renting, or just expand my space? Should I hire an associate, get a partner, or sell the practice today and work for someone else? The list goes on and on. So let’s stop the merry-go-round and plant a stake.
Businesses are built to do two things: 1. Serve customers, and 2. Provide the owner with a return on profit so they can generate the lifestyle of their choice. You have to honestly answer this question: What are my annual personal spending needs? Forget business debt and all the rest. What do you and your family need to live well?
Once you know your spending level, you can then estimate the cumulative assets needed to fund your lifestyle for 30 years. We call this your Financial Freedom Number. Hit this, and you can hang up the handpiece at any age. Here’s a table to help you discover your financial freedom number.
Now that you know your target for financial freedom, the next step is to build assets for that future. For dentists selling their practices between now and 2030, there is a rare opportunity to sell for an amount above collections. That’s right, above collections! As private equity buyers continue to consolidate the industry, the sale price for cash-flowing practices has risen. Interested in knowing what your practice might be worth?
Check our IGP Value Calculator: https://productivedentist.com/practice-value/.
All you need to know is your annual collections. Our software takes it from there to provide you with five-year projections of value based on different growth models.
PRACTICE OPTIMIZATION
There’s the average practice, and then there is an IGP Optimized Practice. The average practice collects $675,000 per year, and the doctor takes two weeks of vacation a year. An investment-grade practice produces $2.4 million, and the doctor takes an average of six to ten weeks a year on vacation. How do they do it? Processes and systems. Here’s another quick (rank: 1-5) quiz to gauge the durability of your systems:
- Our schedule is templated for productivity, and our team is committed to hitting the goal.
- We review revenue cycle management (RCM) and eliminate money leaks in the system.
- We have mapped the patient journey and understand each person’s role in creating exceptional experiences.
- Our team is clinically calibrated to diagnostic standards based on patient risk factors.
- We review our service mix at least twice per year to ensure we are focusing on comprehensive care.
We ask these questions in a survey you can take here: https://www.surveymonkey.com/r/7Q3FHTB.
AUTHENTIC MARKETING
Running a $29 special has rarely attracted an ideal patient. In the early stages of practice, particularly if you are building from scratch, high-volume, low-value marketing may make sense. Once you reach 1,200 patients of record and clinical confidence is rising among all providers, it’s time to tell your practice’s authentic story. It may feel “weird” and self-centered at first, but it’s much easier than you think.
Reflecting on how you built your Cultural North Star, identify the three most common characteristics that best describe your team. This may include things like being curious, professional, caring, a patient advocate, or an active listener. With these characteristics in mind, do a Google search and pull up your patient reviews. Compare the two. Are your patients reflecting back the care you hoped to provide?
This type of research is at the heart of developing genuine relationships with your patients. The payoffs are massive. Did you know that 70 percent of marketing’s impact actually comes from internal marketing efforts and how the patient is treated? Practices can triple their ROI for external marketing campaigns simply by showcasing an authentic reflection of your practice culture on your website, social media, and community outlets. This can mean telling patient stories, including authentic images of the interior of your practice, sharing your core values, and being present at various community outlets. Then, deliver congruent care.
SUMMARY
The next five years will pass whether you grow your practice using “business as usual” or “investment-grade practice” models. Why not optimize your efforts and reap the rewards? To further your learning and complete the IGP Scorecard, please visit https://www.surveymonkey.com/r/7Q3FHTB.
REFERENCES
- https://www.dentistryiq.com/practice-management/financial/ article/16360890/would-you-choose-96-or-4-for-your-retirement- from-dental-practice
ABOUT THE AUTHOR
Dr. Victoria Peterson, is the managing partner and CEO of Productive Dentist Academy, the nation’s leading firm for dental consulting and authentic marketing strategies. Earning her Doctorate in Spiritual Studies in 2018, Victoria combines decades of dental entrepreneurial leadership with solid insights into team behaviors. She can be reached at info@productivedentist.com or 800-757-6077.
FEATURED IMAGE CREDIT: Tumisu from Pixabay.
