Friday, March 19, 2010
Dying for Dentistry

Our man, Matt, heroically tried to make his consulting appointment on January 7th and got caught in a snowstorm in Southwestern Minnesota.

At 10:30 in the morning, he was told by the Highway Patrol they probably wouldn’t get to him until late at night or even the next day.

However, miraculously, his wife rescued him from 160 miles away. It was a Google rescue. Go to our About Us page to watch the story that aired on Fox 9 News on February 10th.

Little Things = Big Gains

When we take a close look at practices that are experiencing good growth, we sometimes find that growth is generated by or can be explained by significant big events such as: adding an associate, a new facility or extensive remodeling, a significant Continuing Education event, or change for the better in personnel.

These dramatic events can change the chemistry or capacity of a practice, the motivation of the Doctor and/or the team and result in growth.

Staff wages are the major overhead item, so it certainly makes sense to go slow with raises if your practice isn’t growing. I’ve often said that the staff’s compensation should be linked to how the practice does, not just to the economy or the consumer price index (which by the way was up 1.8% in 2009).

However, we find that most of the time growth comes from a number of small improvements that cumulatively have a large effect. This is what management is all about…catching every little bit of wind you can in your sails.

I’ve provided a number of examples in our latest newsletter, our February Bulletin.

’til next time…

Posted by Bill Rossi at 5:34 PM
Labels: Advanced Practice Management, Bill Rossi, Dental Consultant, dying for dentistry, Matt Lahn, Staff management

Saturday, May 1, 2010

Are Demographics Destiny?

If you listen to anyone on the lecture circuit and most consultants, they’ll tell you that it doesn’t matter where you practice…it matters how you practice.

True, mostly.

I have certainly seen the substantial difference good management can make wherever you’re practicing,

However, after 30 years of doing this I have come to think that even the most virtuous, capable dentist with a well-managed office can be hurt by crummy demographics.

The toughest demographic—a low population to dentist ratio.

Many dentists locate with the income of the population in mind and little attention to much else. That’s why there’s very high dentist to population ratios in affluent areas such as Wayzata, Edina and North Oaks.

It’s been my experience that these are some of the toughest, most competitive places in the state to practice. The high per capita income does not overcome the high dentist population ratio.

Dentists have an easier time of it if they’re located in a place with a lower dentist population ratio even if the population’s income is not in the top tiers.

On the other hand, there’s a point where the population’s income can be so low that no matter if you have a low dentist to population ratio (e.g. lots of patients) it isn’t worth it because you find yourself doing less and less on more and more people—a version of dental hell.

You can see more info, stats, even charts in our May news letter on the Advanced Practice Management web site.

Posted by Bill Rossi at 10:08 AM
Labels: Advanced Practice Management, Bill Rossi, Dental Consultant, Economic news for midwest dentists, Practice Management

Saturday, May 1, 2010

Your Practice Area Demographics

Are Demographics Destiny?

If you listen to anyone on the lecture circuit and most consultants, they’ll tell you that it doesn’t matter where you practice…it matters how you practice.

True, mostly.

I have certainly seen the substantial difference good management can make wherever you’re practicing,

However, after 30 years of doing this I have come to think that even the most virtuous, capable dentist with a well-managed office can be hurt by crummy demographics.

The toughest demographic—a low population to dentist ratio.

Many dentists locate with the income of the population in mind and little attention to much else. That’s why there’s very high dentist to population ratios in affluent areas such as Wayzata, Edina and North Oaks.

It’s been my experience that these are some of the toughest, most competitive places in the state to practice. The high per capita income does not overcome the high dentist population ratio.

Dentists have an easier time of it if they’re located in a place with a lower dentist population ratio even if the population’s income is not in the top tiers.

On the other hand, there’s a point where the population’s income can be so low that no matter if you have a low dentist to population ratio (e.g. lots of patients) it isn’t worth it because you find yourself doing less and less on more and more people—a version of dental hell.

 

You can see more info, stats, even charts in our May news letter on the Advanced Practice Management web site.

Posted by Bill Rossi at 10:08 AM  

Labels: Advanced Practice Management, Bill Rossi, Dental Consultant, Economic news for midwest dentists, Practice Management

Sunday, August 15, 2010

Another Word about Profitability and Overhead Control
Want to make sure your net is good?
Overhead Control really consists of: Confrontation: Often, reducing overhead comes down to confrontation such as:
Bargaining with your lab guys.
Holding your staff accountable for results (given the correct direction and training— that’s our job to help).
Terminating staff members who are not performing well.
Making sure you are price shopping and bargaining when making any significant investments in technology, facility, anything.
Enforcing work place rules (time clock, reasonable vacation time and coordination).
Result Control: Making sure that for whatever technology, equipment, facility or advertising you invest in you get a good “bang for your buck.” Please see the “Result Control “articles I’ve written regarding this on my website (under Articles) AdvancedPracticeManagement.com
Keeping an eye on the numbers. You can’t manage what you don’t measure and many dental offices have Profit and Loss reports that don’t clearly show the bottom line and don’t organize the expenses into rational groups that make it easy to compare to industry standards.
Wise selection (or de-selection) of PPO participation to limit discounts.
Increasing practice productivity through seeing more patients or doing more for the patients you see.
Posted by Bill Rossi at 3:57 PM
Labels: Advanced Practice Management, dental office overhead, dental office profitability

Thursday, January 13, 2011

You hear it from me every year. Now it’s time to reflect on the past year. Note your accomplishments and challenges. Outline your goals for the coming year. Write down what you’d like to see happen. Share them with us and we’ll help you make them happen.

Most of our clients with written goals reach most of their goals. It costs so little and it can be so rewarding. Just take an hour right now and do it.

The Latest Word on Practice Overhead:

KDV* has just released its bi-annual general practice overhead survey. It’s a sample of 70+ full-time, mature practices. As such, it’s the best and most detailed information of its kind available for our area. Some highlights:

• Average Net Income was $259,842. This was down from the $275,302 average in 2008. KDV said this marked the first decrease in 25 years of preparing these statistics.

• Overhead as a percentage of fees received increased a point to 65%. So the average net is now 35%. What is yours? Remember, average is not necessarily your aspiration.

• Staff gross wages are still about 26%-27%. If you can’t clearly compare your statistics to the industry standards and don’t have a clear look at your bottom line, we can help. Get QuickBooks Pro really working for you. No serious business owner would go without clear financial reports. This overhead survey is a very valuable perspective to help you in budgeting. It will be posted online at AdvancedPracticeManagement.com on the “Surveys” page. You’ll also find other useful information there on the current Dental Economy, Technology and Insurance Participation.

Our Fee surveys are also online and were recently updated in October.

* Davich, Wilson and Morrow, who have been doing these overhead surveys for 25 years, merged with KDV (KDV.com).

Posted by Bill Rossi at 11:02 AM
Labels: Advanced Practice Management, Bill Rossi, Dental Practice Overhead, Setting Goals

Monday, February 14, 2011

Purchasing a Practice:

Example:
Practice/Collections/Month $100,000
Practice Operating Net per month (at 36%) $ 36,000
Dr. Production per month (2/3 of $100,000)
Non-Owner Dr. Compensation $ 66,000
(30% after lab and write offs) $ 19,800
Practice Sale Price (36,000x12x1.75)
Debt Service/Mo. on Practice $756,000
($756,000 x 8 years x 8%) $ 10,687

The Pay Off:
Practice “Operating Net” per mo. $ 36,000
Doctor Compensation $-19,800
Debt Service $-10,687
Operating Profit/mo. $ 5,513

Annualized:
Operating Profit $ 432,000
Doctor Compensation $-237,600
Debt Service $-128,244
Operating Profit Per Year $ 66,156
The Bottom Line:

For an outlay of $128,000 a year in debt service, the owner(s) receives $194,000, a 50% Return on Investment. Where else can you get that kind of R.O.I?? So what seems to be on the surface a sort of slim net of about 5%-6% on collections per month when leveraged really adds up over the course of the year. Now add to that some solid management for practice profitability and growth and the numbers really pop.

Posted by Bill Rossi at 11:24 AM
Labels: Advanced Practice Management, Bill Rossi, Dental Consultant, dental office overhead, dental office profitability

Monday, February 14, 2011

The Economics of Multi-Location Group Practice

Purchasing a Practice:

Example:
Practice/Collections/Month	$100,000
Practice Operating Net per month (at 36%)	$ 36,000
Dr. Production per month (2/3 of $100,000)
Non-Owner Dr. Compensation	$ 66,000
(30% after lab and write offs)	$ 19,800
Practice Sale Price (36,000x12x1.75)
Debt Service/Mo. on Practice	$756,000
($756,000 x 8 years x 8%)	$ 10,687
The Pay Off:
Practice “Operating Net” per mo.	$ 36,000
Doctor Compensation	$-19,800
Debt Service	$-10,687
Operating Profit/mo.	$ 5,513
Annualized:
Operating Profit	$ 432,000
Doctor Compensation	$-237,600
Debt Service	$-128,244
Operating Profit Per Year	$ 66,156

The Bottom Line:

For an outlay of $128,000 a year in debt service, the owner(s) receives $194,000, a 50% Return on Investment. Where else can you get that kind of R.O.I?? So what seems to be on the surface a sort of slim net of about 5%-6% on collections per month when leveraged really adds up over the course of the year. Now add to that some solid management for practice profitability and growth and the numbers really pop.

Posted by Bill Rossi at 11:24 AM  

Labels: Advanced Practice Management, Bill Rossi, Dental Consultant, dental office overhead, dental office profitability

Monday, February 21, 2011
Like Arby’s?

Years ago we thought the trend would be franchise practices in retail settings. It hasn’t exactly happened that way but there has certainly been a growth of multi-location group practices.

In most cases, the model is less formalized than say an “Arby’s.”

Of course, there are the more “corporate” type of large clinics in multiple locations, such as Metro (37) and Park (23).

But, if you look at the recent activity in the Midwest, what you see are groups such as Midwest Dental and Heartland (word is Heartland is coming to our area). Midwest Dental owns more than 77 upper Midwest practices. Heartland (centered in Illinois) has about 300.

Then there are smaller multiple location groups such as Main Street Dental (5 locations in southern Minnesota) and Family and Cosmetic Gentle Dentistry (12 locations) in the Metro area.

There are other niche-type practices such as The Smile Center (7) and Emergency Dental Care U.S.A. (7 Nationally).

Midwest Dental and others are eager to buy and they’re growing. Heck, Heartland Dental even owns a corporate jet! You have to be making some serious moola to have one of those. Let’s take a look at how some of these groups do it.

Posted by Bill Rossi at 11:09 AM
Labels: Advanced Practice Management, Bill Rossi, dental office profitability, Dental Practice Overhead, Economic news for midwest dentists, Group Practices

Monday, March 7, 2011

Step outside, please.

If you can step outside yourself for a moment and look at your labor as a Doctor separately from your role as an owner, you can see what a desirable investment your dental office is. Now let’s look at key points in increasing the profitability of a practice (whether you own just one or 20):

1. Hygiene productivity makes a big difference on the bottom line. Your sweat aside, it’s largely where the profit of ownership comes from!

An approximately $10 per hour (or patient visit) increase in hygiene translates to an almost 10% increase in profits. The average hygiene production per hour is $139 in the Metro Area and $122 for Outstate. Why would any Doctor (owner) in his right mind pay market rates for hygienists that are producing at less than the market?

2. Lower Costs: Some of these group practices have negotiated better prices from the supply houses and labs.

3. Negotiating with PPOs: Because they have a network of practices, they are sometimes able to negotiate better reimbursement.

4. Standardized Systems, training and supervision.

5. Serious Business Ethic: These groups are less tolerant of sub-standard performance than private practitioners often are.

Your Advantage:

You don’t have the group buying or bargaining power that these large groups do but you have one key advantage. You’re an on-site owner! You are totally invested in your practice, both financially and personally. And one more thing, you have the best management team in the upper Midwest (if not the country) eager to support you and add to your success (us). Our depth of experience and perspective in advising and receiving data from over 200 offices gives you a powerful ally in the marketplace.

Our Job:

Group practices aren’t the enemy, but as long as you own your own practice, you are competing with them and their economies. It’s our job to help you continue to thrive in an increasingly competitive marketplace.

So, relish the fact that you own your own business. Be resolved this year to leverage our recommendations and your business systems into greater profits.

Be resolved to let your staff know that you want them to be happy and focused. And, be resolved to hold them accountable for working the systems as planned and be resolved to reward them well for performance.

You and your staff will prosper in direct proportion to how well you follow through on our advice.

Posted by Bill Rossi at 12:03 PM
Labels: Advanced Practice Management, Bill Rossi, Dental Consultant, dental office overhead, dental office profitability, Group Practices