While pursuing a dental career is undoubtedly rewarding, it is also a calling. Enduring through years of schooling, training, internships, and countless other milestones, you eventually arrive at a point where you can own and operate your own practice.
However, opening a practice is not as simple as pressing the “start a practice” button and waiting for the revenue to generate. If it was, everyone would be a dentist, right?
Though your dental office is a place where you can make tangible differences in the lives of others, it is also a place of business. If you do not pay the same attention to the operational side of your business that you do to caring for your patients, you may not have a dental practice in the near future.
Dr. Michael Abernathy recently spoke with Duckett Ladd’s Jared Duckett and Bill Ladd about conducting a self diagnosis for dental practices. How can a dentist assess operational issues and make important decisions to improve their practice’s efficiency and profitability?
It All Starts with Examining the Numbers
Every dental practice owner needs to understand the underlying numbers behind their business. Are you as successful or in the red as you think? Are there any hidden potential time bombs that could affect your business’s viability? Perhaps there are new opportunities to grow your revenue that you have not considered?
Dr. Abernathy advises that dentists invest the time to truly understand the hard numbers rather than relying on intuition. In his experience, most “guesstimates” about a dental performance’s practice are often inaccurate by a margin of 30-40%.
Time is One of the Most Important Numbers
In business, time and money remain forever intertwined. How long something takes to complete also correlates to how much it costs.
The easiest method for calculating a specific task is considering the highest-paid individual who completes it as part of their regular job duties. How much does that person make per hour? If that task takes an hour and a half to complete, it costs at least 1.5 hours of their pay. In turn, this will eat further into the margin that you’ve created for specific services.
Tying Revenue to New Patients
According to Dr. Abernathy, the average dental practice should net around $670,000 per year in collections alone. To reach this goal, your business should average 20-30 new patients per month. Extending this further, that translates into about 500-600 patients per year that a hygienist could see twice annually.
In light of recent restrictions on practices due to the COVID-19 pandemic, some dentists may view these goals as impossible. However, there are a few strategies that Dr. Abernathy recommends to help compensate for recent obstacles:
Invest in an Excellent Marketing Strategy
With the right marketing strategy, you can reach more potential patients. Some simple ways to attract more interest to your practice through marketing can include:
- Posting authoritative content to your website
- Remaining active on popular social media accounts
- Sharing videos that showcase your expertise on a YouTube channel
- Listing your business on all relevant local, industry-specific, and insurance provider-managed directories
- Asking your current patients for reviews
Maintain Proper Hours
If your dental practice is not open at the right days or times, you could be missing out on potential revenue. Do you operate in a mostly white-collar, commuter neighborhood? You may want to consider offering extended evening or weekend hours in place of morning hours to attract the local demographic.
Invest in the Appearance of Your Office
Dental patients want to visit a clean and comfortable office. As Dr. Abernathy stated, many dentists that he’s met with can become operationally blind to the appearance of their practice. There may be a coffee stain on the carpet, a water stain on the ceiling tile, or another similar maintenance issue.
Addressing these and maintaining an aesthetically pleasing practice helps patients feel at ease and makes them look forward to visiting your office. This can also help attract potential patients that are looking for a new place and find the appearance of your space appealing.
Select the Right Location
Location plays a major role in the financial viability of a dental practice. Are you in the right area to attract the most patients? If you are the only office on a remote county road, fewer people will see your practice or want to drive to it versus one in a city or town center.
Referrals: The Lifeblood of Any Practice
Referrals are the lifeblood of any dental practice. Word-of-mouth testimonials can inspire friends and family members of your current patients to also pursue your services. Dr. Abernathy advises that a healthy practice should target referrals for at least 50% of new appointments.
Quality of Cases Matters More than You Might Think
Lastly, Dr. Abernathy also stresses the quality of cases as a major revenue source for your practice. The more substantial the case, the more income you can generate for your business.
As an example, let’s say that you want to target $5,000 for revenue. If that is your goal, then at least $3,000 or 60% of that total revenue should be from substantial cases. This will help to ensure that your business remains profitable while also allowing flexibility for other patient needs that are less labor-intensive or smaller in scope.
Need an Action Plan After Diagnosing Your Dental Practice?
At Duckett Ladd, we provide accounting and financial consulting services to dental practices throughout the United States. We dedicate ourselves solely to helping dental practices optimize the financial health of their businesses so that you can continue to scale while doing what you love most.
To learn more about how we can help you diagnose financial problems at your own business and create an action plan to address them profitably, contact us today to get started.