Economic Recovery Not A Bitter Pill
Take these steps now to get back on track to financial independence.
The last 2 years have been incredibly challenging for dental practices nationwide. The recession hit dentists doubly hard. Doctors saw the value of their savings and investments drop dramatically. In addition to reduced retirement savings, most dentists suffered declines in practice production. According to a published study conducted by Levin Group, dental practices suffered a 3.5% drop in gross production from 2008 to 2009. The tight economy squeezed dentists both personally and professionally. Doctors everywhere are wondering how they can recapture lost savings and revenue and get back on a solid path to financial independence.
While the economy is beginning to show some signs of recovery, dentists cannot assume that the economic turnaround will automatically catapult them to record levels of production and growth. Many believed that dentistry was a recession-proof profession, and, as we all know, the last 18 months put that belief to rest.
If the slow economy has taught us anything, it is that dentists cannot sit back and wait for their practices to increase production. Growth doesn’t just happen—it must be cultivated. A productive and growing practice is crucial to a dentist’s personal and professional success. Without production gains, it will be difficult to move steadily toward financial independence. The following strategies will help dentists reach their full practice potential.
1. Invest in Production
Every practice has the potential for increased production. As the economy begins to recover, more and more patients will be looking to resume regular dental care. Dentists who make their practices more patient-friendly will be the offices that experience the greatest gains in new patients, production, and profitability. Improving customer service will help to ensure that new and current patients remain in the practice for the long-term.
Other steps to jumpstart growth include:
- Implement an effective patient referral program. Your patients are the greatest source of new patients.
- Contact every patient who has not been scheduled for 6 months. A friendly phone call will often persuade many patients to return to the practice.
- Present ideal treatment to every patient. By focusing on comprehensive care—not just immediate needs, practices can ramp up cosmetic and elective production.
- Improve the doctor’s and team’s case presentation skills. Enhanced communication skills will convince more patients to accept recommended treatment and lead to production increases.
2. Evaluate Overhead
Every dollar saved is a dollar of gained profitability. To reduce unnecessary expenses, dentists need to examine each dollar they spend. Overhead for general practices should be 60% or lower. Take regular inventory to see if the office has needed supplies that have been misplaced. If the office is seeing fewer patients, the practice should probably be ordering fewer supplies. If the office has only been using one laboratory for a number of years, it may be time to look at what other labs offer. Do the office’s hours of operation match patient volume? If the practice is open for 5 full days, should it go to 4.5 days to better match demand for services? Asking these questions will help dentists make the best decisions regarding overhead.
3. Adjust Lifestyle Spending
Dentists make a comfortable living, but many doctors go deep into debt by spending on houses, vacation homes, multiple luxury cars, and exotic trips. My advice to every dentist is this—now is the time to live below your means. For example, instead of buying a new car every 3 years, hold onto every vehicle for 5 years or longer. Belt-tightening enables dentists to funnel more money into retirement savings and investments. By increasing the rate of savings, dentists will be in a better position to regain what was lost in the Great Recession.
4. Get a Financial Plan
Every dentist should have a financial plan created by a fee-only certified financial planner. Unfortunately, many dentists resist the idea of working with an experienced financial advisor. Some mistakenly believe that they do not need the help of outside experts. Dentists have a highly developed independent streak, which is good up to a point. Just as we expect patients to visit an expert (ie, the dentist) when it comes to oral health matters, dentists should follow the same advice regarding financial matters. A fee-only certified financial planner works in collaboration with dentists to construct the best lifetime financial plan based on each doctor’s unique situation.
In today’s economy, financial planning is a necessity—not a choice. By engaging in the financial planning process, dentists will be more aware of their earnings potential over the course of their career. They will also be more motivated to make the necessary improvements in their practices and their lives to achieve their financial goals.
It All Starts With the Practice
While making sound investments is critical, it is still the practice that has the greatest impact on the dentist’s financial success. Some dentists will try to strike it rich by investing in other ventures, but the practice is still the best investment that will yield the greatest rewards over a lifetime. Most outside investments are dangerous because dentists have little or no expertise in these areas. Take care of your practice, and it will take care of you.
The economy will continue to go through its up-and-down cycles. While the recent downturn had a negative impact on many dental practices, these four strategies can help dentists return to positive growth, increase production, and enjoy greater profitability.
Inside Dentistry readers are entitled to receive a 50% courtesy on a Levin Group Total Success Practice Production Analysis, an in-office analysis and report of your unique situation conducted by a Levin Group Senior Practice Analyst. To schedule the next available appointment, call 888-973-0000 and mention “Inside Dentistry” or email email@example.com with “Inside Dentistry” in the subject line. For more information on Levin Group programs and seminars, go to: http://www.levingroupgp.com.
About the Author
Roger P. Levin, DDS
Dr. Levin is the chief executive officer of Levin Group in Owings Mills, Maryland.