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Archive for category: Financials

Break the Overhead Stranglehold

Break the Overhead Stranglehold

High overhead is choking off profitability in many practices. Let’s start with the numbers. Levin Group recommends the following overhead percentage targets for general and specialty practices:

  • General Practice – 59%
  • Orthodontics – 49%
  • Pediatric Dentistry – 49%
  • OMS – 50%
  • Periodontics – 51%
  • Endodontics – 49%
  • Prosthodontics – 64%

Most practices run 8-15% too high and don’t fully understand what that means to their bottom line. Look at these examples.

  1. If a practice has overhead that’s 1% too high, it’s losing $1,000 of annual profit (take-home income) for every $100,000 of production.
  2. If a practice is 1% too high and has $800,000 annual revenue, it’s losing $8,000.
  3. If the practice is 4% too high, which is quite common, with $800,000 in revenue, it’s losing $32,000.

Imagine what you could do with that extra income each year! How about going on a dream vacation or maxing out your retirement accounts?

Overhead control alone can contribute heavily to a doctor’s financial independence.

So how do you get overhead under control? Here are three tips that will make a difference:

  1. Measure every category of office expense against comparative information. The ADA and other associations publish relevant statistics to measure against your performance.
  2. Analyze the largest expense, which is usually staff labor. For example, if it’s over 25% in a general practice, the office isn’t getting the proper return on investment. This could be either due to waste or under-producing, but either way it’s costing the practice.
  3. Identify opportunities to reduce costs. Most practices fall into spending habits for supplies. Examine all costs and question sales representatives about how to lower your costs. These conversations often lead to cost reductions. If a sales rep is unhelpful, look at other manufacturers and suppliers.

Additional Resource

Want to get your financial house in order? Check out the Finance Reference Set by clicking here.

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3 Things You Should Never Say to Your Team

3 Things You Should Never Say to Your Team

Words matter. What you say to your team can inspire them or demoralize them… encourage them or infuriate them… empower them or repulse them.

Of course, no one’s perfect. You may occasionally miscommunicate. If you say the wrong thing, find a way to correct the situation as soon as you can.

However, there are some phrases no dentist should ever utter. Here are three of them:

1. We don’t need to double-check Thelma. I trust her with our finances.

Embezzlement can happen to any practice… even your practice. No matter how trustworthy your financial coordinator is, you never want to give one employee sole control over all the money matters in your practice. It’s always better to have several staff members handling practice finances. In addition, use an outside accounting firm to conduct unscheduled audits. A series of checks and balances––with the appropriate in-house and outside oversight––can help prevent any financial impropriety.

2. Just shut up and do your job.

It’s not easy being the boss some days. You and your staff members aren’t always going to see eye to eye, but you never want to lose your temper and utter such a comment. It’s verbal abuse, pure and simple.

If you and a staff member are having a disagreement, ask to see that person in private. Listen to her concerns objectively. If you disagree, state your points dispassionately. Focus on the higher goal, such as what’s in the best interest of patients or the entire team. Don’t let your emotions get the best of you.

3. Let’s go on a date.

Big mistake. You’re asking for a whole lot of trouble, especially if one or both of you are already in a relationship. Even if you’re both single, your language could be perceived as coercive or harassing, which opens the practice to legal action. No matter how friendly you are with your team, do not cross this line.

I’ve met too many dentists who destroyed their marriages, damaged their practices and wreaked havoc on their finances by engaging in a romantic relationship with a staff member. It’s not worth it. End of story.


Additional Resource

Read a free excerpt from Dr. Levin’s popular book Essential Scripts for Patients Communication by clicking here and then hitting the Read an Excerpt button.

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Huge Profit & You: Learn Dentistry’s Most Profitable Treatments and How to Do More of Them

Huge Profit & You: Learn Dentistry’s Most Profitable Treatments and How to Do More of Them

“Roger, I want to make more money.”

I hear that all the time from practice owners at my seminars. Then they usually follow up with something like: “Don’t get me wrong, I love taking care of my patients, but I went to dental school for four years, I own a practice, and I’m bustin’ my hump every day, yet I’m making less than my neighbor who sells hot dogs outside the Home Depot.”

OK, that last part might be a slight exaggeration.

But there are a lot of dentists out there who are unhappy with their income.

Many of them then proceed to ask me what to do. I look them square in the eye and tell them that the answer is staring them right in the face all day, every day…

The most profitable services in your practice are the ones you already offer.

While adding certain services, such as whitening or implants, can definitely increase production, the FASTEST way to do more profitable dentistry is to hyper-focus on fully maximizing the value of the treatment that shows up in your chair every day.

If you haven’t already taken steps to gain another 10–15% profit margin on the procedures you’re good at and perform frequently, what are you waiting for?

Every practice has specific services that are more profitable than others. For example, in general dentistry, it is typically crown and bridge. While it can be debated which procedures are the most lucrative in dentistry, there are other factors that impact practice production and profitability, including:

  1. The Schedule. Too many schedules choke off production because they’re inefficient, inaccurate or just plain outdated. They’re based on old habits rather than sound business principles. Just because the team is comfortable with the pace of the current schedule doesn’t mean it’s the most effective schedule for your practice. Time and again we have shown clients how to manage multiple chairs (and often multiple assistants) smoothly, which easily increases production, lowers overhead and decreases stress. Many dentists and teams hold onto the status quo, believing changing the schedule will lead to rushing and higher stress, which isn’t true.
  2. Speed. In an era when insurance reimbursements are declining, time really is money. The faster the procedure, the more profitable it is. We have clients who range from 30 minutes per crown prep to others who take two hours. While these may be the extremes, simply shaving 10 minutes from most appointments is a significant time savings.
  3. The Cost of Services. Lowering overhead increases profit, which is directly proportional to take-home income. One of the best examples for cost savings is laboratory services. Some offices work with labs that are far more expensive than necessary to provide excellent care. If crown and bridge is one of the most productive services in dentistry, then working with an excellent dental lab at a reasonable cost can make a significant difference. As the number of crowns, bridges and veneers increase, the savings (and profit) can add up quickly. There are excellent national dental laboratories, such as National Dentex, that provide every possible service at a reasonable cost.

Conclusion

If your practice isn’t as profitable as you you’d like, the solution for fixing that is easier than you think. The question isn’t “what procedure is the most profitable?” but rather “how much more profitable can I make the procedures I perform?” The answer is always – a lot!


Additional Resource

Read a free excerpt from Dr. Roger P. Levin’s popular book, 100 Ways to Increase Your Practice Profitability. Go here and click on the “Read an Excerpt” button.

 

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Thinking About Owning Multiple Practices?

Thinking About Owning Multiple Practices?

In our work with hundreds of dentists and specialists, Levin Group has noted a trend. Many of them are now upgrading the efficiency, productivity and profitability of their practice in preparation for launching a small group practice… consisting of five or more offices.

There are many doctors earning excellent incomes from small groups, and many others who are losing money. Obviously, there are pros and cons to this growth strategy. If you’re thinking about expanding your dental business, you need to understand what you’ll be getting into.

Doing well with one or two offices does not translate directly into operating five, six or 10 locations. Managing a business of this scale poses a whole new set of leadership, managerial, financial, marketing, legal, regulatory, human resources and other challenges. To succeed, you need to develop highly efficient systems and best models in your current situation, ready to roll out in a small group practice.

If your vision is to own multiple practices someday, prepare yourself well for meeting the challenges. And don’t try to go it alone. Line up outside experts to help guide the process and avoid pitfalls or significant mistakes.

Additional Resources

Free Whitepaper – For more advice about implementing this growth strategy, download Dr. Levin’s free whitepaper, “Building a Sustainable Multi-Doctor Practice.” Click here.

ADA Seminar – Attend the ADA’s BIG Idea: Small Group Practicea special day-long conference on Oct. 19, preceding the annual meeting in Denver. Dr. Levin will be one of the speakers at this event. For details, click here.

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Three Secrets of a Happy Dentist

Three Secrets of a Happy Dentist

Dentists have an extraordinary opportunity to enjoy practicing dentistry. To be happy, follow these steps:

  1. Eliminate controllable stress factors from your practice. By implementing more efficient management systems and creating a smooth, consistent workflow throughout the day, you’ll see practice stressors decrease dramatically.
  2. Study leadership techniques and cultivate a positive attitude in all members of your team. We’re all dragged down by negative people, so learn how to create a positive environment where everyone has a great attitude.
  3. Avoid spending beyond your means. Whether it’s in the practice or in personal life, dentists facing heavy debt experience high stress and anxiety. You can live anyway you like, but if you go into debt trying to buy happiness, acquiring material things, the financial stress will probably make you un Want more stuff? Focus on improving practice performance… and then you’ll be able to pay cash.

Dentistry can make you incredibly happy… if you start with these three steps.

Additional Resource

Interested in gaining more satisfaction from dentistry—and your life? Read a free excerpt from Dr. Levin’s book, Get a Life and Keep It!. Go here and click the “Read an Excerpt” button.

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Three Things About Financial Management

Three Things About Financial Management

Financial management is a critical aspect of running your dental practice.

The first thing to focus on is cash flow. Too many dentists simply go to the office, treat patients, pay the bills and see what’s left. Instead, you should give serious thought to cash flow factors, such as when patients pay, how they pay and whether they pay at all.

Design a system to have patients make their payments as early as possible relative to the time of treatment. Then use a Levin Group consulting innovation known as a one day rule to collect 99% of all money due to the practice. The one day rule states that patients will be called the day they are overdue. This is followed by a nine-week follow-up process. Together, these two methodologies enable Levin Group clients to collect 99% of all the money they’ve earned.

Another critical component of managing practice finances is budgeting. Very few dental practices have a budget, and many of those that do pay little attention to it. This is how practices get into financial trouble and doctors end up with lower income.

Most doctors have no idea where their revenues stand for the year and whether they’re on budget. With today’s profit margins being squeezed, we see many new management consulting clients whose income is flat or declining.  The solution is to establish a budget, track each line item continually, and make adjustments as needed throughout the year to hit your financial targets.

Additional Resource

Interested in improving your financial management skills? Read a free excerpt from Dr. Levin’s essential book, Practice Finance, by clicking here.

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Three Things that May Threaten Your Future

Three Things that May Threaten Your Future

There are new forces coming to bear on dentistry, and they’ll have a profound effect on the future for all of us who have dedicated our lives to this profession.

First, according to the Levin Group Data Center, the number of new patients entering dental practices is down significantly. This means that, to avoid decline, practices need to start working with excellent new systems for retaining patients and maximizing revenue opportunities.

Second, I believe that over that next five to eight years profit margins in many dental practices will decline by 5–10%. While this is just beginning to show up, many dentists believe they can simply cut costs to make up the difference. I don’t believe this will work.

Third, circumstances will force many dentists to retire 10 years later than in the past. The average retirement age of a dentist, according to the Levin Group Data Center, currently stands at 70.1. This trend is caused by competitive factors such as the growth of corporate dentistry, the addition of new delivery models and an increase in the number of dentists due to the opening of new dental schools. All of which adds up to one thing—increased competition. Unfortunately, most practices today are not competition-ready. If a dentist wants to work for more years, that’s fine. But many will not have a choice.

Additional Resource

Learn about the game changers that have reshaped the dental economy—and how you can assure a brighter future for your practice. Download Dr. Levin’s free whitepaper “The 8 Permanent Game Changers” by clicking here.

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Three Things You Can Learn from a Declining Practice

Three Things You Can Learn from a Declining Practice

Over the last eight years, Levin Group has taken on hundreds of clients whose practices were declining. This was caused by the game changers that have altered the dental market and our profession forever. There are three things dentists can learn if their practice is declining. These are:

  • Take a breath and make sure you understand why decline is happening… before taking drastic action. Many dentists react far too quickly to declining production and make a move that actually hurts them rather than helping.
  • Be careful about what you buy. When a practice is declining, dentists become open to buying anything that someone will sell them by claiming it will turn things around. Buyer beware.
  • Look at your practice systems. The truth is that most practices have inadequate systems in terms of creating growth. When the systems are replaced with proven, documented systems that address the decline, the practice will begin to grow again.

Additional Resource

For sound advice from Dr. Levin about adapting to changes in the dental economy, read his whitepaper, “Wherever You Are Today, You Won’t Be There Tomorrow.”

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Are You Throwing Away Income?

Are You Throwing Away Income?

Now, more than ever, dental practices need to take control of their overhead.

Every year, Levin Group’s expert business analysts fly all over North America visiting hundreds of practices to perform our unique Practice Performance Analysis. One finding that’s turning up more and more often is “overhead creep.” Disappointed with the growth of their businesses and concerned about lower insurance reimbursements, many dentists think they need more… more staff, more new technologies, more treatment rooms, even more doctors.

The resulting increase in operating costs doesn’t translate into increased revenues…. but it does cut into income. When dentists become Levin Group clients, our consultants walk them through the overhead reduction process, investigating and finding ways to make cuts in each overhead category based on reliable national and regional averages.

If you’re not yet ready for practice management consulting, at least do this… set a goal of lowering your overhead by 2% or even 4%. Otherwise, you’ll just continue throwing away money.

Additional Resource

Watch Dr. Levin’s free video “Total Overhead Control”

3 Things about Collections

3 Things about Collections

Collections continue to be a problem for many dental practices.

Too many front desk team members don’t feel comfortable asking for payment from patients. That reticence can cost your practice thousands of dollars every year.

Here are three things you can do to improve collections:

1. Collect at the Time of Service

Make that your standard policy. Your practice should function like other retail businesses, which all collect at the time of purchase. By doing so, you will receive a higher percentage of your fees sooner and reduce the potential for overdue receivables.

2. Train Your Front Desk Team to Ask for Payment

Your practice is a business, and collecting fees in a timely manner is part of running a financially successful business. Fixing your collections system can yield an immediate and profound boost to your bottom line. Train your team using scripting, which will enable them to be comfortable at asking patients for payment.

3. Make Collections Easier by Offering Patient Financing

With dental insurance covering less, patients today have more out-of-pocket costs than ever before. Giving patients the option of financing through a reputable third-party provider can make treatment––elective services and larger cases––more affordable. You also eliminate any potential collections issues by receiving your fee upfront (minus a small financing charge).


Additional Resource

Download Dr. Levin’s free whitepaper “The 9 Areas of Expertise: Collections” by clicking here.

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