AUTHOR: The Dental CFO
April 16, 2021
What makes a dental practice successful? It could be having a large number of patients who are satisfied with the service provided. It may be meeting specific financial goals. A successful dental practice typically has engaged employees, those that provide exceptional care to patients and meet all compliance requirements.
One of the most important ways to look at the success of a dental practice is to consider the competition. What factors can cause a company to fall behind the other providers in the area? Sometimes, it comes down to dental practice management. Costly mistakes and unfavorable consequences can reduce the competitive edge within any company.
Here are some common mistakes made by aspiring dental practices that limit their long-term success.
Mistake #1: They Fail to Think Like an Owner
Thinking clinically is natural and expected but thinking like a business leader, and owner also has to become first nature. There’s no doubt that patient care is your priority as a dental care provider. However, there’s much more to running a successful dental practice than the clinical aspect of it. More so, business leaders need to make key decisions that impact every aspect of the business. Decisions made have a trickle-down effect on many aspects of the business, including both the financial and clinical sides.
Thinking like a business leader means making decisions that positively impact the company’s financials while also ensuring patient care is maintained at the highest level possible. Dentists who fail to do this put their business at risk on one side or the other.
Mistake #2: They Don’t Hire Well
Successful business owners hire well. That’s a simple statement but a common concern. One of the challenges of running a dental practice is ensuring that every person hired can do their job but also accurately represent the company as a whole.
Who you hire for various areas of your practice and operation directly impacts every facet of your organization, including how your business performs across all sectors. It’s not uncommon to make mistakes that lead to costly problems later because of the wrong employee. As a business leader, it’s up to you to hire the right employees and office managers. You also need to hire the right vendors, consultants, and advisors to help guide your business (not just your dental practice). Just as you invest in continued education for yourself and ongoing investment in equipment to improve clinical outcomes, the same investments need to be carefully made in your employees.
How do you hire well? Learn from previous hiring problems and mistakes. Hone in on what your practice specifically needs. Look beyond just a smile or a certificate. Seek out professional with proven track records and dedication. Hiring good quality talent, training them well, and ensuring they fit your organization’s culture enables you to build a strong reputation as an employer. This attracts more quality talent over time.
Whether you are expanding, filling vacant openings, or opening a dental practice from the start, consider the value of using a vetting service to minimize the wrong hires. This investment may help to improve overall costs. The best hiring practices are those that focus on the right fit for your organization. If you’re struggling with making hiring decisions, work with a company that can provide you with insights into hiring best practices as they apply to your organization. You don’t have to be the master of it all. You can get help from The Dental CFO. Let our team offer guidance and support today, so your business grows in the future.
Mistake #3: They Don’t Know Their Numbers
There is no way to manage your business if you don’t know where it stands. You can’t manage what isn’t measured. What should you measure? How do you measure? It’s all about KPIs.
What is KPI? Key performance indicators (KPIs) are specific factors that shed light on how well the business is running. While dentists use lab work to understand the medical and dental aspects of a person’s needs, these numbers provide insight into the overall function of the business. There are many KPIs. With defined KPI metrics as a baseline and goals, you know if your company is heading in the right direction or falling behind.
Some KPI examples that may apply to your dental practice include:
- Practice production
- Practice profit
- Percentage of active patients scheduled
- Average production per patient
- Average production per new patient
- Case acceptance rate
- Number of new patients
- Patient attrition rate
- Staff labor percentage
Consider a few of these metrics.
The average dental practice overhead is 65%. This includes every cost that is not associated with the compensation of a dentist. It includes rent or mortgage, supplies, equipment, employee compensation, and others. Take a look at your current dental practice overhead. Is it much higher or lower than this figure? IF you have not figured out what this number is just yet, now may be the ideal time to start crunching those numbers.
Not only show you compare it now to the national average but use the figure you obtain now to calculate your overhead over time. Lowering costs and improving profit margins is a big part of managing a successful organization over the long term.
A lack of understanding and focus on inflows and outflows, as well as overhead expenses, payroll management, and various operational costs, tanks your business. It leaves big, gaping holes where money may bleed. Each of these areas has a huge impact on profitability and some dental practices don’t have any ability or process for managing these figures month-to-month or quarter-to-quarter.
You may say that you’re not focused on profit. To a point, that may be okay, but without tracking these figures, it’s impossible to remain competitive long term. Over time, your competition has more money to advertise and build their brand. That reduces the longevity of your dental practice, as well as potentially the level of care you can profit if you don’t have the money to reinvest in your company.
The implications of lack of insight are huge. Simple, yet they cannot be ignored. Learning how to run a successful dental practice using KPI and other figures can help you provide a better clinical experience as well as a business foundation.
Mistake #4: They Fail to Plan
You’ve likely heard that statement before. If you fail to plan, you plan to fail. It’s true of any dental practice without a core plan in place for any and all facets of the business. It’s important to have a specific end goal defined. Without it, there is no way to plan and prioritize the stepping stones to get to that goal. The best plan is to start with a solid strategic plan. A good strategic planning process will help you establish an actionable list of goals. These goals should be SMART goals. Those are goals that are:
- S: Specific
- M: Measurable
- A: Attainable (realistic)
- R: Relevant
- T: Timely
All goals need to follow this format to provide you with insight into if you are working to achieve them or if you are falling behind. In both cases, you’ll be able to make decisions for improvement.
Mistake #5: They Fail to Seek Good Advice
Probably one of the most detrimental components that lead dental offices to fail is this. Without insight and guidance in dental practice management, companies fail. You spend years learning your skills. Others spent time learning their skills to be able to provide insightful support to business owners. Having that type of help can be critical to your long-term success.
Lacking guidance can lead to loss. Investing in good advice and practice consulting, as well as financial consulting, is an investment in the overall success of the dental practice. Working with dental practice management consultants empowers organizations to achieve more but also to maintain profitability.
- Think like a business owner. Don’t view your business just as a clinical practice, but also as a business you need to nurture and grow over time. Change the view you have of your business so it can grow effectively.
- Invest in human resource support to help you pick the best talent for your company. That includes consultants and vendors as well as your office staff.
- Set KPI metrics and then follow them over the long term. Good practice management software can help make this easier for you to manage, but the work is necessary to know where your company is progressing or falling behind.
- Have a plan in place that maximizes the use of your time. The best way to do that is to create goals for your company using the SMART system and then track them over time as you work towards achieving the best possible outcomes.
- Get good advice. Information and knowledge are the core components of the success of any dental practice. Focus on what you do best in providing your patients with the care they need. Let professionals help you ensure you get the best possible outcome.
Don’t Wait Until You Are Losing Money to Get Help – Call Us Today
At The Dental CFO, we provide the tools and resources you need to properly manage your business – not just your clinical practice. Contact The Dental CFO today to learn more about the tools we can offer to you today.