Why a Dentist Should Be Running the Oscars

I recorded the Academy Awards last night so I could fast forward through the
commercials, and I even added 30 minutes extra to the recording time, and I STILL missed the Best Picture Award.  How the heck can this be the 87th Academy Awards and they still can’t figure out how long it’s going to run?  35 minutes long on a three-hour show?  That’s off by 20%!This recording has ended-3

So here’s my solution: get a dentist to produce the Oscars.  There isn’t a single dentist I know who would consistently run over by 20%.  Dentists know how to make those 10-minute blocks work.  They certainly learn from experience, and if they ever did run over on a procedure, they wouldn’t book the same amount of time the next 86 times!

As an aside, I probably won’t be the first person to point out that while an Oscar was given to a screenwriter who spoke eloquently about his near suicide and how people shouldn’t give up, and another was awarded for best short documentary about the veterans’ hotline,  where the director spoke of how she lost her son to suicide, that the Best Picture winner was the one film where (spoiler alert!) the lead character kills himself. Huh? I love irony as much as the next guy, but seriously, folks.

Back to the show timing. Here’s a suggestion.  You are nominated for an Oscar, which means you have a 20% chance of being in front of 1 billion people accepting the award.  So prepare something eloquent. If you can’t think of something eloquent, ask someone to write something for you and then memorize it.  Then pick the two most important people you want to thank, thank them and do a blanket thank you for everyone else. (We actually watched someone thank his dog last night, which Mickey Rourke also did a few years ago.) That way maybe, just maybe, we could watch more film clips and more retrospective montages rather than strangers in badly-fitting tuxedos listing their co-workers, agents and family members.

Which is why a dentist would also be a great producer for the show.  Dentists know that the schedule is about treating patients, so they would know that the Academy Awards is about our love of movies. They’d focus on that, get it done right and get us to bed on time.

And finally, why a dental office should be more like the Oscars:

Take a little more time each day to express your gratitude and appreciation to your team. And, as team members, express that appreciation more to each other.  One thing we do learn from these acceptance speeches is that these people all know they didn’t get there alone.  None of us do.  Express it often, and don’t be afraid to go long.

 

Is Your Practice a Tear-down?

tear-down houseThe long-standing tradition in dentistry has been for a dentist to run his or her practice for 30 or 40 years, occasionally replacing some equipment as necessary, and then selling the facility and patient list to a young dentist or associate.  That game has changed significantly, but many dentists haven’t realized that yet.

Now, when someone is assessing a practice for acquisition, they are looking at the age of two things: the facility and the patient base.  Let’s talk about the first one.

New dental school graduates are learning to work with digital everything.  And they are already fully digital in their personal lives.  In fact, more and more schools now train on CAD/CAM. (Sirona just equipped Boston University with a full array of CEREC machines for the students to work with, for example.)  This generation views digital radiography as standard.  They also understand marketing much more than previous generations, and they have grown up surrounded by brilliant retail design, from iPhones to Nike stores.

So when they walk into a dental practice that is essentially devoid of new technology, with tired and dated design, what they see is a tear-down.  They imagine that they will have to gut the facility and bring in new technology, as well as create an office design environment that is appealing to patients.  From an expenditure standpoint, they are often better off starting with raw office space somewhere else.

So my question is, if you were selling your house after living in it for 30 years, would you not paint, landscape, replace furniture, throw out some magazines, upgrade a few appliances and generally spiff the place up?  Because we all know the differences in price between a house in move-in condition, one that needs work, and a tear-down.  And we all know which one sells the fastest.  So why not do this with your practice?

The economics justify the upgrades, because you will recoup the money in the sale.  But something else will happen, something that many dentists don’t expect.  Suddenly, your existing patient base starts accepting more treatment, and coming in more often.  Why? The place looks new again, and the technology is appealing, especially if you talk about the benefits to them when they come in, or if you use something like PatientActivator to tell your patients about new services and technology.

Which leads to the second part–the aging of your patients.  In most practices,  the median patient age mirrors the age of the primary dentist.  In a transition, the buyer is going to look at the average age of the patients, and price accordingly.

The parallel to the real estate market is that young families with kids are going to look in neighborhoods where the residents have children of similar ages.  So a young dentist is not going to be eager to try to treat an aging patient base (who considers him a child, too young to know anything about medicine or dentistry, right?) instead of a broad mix of patients of all ages.

So the second part of your practice renovation is to refresh your patient base.  This is a lot easier when the facility is refreshed with design and new technology, by the way.  If you’re marketing to new patients, if your practice doesn’t look new and modern, you won’t have good photos to put on your website, and certainly can’t do a video tour.   But it also means investing in promotion to bring new patients in–new blood, so to speak, that brings that median age down.

This is a five-year plan, in my mind, or longer.  This isn’t something that all comes together in 6 months, but you can certainly execute the first steps–remodel, start adding new tech, market for new patients–and then the results will start coming in. Your production will go up, and when you’re ready, you’ll have a practice in move-in condition, commanding top dollar.  Make sense?

 

Why Goal-Setting Alone is a Pointless Exercise

 I was talking to a dentist at the end of last year, and he was whining to me that despite all failure-successhis goal-setting efforts, his practice didn’t grow at all, and in fact production was off 4% from the previous year.

I asked him about his process and he told me, “I did what everyone says to do.  I made  my goals very specific and I wrote them down.”

“That’s good,” I said. “That’s key.”

“And then, every day I would take them out and read them,” he continued. “Out loud.”

“And?”

“And nothing changed.  In fact, things got worse. The whole process was pointless.”

“But what did you do to achieve those goals?”

“I told you. I read them every day.  Out loud.”

I had to agree with him.  It was pointless, because he skipped the most important part of goal setting, which is you then have to DO something to achieve those goals.  Usually every day.  And perhaps even more important, DO SOMETHING DIFFERENT.

A goal without a plan is a wish.

Just as a dream without a strategy is a daydream.  It’s important — critical, even — to set goals and write them down.  But then you have to decide what the steps are to achieve them, and commit to doing those steps every day.  And if you don’t know what the steps are, then you need to get help to figure out what those steps are.

Another dentist I encountered two years ago was very down about how the economy in his area had affected his practice, and asked what I thought he should do.  I gave him a copy of my book, and suggested he read it and if it resonated with him to get his team members to also read it.  I ran into him again earlier this year and he proudly told me that his practice was up 50% from two years ago, and attributed it to what he learned in the book.

But it wasn’t because he read my book.  It was because he decided to ACT on what he had learned in the book. He realized if he wanted different results he needed to do something different.  You don’t have to use my book, but most often you need to get outside yourself to figure out what to do differently. Get a coach, or take a course, or both.

Our world is in constant flux.  Communication is changing — try leaving a voicemail and getting a response. Technology is changing — would you buy a car today without Bluetooth?  And consumer behavior is changing — you can deposit checks with your phone, ask a hundred strangers what they think of a restaurant, and have Amazon deliver your groceries. And thinking that you can keep doing the same things you’ve always done in the face of these changes is a recipe for extinction.

So when we set goals, we often plan to put greater effort into doing the same thing, instead of trying something different, or learning a new approach.  But very often a different approach yields exponentially better results.  For example, you can spend five minutes trying to explain the decay issue with the old amalgam on a patient’s #2, with no success.  Or you can show them on your monitor using an intraoral camera and they’ll accept treatment instantly. (A 3M study showed we respond 60,000 times faster to visual information than text.)

Or you can try to place implants using traditional radiography, and hope you get the angle and depth right, or you can use a Galileos and know exactly which implant to use and how to place it, and even create a drill guide so you can practically do it blindfolded.

The answers are everywhere.  Upgrade your website, ask for Yelp reviews, get a friendlier receptionist, or redo your reception area.  Have evening hours.  Stop wearing Hawaiian shirts (unless you practice in Hawaii).  Or get CEREC. If you think that one visit versus two is not a huge consumer benefit, you are deluded about how much fun it is to be treated by you.

Goals are pointless without a plan to execute.  And as you execute, be sure to pick one thing, get it done, make it part of the fabric of your practice, and then go on to the next change. Trying 20 changes all at once is another recipe for failure.  But make a plan to reach your goals, decide what you’re going to do differently, and then take daily action. Otherwise, this year will be just like last year.  Or maybe a little worse.

Throughout this year, I’m committed to finding great ideas and practical solutions for you, so that you can reach your goals even faster.   Happy 2015!

You’re Just Like Tom Cruise

Living in Los Angeles, I meet more than my share of actors.  Not just the more famous ones, but the ones trying to make it.  And there are many of them at the “undiscovered” tom-cruise-in-mission-impossible-4-movie-hdstage of their careers who are pure artists.  By that I mean they love acting. They are passionate about the process of creating a character and performing.  And some of them are extremely talented. They consider themselves as pure artists, but they are starving, because they have not adjusted to the idea that successful actors know that they are not just artists, but are working in an industry trying to make a profit, not just art.

Tom Cruise, on the other hand, knows that he is in a business. He loves acting, and works as hard or harder than almost anyone in the industry at his performances. He has been the lead in 29 films, has won three Golden Globes and been nominated for three Oscars. But, he is also ranked #3 in all-time box office revenue ($6.5 billion so far), because he understands the business of acting, perhaps better than almost anyone.

So what does that have to do with dentistry?  In my experience, the best dentists clinically are artist/engineer personalities.  They want to do great dentistry, and train themselves constantly to get better.  But many of them are in practices that are struggling financially.  Despite being extraordinary “artists”, their careers are not paying off.  Just like the “pure” actors, they don’t like the idea of promoting themselves, or focusing on the business aspects of their practice, and don’t feel the need to understand their “audience.”

Tom Cruise has a PR team, an acting coach, a manager, an agent, a financial advisor and business partners in his production company.  Why?  Because to succeed in acting you need all of those things, as well as talent.

The successful dentists I know all have their team as well. They use a practice consultant to coach them, work with a financial advisor, use outside marketing resources, and have a deeply-engaged relationship with their distributor representative.  And they make sure that their office manager is constantly updating her skills (through organizations like AADOM).

But all that is expensive, you might say.  In response, I say, you know what’s expensive? Houses. Cars. Kids’ educations. Travel. Retirement. That’s why you need to be successful as a dentist, not just clinically excellent.  That takes investment.  Tom Cruise pays his manager 10% of his income because he earns it!  His acting coach isn’t expensive–he’s an investment in growth.  His financial advisor doesn’t cost him money–he makes him money.  And all of these people do these things so that Tom can focus on his performance.

But that doesn’t mean he doesn’t understand the business aspects of his career.  You can bet he’s paying close attention to it. (Just as you should.)  And his reputation is also vulnerable, just like a dentist’s is.  You may have some troubling Yelp reviews, but he’s had some issues with his involvement in Scientology.  But he doesn’t ignore them.  And you can’t afford to either. He fixes it with good reviews for a hit movie (The Edge of Tomorrow).  Just as you should have a systematic approach to generating great reviews. (This whitepaper gives you a step-by-step approach for this.)

Successful dentists–dentists who are thriving and enjoying their work–focus on the clinical and the business side of their practices.  Clients of mine use 1-800-DENTIST because they know their ROI is 4-1 on their marketing investment. They have us build their websites because they know they couldn’t possibly keep up with SEO on their own. Fortune Management clients keep using their coaches even as they get more successful, because they know they can always get better (or slip back into old, unproductive habits.)  Patterson clients know that their rep isn’t just keeping their cabinets full of sundries, but are also steering them in the right direction on new technology, office design and clinical training.

Those are just examples of the many good resources that are available to you.  I list my favorites on this blog on the right-hand side, from Gary Takacs to Spear Education to the Madow brothers, and in the resources section of this blog as well.

Long-term success in dentistry is not an impossible mission, but a noble one.  You’re helping people, and the only way you can keep doing it in the next 20 years is by running your business extremely well.  And that takes a team.

Escaping Gravity with Your Practice

On a manned space flight to Mars, which is 34 million miles away, 50% of the fuel would SLS Booster 11X7 K65634be used to go the first 400 miles.  The reason for that, of course, is what’s involved in escaping Earth’s gravity.  In many ways this is similar to starting and operating a dental practice.

The gravity is your list of fixed expenses–rent, equipment leases, loan payments, utilities, salaries, etc.  Until you “escape gravity”, that is, produce enough to pay your fixed expenses, your practice profit for the month is $0.  After that, you are able to keep an exceptional amount of the collections for that month, because for the most part your variable expenses–lab costs and supplies–is less than 20% of your fees.

This is very different from many other businesses. In most retail stores, for example, the fixed expenses are less than 20% and the variable costs, like the stuff they put on the shelves, is close to 70%. If they sell a lot more in a month, they still only keep 10-20% of what goes in the till.

The challenge for most dentists is that they are barely escaping gravity.  The team works hard at “cracking the nut” every month, and the accountant tells the dentist that her overhead (calculated by all costs except the what the dentist pays him or herself) is 70%.  So the dentist thinks that for every dollar she produces going forward she is only going to keep 30%.  That could not be further from the truth.

Once you escape gravity, you keep 80% of the increase in production.  This economic fact is one of the most beautiful things about the dental practice model.  For example, say a  practice is producing $40,000 per month, (which in the average urban area is still trapped in fixed-expense gravity) and the profit margin is 30%.  That’s $12,000 to the dentist. Now imagine production is increased by $8,000 in the following month. Then the economics change significantly.

How?  Simple.  Because on that additional $8,000, the only expenses are variable ones: lab costs, consumables, and perhaps a bit of employee time.  Even a high estimate of that would come out to only 20% in the average practice.  Which means $6,400 is additional profit.  You’ve gone from making $12,000 to $18,400.  You’ve increased production by 20%, but in fact your profit margin has now gone from 30% to 38%.  And your take-home income has increased by more than 50%!

This is why the more successful practices can do more marketing, bonus their teams more, add new equipment and technology and upgrade their facility, further improving the efficiency, appeal and success of the practice.  It is not unusual for a dental practice producing over $800,000 to operate at less than 60% overhead.

I’m writing about this because I often encounter dentists who are thinking about advertising to get new patients (or using 1-800-DENTIST) and they make a calculation on the return on investment based on their perception of their overhead percentage.  But the production on those new patients is at your “escaped gravity” percentage, which means you can afford to invest in your growth at a much higher level.  You may pay $200 or $300 for a new patient, but if the lifetime value of a patient is $4000, (it’s much more than that, by the way–watch this video if you don’t believe me), and your true profit is 80%, you’ve invested $300 to make $3200.

Do you think group practices understand this formula? You can bet they do.  And if you want to compete effectively with them, you’d better understand it too.

Isn’t this unique economic opportunity good motivation for getting better at what you do, and increasing your production?  Does it not make sense to incentivize your team to get the practice to escape gravity every month, and every year?  By the way, this is also where your economic freedom will come from.  It’s a lot easier to save 10% of your income when your profit margin is 40%.

There are thousands of practices that do this every month, and they don’t have some magic bullet marketing trick.  Okay, they do, but it’s not some secret Google AdWords formula or miraculous direct mail offer. It’s this: consistently creating a great patient experience.  And that may not be easy, but it’s doable.  And when the rewards are this stratospheric (you know I had to complete the metaphor somehow!) then it’s worth the focus.

So get a coach for you and your team.  Or buy a copy of my book for every team member, and have weekly sessions on how you can improve your practice experience. In other words, do something different if you want different results.  And blast off!