Cliff's Notes

The Business of Dentistry

Mr. Dentist, Meet Watson

Have you met Watson? He is your very near future so you should know who and what he is. He is not just a Jeopardy champion he is artificial intelligence and he is learning healthcare.

Watson or one of his siblings, will eventually design the crown you scan and send it to wherever you want, a mill or a lab. The end result will be nothing less than perfect. Watson will diagnose, treatment plan and pre-D on its own. Your medical counterparts are already utilizing Watson’s diagnostic options and to think that dentistry is not far behind is just sticking your head in the sand.

How far behind the curve are you? … When do you plan on jumping on the technology train? OK, you bought digital radiography, but how long did it take you to engage with the technology and what was the result? Now we are into all types of digital imaging that greatly increase diagnostic abilities and provide very predictable results. The train has left the station and if you will be practicing for more than 5 years it is important that you catch up. At the end of the day consider the value of your business and its curb appeal.

Where do you need to go? … You need to fit into the future healthcare network. Insurance companies will require more diagnostic information for pre-determination. They will require digital transmission to reduce their expenses and claim processing. Every business, big or small, looks for ways to reduce or control expenses, it’s part of doing business. However, doing business requires investment. Your first step should be to fully understand your practice, surprisingly most of today’s dental practitioners don’t.

Understanding Your Practice … What type of practice do you have? Is it restorative, hygiene or surgical based? Are you high volume or a private boutique? What ever it is you will need, at a minimum, to accommodate industry standards. Watson is only the first, there are more coming. Technology is fueling technology and a business today has to budget technology as an annual operating expense.

Make the plan, meet Watson … He is waiting to meet you. Please feel free to contact me at any time with questions or concerns.


March 26, 2017 Posted by | Uncategorized | Leave a comment

Just-In-Time Inventory Management


Maintaining an inventory for any business is a necessary evil. It is part of the life blood to continue business operations and requires an investment of time and money. Although it is not a glamorous investment it does effect every profit center within your dental practice. We’ll get into “profit centers” later on, but for now let’s try to understand inventory expense and control and what Just-In-Time Management can achieve.

Just-In-Time Inventory Management Who handles the replacement of consumable inventory in your office?

Consumable inventory … Your practice can’t function without products or tools. From copy paper to cotton rolls everything you use you during a normal business day needs to be reordered. Most dental offices have a clinical assistant make the list of clinical supplies and place the orders (what happened to the checks and balances from my last issue of Cliff’s Notes?). You have the clinical team make the list because they know what the products are and the front office orders the business office supplies that they need because they know where to get the cheapest pens. There is nothing wrong about this approach it just is not very cost effective or smart. Most dental practice owners tell the team members doing ordering “just get me the best deal” or they do it themselves. That is a consumer mentality and not good business sense, it may actually cost you more money due to carrying costs.

Carrying Cost … Most dental entrepreneurs don’t understand carrying costs. Did your business advisor ever ask about your operational procedures or do they just talk about numbers. Numbers tell you that if you buy 4 and get 1 free you are saving 20%, that’s true if all the product is used up within 30 days of paying the bill. If the inventory sits on the shelf more than 30 days it has a carrying cost. If it reaches expiration date you may have laid out money for un-usable product and now that savings could turn into a negative. How much expired inventory do you discard every month? How much is sitting in your supply closet? Do you know? Probably not. Distribution Partners also affect carrying costs.

Distribution Partners … Your choice of the distribution and supply chain organizations you work with is a key factor in achieving J-I-T inventory. Aside from an occasional hiccup (even Babe Ruth struck out once in a while) you need to have consistent restock time frames. You need to know how long it will take for product to arrive. My clients know that if they palce an order by 4:00 in the afternoon (EST) UPS will deliver the order the next day with a 99.8% fulfillment rate.

An Example … About 4 years ago I was approached by a large dental practice in crowded/fast paced northern New Jersey. The problem was lost inventory. Lost inventory is what expires and needs to be destroyed. The owner was alerted to the issue by accident when he observed his head assistant throwing away dental supplies because they were expired. He decided to centralize his ordering process for everything the practice was ordering, from light bulbs to composites. Clinical and business supply lists would be given to one person who could access usage levels and order product for a 5-8 week supply. The problem was that the “buyer” did not know clinical supplies so everything needed to be turned into widgets, we did that with a bar code scanner. The scanner along with purchasing software allowed the buyer to track usage quantities. The office orders twice per month and the stock room is in perfect order. Inventory is turning 4 to 6 times per year and nothing expires. Carrying costs have been minimized and they never run out of product.

Why keep walking over dollars to pick up dimes? … Start automating your systems! Next week we’ll talk about why and meet Watson.  Please feel free to contact me with any questions or concerns.


March 19, 2017 Posted by | Uncategorized | Leave a comment

Once Again it is Time to Talk About … Dental Office Embezzlement

Embezzlement is live and well and the dental office is no exception. As a matter of fact, most dental office have been embezzled. Some catch it some don’t, I have heard about it and seen it countless number of times over my 40 year career (I started when I was 8). New team members, long time staff, young or old, it doesn’t matter. Who’s fault is it? The boss!

The Boss … The identification of faults in any business relies on information supplied by reports from different departments. Management’s job (The Boss) is to review these reports and make sure they match. Checks and balances are necessary to insure that all procedures and protocols are operating efficiently and “that the check book balances”! Production reports, daily collections, day sheets & deposit slips must all balance with each other. Trusted long time team members as well as new ones must all be subject to checks and balances. A team member should never feel insulted by verification. As Tom Hayden said to Sonny Corleone “it’s only business”.

The Control Freak … We all have or have had the team member that wants to be in control. They develop ownership of their tasks and get agitated when someone else gets involved or asks question. This situation is not healthy for the practice or the employee. Assuming the person is extremely honest, any inconsistency may cast doubt and damage a good relationship with management or other team member and disrupt team harmony. That will effect the patient experience and office production. Then there is the other side of the equation, they don’t want you to look.

Receivables & Deposits … Who opens the mail? Who enters payments into your management software? Who fills out the day sheet? Who fills out the deposit slips? Who goes to the bank to make the deposits? If it is the same person and not a family member, a change is needed. Checks and balances, ask your business financial advisor to help set up the system. Let the accountant be the “bad guy” changing the system. My dad once told me that when it comes to business trust two people, God and yourself and watch God.

Payables … Payables involves so much more than just paying bills. Why do you have the bill? Who authorized the services? Where the services requested in the best interest of the organization? Embezzlement isn’t just diverting receivables, it could be theft of goods and services. I could think of a hundred examples like the front desk that has the snow plow company do their home and add it to the office bill. Or, the assistant that places a $2000.00 supply order to get the “Free Kindle” that is shipped with the order and the assistant is checking in the shipment. Did you need the supplies? Were they priced correctly? Nothing is free. Then there is the accounting manager that has been with you for 10 years submitting bills from non-existent companies and depositing them into a personal account..

Embezzlement … is alive and well in the dentistry. It is all about prevention. Talk to a professional and please feel free to contact me with any questions or concerns.

March 12, 2017 Posted by | Uncategorized | 1 Comment

Professional Healthcare Practice Ownership, You’re a Dentist, What’s So Tuff?

ask-the-right-questions Invasive dentistry is surgery so you have to be pretty smart to be a dentist. Unlike your primary care counter parts, you don’t just diagnose and treat, you repair and create, you are a specialist. That takes a special talent and it’s what you enjoy doing, but practice ownership is getting more complicated.

What was your vision of the future when you finished dental school? If it was running a business, great, because that’s what your doing. As a healthcare provider you need to deal with almost every regulation and legal requirement for the public trust as well as generating the revenue to pay for everything. On top of that, you would think that the difference between what you spend and what you collect is yours, wrong! Uncle Sam still has to take their fair share. Then there is the anxiety of making payroll.

Making Payroll … Making payroll, for a small business owner is something you can’t understand unless you have been there. Dental business owners are entrepreneurial making them competitive by nature. Making payroll every 10 days is always a competitive challenge that will keep repeating until the day you retire. Team members get paid before the boss and for most of us there were times when your pay check was left in the desk draw for a few days until cash flow caught up. You can’t imagine that pain unless you lived it, it’s like facing the unknown alone.

Cash Flow … Let’s talk about the value of a healthy positive cash flow. Equate it to the blood stream feeding the body. It supplies all the things your business needs to survive and grow. My dad once told me that a sale is not a sale unless you get paid and until then it’s a gift, so how far out are your receivables? Beyond 30 days you are starting to give gifts and after 90 days you are loosing money. You also need to budget your expenses to match your inbound cash flow. In-bound and out-bound revenue need to be carefully monitored and budgets need to be reviewed. The best way to do this is to review your P&L on a quarterly basis.

The Profit & Loss Statement (P&L) … The P&L may be the most misunderstood report that a dental business owner looks at. It tells you where your money is coming from and where it is going. This single report will tell you the most important area’s to address. To the surprise of most dental entrepreneurs , Lab, clinical & office supply costs have the smallest effect on the P&L yet so much time and energy is spent on managing them to “reduce the overhead” that you can’t reduce.

Overhead … Don’t you hate paying bills? Aren’t things getting more expensive? You are concerned about raising your fees and insurance re-imbursements are falling. You are trying to reduce overhead but you can’t. Let me say this again “you can’t reduce overhead, you can only control it and reduce it’s footprint on your P&L by increasing production”.  The cost of doing business will continue to rise and so will your operational overhead. Address the costs that will give you the biggest impact on overall investments. Note that I said investments. You don’t have expenses, every check you write is an investment in your future. Rent, insurance, payroll, etc. are all investments. Look at where you money is going. Think of overhead as a necessary investment guided by the P&L.

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March 5, 2017 Posted by | Uncategorized | Leave a comment