Cliff's Notes

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

 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.

March 5, 2017 - Posted by Cliff's Notes Blog | Uncategorized