Today, we commence with a discussion we referenced last week. In it, we lay out a roadmap for orthodontists and dentists to grow their practices substantially. No, we’re not talking about 25-30% growth a year from your existing practice or pushing some maybe-it-works-maybe-it-doesn’t marketing hook. We’re talking about adding multiple locations to the point at which you are now the owner/main renter of anywhere from 5-15 individual, fully functioning, locations. So, if you have an office generating $500,000 per year in revenue and you are able to do that 10 times over, you are talking about a $5 million annual revenue practice with the attendant potential profit. If you have 10 offices and take home a paltry 20% after paying everyone else, that still leaves you with a $1 million personal annual income.
This is no get-rich-quick scheme. It is a process that takes planning, effort, support and organization and plays out over a period of time.
In the past, we’ve seen quite a numbers doctors build their own “group” practices –and guided a decent percentage of those all the way through the process-- run under the doctor’s own philosophy regarding treatment, facility design and patient experience. We’ve seen these types of practices become wildly successful and we’ve seen some fail miserably. We want to give you the information you need to put you in that first category.
The first assessment you must make is whether or not you have the desire or mentality to go through the process. Here are some questions to ask yourself before jumping in to becoming a group practice.
Nothing is guaranteed in this world. Each new office you add could struggle. Geography, personnel, demographics, the economy, freak occurrences (Hurricane Katrina, anyone?) and a host of other factors might all conspire to impact some or all of your group of offices. If you have one office impacted with a full load of $500,000 of debt on it, that’s one story. If you have 10 offices and the debt load is in the millions (to take a more extreme example), that’s an entirely different book in a completely different section of the library. Because you are expanding to a greater scale with a greater potential reward, risk is higher too. Ensure that you are OK with it before proceeding.
Am I willing to change my role?
A simple math example makes the point here. Let’s say you have a one office practice with 1,500 patients. As the doctor, you may pride yourself on seeing every single patient for every appointment. If you go to multiple locations and 10,000 – 15,000 patients, seeing every patient is clearly impossible. Should you be unwilling to delegate functions to associates (and there’s certainly nothing wrong with that), this process may not be for you.
In fact, your role will generally move from a daily provider of care to more of an executive handling the running of a business. You will certainly be involved in the treatment process, but it will be from more of a monitoring, training, audit and review perspective than seeing patients in your chair every production day. You will also be asked to handle more administrative tasks and use tools to track results. Again, with 10,000 – 15,000 patients, reviewing every single past due balance, bracket order and petty cash transaction becomes impossible. You need to be able to deal with a broader view, delegate authority and examine exceptions. We’ll certainly talk about ways to deal with all of those things in coming posts.
For some doctors, this can be an uncomfortable change. Some are excited to jump out of the day-to-day of treatment. Before moving forward, make sure you have a good understanding of how your role will change.
Am I willing to get support for my weaknesses?
This is a question to be answered before you begin to build your first office, but the question expands substantially when your practice grows. The change in role requires new skills to be applied. As a manager and small business problem solver, you will need to apply more business analytics, resolution and management techniques than in a single or double office environment.
Some doctors have all the required skills and won’t need any assistance. Most will show strength in some areas and need assistance in others. Some are not numbers people. Others struggle with marketing ideas. Still, others may need help with building and managing staff. If you need help with something, do not be afraid to seek it. There are a number of good services out there to help you accomplish whatever you want to get done.
Simple time management shows that when things get super busy in the process, you can’t do it all alone. You will need to be able to focus on the major, important areas while having others provide support for areas that will get in the way of that focus.
Does my current practice business plan work?
This is obvious. If revenue is bouncing around $10,000 per month and you are barely breaking even on a consistent basis, you need to organize your current operation before moving on.
Outside of that, we’ve found that things like age and location really do not determine whether a doctor will be successful building this type of practice. Credit rating doesn’t have a major impact either. Even though poor credit may increase the challenge, especially early in the process, we’ve seen several doctors with disastrous credit build some sizeable, successful operations.
If, after going through this assessment, you believe that you are the man or woman for the task, stick with us. There’s much, much more to come.
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