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As part of our effort to improve our service offerings to you, we have partnered with Diversified Practice Solutions to add new solutions and improved pricing for your dental and orthodontic practice.

Please visit us at www.DiversifiedPractice.com for updated content and solutions for your practice.

UPDATE: We haven't moved.  We're going to hang out right here for the time being.

Our summer special offer

Over the last year, we've talked about our offer of services in generic terms.  This was done intentionally simply because different practices have different needs and one size does not fit all.  A large group practice in need of reporting has a completely different set of needs than a single office practice that only has enough cash to last one more month.  But this flies in the face of the advice that we've given which says to provide a concrete offer that a patient can evaluate on his or her own terms.

So, in keeping with our own advice, here's a specific, concrete offer for you (if interested, just e-mail us at bpalmisano2@gmail.com).

Where we think we can be of most value is in improving results in struggling practices.  For these practices, we will come in, visit with you and your team, analyze numbers, find the weak areas, apply our expertise and work with you to implement solutions.  Our history is not to come in firing people (unless necessary) or asking you to spend a bunch of money that you might not have.

If the office has less than $60,000 of annual profit (per office) before owner pay, debt service and personal expenses, our services are free.  If the practice grows past the $60,000 threshold, we will take 25% of the growth only.  So, if the practice grows to $100,000 in annual profit, the $40,000 of excess profit ($100,000 - $60,000) is subject to a fee.  We would take a fee of $10,000, while you enjoy the 75% of growth.  This fee is computed and paid quarterly.

Your new office: less cost, better results

In our last post, we left off with the question of how, in this day and age, with the level of competition that exists for new patients, how can I possibly keep the cost of construction and equipment under $500,000 - $600,000?  

Here, we discuss some methodologies for you to accomplish just that task. Now, by no means do we intend to suggest that you somehow cut corners or have an office that is less than acceptable.  Nor are we suggesting that you have some bleak, stark office that resembles the inside of an asylum.  

Keep in mind that if you start 20 patients per month in a more expensive location, your return on investment and ability to repay is substantially lower than if you spent 40% less on the facility and started 18 patients per month.

Here are some things we’ve seen over the years that help to keep cost under control while allowing to create a professional, inviting environment for patients.

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New office construction: When does "nice" become too nice?

One obvious observation: you want your office to look nice.  Patients want to spend their appointment time in a comfortable, inviting environment.  Not only does this enhance the patient experience, but it also encourages patients to want to come back and refer their friends for appointments.  On top of that, you and your staff spend a lot of your waking hours in that office and for purposes of morale and energy level, you don’t want to walk into a dump every day.  

The overriding question is what constitutes “nice.”  For some that means Herman Miller chairs, fountains and chandeliers in the waiting room and Italian marble wherever you can put it.  For others, that means clean carpets and a minimum of fingerprints on the walls.  The best solution usually lies somewhere in between those two.

A number of practices operate under the notion that “if you build it, they will come.”  That only works in the movies and only if you build a baseball diamond that people can visit for free.  An uber-fancy office does not necessarily mean that patients will flow in.  This is because patients need a reason to come to the office BEFORE they see the fine interior.  It’s not like a retail store where some great signage and buzz is going to generate walk-in traffic.  For most practices outside of malls, walk-in traffic does not exist.

For some evidence of what I am discussing, a story:

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3 qualities to look for in your office manager

Throughout the life of this blog, we have discussed the size and significance of the staffing and employee cost in your practice.  Over the coming posts, we are going to dig deeper into the human resources component of that cost.  We’ll talk about components of costs, characteristics to look for in a new employee, hiring, firing, discipline and much more on incentives.  

Today, we look more closely at one of the key people in your practice: the office manager.  Over time, this person can develop into your right hand for carrying out the business operations of the practice and a trusted advisor on matters of future practice development.  They’ll usually oversee the front desk area, monitor marketing, receivables, cash management, payroll and a host of other tasks.  This person may also be responsible for other hires so his or her personality and preferences will touch every piece of the practice.  

In this segment, we look at some of the characteristics we feel are most important when considering what type of person to put in this key position (aside from the obvious things like not being a psychopath).  This characteristics are ranked in order of importance:

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Marketing strategy: Preparing for the first quarter

As we wind down 2013, many folks are looking back on the year that was, but I know that you as a forward-thinking owner of a dental or orthodontic practice are looking forward to the new year.  Specifically, you are zoned in on what should be a very lucrative quarter: the first calendar quarter of the year.

Historically, the first quarter is a strong demand quarter for potential new patients.  On top of that, you usually don’t see any other major expenditures besides, potentially, end of year income tax payments.  As such, the demand from new patients plus low stress on the expense side equal a possible increase in the bank account.  

How do you take advantage of the opportunity presented here?  In other words, how should your marketing be structured to attract as many new patients as possible during the first quarter?  As you consider this, note that two major factors come into play during the first quarter:

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5 acquisition warning flags

We’ve recently come across several acquisition deals that had real potential when reading the basic description of the practice (who writes those?  Most of them are fantastic).  But at some point in the process, red flags got thrown up that caused us to pack up our bags and head in the other direction.  

Here are some of the things that we’ve seen recently and over the years that should immediately sound warning alarms all throughout your head.  Please note that not all of these are necessarily deal-killers, but they should cause you to give extra thought and do extra homework before making a deal.

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Employee incentives: lesson learned

In the brief existence of this blog, I think you have noticed that we have regularly preached the importance of numbers and good reporting.  More important than just having the information is understanding what that information is telling you.  Does the data appear to indicate one thing, but the practice is moving in a completely different direction?

When it comes to employee incentives, the importance of quality information and goals is doubly important because if your team is unfocused or has goals different from yours, you will end up with a mess on your hands.  And by mess, I mean you are paying a bunch of money for reaching an incentive that has nothing to do with the overall success of your practice.  

I’d like to give you a story of one case in which we thought we had all the incentives lined up properly, but ended up learning a costly, yet valuable lesson instead (kind of like the plot of most sitcoms).  

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Marketing case study: Daily deals site

In our last post, we ruminated on some of the issues involved with using daily deals sites to promote dental and orthodontic procedures.  At the top of that post, we promised to discuss some results that we’ve had with using them so this post is dedicated to that subject.

Before diving in, note that as believers in quality advertising, we are willing to try a number of new avenues to keep marketing diversified and in front of as many people as possible.  You may have found the formula that works for your practice and do not want to change things.  That makes perfect sense.  But if you ever want to experiment with something without having to affect your delicate balance, we might be willing to try it (if the cost and setup are reasonable) in one or more of our offices for you and then provide full feedback on how things went.  This gives you a “live fire” test without deleteriously impacting your results if things don’t go according to plan.

With that, on to the case study:

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Marketing strategy: Daily deals sites

One media channel that some practices, including some of ours, have experimented with over the past few years are the daily deals services that have sprung up throughout the world.  You know some of the bigger names: Groupon, Living Social, Sweet Jack.  We know that they can be effective for restaurants, kids’ play areas and the like, but what about the dental and orthodontic practice?  

Generally, the process is the following: you contract with one or more of the services to advertise a price or other promotion to their “fan” base.  The ads are usually limited to a period of time and/or a certain number of people.  Once someone utilizes your services with one of the coupons from the site, you split the proceeds with the daily deals company.  Typically, you’ll split the proceeds 50/50, although Groupon has been cutting its take down to 35% in some cases to beat on the competition.  So, let’s say that you offer a deal for a $20 cleaning through Groupon.  When you get the $20 from that patient, $10 of it goes to Groupon and you keep the other $10.

In this post, we give you some of our thoughts and results that we’ve seen.  As you might expect, when the conversation with a doctor ventures into the realm of something like Groupon, we get a response along the lines of “No way.  That may work for other businesses, but not mine.”  Here are the main objections we get:

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Process simplified: generating important numbers

Over the last couple of months, we’ve thrown several computations and numbers at you.  Taking the time to compute things like the batting average, conversion rate, show up rate, etc. can benefit your practice and help you make effective, efficient decisions.  But a savvy practitioner may ask, “Those numbers are all well and good, but do you expect me to spend all of my time summarizing results and making computations?  Not only is that boring, but it also takes away time from analysis and focusing on my practice.”

And this, savvy practitioner, is an excellent point.  There are quite a number of ways to get to these numbers without burdening you with a green visor and a bunch of 7 column paper.  Here are some of your options:

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3 ways to improve your new patient show up rate

In our last post, we discussed the useful number known as the conversion rate.  One component of that conversion rate relates to patients who have made an appointment, but do not show up for that appointment.  In our scheme, the percentage of the patients that show up for their new patient consultation is known as the show up rate.  Like the conversion rate, the computation is very simple: take the number of patients that showed up for a new patient appointment divided by the number that made a new patient appointment for that period.

Like the conversion rate, this number will result in a percentage between 0 and 100 (if the number is greater than 100%, you probably have an issue with the process that computes this number).  Also like the conversion rate, we’re concerned with the trend and performance over time.  If your show up rate is 80% for 6 months straight, drops to 40% in one month and then goes right back to 80%, we’ll look at that one aberrant month, but not spend too much time stressing about it.

In a lot of ways, getting a patient to show up for that first appointment represents the last major hurdle in getting a patient into your system.  

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Key metric: conversion rate

On a regular basis, we here at My Practice Engine like to equip your dental or orthodontic practice with simple, meaningful statistics to track.  When you look at the number, that number is telling you something very powerful about your practice.  In the past, we’ve discussed things like benchmark expenses as a percentage of revenue and batting averages.  

Here’s a key marketing barometer to add to your quiver.  We refer to it as the conversion rate and it is very easy to compute.  For any given month, take your number of new contracts or total of new patients who have agreed to start treatment and divide that total by the number of consultation appointments made.  That bit of mathematics will yield a percentage somewhere between 0 and 100%. 

More important than the number itself is what does this number tell us?

As you can probably tell from the numerator and denominator, we are answering the following vital question: At what rate did potential new patients get converted into actual new patients?  If I want to sign x patients, how many consultations should be on the books for a given month.  For example, say that your conversion rate is normally 30%.  If you want to sign 10 new contracts in a month, you need to have 34 consultations booked (actually 33.333 if we take 10 divided by 30%).  

When we have a consultation on the books, there are 4 things that can cause this potential patient not to become an ongoing, paying patient.

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Avoid these information errors

If you’ve read this site before, you know that we preach the importance of information.  But what seems to be lost in the discussion is the fact that the information needs to be pointed, simple and useful.  Practice management software companies and other services are perfectly capable of generating reams of data.  But who has the time to look through all of that stuff?  And does all of that information have meaning?  

Today, we’ll discuss those and other fallacies that come with the generation of information and the usage of those data.  You don’t want to be presented with information that consumes excessive amounts of your time to understand or that lead you in the wrong direction.

Here are the potential mistakes you want to avoid:

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Marketing strategy: Dealing with the holidays

Perhaps you recall our piece on advertising during the high-demand summer months.  With the expiration of dental health month, we move into the holiday season and the absolute nadir of demand for services, especially for the specialists in the field.  

The reason for this is simple: most people have limited incomes and limited time.  That income and time generally turns toward holiday purchases and getting everything organized for the season – searching for gifts, preparing meals, attending parties, etc.  Unless there’s an emergency of some kind, you generally don’t see people trying to fit appointments into their schedule.  If they’ve waited this long to get started with treatment, another couple of months cannot possibly hurt, right? 

And, on the money side, not only do you see people spending money on gifts, food, etc., but you also see these type of situations: “I budgeted $200 for gifts for the kids, but I spent $1,000 on them.  Where’s the nearest lottery?’  Those types of situations add even more stress to an already stressful time of year.  Even the most favorable economic offer can seem like an additional burden.

So, how should you handle this time of year?  Here are some tips:

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Group practice roadmap: Finding deals

You’ve read the post about the basics of a practice purchase, the pitfalls and how to determine a price.  After reading them, your response is, “Looks great! Where can I get one of those?”  And the answer is relatively simple, “Lots of places.”  

Here, we’ll take you through a number of things we’ve seen and some of the pros and cons of each.  In a number of cases, the principles of finding a practice to purchase are similar to those when purchasing a home.  The best deals tend to be ones that are never publicized and the longer a practice remains on the market (especially in a retirement situation), the more wary you should be.

Just about every practice for sale will come with its own issues – some more severe than others.  The question is whether or not those issues matter to you and your situation or if they are deal breakers.  

Still, good deals can be found everywhere – especially because every potential purchaser has his own goals and intentions.  If you are interested in a practice purchase, make sure to explore as many avenues as possible because gems are out there and what may not be appealing to others may be the perfect fit for you.

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Group practice roadmap: solving the "corporate" problem part 2

By now, you’ve read about the corporate problem in your group dental and orthodontic practice and the first part of the solution to that problem.  We continue our discussion on that topic.

Not every corporate problem relates solely to the number of people in the office.  In a number of cases, problems arise from a lack of focus, training and simple disorganization.  Here’s what I see a lot: you hire someone, or start a new system or engage a new outside service and then wipe your hands of the situation and let things happen.  That almost never works.  You run a practice and there are certain ways you want things to be done – and we all know that there are dozens of ways to run a successful practice.  If you don’t communicate those things and keep the business on track, you have mass chaos and a business going in the opposite direction of what you anticipated.

Here’s what you need to do:

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Group practice roadmap: solving the "corporate" problem - part 1

When we last left our story, we were talking about the “corporate” problem: the #1 destroyer of group dental and orthodontic practices.  So, what do you do about it?

First of all, keep our initial discussion on group practices in mind.  Know your weak areas and shore them up.  In my experience, for a majority of owners of group practices, handling the pure business side represents a weakness, especially as the size grows and the business issues become more involved.  This may be because doctors do not have the training to handle this side, have more of a focus on patient care or simply don’t want to deal with that side of the practice.  The reason does not matter.  And this is not a criticism in any way.  Just what I’ve seen.

And this desire to have someone else handle the business side is why I have a job, OCA grew to the point it did and because you see a number of management companies, service companies and consultants out there.  They fill that void in business services.  Some of these companies are very knowledgeable and some plain suck, but that is not the point of our discussion here.  We want to show you some tools to handle it on your own.  If you still feel uncomfortable with that side of the operation, by all means look at some outside help.  But for now, check out our discussion and talk to us about it.

If you do plan to have staff to handle purely business (aka “corporate”) functions, you need to apply these techniques:

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Group practice roadmap: the #1 group practice killer

                                                               (Image credit:  skinzweb.wordpress.com)

As we look back on history, we see an absolute graveyard of group practices that have accumulated debt, expanded rapidly, burned brightly for a period of time and then disintegrated quicker and more spectacularly than a Newt Gingrich presidential campaign (insert Howard Dean there if you lean red).  

And if you look closely at the tombstones of these practices, the epitaph for many will read something along these lines: “Here lies practice x – killed by an out of control corporate office.”

Here’s an example of what typically happens.  You have a member of your front desk staff handling your accounts payable in addition to his/her regular responsibilities at the front desk.  And for one office, it’s not a big deal.  You don’t have a very large volume of bills, the number of vendors are small, all expenses relate to that office (making the accounting for bills very easy) and all tasks can be fit in during slow points in the schedule.  Now, if you have 10 offices, that dynamic changes.  The volume of bills is 10 times what it was (maybe more), each bill may have some coding and allocation issues to get the accounting correct, erroneous bills may take more time to correct because those bills may be more complicated, etc., etc.  Most significantly, that person needs to spend more or maybe all of his/her time on accounts payable now due to the sheer volume and complexity.  So, you switch that person to become a full time accounts payable manager and hire someone to take over the front desk duties.  And so it begins…

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Group practice roadmap: 5 tips for super staffing and scheduling

As your office count grows, one of the costs that most frequently grows out of control is employee costs.  This happens for 2 reasons.  The first is that poor information  and scheduling strategy leads to a disorganized schedule, confused staff and patients and spiraling costs.

The second is that adding staff seems like an easy, quick way to solve a particular problem, especially a problem that relates to your patient and office volume increase.  The thought process goes along these lines: “With one office, I didn’t need a person to handle [function x], but with 10, I’ll need someone full time to do that.”  So, for doing the financial accounting, you add an extra person.  For handling the marketing, add a person.  Tech support?  Need a body.  And so on.  We’ll deal with this issue in our next post.

Here is how you keep your schedule and staff organized to keep that cost under control.

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