Don't throw people at a problem. Do this instead.

When writing pieces, I generally do not find anything more useful than taking a real life situation and relaying the results of examination of that problem into the wild for public consumption.  Our latest example comes from a dental practice on the gulf coast of Mississippi.  

Here, a dentist has a practice in a startup phase.  It is in that limbo phase of being larger and more mature than a startup practice, but not quite to the point of constant busyness.  There are some heavy activity periods and still others where there are no patients in the office.  This office is in a shopping mall so it tends to get more walk-in traffic than a practice that might be seen at an office that is located in a medical complex or out of the way location.  A potential patient might be moving from the Apple Store to the Disney Store, see the office sign or remember that they need a cleaning and stop in at the front desk.  For this reason, the practice will occasionally have some pretty busy times if a few folks come in at once without an appointment.

The doctor in the practice worries, and properly so, that patients will come in, see a line or find they are waiting too long.  They will decide to delay the appointment and maybe make that appointment with another doctor closer to home.   To deal with this, the doctor suggested that we place extra staff at the front desk at all times.  So, if things got busy, all patients could be handled and no one would be lost. 

Of course, if things did not get busy AND front desk staff wasn’t using that time to do things like market to potential new patients, that would result in cost just running higher. 

A much better solution would be to give the tools to the existing staff to enable them to handle more patients.  We’ll get into more detail on each of these, but specifically:

Winning the waiting room

In our last post, we unearthed the somewhat obvious finding that people do not like to wait.  If it’s waiting for appointment day or waiting in the appropriately-named waiting room, people generally have better things to do than to sit around.  Here, we address the in-office waits that can cause blood pressures to rise and patient schedules to be upended.

We certainly understand that things happen during the patient day.  Shorts suddenly become longs, unanticipated discussions arise and even impromptu bathroom breaks can turn a day packed with patients into a day and night packed with patients.  Even the most efficient, well-oiled machine of a practice will experience hiccups.  

On the other hand, some practices can somehow take a light, 25-appointment day and turn it into a overtime-generating mess.

Here are some tips and techniques to minimize and soften the waiting room experience.

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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Turn old inquiries into new patients

As we progress toward the end of the year and demand begins to decline into the abyss of the holiday season, you are probably looking for source of potential new patients – probably not for the rest of this year, but certainly as we head into the new year.  A recent post discussed the fact that generating fresh demand from patients is extremely difficult at this time of year, but most practices miss out on a hidden treasure trove of potential new patients.

These potential patients are essentially any patients that have made any type of contact with you in the past, but for whatever reason, did not sign up with you.  Let’s take a look at these patients and some ideas for marketing to them:

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Should I relocate?

If you have an office that has been operating for a period of time, at some point within the first 5 years, you will reach a key decision point.  Maybe your lease is expiring.  Maybe a spanking new mall is being built a few miles away.  Perhaps you feel that the area around your office is in decline.  Whatever the case, you are probably faced with the decision of whether or not to relocate the office to a new facility.  

Clearly, the first thing you need to do is to assess the cost of a potential move.  In a lot of cases, you can move your equipment, waiting room furniture and other office furniture to the new facility.  You’ll probably want to upgrade some electronics so maybe you are looking at another $10,000 or so for that plus $5,000 or so for the movers.  You won’t be able to take your leaseholds with you so, for a standard office, you are probably looking at another $150,000 of buildout cost (excluding any tenant improvement allowances).  If your office was profitable at the time of the move, there should not be any startup costs to bear.  You also may be looking at a rent deposit or other costs to get into your new facility.  So, we’ll peg the total cost at about $175,000.  

With that cost in mind, what should you be thinking about with regard to a relocation?  Let’s take a look at the issues:

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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: Real world applications

We’ve spent so much time on the group practice roadmap for a couple of reasons: first, it is a tremendous opportunity for those who are willing to take on the challenge of substantially growing their business.  Second, we live this type of environment every day with our own group practices.  We love doing this and want to share our experience and evolution within the process with anyone who is willing to give us a read.

Of course, we constantly see new issues and opportunities and learn new things every day.  In the following paragraphs, we’d like to share some things that we’ve learned from some actual experiences over just the last few weeks.  I find that it’s always helpful to show some real world applications of what we’ve written about.  Hopefully, you’ll see parallels with your own experience in the past and future and be able to apply the lessons herein.

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Group practice roadmap: You don't have to sacrifice patients for profits

With everything laid out for the group practice development, some of even the most aggressively growth-minded doctors get stopped in their tracks by a fundamental concern: they don’t want to be that practice that upsets their own principles, and colleagues, by making business decisions that work contrary to the treatment of the patients.

The term “corporate practice of dentistry” has taken on a very negative connotation.  For quite a number of years, I was one of those people in a corporate office charged with providing management services in a relatively sizable company.  I heard about the potential evils of a group practice or MSO involvement in dental and orthodontic practices several times a week.  We’ll address that issue a bit later, but for now, we know that few people want to be tagged as the owner of a “patient mill” or that guy who will put braces on a patient with 9 teeth.  Heck, even a body as august as the U.S. Senate has broadly painted “corporate operations” as ones that place “profits above patients.”  And if you can’t trust the government, who can you trust?

For a group practice, we should examine some more practical examples.  And no, this is not some kind of ethics class.  I’ll leave that to the experts in the field.  Rather, this is an attempt to show you some of the common problems and decision making you will see as you go through this group practice process.

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Group practice roadmap: Acquisition outliers

We wrap up our acquisition discussion by hitting on some frequently asked questions  about some situations in practice purchases that do not fall neatly within the examples we’ve discussed in the previous musings on this topic.

Of course, every situation is unique and it would be impossible to cover everything here, but here are some outliers that we’ve seen frequently enough that you will probably stumble across a couple of them if you are serious about practice acquisitions.  

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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: how much should I pay for a practice?

Among the top 3 questions that always come up when you purchase a practice, one of them is “how much?”  Clearly, the price of a practice is often a major, if not the, determining factor in whether or not to ink the purchase contract.

A lot of variables go into the determination of a purchase price, but here, we’ll boil it down to its simple essence.  We’ll also give you some rules of thumb for making a good practice purchase so that when you close, the practice is producing income for you right away – unless you’ve bought a fixer upper.

Before getting into any part of the purchase process, please understand this: the starting point for you in negotiating a purchase price is NOT the seller’s asking price.  Rather, your starting point is your own independent evaluation and computation of price.  If the asking price for a practice is $500,000, and your independent assessment is that the practice is worth $300,000, you should have no problem passing and looking for other opportunities.  On the other hand, if the asking price is $500,000 and you value it at $750,000, we have a winner.

Let’s break down the process of determining the value for a practice:

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Group practice roadmap: Acquisition pitfalls

Buying a practice is not unlike dating.  You see someone that looks good to you, evaluate the situation, and think only of all the great possibilities.  Then, you enter a final “transaction” and once you are committed to that transaction, BAM!, you discover some horrible skeleton in the closet.  Unfortunately for you, now you are in and extricating yourself from the situation is difficult.  

Without extending that painful analogy further, let’s take a look at some things that have gone wrong in acquisitions.  We’ll also discuss how you can prevent yourself from becoming a victim.  And here, we’re not talking about the normal due diligence issues that arise: unpaid tax bills, bad credit ratings on purchased corporations, looming lawsuits, etc.  We’re digging a bit deeper here to find a few of the messier situations that you might run into.

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Group practice roadmap: the purchase option

As we’ve wound our way through this group practice roadmap, we regularly get asked a simple question: throughout the discussion, you’ve talked about building a new location as the means to add new locations to your group practice.  What about acquiring an existing practice?  And certainly this is an effective, useful way to grow your practice.  In fact, most of the top group practices grew through a combination of new office development and acquisitions.  And we were definitely going to get around to discussing it.  Now, would be a good time to have that discussion.

Like a lot of other folks out there, we’ve done our standard hundreds of acquisition deals – from having no money and begging for owner-financed deals to having public market money and overpaying in cash to beat out competitors.  And while every deal has its own characteristics and unique issues, things can generally be boiled down under the umbrella of some major overriding points.

In our first review of acquisitions in this post, we’ll talk about things you need to know and should consider.  We’ll follow that up with a discussion of some problem areas, do a breakdown of how the economics of a deal might look and then give you some places to look for a practice to buy.

If you are going to buy a practice, make sure to consider these handful of items before signing that final deal.

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The multi-specialty practice: the marketing

One of the main considerations when building a multi-specialty practice is effectively marketing to let potential patients know that you offer different specialties.  This is especially challenging if you have established a reputation as a practice with one particular specialty and now need to recreate that brand to encompass broader offerings.  It’s not totally unlike James Gandolfini attempting to show the world that he’s more than just Tony Soprano.

In addition to that, an oft overlooked part of switch to a multi-specialty practice is what happens during consultations themselves.  Here’s a very typical scenario: A patient needs an implant and schedules a consultation with the implant doctor working in your office.  This patient also happens to need orthodontic treatment.  Will the implantologist notice that the patient needs orthodontic treatment?  If so, will that doctor have the presence and incentive to refer that patient to the orthodontist in the office?

Here, we’ll address both of those topics.  First to the practice marketing side:

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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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Group practice roadmap: More offices, more problems

To this point, we’ve painted a nice, white picket fence, daffodils and roses view of opening a group practice.  If you have a good system, find new locations, get financing, open the offices using that system, monitor results, lather, rinse, repeat.  Of course, life isn’t that simple.  Yes, no matter how many offices you have, supply orders will get screwed up, employees will quit and a patient or two will have an unpleasant experience.  On top of that, certain problems unique to a group practice setting will loom over you at some point or another.

Here we discuss some of the problems that you will see as you develop and operate a group practice.  We’re not going to discuss the most frequently occurring problems, but a number of the ones that tend to cause negative emotions to swell, hard feelings to harden and chairs to get thrown (OK, I haven’t seen any chairs actually thrown, but a few were grabbed in anger before cooler heads prevailed).

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Group practice roadmap: Your most important hire(s)

Among the most important personnel decisions you will make as your group practice grows is which associate doctors you will want to employ in the practice.  On patient days when you are not there, this doctor represents not just the attitude and environment you want to convey to patients, but also have to treat patients with a level of quality that is satisfactory to you.  Clearly, you want this person or people to fit the treatment style for all of your patients and have an amenable personality.

Beyond that, there are a number of other important considerations when identifying and employing associates (not that I use the term employing here – if you and your tax advisor feel that an independent contractor arrangement is superior and IRS-friendly, the considerations described in this post do not change).

Here are the items to consider with an associate:

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