In this blog, veteran Dental Business Coach, Chris Barrow, advises practice owners and managers to look for the leaks in their profits and suggests ways to plug them.
After more than 30 years in dentistry, I have yet to walk into a practice and find a business that is squeezing every pound of profit out of what it already has. What I do find, is money leaking from the business in ways that are entirely avoidable.
Rather than dramatic losses or disasters they are steadily dripping away. The real danger with a drip is that you stop hearing it.
Answer a straight question
In these circumstances I ask owners when they last took a proper look at the practice’s chair utilisation. Because what I typically see is a practice that tells me they’re busy. The team feels stretched and the diary looks full most days. However, when we run the report, we discover they’re at 80 to 85 percent utilisation.
This may sound decent, but it isn’t. That missing 10 to 15 percent is where a big chunk of their profit has gone. What’s frustrating is that it’s not lost through anything complicated. It’s simply through empty time, gaps, unused surgeries and clinicians choosing to work fewer days, which is something that’s been happening more frequently post-COVID.
Take control of the diary
Your diary is your factory floor. However, in many practices, nobody really owns it.
What often happens is, as there are no clear rules on how the diary should be structured, it fills itself. So, before you know it, prime clinical time is being swallowed up by routine reviews.
While preventative care matters, having your highest earning clinicians spending most of their time doing low value activity is not making the best of the opportunities you have. Especially not in the current economic climate.
This is where diary zoning comes in. That means protecting time for higher value treatment and not allowing it to be chipped away because “we had nothing else to put in there”. It also means making better use of therapists. A therapy-led preventative model frees your dentists to do the work that actually drives revenue while your therapists do the routine examinations and so on.
The Swiss cheese problem
Another problem I see is recalls. Most practices tell me their recall system is automated. It’s all set up so it runs in the background. However, what I often find is what I describe as a Swiss cheese system. There are holes everywhere in the system where patients are slipping through. Follow-ups are not happening which means opportunities are missed. The reason for this is simple: everybody assumes it’s working, so nobody owns it.
The same applies to cancellations. When a gap appears in the diary, there’s nobody actively working to fill it in real time, and so the opportunity gets lost. Capacity leakage like that is silent, but relentless.
Why this goes unnoticed
The reason behind these leakages more often than not is because practice owners are not on top of their numbers enough. This isn’t because they don’t care, it’s because they’re busy, the data arrives too late or because they have never been shown how to look at it properly.
This means that instead of being guided by data, their decisions are made on instinct. The problem with instinct is that it doesn’t show you where you’re losing money.
If you are not measuring:
- chair utilisation
- productivity per clinician
- and the efficiency of each surgery
then you are effectively flying blind.
The cost of opening the door
For years, the cost of running a surgery sat at around £450 a day. However, with the changes in the economic climate over the last few years, today, for many practices, that figure has nearly doubled to closer to £850 a day.
So, have your prices doubled in that time? The answer is obviously ‘no’, which means the only place left to find your margin is through productivity.
The conversation most people avoid
Examining productivity properly can throw up some interesting facts. One is that not all clinicians are contributing equally to profit. In many practices, one or two people are doing the heavy lifting while others are either breaking even or worse.
Rather than getting into a debate about percentages, which can be a toxic subject, it’s best to sit down with the numbers and have an honest discussion with the people who are not pulling their weight. Show them their average daily production, what it costs to open the surgery and then ask them if they think that is sustainable. Most people will engage with that.
The aim of the conversation should be about helping them to produce more rather than paying them less. It should be about better workflows, case presentation and support from the team. That’s where the real opportunity lies.
How to make a start
Like most things in life, it’s best to keep it simple. Start by finding out where you actually are:
- Measure your chair utilisation
- Look at your average daily production per clinician
- Calculate your operating cost per surgery per day.
Then act on it:
- Appoint someone to own the diary
- Put in place proper diary zoning rules
- Fix your recall system so it is actively managed, not passively assumed
- Make sure no patient leaves without their next appointment booked in the diary.
And most importantly, talk about it. Have daily huddles, weekly KPI reviews and monthly management meetings. Because all problems exist in the absence of a good conversation.
To sum up
There’s a belief that growth comes from finding more patients. However, in my experience, that’s only part of the story. Often, the money you’re looking for is already in your practice sitting in unused time, unaccepted treatment and systems that aren’t being followed through.
Make the best use of what you already have and stop allowing profit to leak out of your business. When you get this right, you don’t need to chase more, you simply need to run what you’ve already got properly.
