The Dental Shopper Blog

When it comes to management of you dental practices, especially in tougher times, all of us fall into two main categories.  One category is those dentists who are tired of hearing about it and decide to "not do anything, because “I can't do anything about it", and the other category, who is also tired, but determined to do "something" about it.

I have seen several offices and can tell you many have chosen to "throw up their hands" and try to "make the best of it".  Not only is this is a mistake, but I have found it is done many times out of ignorance, rather than choice.

I have practiced 23 years and have seen slow times on more than one occasion.  I am not here to tell you that I have a single magic bullet that is going to make the tough times go away.   I am here to give ideas, and hopefully get ideas from the readers of the dental shopper forum about how to fill the empty chairs that I often hear about.

I believe that most of the readers of the dental shopper are self-employed, hard working dentists who try to wear both hats of the two basic needs of a dental office.  One hat is clinical, the other hat is the business side, as one cannot work without the other.

Too many times I see dentists spend thousands of dollars on equipment or continuing education courses that only add to the overhead/stress of the office, rather than increase production/collections. 

This strategy often fails because your office is not prepared to "sell" the new technology, and/or your patient base is too low to support the cost of the new product.

In this forum I want to discuss "tougher times strategies".  I want to hear the good and bad of what is working in your office to keep your practice going.  I realize that many of you may not want to share your "secrets", but keep in mind that sharing ideas is not the same as implementing them.  We have to remember that rarely are we in competition with each other.  Generally, our “competition” is the wants and needs of other items that our patients want to buy, instead of dentistry, now days that can be housing, food, and basic necessities. Two years ago it would have been the new car or new boat.

If I am asked what to do in tougher times, I usually suggest starting with what is called the "chart separation exercise".  This is a physical chart separation of who has an appointment, and who doesn't (but you wish they did).

The exercise is fairly easy, as you go through your charts one by one and separate them into 2 different chart filings.  This can take several hours depending on how many charts you have.

Once you have done this you have 2 sets of charts in 2 separate areas.  Take a good look at the area that is holding the patient charts that have appointments.  Count them, because this is really your "active" charts (or active patients), as they have an appointment to return to your office. (I realize that there is no guarantee that they will show up- but that is dependent on your systems you enforce to assure the patient will show up).

Just a side note, I always chuckle when a practice broker tells me that an active patient is anyone that has been seen in the last 2 years.  I believe this is nonsense, but that is a discussion for another time.

Now you have the other set of charts-patients without appointments.  These are the first patients that you need to be in contact with.  Postcard, letters, email, and phone calls are needed.  As with all marketing, you must contact these potential several different ways and times to let them know you are still interested and available for them.

Yes this takes time, effort, and a little money.   If you have idle staff, make the most of them.  Even in a moderate busy office, there is time to make a few phone calls, send emails, and mail a letter or postcard.  You have one person that is very valuable to do this- go look in the mirror!  If you are sitting around at 10 am waiting for your 11 am patient walk in, be wise, take the time to do some clerical work, don't let pride get in your way.  Remember, tough times require tough sacrifices.

You can't believe how effective a personal phone call from a dentist to a past client "concerned about them as I have not seen you in such a long time", or the personal letter, with a small handwritten personal note to the patient that you haven't seen in 10 months.

It amazes me how many dentists have the time to whine bout their office being "slow", but have too much pride to pick up the phone, pen a personal note, or write an email to an existing patient that doesn't have a return appointment.
So tell me- lets talk- what are your thoughts and what have you done for your office lately?

Gary Moore DDS
www.JungleConsulting.com

I wanted to thank Dr. McLerran, a practice transition specialist in Texas, for providing us with this valuable information. This is a question that many of you have asked me in the past. Lon

Dr. Johnson appeared somewhat flustered when he arrived at our office to discuss his transition. He is an old friend and colleague who had hired a young associate to be groomed as his eventual successor. Their relationship was good and the associate was ready to affect the purchase. Before pulling the trigger on the purchase, the associate had requested a second appraisal from another company to verify our appraisal. Dr. Johnson had received the second appraisal and was bewildered. He had received a large folder full of financial printouts with a summary page that stated the appraised value of the practice. He could not make heads or tails of the printouts and wanted us to look it over.

Upon our review, we found that the appraised value was right in line and the printouts were all accepted approaches to value, albeit without any explanation.

Dr. Johnson shook his head and said that, for the money he spent, he expected to be able to understand the appraisal.

Dr. Johnson is not alone. Many doctors have a difficult time understanding dental practice appraisals. So, what are the elements to an appraisal of a dental practice and what should you expect for your money?

There are a number of types of appraisals used for different situations. A limited, letter, or summary appraisal might be used when you just need to know the value. This may come into play in estate planning or to verify the value of your assets. This kind of appraisal will only state the basic assumptions and give you a value.

A fully documented appraisal will be needed in most circumstances. These include a practice sale, divorce, partnership buy-sell agreement, and partnership purchase. Be assured that all parties in the transition will have their advisers; attorneys, accountants, lenders and consultants. These advisers will want to be able to understand how the value of the practice was derived and the rationale of the appraiser.

Therefore, the appraiser should provide some basic, commonly accepted information. The appraisal should state the subject and date of the valuation. It should define the standard of value-fair market value, fair value, or investment value, and it should define the scope of the valuation- for divorce, purchase, or a buy-sell arrangement.

In addition, the appraisal should discuss the general economic situation at the time of the appraisal and discuss the state of the dental industry in the area of the practice. There should also be an in depth discussion of the practice itself.

Then, there should be a discussion of the financial statements and condition of the practice with adjustments of income and expenses to arrive at a true operating net income of the practice.

After the financial analysis, the appraiser should discuss the various approaches to value and how they are weighted in the appraisal.

The Practice Valuation Study Group, which is a national organization of dental practice consultants/appraisers, recommends three approaches to value; an asset approach, a market value approach, and an income approach. Although the result of each approach might be averaged to obtain an appraised value, the appraiser must use his/her judgment in how to weight these values. For example, a practice may have tremendous net income but is full of old equipment and is located in an undesirable area. In that case, the income approach may give us a result that is not justified by market conditions.

And, finally there should be a list of qualifications of the appraiser. In reality, all appraisals are opinions of value based upon a comparison of the subject practice with like practices which have sold in the marketplace. Therefore, it is a great advantage to employ an appraiser who is familiar with dental practice sales.

Keep these points in mind so, when the time comes, you can seek an appraisal that you can understand and one that fits your needs.

Paul E. McLerran, D.D.S., CCIM
(888) 656-0290
paulmc@dental-sales.com

Dear Colleagues,

It’s hard to believe that we have almost ended another year. Thanks to you, The Dental Shopper is more than 25 years old. When we started there was no Dental Products Report, no Dental Economics or many of the magazines that you younger dentists now take for granted. There were a number of association journals that dealt mostly with clinical articles and data but none that were concerned with the business of dentistry. We were pioneers and you recognized the value of what we were doing and you supported us. We took a chance and put our money and our effort into this project and you rewarded us. It was the American promise of finding a need, having a great idea, working hard and succeeding, much like what you are doing in your practices.

This year has also brought some economic challenges to many individuals and businesses; our profession is no exception. Shopping wisely has never been more important and I have encouraged my advertisers to give my readers the best deals that they can. I encourage you to find and take advantage of those deals.

Arm yourselves with products that educate your patients and encourage them to make the right decisions for their oral health. Market your practices wisely and accurately track the return on investment (ROI) of that marketing program.  You will survive the tough times and be better and stronger for it.

As we enter the Holiday Season, I wish you all good health, joy and prosperity in the coming year. Only we know how truly demanding our jobs are and I hope that you all find the time to recharge your batteries and enjoy time with friends and family.

My everlasting thanks to you that support us including our loyal advertisers that truly make our publication possible.

Cheers,

Dr. Lon Uso, UCLA ‘77