Are you in the Retirement Red Zone? Are you 20 Yards (and ideally 3-5 years) within hanging up the ol’ loupes? Haven’t thought about how and when it’s going to go down? As my first client ever, Dr. David Mayer says, “I love Dentistry. It’s my hobby. It’s my identity. I will end up collapsing on my last patient.”
This might sound morbid, but I hear this over and over with the many docs we work with when setting up their practice for transition. It’s no wonder that only 4% of dentists are set up to retire at 62 and, according to the ADA, the average “Rolex ceremony” is 68.8 years old. Whew! Lots of things to think about and deal with, right?
Are you in one of these three stages?
1. Thinking about it
2. Deciding what to do
3. Ready to execute a plan
If you are reading this article, you are in the first category and are at least considering your options. Once you have decided that you are all in, you are looking to pick a path. Should you build your practice up to its max, slowly bring on and nurture an associate, and sell over time? Maybe you’re thinking about abruptly selling.
There are a lot of things to think about and your personal values and integrity will dictate your choices.
Work with a coach who has experience to help you see the things your spouse has been telling you for years. If we all just listened, life would be better. And truth be told, while a spouse is always right, we need to hear it from an independent, third party. This is why I need to hire a college kid to teach my son the mechanics of a swing and his dad is a rock star baseball player. AHHHHH!
When you have evaluated all your options, it is time to develop an exit strategy playbook.
Most of our community members are docs looking for a 1-2-3 solution to fix things. They want it fixed and they want someone else to fix it. They want a system that is fool proof and guaranteed.
They also love to see that they can plug in their own numbers, have the math done for them, and determine where they stand. They really like having a tool to do this, even if numbers are not their thing. It is very powerful to see when you do X, then Y happens. The important aspect about this, when you don’t know what is possible, is to create hope. Without hope there is no action. The second aspect to this is to have the tools for the team to implement the changes necessary to turn X’s into Y’s so that the retirement asset is maximized.
The greatest gift a fourth quarter dentist has is that for every dollar you earn, it’s doubled. One in increased revenue and the other in increased equity when you sell. Investing in your own stock during this period will be better than any on Wall Street.
Let’s together take a look at all the financial levers you can affect to give you and your family the most at this vital time in your career.
The first mindset shift is to move from an output focus to an input focus. When I say outputs, I am speaking about bank account balance, production and collection – your end result. These numbers are created from input numbers up to seven months upstream. Specifically, patient retention, preappointing patients from hygiene, reactivating lost patients, total treatment presented, total treatment accepted, broken and cancelled appointments, new patient calls and conversions, daily scheduling to daily primary outcome for doctor and hygiene, and increase individual throughput by leveraging your hygienist’s expertise to cut down on perpatient-time.
The first step is to determine how much capacity you have right now if you increase retention and case acceptance. These are the two levers that are immediate and right in front of you with the biggest return on your time and energy.
Take out your calculator and add up the average fees for a prophy, exam and radiographs.
Let’s say the PPO fees are $150. Multiply this number by 2, because when you focus on complete health and creating known value in the patients’ minds, they will return knowing that it is not just for a cleaning. Therefore, the total revenue in hygiene for an adult is $300 annually.
When you properly train your hygienist and assistant to ethically educate the patient, using intraoral pictures, speak directly to something called a Personal Motivator (which taps into the patient’s inherent emotional drive to invest), employ a Healthy Mouth Baseline tool (that establishes your benchmarks for soft and hard tissue health in your practice), and then train a treatment coordinator (who learns how not to place her own money issues on the patient and thereby removes barrier to treatment) – you just got a crash course in doubling your practice.
So – back to the math for the average annual value of a patient.
Annual Hygiene Revenue: $300
Annual Restorative (the value of one crown and a buildup) – this doesn’t mean every single person walks out with a crown – it is the average case acceptance dollar amount. We’re saying an average of $1,000.
Add the hygiene revenue of $300, plus the restorative $1,000 = $1,300.
Now take the average number of adult patients who came to your practice for any reason during the last 12 months – let’s say 2,000 patients multiplied by the average annual value of a patient at $1,300, for a grand total of $2,600,000. This practice, when they come to us, was doing about $750,000.
Here are a few more levers for you to think about…
1) Dramatically increasing individual throughput by using the hygienists to do most of their patient engagement education and cut down on per-patienttime in re-care visits. This also increases case acceptance because the patient trust level for the hygienist is higher than the doctor. They think your recommendation pays for the Porsche. Dentist just call balls and strikes from the work the hygienist sets up, rather than uncomfortably trying to sell patients on prescribed treatments. By allowing the dentist to arrive late and leave early, they cut time with patient in half (or more) AND improve patient experience/acceptance rates. This allows dentists to theoretically see more patients. 2x patients = 2x revenue if all else is equal.
Only 4% of dentists are set up to retire at 62 and, according to the ADA, the average “Rolex ceremony” is 68.8 years old.
2) Improve scheduling efficiency and patient on-time show-rate. It doesn’t matter if you can theoretically see twice as many patients if you don’t have them scheduled to come in or can’t get them to show up on-time. By getting up-front payments and a commitment from patients ahead of time, and by giving them automated 3-day and same-day reminders, you end up with packed schedules. Up-front payment doesn’t just improve cash flow, it improves patient commitment as well. Reduce cancellations by getting the unforced commitment up front reducing doctor cancellations by up to 70% and when your hygienist uses a Healthy Mouth Baseline (free download at http://www.partnersincompletehealth.org/resource-library/) the patient learns the value of their hygiene visit.
3) Improve treatment acceptance. If you are constantly doing low-level single surface work, your payment per treatment is low. If you can (honestly) recommend higher-level treatments and have patients accept that recommendation, you get paid more per treatment, which equates to being paid more per minute spent chair side. This allows you to get paid more per patient, while also seeing more patients per hour. The average case acceptance for new patients is 15% and existing patients 34%. Our benchmark for both is 67%. Run the numbers here and see the reality of your second home fund get filled.
There are so many opportunities and levers to pull to get you where you want to be even if you are one of the many doctors we work with that got hooked into the get rich quick 2007 real estate debacle and in 2008 had your 401k turn into a 201K. You have an opportunity right now to score big inside your retirement red zone and get the two-point conversion – which is your first-class ticket to your dreams and desires for you, your family, and your legacy.