The MSM Triangle-Your Key to Greater Profit

By Michael Warm, DDS

“We know what we are, but not what we may be”.  William Shakespeare

You cannot turn the television on these days without hearing the doom and gloom that has resulted from our anemic economy.  Unemployment rates in double digits, foreclosures on homes at an all time high, interest rates on investments at next to nothing, and a government dedicated to funding the whole meltdown. 

How has the economic downturn affected your practice?  Most dentists report a 20% decline in gross revenue over the past two years.  That translates to a 50% decrease in dentist net profit.  It’s difficult to live on 50% of what you are used to bringing home.  The outlook for a near term recovery appears unlikely.  We may be stuck in this stagnant economy indefinitely. 

This report has been compiled based on 20 years of dental practice ownership and five years of  engaging in dental consulting and coaching.  Every dentist believes they have a unique array of challenges in their practice.  The reality is that all dentists face the same issues and obstacles, only varying in scale.  The good news is that the light at the end of the tunnel is not a train speeding toward you!

I want to share the true essence of what you need to do to optimize your practice performance and ultimately increase your bottom line.  I’ve addressed several aspects of your practice performance in the index to the right.  These are provided as a more detailed adjunct to the material presented on this page.  Read this entire report so that you avail yourself to the offer presented at the bottom of this page. 

Are you the kind of person who would rather take action and learn how to increase your net profit?  Or are you too busy reacting to your current business to take the time to learn new skills to improve performance?   Ask yourself the following question:  "What lasting contribution are you making to society, and how do you know if that contribution is effective?" (Gary Ryan Blair)

How do you wear two hats: provider dentist and management of your business?  It is only the rare doctor that can perform both tasks at a high level.  You generate income by providing dental services.  If you are like I was as a practitioner, you do not have much enthusiasm for business management.  I don’t blame you, but your lack of attention to your business can cost you dearly.  Most dentists are leaving $200K or more of net income a year on the table because they are reactive in the practice as opposed to being proactive. 

If you would like to increase your income and your practice satisfaction, please read on.  Let’s discuss the three points of the MSM triangle:  Marketing, Sales, and Monitoring.  This concept applies to every business:  you must attract new customers (patients), you must make sales (accepted treatment plans), and you must track your results to measure your performance (monitoring).  Let’s take a closer look at each of these vital aspects. 

Marketing Part I: External Marketing

One statistic you cannot measure is patient attrition in your practice.  Most patients that leave your practice will not inform you.  In order to assure steady growth in your practice, you must strive to consistently attract new patients either by referral (word of mouth) or by external marketing.

The referral new patient is typically the best new patient.  They come into your practice based on the recommendations of someone they trust and statistically will accept twice as much treatment on average compared to new patients that are generated by your external marketing efforts that do not possess that initial level of trust.  You will learn more about generating new patients by referral in Marketing Part II below. 

External marketing is a great mystery to most dentists.  Spending money for marketing seems as risky as going to Vegas and throwing money at the blackjack table.  In reality, marketing is an art based on the science of numbers.  Marketing is far more calculated and predictable than most realize.   Follow the lead of Fortune 500 companies- if you want to market effectively, hire a professional marketing company.  They will brand your practice and tailor a plan that will provide consistent results.  

A good return on investment (ROI) is greater than 3, meaning that for every dollar you spend on your marketing, you get three dollars or more back.  If you are running multiple marketing campaigns, do you know the ROI for each campaign?  This is critical information necessary to determine the best future marketing budget allocations for your particular practice. 

How closely do you monitor you marketing?  You should know the origin of each new patient so that you can track your marketing ROI and thank your referral sources with notes or even movie tickets or restaurant gift cards. 

Our clients have enjoyed excellent results working with a professional marketing company.  Your marketing is too important to be let out to the cheapest print and mail outfit.  A professional marketing company provides value added features such as monitoring all of the phone calls generated by their marketing and pin point demographics to get your marketing into the homes of your ideal patient.  Call me if you would like to learn more about professional marketing that really works. (my cell number is at the end of this report)

In a start-up or acquisition, the best immediate use of working capital is in an extensive marketing campaign.  This will drive more new patients which will drive revenue and quickly grow the practice and its value.  The tendency for a new doctor is to leave their working capital in the bank as a cushion against negative cash flow.  When this is depleted, now you have lost the luxury of having funds available for the marketing you should have done in the first place.  Many practices have failed for this very reason.  

Marketing Part II: Internal Marketing

Has this ever happened to you?  You go into a doctor’s office and stand at the front desk waiting for someone to address you.  The person behind the desk is on the phone and oblivious to your presence.  After a couple minutes another person sees you and asked if you been helped.  You tell her you are a new patient and she tosses you a clipboard filled with forms you must fill out. 

Does this occur in your office?  What kind of first impression does that leave?  A better first impression would be greeting the new patient at the door and giving them a quick tour of the practice, then letting them fill out their paperwork in the comfort of your consultation room.  Make them feel like an important guest.  You can also create a great first impression by having the doctor call the new patient the night before their appointment and welcoming them into your practice. 

A clean, friendly environment is better received by patients than the high-end, sterile practice with granite countertops, travertine tile and water features.  Treat your patients like guests in your own home.  Make sure that you and your staff ask for referrals (most patients think that all practices are busy and do not accept new patients!).

Many of your patients are nervous going to the dentist anyway, and if they aren’t treated well in your practice, they will never refer their friends and family to you.  New patient flow coupled with treatment acceptance is the main focus of a successful practice.  Every other facet of managing your practice is mere subsets to attracting new patients and having your treatment plans accepted. 

There is a much more extensive treatise on Internal Marketing located in the index to the upper right.  I suggest you check it out by clicking here.  Read the other pages as well for suggestions on improving practice performance. 

Sales (Treatment Plan Acceptance)

Most dentists I have interviewed claim that their treatment acceptance rate is “around 80%”.  In reality the average acceptance rate for dental practices is in the 30% to 40% range.  It may seem like acceptance rate is higher as depicted in this example:  You present 9 cases in a row, each of which is $1,000 of treatment and each patient agrees. Your 10^th case is a $9,000 treatment plan that the patient declines.  It feels like 90% acceptance but in reality it is only 50% acceptance by quantity of treatment. 

Do you know your treatment acceptance rate?  It is very difficult to improve a value which you don’t know.  Your practice management software can provide this value (which may or may not be accurate based on inputting skills of your front desk).  I advocate tracking this value on a daily basis.  By some mystical force, statistics that are tracked improve.  This is the premise of Pearson’s Law, which states, “That which is measured improves”.  

Treatment plan presentation works best with the doctor explaining the benefits of treatment and the treatment plan coordinator (TPC) negotiating the payment options.  In most practices the TPC is also the office manager, and already has many responsibilities and may not see treatment presentation as a priority.  Treatment acceptance is the lifeline of your practice.  Consider providing an assistant for your office manager so that she can spend uninterrupted time with the patient presenting treatment.  The assistant can act as a utility person in the practice as well, answering phones and scheduling, setting up and taking down treatment rooms, and filing insurance claims. 

Most dentists think the major reason that treatment isn’t accepted is that the patient cannot afford it.  That may be a factor, but it isn’t the primary one.  Even your wealthiest patients won’t accept treatment because 1) They don’t trust you; and 2) They do not perceive the value of the treatment.  You spent years learning your profession but your success will parallel your ability to build strong relationships with your patients.  If your patients truly understand how they will benefit from accepting your treatment recommendations, they will go to great lengths to find the money to pay for it.

After the doctor explains the treatment plan to the patient, it is the objective of the TPC to get approval, even if it is just a small portion of the treatment plan.  Consider breaking up larger cases into phases of treatment which can be completed over time and thus paid for over time.  Even if all they accept is an occlusal filling, that’s a start.  Return visits allow for building a stronger relationship with the patient which leads to greater trust which may result in the patient accepting more of the treatment you presented to them. 

Check out our page on Case Acceptance Rate. You can increase your treatment rate acceptance by 10% to 20% just by tracking your results, which leads us into the next section. 

Monitoring Your Results

“Tracking works because it brings moment to moment awareness to the actions you take in the aspects of your practice you wish to improve.  You cannot manage or improve your statistics without measuring them”.  Darren Hardy

How do you measure the performance of your practice?  Collections?  Cash flow?  It doesn’t really matter how much revenue you generate; what does matter is how much you get to keep.  As mentioned earlier, it is important to track your treatment acceptance rate, the origin of your new patients, and the ROI of your marketing campaigns.  What else should you track in your business?

Do you know how much you have outstanding in Accounts Receivable?  Generally your total receivables should be less than one month’s revenue.  If total receivables exceed monthly revenue, your office may not be doing a very good job collecting money. Do your insurance receivables exceed your 30 day receivables?  If so, perhaps your insurance claims need to be followed up. 

What is your overhead expense as a percentage of revenue?  Well managed practices can usually keep their overhead less than 60% of revenue.  Of course the best way to decrease overhead as a percentage of revenue is to increase practice revenue.  Increased practice revenue is the result of: 1) increased number of new patients or 2) increased treatment plan acceptance, or 3) raising your fees.

What percentage of your patients has periodontal disease?  According to the ADA, 80% of people over age 35 have some form of periodontal disease.  If your patient median age is 35, statistically you could expect that 40% of your patients have perio problems (most offices we have analyzed have far fewer periodontal patients than the national average). 

What is the value of your practice?  What could you do to increase its value?  What percentage of your production is attributed to your hygiene department?  What percentage of your production is generated by new patients each month? 

Our company has created a simple business management program designed to monitor all these aspects of your practice and provide performance analysis with proven methods to improve your vital statistics.  This program is called Practice Hawk (www.practicehawkpro.com). 

The Daily Trak module allows your front desk to track new patient origin and treatment acceptance which will allow you to generate month end reports to track the ROI of each marketing campaign and accurately determine your treatment plan acceptance rate.

The Analytics module is inputted each month with profit and loss values and data from reports generated by your practice management software.  You receive a snapshot analysis of your practice performance and using the Dental Profit Wizard, discover the path of least resistance to greater profitability. 

Earlier we stated Pearson’s Law, “That which is measured improves”.  Benchmarking your vital practice statistics will allow you to focus on those areas of your practice that need improvement.  The other half of Pearson’s Law states, “That which is measured and watched improves exponentially”.  Your data on Practice Hawk will be monitored by our professional team to make sure you are inputting data correctly and getting the most out of the program.  Practice Hawk is an online program, so you can access your practice data from home or even your smart phone.  Our low subscription price makes this dental business management program affordable for every practitioner. 

Despite the economic downturn, some of your peers are enjoying record months.  Of course they are working harder than they worked several years ago, but they are also working smarter.  Are you the kind of person who would rather take action and learn how to increase your net profit?  Or are you too busy reacting to your current business to take the time to learn new skills to improve performance?  You have chosen a great profession and with your dedication and hard work you deserve a rewarding career.

We are offering you a simple program that includes the following:

• Determine your near term and long term career goals
• Assess your desired retirement needs and create income to satisfy those needs
• Analysis and performance critique of your practice’s current status
• Suggestions to enhance your strengths and improve your weaknesses
• Determines the path of least resistance to greater profitability in your practice
• Put you on a plan to increase your net profit by $10,000 or more in just 90 days
• Phone support to keep you on track to accomplish your goals
• Daily Trak monitoring of your new patients and treatment acceptance

 In the past we have charged our clients as much as $50,000 to help them improve their practice and their career.  Because we have streamlined our coaching process and really wish to see you perform at a high level, our fee is only $397 a month (or $3,897 a year if you would like to save $862 over the monthly subscription).   Of course we provide a 100% money back guarantee if you are not satisfied with the program.  That means that you can try the program at no risk to you.  To receive this special pricing and getting started, use discount code ‘profit now’ on www.practicehawk.com

This program is designed for the practitioner that wishes to maximize their potential, raise their income, and willing to listen to and implement advice that perhaps isn’t mainstream.  Our system will probably require 4 or 5 hours of your time each month.  A few hours a month will raise your net profit by $10,000 or more. 

To schedule a 30 minute demonstration of this program in your office call Mike Warm, DDS at 602-702-1218 or email a request for appointment at mike@murraywarm.com 

We can also show you the program on the Internet using GoToMeeting.  Make a commitment today to improve your practice performance and increase your net income.

Thank you for your attention and good practice!

Mike Warm, DDS

P.S.   Those who are anxious to springboard their practice into enhanced profitability can use the discount code, ‘profit now’ and receive a $300 discount on the yearly membership rate.  It is very likely that you won’t see this offering again.  This offer expires on Friday, August 13^th, 2010 so don’t delay.  Let us help you to help yourself. 

P.S.S   Are you a self starter that doesn't need consultant interaction?  Try Practice Hawk and still get the full benefit of the program without consultant support.  You will still have access to technical support and of course your satisfaction is guaranteed.  Pricing is only $147 a month or $1,497 a year.  Log onto www.practicehawk.com and enter the discount code, 'selfstarter' to receive this special pricing.