Mathematics of Cosmetics: Multiplying Your Opportunities
Mathematics of Cosmetics: Multiplying Your OpportunitiesReprinted from Dentistry Today (1998:17(7):102-103), Copyright (c) 1998. Dentistry Today, Inc.
How to increase the cosmetic portion of your practice- that is the question. Most practices have the capacity and technical skill to produce much more, which would dramatically increase the net. We want to increase the number of fee-for-service patients who see value in a new smile. We need more non-media generated and non-coupon generated patients. As technical skills increase, so should production. In many practices, new patient numbers are changing. The old fee-for service insurance model, offering practices a steady flow of newly insured patients for their free 6-month cleaning and exam may no longer be in the majority in your area. Alternative delivery systems of managed care initially are attracting those patient numbers. This has created a concern for private care practices, which have the technical skill to deliver much more excellent dentistry.
In a cosmetic practice, healthy new patient numbers should approach 10 to 15 adults a month. When the focus of the practice is to present every patient with ideal treatment, a 50% case acceptance rate can be achieved if verbal skills are excellent. This number of new patients will result in $500,000 to $600,000 gross production.
If your new patient numbers have reached a plateau in the past several years, as your ability to deliver cosmetic dentistry has increased, you have cause for concern. There are several solid answers to the concern over declining new patient numbers. One solution is to create a program of niche marketing. This is deciding the direction of your practice, building a reputation within that niche (cosmetics, reconstruction, mercury-free, etc) that will garner new patients who see value in your excellent care. A marketing budget should be established and a professional marketing expert should be hired who understands niche marketing and the desired reputation for your practice.
The second solution is to purchase an existing practice in your area and merge it with your current practice to create the potential of an excellent cosmetic practice. The benefits to the patients, the selling doctor and your bottom line are very positive if the purchase is structured correctly with a win/win for all. A practice merger is a perfect opportunity to create a new image in niche marketing with a dental marketing expert In fact, marketing with a practice acquisition is a must. One win is for the patients of the purchased practice. With warm welcome letter and increased verbal skills of staff, the patient retention is high. Patients feel well served. The new energy level is high, and newer technology might be offered. The selling doctor wins the financial structure of the sale supports his goals and is able to move onto his next project. The new doctor wins when the contract structures the sale so there is financial reward from the beginning. He must be in control and able to see benefits from the beginning, rather than strictly a payback for the first 5 years. Learn how to avoid costly pitfalls in purchases and sales.
Another benefit to the buying doctor is these patients are already established patients who see value in regular dental care. It takes more effort and funds to attract new patients than to geometrically reproduce established patients. A practice merger brings established patients. A successful practice purchase really requires the help of a smart practice broker. His goal is a win/win for both parties. We coach our doctors to the heartbreaking pitfalls of practice purchase with strong guidelines. A few are purchasing the practice outright and avoid any “partnership” situation; seller leaves the practice with an incomplete covenant; purchase price is definite at time of sale; and 100% financing through a bank as a total buyout is the best.
These are practices for sale within a 5-mile radius of your office, which could nicely merge with your existing practice and satisfy the new patient craving. Some of these practices are smaller and are overlooked by recent graduates, as they perceive they could not make a living on just that practice.
Practices may be for sale because the doctor is going back to graduate school, has family needs in a different area, or feels it is just “time to sell.” Some practices may be listed with a broker, while others are not officially for sale. This is where networking with your peers works well, as there are dentists who are either frustrated with the current system, nearing retirement age, or perceive a different practice environment would be best, but have not definitely made a decision yet. By lunchingwith possible candidates, you can offer your support should the decision be made. Be first in line.
Almost all practices can qualify for a cosmetic transition. If the seller was an adequate dentist with a loyal following, it is very possible for you to have a high patient retention rate, and after several hygiene cycles, to see the fruits of your communication skills create good results. If the seller has a small, high-end cosmetic practice where most work is completed, this practice has value for you, too, as the reputationis already established and these patients see value in cosmetic work. They will continue to refer their family and friends to you.
With a desired result of 10 to 15 adult new patients a month, a practice merger is a great solution. Depending on the patient base, new patient flow can increase from 10% to 15%.
There are several important keys to having the results show well:
- Use a smart broker representing the buyer;
- Develop strong relationships with patients, so treatment is not perceived as overwhelming
- Learn and master skills in communication and enrollment; and
- Broker represents the one paying the fee.
I have seen excellent cosmetic practices produce incredible work on 5 or less new patients a month. What this means is that doctor and team have learned how to form lasting, trusting relationships, and have mastered sales skills that create value with the patient. Without these sales skills, your excellent technical cosmetic work will unlikely be in someone’s mouth. Therefore, purchasing a practice and doubling your new patient flow is not the whole answer. You must be able to convert those new patients into dental missionaries for your cosmetic work.
Once the practice purchase has been made, your “new patient” flow has been increased to meet your goals. The next immediate step is learning and mastering new skills in enrollment to make certain these patients are asked questions to discover their needs-really listened to as never before, and treatment is actually completed. This is the real value of purchasing a practice. Do you and your staff have the excellent skills necessary in today’s market to present and have accepted, ideal treatment?
For assistance in structuring a practice sale, call (800) 722-5580 for Dr. Blatchford’s audiotape, “Practice Transitions.”