Episode 618: How to Make Your Practice Profitable

As a business owner, do you want freedom, autonomy, growth opportunity, and less stress? Kiera and Spiffy Tiffy preview the eleventh system the Dental A-Team will dive deep into next year: practice profitability. To make your practice operate at a high level, you need to put in the work and pull the right levers. 

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0:00:05.9 Kiera Dent: Hey everyone, welcome to the Dental Aid Team podcast. I'm your host Kiera Dent, and I have this crazy idea that maybe I could combine a doctor and a team member's perspective, because let's face it, dentistry can be a challenging profession with those two perspectives. I've been a dental assistant, treatment coordinator, scheduler, biller, office manager, regional manager, practice owner, and I have a team of traveling consultants where we have traveled over 165 different offices coaching teams. Yep, we don't just understand you, we are you. Our mission is to positively impact the world of dental, and I believe that this podcast is the greatest way I can help elevate teams, grow VIP experiences, reduce stress, and create A team. Welcome to the Dental Aid Team podcast.

0:00:51.2 KD: Hello, Dental Aid Team listeners. This is Kiera and the one and only Spiffy Tiffy, coming to you guys on our Labor of Love today with theme 11 out of 12 for these 12 systems, practice profitability. Tiff, how pumped are you for practice profitability and not ops manual?

0:01:08.0 Tiff: Closing out the ops manual, moving forward.

0:01:15.2 KD: Amen guys. Amen. Practice profitability is so much more fun, and it's fun because it used to be my greatest weakness. Like neck and neck with marketing, practice profitability used to be the zone that I just felt like an idiot on. Tiff, how did you learn as an office manager? Because you had it before I met you. How did you learn how to get your practice profitable as an office manager? What was your training and experience as an office manager?

0:01:40.1 Tiff: Yeah, well, I had a great doctor that I worked for that was always really informative and shared a lot of information with me from the get go. And he always worked off of goals. So I think from the start of my time with him, my almost 13 years with him, he really just had me goal-oriented and also personally goal-oriented.

0:02:03.3 Tiff: So we were always working on both aspects and really seeing how my personal development would relate back to the practice profitability. And then we did have an office manager as well who was wonderful. And she handed me down a lot of tools and taught me what KPIs were, how to pull the information I needed, and really how to see the trends of the KPIs and the trends of the treatment case acceptance to see what the issues were. She's where I learned that if the diagnosis... If he's not given us enough to diagnose, we can't solve cases, et cetera. So all of those pieces, I think both of them were really detrimental in my learning all of that. And the practice that we built was built off of numbers and not off of necessarily people. The people came in and we fit them into the numbers. And we took a lot of continuing education courses as well.

0:02:55.2 KD: That's actually really helpful because I feel like... I didn't know guys, my practice profitability came not because I actually knew what the heck I was doing, but from the school of hard knocks. As an office manager, I didn't know, we did not set annual goals. My doctor told me what they wanted. I didn't have any part of it. I had no clue why we were doing it. And then we didn't have meetings. I had like kind of monthly meetings. There were no calibration meetings amongst our practice. We did not have standardized exams. We did not have monthly one-on-ones. I didn't have weekly meetings. I didn't have a doctor hygienist calibrations. I did not have any type of meetings with any of my team members to check to see how our AR was going on our billing. I did not know how to give reviews and raises. I did not know how to make effective bonuses. I just willy-nilly that. I didn't even know how to help our team hit a goal. I didn't know what my dollar per hour per doctor production was or hygienist. I didn't know that my supplies should be below 5%. I had no idea that my lab should be below 9%. No idea that my payroll should be 30% or less. Had no idea about any of those items. Like I literally didn't even know how to read a P&L. I didn't know that what overhead was.

0:04:10.7 KD: I didn't know that my overhead should be 50% or less, excluding my doctor pay. I didn't know what taxes were. I didn't know what practice profitability should be. Like none of those things were there and so my meetings were less than effective. My focus of the company was less than effective. I was just, I was being very reactive instead of proactive, and trying to push our team without any basis as to why we needed to have it done. So that's where I feel like practice profitability is so huge. Like, end all be all. If we're not taking home paychecks like our doctors, and we don't have money left over at the end of the month, we are struggling on practice profitability. You should as a business owner be profitable every single month. That is a standard. That is something that is real. There are hundreds and thousands of offices out there that have made this a reality. So it's not just a pipe dream, but it really is there. But I feel like office managers and doctors really need to be aligned on practice profitability and making sure that they're looking at those numbers using the numbers as their guide rather than just a hope and a wish to make it happen.

0:05:17.7 Tiff: Yeah, I totally agree. I totally agree. And that made me think too, as you were talking about all of that, my office manager did really well at wrangling my doctor into the meetings and we had... We didn't have... I think we still could have done more meetings, like now that I'm consulting and I'm seeing how all these pieces flow together. I think we did really, really good at looking at lag measures, but not necessarily lead measures. And so I would say, looking back, I would add more meetings, but she did make sure we had a lot of... We had our monthly meetings and our quarterly and our yearly and then we always had our quarterly CPA meetings and towards the end of her lifetime with our practice, she started having me in those meetings too. So it had helped me to see what all of those numbers really meant. And so I think too for doctors that have office managers or business administrators that you're trying to figure out like, why are you looking at the numbers? Why don't you understand? Why can't you read a P&L? Like, it's probably because they've never seen it.

0:06:14.6 Tiff: And so if you just get them invested into those conversations and into those meetings with you, that really spearheaded it for me and made it kind of full circle for me to be able to see why all of these pieces float into one another.

0:06:27.8 KD: Hello, Dental Aid Team team listeners, this is Kira and you guys, how was your 2022? I want you to look back and tell me was it the year of years? Or was it a really hard year? Did you crush it? Or did it crush you? This is the time guys, for end of year Dental A Team platinum is welcoming you where we will physically fly to your practice, we will come and we will elevate your dreams and make them into a reality. And guys, space is limited and prices are going up. This is not a sales pitch. This is not something where I'm trying to scare you into it. I'm just facing the reality of inflation is here, flights are expensive, and I want to see as many people as we possibly can and serve as many as we can. So if you want to be part of our elite group of people, there are limited spaces because our consultants can only see as many.

0:07:19.9 KD: We are taking on 10 new platinum offices by the end of the year and that's it. That's all we have space for. So if you want to be one of the elite 10, come join us. Be a part of our top notch elite doctor community. Be a part of our office manager and hygiene and front office communities. Get your operations manual done and live the life that you've only been dreaming of today. Email me hello at the dentalateam.com and make 2023 truly a year that's unforgettable. We are a complete tax write off and like I said, we are only taking 10 offices. So don't get left behind. Be one of those 10 and I cannot wait to give you the biggest warmest welcome to completely and utterly changing your life for good. Welcome to the dental team. I can't wait for you to join us. Hello at the dentalateam.com. Cheers to 2023 and making you your best self yet.

0:08:16.8 KD: And I think it's like learning a new language, learning to ride a bike, some people will get it right off the bat, and other people, it's going to take you a little bit of time to be able to understand what all these numbers do, how they all impact. And Britt Stone and I did a podcast a while ago where Britt really... She made it very simple of like, looking at the numbers are just the different levers that we can adjust in our practice to help our practice grow or decline. And I think having a lever image for practice profitability really helps. So on this one, to make it tactical for you is like number one, do you have goals in your company, in your practice? Like I'm talking annual goals. Do you have them there? That would be one part of this. Do you have quarterly meetings to help set goals to get to your larger goals? That's EOS traction guys. You don't have to do it that way, but I think it really helps and it's a great framework. And we do coach offices how to implement this into their practices. Do you have meetings with your biller every single month to review the AR? Are you looking at the AR and making sure that we're actually collecting from patients? Do you make sure that your practice, all expenses, like make it real simple for you guys. If our practice is collecting $100,000, a 50% overhead on this practice would be $50,000 should be remaining at the end of that month.

0:09:40.9 KD: That does not include doctor pay. Doctor pay should be 30% of that. And then we have 20% profit, which goes towards debt, services and taxes. You can shake up that formula if you so desire and have everything above the line between a 70 and 80% overhead, including our doctor pay and including our debt services to make sure after taxes and everything, our practice still sits at at least a 20% profit margin on that practice. That is a baseline minimum. And that does not mean our doctors are not getting paid. That means that they are taking home paychecks. They're being paid as associates, if you will. So the same as if we had an associate, plus they might also be paid as a CEO of the business, depending upon how your CPA and you choose to set it up. Like Tiff said, are you having CPA meetings where you're literally tracking this and trending this? Do you have a tax strategy in place? Are you working with your CPA consistently to make sure that you're not getting surprise tax bills at the end of the year? Do you review your P&L every single month, line item by line item by line item?

0:10:44.5 KD: Do you, every quarter review your P&L and look for areas where we might be overspending to make sure that we're wise stewards over our finances? Are your collections at 98% or higher? This is the magic that I also feel can be a very simple cadence for you and can make it towards very, very, very easy for you guys to implement. But at the same time, you've got to be willing to put in the work to get the system set up. The system's pretty simple for me. I know every quarter around traction time, I have it set up where I will go through my P&L. Every month I have a meeting with my bookkeeper and I review our entire P&L. Shelby sends me my P&L every single week and I review it line item by line item by line. Tiff will tell you, I know our numbers forwards and backwards and Shelby does too. We talk about our numbers all the time. I have a meeting with Shelby on our AR. I see the AR every single week and I know every single account on there. I know what our overhead is. Tiff knows that I was like, Oh, our overhead was real high. We had a September as well. And yet I know what our profit margin is. I know where we need to go. And looking at that to make sure we can make smarter decisions.

0:11:52.8 KD: So I really feel like practices, this to me is the treasure map to success. This is where I feel like the magic lies because numbers don't lie. Numbers are not objective. They really truly do have an A plus B equals C and you can get there, and then you can determine when do we give reviews? When do we give raises? When do we have bonuses? Are meetings focused on the profitability and the success and happiness of our practice? Because if we have a profitable practice, we can do so much more for our community and for our team. So I'm obsessed with it. I feel like it is an absolute necessary piece to it and really getting doctors and OMs to sit down every week, review the numbers, create a game plan. That way you guys feel confident and truly have a profitable practice. Tiff, any thoughts from your side? There's a million things to add. I have no idea where you would want to take that, but what about from your side that you want to add?

0:12:47.0 Tiff: Yeah. I think that was a ton and I think it was beautiful. I think all of it flows into each other and just making sure, but all of those pieces are in place. I think we talked about it last week or the week before that everything we've set up here for these 12 systems is meant to flow into the next month, right? Like, into itself. And so really all of the pieces you've been working towards are for your practice profitability. Your patient experience is your practice profitability. So being able to take all of those pieces, your operations manual is going to flow into your practice profitability because there's not wasted spaces of time where you're doing all this training on things that they could just go watch a video or read a read a simple sample on like... All of those pieces are going to flow into this practice profitability and really learning how to dive into those numbers and see them and see what you need to be doing in order to get the results you want and or see the results you want and be able to pick through and see the trends that are creating it so you're not needing those results. Those are the keys and that's something that we can always help you with.

0:13:53.3 KD: So two tips point guys, this is the magic, this is where it's at. So I want you guys to rate this Tiff, Dental A Team hot seat moment, one to five and one to ten. One to five, again, I really guys would rate you on your today. Where is your profitability? Are you profitable as an organization and as a company? Do you have these meetings in play? Do you look at them? That's what's really going to be the rating system here. I don't care if you have all these things in play, if you are not profitable, do we got to fix it like that's not that's not an option at all. So Tiff, What do you feel? I'll give my number so, one to five, and a one to ten, how do you feel Dental a team's practice are, our company profitability is systems overall company. How do you feel like it is?

0:14:42.5 Tiff: I think overall practice profitability based on systems and really just our numbers. I think I think current, right now we've got September and we've had marketer we didn't have so I think I would give us like a 3.54 and then probably a 7.58 if I'm doing those two metrics.

0:15:04.4 KD: For sure. I think I would give us, I think as a practice... As a company, I would say system wise numbers reviewing it cadences, we're like a 4.55, 9.5 out of 10. Like I think we've got... Actually 9.5 feels real high. I would give us an 8 out of 10. I feel like I'm not a CPA and there's a lot I could know that I don't even know I don't know. However, I would say, this year Dental A Team's profitability, I would give us same as Tiff, 3.5 to a 6.5 to 7. Now that's not because I feel like we haven't been wise stewards. This year, I knew and Tiff knows and the whole company knows, this year was a growth year for us as a company. We knew we were bringing on a lot more manpower than we've ever done before. It was a completely different strategy that Dental A Team had this year. So I knew our practice profitability would be low. With that said though. Great, we brought on the manpower. Now it's time to shift it. So right now that's where I'd put it, just overall year to date. We have a much higher overhead than we've ever had before.

0:16:04.3 KD: Again, you bring in new people, they don't pay for themselves right away. That's totally normal. But making sure that we get there. So agreed with Tiff, that's where I'd rate us. So guys I'd put that on there. This would be one of my top systems that if I was not profitable or to the level of profitability that I want and know I could be. Alright, guys let me just give you an example. I have an office six operatories, 35% overhead. I'm not kidding, I will not tell you they're in the many millions of their production as well. So you guys can figure out the numbers there. That is a reality of practices we coach. So if you're not to that level this would be one I would radically star as a big one that next year I would put a focus on. I think this is one of the biggest ones to give owners, office managers, and practices, freedom, autonomy, growth opportunities and just really reducing that stress. So give yourself a number. What is it on a one to five or a one to ten. We're about to wrap this up. Next week is going to be a team hiring and onboarding to wrap this year up.

0:17:07.9 KD: That's the last theme system that we're going to be bringing to you guys. Practice profitability. Give yourself a rating. Tiff as always thanks for being on this podcast. It was fun. We are about to wrap up our Labor of Love next week. So Tiff I think this is the final countdown honey. We are here.

0:17:22.5 Tiff: We got this. We got this.

0:17:25.9 KD: All right guys as always thank you for listening. I'll catch you next time on the Dental A Team team podcast.

0:17:33.6 KD: And that wraps it up for another episode of the Dental A Team team podcast. Thank you so much for listening and we'll talk to you next time.