The Dentist as an Enterpreneur

Whether we like it or not, when we put up our practice, we also put up a business enterprise. Unlike most medical doctors who don't have to worry about overhead expenses as most of their income comes from their Pfs collected by the hospital for them, we have to contend with running our own  'mini hospital' clinics. With it comes overhead costs,  material and supply inventory, equipment amortization, employee benefits(ax payments and a host of other management related issues.
Our lone college subject of 'Practice Management' would never have sufficed. Aside from, many of us, not taking the subject seriously, it was probably taught by professors who were not practicing or not running a practice by themselves.

It is no wonder then that a number among our colleagues would have problems managing clinic finances: unable to pay laboratories and suppliers on time or if at all, and defaulting on equipment amortization.


Yet these same colleagues may be driving luxurious cars and taking expensive vacations. Do I blame them? No, not entirely. We were never prepared to put up and run a business. A practice, maybe, but even that is arguable.


For those among us who did make it or are making it, there were probably a lot of hard lessons: an employee embezzling from us, tax penalties, over drafted accounts, unpaid bills and etc. it was school of hard knocks, because we were never educated or trained to manage our finances and run a business as we should have been.


3 Aspects of our Dental Practice


Just like any business enterprise,  our dental practice also has, at least, 3 aspects: Finance, Operations and Marketing.


Finance
We really have to be aware of the financial costs of running our practice. Knowing our costs would enable us to set realistic fees and give us financial goals to meet to be able to sustain our practices as well as our personal/family needs. 


Costs can be classified as fixed and variable. Fixed costs generally includes rental, utilities( electricity, water, telephone) and salaries, which we commonly consider as 'overhead'. Variable costs ,which may be direct costs of the service, usually includes laboratory cost, supplies, materials, and equipment depreciation. The ideal formula to  set your fees would be: overhead cost/hour + direct cost of service +value of time or professional fee. 


When starting a practice, knowing your overhead cost will allow you to estimate how much reserve fund you would need to cover for the first few months of operation when your practice is still picking up. 


One common mistake in managing finances is when dentists treat their clinic income as their own personal fund. With this mindset, it would be easy to forget that we still have bills to pay, aside from the usual overhead expenses like laboratory and materials, and prioritize our personal 'wants'. It would be a good idea then to separate your clinic income account from your personal account. That way, all your income gets to be accounted for. You can then  issue yourself a 'salary' according to your needs and a 'bonus' when all the bills in the clinic has been paid for. 


If you have a lot of personal needs and wants, then set higher financial goals and back it up with hard work. Or else, live within your means.

Operations
In a single or small practice, operations simply means how we things in the clinic: when do we open/close; how do we handle walk-ins/ appointments; how do we sterilize/prepare our instruments; how do order materials/ manage inventory; how do we bill our patients; how do we schedule/ remind/recall our patients; what tasks do we assigned to our secretaries/ dental assistants. In other words, having a system in place, written or otherwise.

In bigger practices, this system should be in a form of written processes, flow charts, work instructions and procedures to guide our associates, staff and ourselves, as well. This creates more accountability  in our practice.


Being mindful of how we do things or having a system, gives our practice a sense of consistency and predictability which would inspire and  instill patient confidence in us.


Marketing
Aside from being considered unethical, It is not necessary to do external marketing ( print and broadcast media) to promote our practices. As they say, the best advertising is by word of mouth. This can be enhanced by the 'internal' marketing that we can do inside our clinics. 

Facility. A clean, orderly and relaxing atmosphere in the reception and the whole clinic in general, creates a good first impression of our practice.

Staff.  The receptionist/ secretary is the first to come in contact with the patient. A friendly and attentive receptionist would make a lot of difference in convincing a potential patient, whether walk-in or phone inquiry, to make an appointment. It's therefore important for us to choose our staff well and assign them tasks which would suit their personality and/or training. 

One of the 'episodes' that we should not take for granted is the first dental appointment. The challenge is convincing the first time patient to come back for their other dental needs. This is called 'patient conversion'. Your patient conversion rate is the number of returning patients over the number of first-time patients with additional dental needs multiplied by 100. Ideally, it should be 70% and above.

Recall. Having a recall system not only gives your practice a steady income in 'lean months', but also gives it a sense of reliability. So, even if they do not come after being reminded, it puts your practice on top of their mind whenever they would have dental needs or if asked for a referral by family or friends.

After all, the best advertisement is a satisfied and happy patient.

Dr David Alesna