Opportunity, opportunity, opportunity everywhere!
In June this year, leading dental market analysts forecast a 21% increase in the size of the private dentistry sector (in real terms) and a 12% increase in the size of the NHS dentistry sector (in real terms) by 2014 (Source, MBD June 2010.) This increased demand for dentistry will occur across the whole range of dental services but will be most keenly felt by the practices who are able to offer look good feel good services such as:
- Cosmetic Dentistry
- Affordable Family Dentistry
- High Street retail style Dentistry
- Boutique, Business Class Style Dentistry
- Specialist Dentistry (Implants, Orthodontics etc).
At present, the delivery of these services is provided, extremely well by a few clever entrepreneurial practice owners and is (mostly) provided poorly by the remaining practice owners, who are simply taking advantage of increasing demand by clients who are (for the time-being) naive about these services. Relatively few practices are actively positioning themselves to take advantage of the coming increase in demand.
The Problem
At a practice level, the success of the business end of dentistry is almost completely dependent on the sales performance of individual clinicians (as many of the practice costs are fixed), meaning that a small improvement in sales by every clinician creates a significant improvement in practice profitability.
Some Hygienists and all Associates:
- Are self employed and so therefore feel that,
- They can make all decisions autonomously.
- Are reluctant to show up for meetings in ‘their clinical time’, and therefore,
- Can be difficult to manage.
In the absence of strong leadership and good management, will do what suits them first, (particularly within the realm of how much they generate in gross fees), thus satisfying their own needs first, rather than those of the practice.
(Most) are not trained in how to sell dentistry and so tend to prescribe single unit, low value dentistry.
Think that ‘selling’ is something they shouldn’t have to get involved with.
For example; If the Associate is paid on a 45% contract then an Associate dentist who grosses £1000/day will earn approximately £405/day after the lab bills have been shared equally between the Practice and the Associate. £405/day, 5 days a week, 46 weeks a year creates a salary of £93,150/Year. This is more than the average dentist earns in the UK. (Figures, based on dentist’s own tax returns, reveal that the average income for all dentists in 2009 was £89,062 before tax. Source; The Guardian.)
The contribution to the practice from the £1000/day dentist is £595.
Laboratory costs, Materials costs and Practice fixed costs account for all but between £10-£100 of the original £1000. A margin of 1-10%
Proven Strategies
To take advantage of these coming opportunities, it is critical to to have your Associates empowered, motivated and incentivized!
1. Empowering Them:
It is often of considerable value to give your Associates a sense of ‘belonging’ together with the ability to make a difference to the practice and for the practice team, by taking on responsibilities in addition to simply doing the dentistry! As to what responsibilities they might be encouraged to take on, generally,
Associates don’t want to:
- Run/Manage the practice.
- Know/Report/Concern themselves with the numbers.
- Manage their support team.
Associates might want to:
- Be involved in creating the big picture for the practice future.
- Lead their own support team.
- Improve their clinical skills with postgraduate courses.
- Be involved with practice investment decisions.
Associates will almost certainly have a view on:
- Marketing.
- The practice patient experience.
- How patients should be treated.
Giving them some responsibilities for some/all of these activities could well help them take responsibility for increasing the success of the practice.
2. Motivating and Incentivizing:
In the days of fee per item NHS Dentistry, the NHS executive quickly discovered that they could readily influence how dentists prescribed by changing the NHS fee structure. If they increased the fee for an item of treatment then dentists prescribed it more readily and vice versa. Therefore, using money to drive the behaviour of clinicians already has a successful track record!
Sliding Scales. Paying Associates at a variable percentage rate as they increase the value of their gross is known as a ‘sliding scale’ and this system of payment has been used to pay associates for more than 30 years. However, sliding scales are not used by many practice owners (and they are generally disliked by associates who prefer to be paid a fixed percentage of their gross fees). Commonly, sliding scales start at around 35% and finish at 55% of gross fees. Some more extreme examples exist, including the Breathe Model of a 30%/70% sliding scale with a break point at around £1000/day. (That is, for the first £1000 in gross fees per day the clinician receives 30%, for all monies grossed and over £1000, 70% of the fees are paid to the Associate.)
A slightly different and possibly more acceptable (to the associates) version of a sliding scale, is to offer a clinician a fixed percentage (say 45% of their gross fees) unless they reach a target gross figure (of say £20,000/month) and then if they exceed this target (say £21,000) they receive 46% of all fees grossed. This encourages them to go beyond a target.
Targets. Targets that are known to the whole practice team and rewards the whole team for going beyond such targets, are far more effective than targets that are just known to the principal and the associate.
Implementing a change
It is essential to the success of any scheme to empower, motivate and incentivize Associates that the method, messenger and style of any communication concerning changes to their responsibilities or remuneration is carefully considered. Associates are generally not entrepreneurial by nature and they prefer a safe option to taking a risk. Therefore, it will be important to be able to manage their response to any proposed changes to their contracts and for the ‘messenger’ to be available to quickly demonstrate exactly what’s in it for the Associate!
In summary
In a dental practice, the clinicians control the quantity and quality of the sales made in every surgery. Leaving the clinicians to ‘do their own thing’ can work well if what they do is profitable for them and for the practice. Empowering, motivating and incentivizing Associates will create an increase in sales which will benefit their remuneration and the practice’s profits.
If you would like to know more about how Breathe Business can help you improve your sales, your turnover (and profitability), then please contact Ernie on 0845 299 7209 or ernie@nowbreathe.co.uk.