When big is too big


Jonathan’s fascinating article on the possibilities of a “micro-practice” this week got me thinking about the perfect size for a dental practice.

As you know, practices come in many shapes and sizes and their profits vary as much as their treatment plans. For me, small isn’t beautiful and neither is the bigger the better. At one time, I owned a one-surgery practice and having just one room to earn fees made it hard to get past my overhead and I had very little profit to spend on developing my practice. I quickly moved to a two surgery model which delivered plenty of profits and enough surplus to make my life easier (such as book-keeping, business manager, marketing etc).
And I’ve worked with many large practices (four surgeries or more), the biggest to date is a 12 surgery site in London. Paradoxically, many large practices find that although they have plenty of turnover, profits are hard to generate because of the complexity and the cost of running a much bigger practice.
(I should point out at this juncture that I have worked with practices that buck these generalisations, however they are a minority in my experience.)
So, I believe that with a dental practice you can also achieve a simplicity beyond a micro-practice or big-practice complexity that looks something like this:
A private practice with three surgeries, on a site in the right part of town with plenty of easy parking, and open beyond office hours.
2,000-3,000 general dentistry patients with some provision of high-fee services such as implants and adult ortho. Good solid marketing delivering enough new patients to replace the leavers (probably around 10-15 per cent a year) and a retail-type environment (not domestic or office) which is clearly modern and medical in style.
This type and size of practice, in the right urban environment, should be able to fill each surgery for 50 hours a week, (6 x 8.5 hour days or 5 x 10 hour days) with around 10 per cent of down-time. This will create gross fees of around £180/hour in two surgeries and £100/hour in the third surgery for 46 weeks a year. That’s 828k for the two surgeries and 230k for the third; £1.058m at 90 per cent occupancy = £952k gross/year.
The costs should look something like this:
Clinicians at 45% after lab bills at 10% = £385k
Lab and materials, 17% = £162k
Overhead at £50/surgery/hour = £345k
Total costs = £892k
Profits = £60k
If the principal takes a seat in one of the two higher grossing surgeries and pays himself as an associate, he would receive £167k for going to work plus the super profit of £60k = £227k (admittedly for a 50 hour week).
Clearly, the numbers stack up in this size of practice. One of the most important numbers is the overhead cost of opening a surgery per day. In my example above, it’s running at £500/surgery/day. In a one surgery model, it can be almost twice this. In larger practices this figure seems to creep up mainly due to the staffing costs (around 20 per cent of the gross fees) and also the costs to buy/rent and run a bigger building.
But it’s not just the numbers is it? Dentistry is a challenging occupation and having your own business is difficult and demanding. A practice of the size I describe allows the owner to be a dentist, be a practice owner and have time for the rest of his/her life. Whereas in my experience, anything bigger (or smaller) tends to demand a much bigger chunk of your life.
That’s a price many of us have stopped wanting to pay!
If you like the sound of this scale and you would like some help in adapting your practice quickly, contact me for an initial chat:
m. 07770 430576
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