In a recent news report, the headline proclaimed, "The economy's biggest mystery: Paychecks just aren't growing." It doesn't take much for anyone who provides a service for a living to agree with that statement. Unless you're employed within some state-supported venture like government or public safety, where job security and pensions can be based on taxation or the printing of money, this statement rings true. How is it that this happened? What is one to do? And, what is the future?
My last column generated many comments—or as one of the categories in the message boards is so aptly named, "bitching and moaning."
Some clarification to explain some of the statements I made: In addition to attempting to stimulate discussion, I wished to alert the readership that the "person" in the practice and the "business" in the practice are two distinct entities. In the past, practices ran by having the doctor provide a service, charge a fee, pay overhead and then keep what was left over. Many kept a lot; some, not so much.
Successful practitioners were often those able to charge higher fees and manage overhead. Corporate entities reduced the perceived value of services, and providers employed by them are paid what the market will bear.
The large debt required for one to become a provider has changed the mentality of the provider, as well as business models, so salaried positions are created to allow these providers to earn a living and, hopefully, also reduce loan debt. Investing in one's self was often the reason to justify the large debt burden. Is one's self the same entity as it used to be?
Those salaries, in my estimation, are what orthodontists and dentists are "worth" in today's marketplace. Anything above that becomes the reward for business acumen or creativity that involves the use of leverage, imagination or some creative enterprise that will allow you to break free from the restraint of debt and loan payments.
This is all explained by the concept of human capital. Yes, it is becoming less valuable unless you employ one of the attributes just mentioned.
Just look around and reflect on history.
- During the 1950s, Ward and June Cleaver were pretty much capable of surviving
without a working spouse, and the house payment, if any, was manageable.
The 1960s brought the expansion of entitlements and women's rights, leading many women into the workforce. Yet, for many families, the standard of living didn't double.
The 1970s brought the repeal of the gold standard to help pay for entitlements and keep the federal budget's ever-increasing number solvent.
During the 1980s, the Rust Belt formed as the result of manufacturing being lost overseas to cheaper labor.
The 1990s continued offshoring of manufacturing while large trade deficits formed, placing more downward pressure on our dollar.
The new century brought a number of financial crises all solved with printing of more money, reducing the value of same.
Meanwhile, wages and benefits outside of the public sector continued to decrease because of an influx of cheap domestic labor. It's a giant confidence game, with everyone depending on one another to keep it all moving, with central banks printing large quantities of money. I didn't make the rules!
Many years ago, Bill Gates' comment about the progress of technology and society's need to provide incentives for the billions of potential workers is beginning to play out. One of the most inspiring figures that I have met and enjoyed listening to is Michael Gerber, who writes many of the e-Myth books and is credited with growing small businesses and teaching business owners that the business or practice is more than just the owner.
Gerber suggests employing techniques to change the world (or at least the business or profession you're in):
Transform by creating: A different vision for the specialty of orthodontics, much like Steve Jobs creating an ecosystem around Apple products—not being better, but different.
Become scalable: Create systems for performance and training, and embrace franchising and multiple owners of the system.
Use leverage: The above policies can be maximized with multiple offices, multiple doctors and proper delegation.
Almost always, expanding the patient pool or demographic base is essential to allowing the product or service to reach more persons through three key areas: mechanics, management and marketing.
Mechanics have been improved with the use of:
- Instantaneous viewing of X-rays and photographs.
Same-day treatment planning that starts with no lack of diagnostic or treatment quality.
Scanning with built-in treatment simulation adding in the ability to visualize outcomes and communicate to patients the expected result.
Indirect bonding for better bracket and appliance placement requiring fewer bonding changes and simulated outcomes.
New designs for appliance systems including either aligners or conventional brackets allowing for shorter treatment times.
Advances in diagnostic procedures and treatment modalities focusing on airway and muscular function and how it improves overall patient well-being.
Management techniques from the business community include:
- Staffing with the aid of personality testing and HR screening and team building.
Business planning using the demographic studies and techniques utilized by large and small corporations.
Marketing can go beyond the local neighborhood with the advent of social marketing techniques:
- Web presence with blogs and integrated social media.
SEO and analytics to track the efficacy of marketing.
Using modern phone call techniques to monitor and improve service and answer questions for patients.
In the orthodontic field, products and services are available to assist in the transition to change the world (or profession) and are regularly featured in Orthotown magazine.
As orthodontists young and old are recognizing the changing value of human capital, it is important to utilize other forms of capital to increase the value of one's self.
We at Orthotown are positioned to inform you and assist you throughout the year with articles written and composed by the best and the brightest in the field who have expanded on their human capital to grow their practice and personal wealth.