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How’s Your (Financial) Health? by Jay Geier

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Categories: Financial Planning and Investments; Practice Management, HR and Accounting;
Dentaltown Magazine 

Ongoing assessments can help doctors stay on track and achieve their financial goals—and more

by Jay Geier

Assuming you’re a healthy person, an annual checkup with your doctor may be sufficient to maintain your health. But when it comes to the financial health of your practice, a checkup once a year is not enough. Even if you don’t feel like your financial health is slipping, there is no time like the present to assess how things are going. This assessment gives you time to make the necessary adjustments to ensure you’re on the right path to achieve your 2021 financial goals in the next few months.

If you had a great year but don’t realize it until the year’s over, you blew the opportunity to build on that momentum, end on an even higher level and go into the next year that much stronger. Unfortunately, you robbed yourself and your team of the opportunity to celebrate success along the way. On the other hand, if you aren’t happy with the way the year turned out, the end of the year is too late to do anything about it. Instead of recognizing shortfalls in time to take action to get back on track, you and the team are disappointed about the current year and discouraged as you go into a new year

Goal checkup

Ideally, you set quarterly goals at the beginning of the year for all your key performance metrics—revenue, production, collections, referrals, new patients—and track progress to easily assess where you are, compared with where you want to be, by the end of second quarter.

If you set only annual goals and were pleased to be “halfway there” by summer, don’t assume the remaining six months will mirror the first six. Quarters differ and circumstances change. If you’re not sure where you should be at this point, it’s well worth some thought and simple calculations to come up with fourth-quarter goals based on where you are now. Then, do a better job of tracking progress. Even if you miss your goals, you’ll do better just because you’re paying more attention. You also won’t be surprised at the end of the year.

If you exceeded your midyear goals, congratulations! That means you have unexpected revenue you can put to excellent use to build on your momentum. Assess what worked and reinvest in those efforts to generate an even higher level of return. A few examples:

Was a particular marketing campaign highly successful? For minimal investment, you could send this as-is to a larger audience, or tweak slightly and send to a different target audience

Did team training increase case acceptance? Schedule another training ASAP—this time on delivering a superior patient experience or new-patient generation. Maybe you have it planned for next year, but why wait when you know training more than pays for itself with increased revenue?

Did you add a team member and already see a positive return? Assess the return on investing in another team member sooner than later.

If, however, you fell short of goals, a common mistake by many business owners is to cut expenses without assessing which investments generate a positive return. Such a knee-jerk reaction just exacerbates a negative situation and drives results further down. Instead, reset goals if necessary, recommit to doing what it takes to meet them and take full advantage of the remaining months by investing in low- and no-cost strategies that will improve results quickly.

Invest in your practice

We often remind our clients why it’s necessary to invest in their practices and that some of the best investments they can make require time and energy more than money. Virtually every practice follows a typical financial cycle: When it first opens, profitability is high, but there comes a point at which revenue begins to flatten out. That’s because expenses steadily rise from day one, resulting in shrinking profits over time. Moreover, your patient base will steadily decrease because of attrition, so you must constantly attract new patients to offset the inevitable losses. The trick is to make investments in the practice to put revenue and profits back on the rise before revenue and collections go flat.

Some of the best investments you can make in a practice that generate positive returns are not financial investments at all—or at least not large ones. They mainly involve your time and energy in ways that contribute to the long-term success of the practice. Along the way, they also generate positive ROI in terms of cash flow, profits, referrals, new patients and even staff retention.

We coach our clients on the 14 best investments an orthodontic practice can make. Most of these investments cost little to no money to implement. Here are a few of those 14 best investments, all of which have a guaranteed positive return … and fast.

• For immediate return: Invest in team training.
This doesn’t have to do with job skill, training on software or clinical technique training. Investing in team training transforms a group of individuals into a high-performing team that’s more productive because of better processes and teamwork. They are more service-oriented and more focused on business results and goals. Team training turns your single largest expense into your single largest investment, on which you will earn significant returns in many ways, including on the bottom line. And while training and development should be ongoing over the life of the practice, a single training session, done well, will bring an immediate positive ROI.

• For short-term return: Invest in marketing.
Hire a part-time marketing person or outsource the function to ensure you’re engaging existing patients and attracting new ones. Use newsletters, mailers and events to build relationships, reward loyalty, show appreciation, and generate buzz over contests and giveaways. COVID-19 has forced us to learn new forms of communication we may not have used much in the past, including video messages in emails and websites, podcasts/webcasts and social media. Marketing doesn’t have to be expensive, and you should see the ROI as soon as you execute.

• For a longer-term return: Invest in capacity.
At some point, every practice maxes out the number of patients it can see in the spaces it has. Once that occurs, you’ll see flattening revenue and collections and eroded net income and profitability. You will have two choices: Accept where you are in the financial cycle and know that profits will continue to decline, or invest in capacity. Interest rates on borrowing money are at historic lows, but they won’t stay that way. If you’ve ever given a thought (or even if you haven’t) to expanding your existing office with more treatment rooms, or buying or building another office, the timing has never been better. You won’t see the return in terms of increased new patients and revenue within the next six months, but you should consider the money you’ll be saving in interest over the life of the loan as a form of substantial ROI achieved this year.

Conclusion

We all know the adage: “Insanity is repeating the same mistakes over and over and expecting different results.” Change the trajectory of where you’re headed by investing in ways that will give you a different result and a positive return. Whether the investment cost is in time, energy or money, it’s never too much if what you get back is more than you have to put in. In other words, “I can’t afford it” is never a valid excuse for not making a profitable investment in your business. 
More free guidance available online

To request a copy of Jay Geier’s 14 Best Investments for Dentists guide, which comes with a complimentary analysis of your practice, click here.


Author Bio
Author Jay Geier is a world authority on growing independent practices He is the founder and CEO of The Scheduling Institute, a firm that specializes in training and development, and coaching doctors on how to transform their private practices into thriving businesses they can keep for a lifetime of revenue or sell for maximum dollar. To subscribe to Geier’s Private Practice Playbook podcast, go to podcastfordoctors.com/townie.
 

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