You will find when you study history that there are lessons to be learned.
You see, history repeats itself.
Behaviours tend not to be isolated instances, but rather, they recur regularly and repeatedly.
And history therefore has its lessons to be learned from.
Tomorrow, Saturday, in Melbourne Australia, at the Australian Dental Association Congress they will be conducting a members’ forum panel discussion, kicking off with the topic entitled “Being a ‘preferred provider’ is good for business”.
I’m assuming that this discussion, on a topic that is not new, is to evaluate whether or not it is financially viable for dentists in private practice to have a commercial relationship with dental insurance companies.
In its simplest form, that relationship would be that the insurance company would offer to direct its members to a dentist who has an agreement with them.
In so doing, the insurance company would expect to contract an arrangement whereby they [the insurance company] would pay the dentist only a certain fee [guaranteed] for the services that the dentist provides to those referred patients.
This agreed upon fee is usually lower than the fee that the dentist regularly charges his “general” patients.
The rationale presented to the dentist in this scenario by the insurance company is that the insurance company will provide the dentist with a source of new patients for his practice, and these patients will “fill the spaces” in the appointment schedule that the dentist has in his day where he is doing nothing and therefore earning nothing.
And that seems to be the logic. That working for a lower fee is better than not working and receiving zero fee.
What this scenario does not take into account is the term “profit”.
A dental office is a business that needs to make a profit for its owners so that the owners can continue being in business.
An arrangement that puts pressure on profit margins then exerts unnecessary pressures upon the business owners.
Would you work for nothing or next to nothing?
What I’ve found during my time as a dentist and a dental coach is that more dentists than not do not have a handle on their numbers.
Most dentists run on the belief that if there are gross collections coming in then at the end of the day, at the end of the week, at the end of the year there has got to be some net profit around somewhere.
And all that is is hope.
And hope is not a good business strategy.
Here are a couple of lessons that I learned along the way to running and then selling an independent non-contracted dental practice in a working class area of Western Sydney where my valued patients came and were happy to pay significantly higher fees for their dentistry than my neighbours were charging.
Lesson #1: The Seniors Card
Years ago I joined up with the Seniors Card programme when it first started. It seemed like a good idea at the time.
I was told by the programme that my dental office would appear in a booklet circulated to the over-sixties, and that this booklet would result in an increase in new patients to me who would all find me in that booklet.
This made good sense to me.
After all, in those days, my schedule had spaces and so I had capacity for new patients.
Here’s what happened:
All that happened was that all of my existing patients who were over sixty and who were happy coming to see me anyway were now seeing my name in the Seniors Card Booklet and were asking now for a concession on the fees that they had previously been happy to pay.
So all that I was seeing was that having my name listed in the Seniors Card booklet resulted in no increase in new patient numbers and rather only resulted in a decrease in patient collections.
And so profit margins took a dive.
As a result, I quickly ceased the arrangement with Seniors Card.
Lesson #2: The Yellow Pages
Back in the day, I was a big advertiser in the Yellow Pages.
This was back in the day when opportunity existed with Yellow Pages advertising.
This was back in the day when the Yellow Pages in Sydney was two very thick volumes released annually and delivered to every household and business in your city.
My full-page advertisements in the Yellow Pages resulted in a significant increase in new patients to my dental practice.
And I monitored these resultant increases in extra production by tracking dollars, patients, and patient retention numbers.
I could tell you in any year how many patients in that year were still coming and still spending as a result of a Yellow Pages enquiry from a year previously gone by.
And because I tracked, I was able to know and anticipate correctly when was the appropriate time to cease advertising in the Yellow Pages because it was simply becoming unprofitable to continue doing so.
You see, history will show, that the effectiveness of the Yellow Pages as a means of attracting new patients began to diminish.
And I am happy to say that I successfully anticipated when that was.
Here’s what happened:
At the time, most dental practices were running on an overhead of about sixty percent, and therefore a profit, before paying the dentist, of about forty percent.
And so Yellow Pages came to me with a bill for $60,000.00 for the following year’s campaign.
The previous year, the revenue generated from Yellow Pages enquiries had dropped again to reach a level of only $150,000.00 for the year.
So I told the Yellow Pages guy that I wasn’t going to be renewing my advertisement.
He thought I was crazy to be turning my back on $150K of income for the year, which amounted to about two months worth of my annual collections.
But you see, I was looking at the net profit.
I was looking that the forty percent profit on $150K collections was equal to the fee of sixty thousand dollars that Yellow Pages wanted me to pay them for the advertisement.
In effect, I would have been working for the whole year for Yellow Pages just to repay their invoice from the profit from the patients that their advertisement was directing to me.
And this made no sense to me.
Why would you do that?
I told the Yellow Pages guy that mentally and emotionally I would be better off closing my doors for two months and taking a vacation rather than working for zero profit just to repay his organisation for this under-producing form of advertisement.
And so that’s what I did.
Lesson #3: There is no gift horse to look in the mouth.
Nobody is going to turn up on your doorstep and hand you a bag of money just because.
That’s fairy tale stuff.
Success follows hard work and research.
You can learn from what others before you have done.
And you can be taught by others who have been successful.
Omer Reed said that ninety five percent of dentists reaching the age of sixty-five are not in a position to retire financially on an income equivalent to what they were working on.
Well, I wasn’t one of the ninety five percent. And I was well short of age sixty-five.
I got there early.
Sure, I made the odd mistake along my way, but I learned that success leaves clues and the best way to be successful in the shortest amount of time is to hire a coach and learn from them.
And that’s what I did….
And that’s what I do now.
Today I teach dentists how to be independently successful.
Dan Kennedy says that if you want to be successful in any business in any location just take a look at what everyone else in the town is doing and just do the opposite.
And most people in town are copying others, most of whom are not successful, and trying to do things without advice or counsel….
My next public speaking presentation showing Dentists how to grow their Dental practices will be in Chicago, USA on Friday 2nd June 2017.
For more information and to secure your seat click this link here.
Have you read my book , How To Build The Dental Practice of Your Dreams [Without Killing Yourself!] In Less Than Sixty Days.
You can order your copy here: Click Link To Order
The Ultimate Patient Experience is a simple to build complete Customer Service system in itself that I developed that allowed me to create an extraordinary dental office in an ordinary Sydney suburb. If you’d like to know more, ask me about my free special report.
Email me at firstname.lastname@example.org
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