Is Your Dental Practice Really A Business, Or Is It Just A Highly Paid Job?

Years ago I had the pleasure of seeing Michael Gerber, the author, speak on stage about his breakthrough philosophy and book titled “The E-Myth”.

Gerber spoke about the E-Myth [short for entrepreneurial myth], and how this title refers to the commonly held, and usually disastrous assumption that a person who excels at the technical and operational aspects of their employment should automatically succeed in running a business based on delivering that same skill and/or service.

Gerber is renowned and world famous for dispelling this misguided myth.

He explains why it is a myth… and that is because to become a successful business owner, not only is this person needing to still perform as a highly skilled technician, doing what they used to do when they had a job, they are also needing to be an effective business manager [who can excel at systemising the business’s profitable processes] and also somehow be an entrepreneur [who has a clearly focused vision for the business’s future].

Ultimately, Gerber says, all businesses created should be able to operate independently of the “doing” actions and efforts of the owner.

Sadly for most small businesses, the owner is most often the ONE KEY PERSON who knows everything and does most things, so much so that when that one key person is absent from the business, the business’s functionality grinds to a shuddering halt, and the business’s profits evaporate.

In a dental practice…

In a dental practice, what usually happens is that the principal dentist [i.e. owner] usually performs a significant part of the dental production of the dental practice.

And so it goes without saying, that when the principal dentist is away from the practice, and not doing dentistry, the dental production the practice needs to continue operating and paying its mandatory bills disappears into thin air. [These mandatory bills include rent, salaries, utilities, and insurances, amongst others…]

Only a small percentage of dental practices are run as true businesses, where there are sufficient [employed] dental providers doing enough dentistry on patients to pay the expenses of the dental practice and return an operating EBITDA or profit to satisfy the shareholders who own the dental practice.

A healthy EBITDA for a dental practice to show is around twenty percent.

What should happen when a principal dentist takes any sort of leave from the practice is that the remaining employed dentists can perform in such a way that the dental practice production continues at its same levels and therefore the EBITDA of the practice also does not change.

Sadly, what we do see in most dental practices is that when the principal dentist takes leave, even if there are associate [employed] dentists in the practice, for some reason the production of those associates diminishes, as if the whole dental practice just gets “stuck in second gear”.

When in reality, the amount of dentistry needing to be done on the practice patients should be maintained by the employed dentists continuing at their production rates, as well as locum dentists and employed dentists doing dentistry on the days that the principal dentist is not present.

Sadly, the reality fails to materialise…

For the contracting dentist on a facilities and service arrangement…

It’s very difficult and almost totally impossible to say that a contracting dentist engaged by a dental practice on a facilities and service arrangement is running a business as defined by the Gerber definition of a business.

The harsh reality is simply that nearly all contracting dentists are exchanging labour and time for a percentage of production [payment] from one or less than a handful of locations, and they don’t have a business plan or a business vision for their imaginary business.

The interesting thing is that 95% of [imaginary] businesses out there that rely on a key man don’t even have a written down business plan, with goals, and dates.

I take my hat off…

I take my hat off to dental practice owners who have removed themselves sufficiently from their practices such that their practices do run as true businesses, and not as examples of this imaginary entrepreneurial myth.

Which category of business does your dental practice fall under?

Real business?

Or imaginary?


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