Berning & Affiliates

A Focus On Economics Without A Strategy Is Likely To Fail

I’ve been preparing this week for my presentation at the Greater Philadelphia Society Of Orthodontists Annual meeting. The meeting has the theme "The Economics of Orthodontics in Today’s Financial Climate". In my view this is an important and especially pertinent area at this time. As if to emphasize the timely nature of the meeting, in the course of the last few days I have had consultations with several doctors worried about their practice starts and drop in practice collected gross. Most of the inquiries have focused on what quick fix there may be available to stem the tide. The answer, as I’ll be sharing at the meeting in Philadelphia, is that quick fixes are just that, a fix that is likely to be temporary. There are some "fixes" we suggest, of course, but it is far better to use any available time to revisit the practice vision (which may require changing given our economy) and even more importantly the underlying strategy the practice is using to gain practice growth or at least hold even. My presentation "What’s Your Strategy, Doctor?" will emphasize that without a strategy to guide using practice resources carefully and to provide benchmarks for performance all that is left is flailing around grasping at straws. I intend to provide group of resource materials for the attendees as a helpful start in ensuring they develop a clear strategy.

"To A Degree"

In a recent discussion with a specialist who had just opened a new practice location, I asked if he had studied pertinent demographic information prior to choosing the location. His answer was, "To a degree". I found this a surprising answer given the nearly $500,000 spent to open the practice in leased space. He said that he had been in the area for 5 years prior to opening the practice and so he knew about the location. Of course now a great deal was dependent on attracting patients and making the practice viable. We talked about his marketing challenges and lack of patients and, given his limited study of demographics, his answers were lacking in detailed prospective resident and business information. In my view, it is critical to secure detailed area specific demographics when considering any practice related initiative. Just a cursory look or thinking that as a doctor CEO in a local area for a number of years means that you know everything about the area can be costly and just plain wrong. Whether for a new practice or established practices, ordering a demographics study for your practice patient drawing area is a prudent step prior to any transition, marketing or expansion initiative. See how at:  http://www.berningaffiliates.com/demographics.htm

Doctor CEO's Net Is What You Want!

Recently I discussed with our practice valuation firms their perspective on current practices. Here's what one said. "I see practices with lots of patients, great facilitates, major marketing efforts but outrageous overhead and little profit." Wow! What an indictment! If you have a practice with lots of patients, big payments for facilitates, equipment, staff and marketing but i.e., big overhead and little profit, STOP. It is time for a review. Consider our Doctor CEO day examination and review to re-calibrate your practice and achieve more net!

Creating Value: The Excellence Standard

Every month I examine a lot of practices and digest their performance numbers, new patients/starts, collections to production ratio, fixed and variable expense ranges and much more. We perform practice valuations that provides yet a further drilling down on the performance of practices. But in some practices there is a significant element that only comes to attention when the history of the practice from years in the past right up to the current moment is understood. Namely, some consistent performing practices are consistent precisely because of the attention they have devoted to every facet of the patient care experience. Patients appreciate and respond to the attention, staff has a higher expectation of their own performance and the doctors are on a quest to ensure that they have the environment that augments their skill and caring. The sum total of the practice says excellence and that creates its own forward momentum and, I find, in turn creates the exceptional value practice.

Execution With A Financial Diet

Had an interesting doctor coaching session recently. The doctor has developed a detailed and well paced practice plan based on a vision that his team has embraced. Now she is very desirous of making the plan happen as fast as possible. The problem is that fast, in this case, equals a lot of money! The reason is that the facility and equipment components, which could be spaced out over the planning period, are sought to be done all at once at the beginning of the implementation phase. We talked extensively about financial management and cost and use of financial resources, including credit. I think this doctor CEO has the disease that many doctors from time to time suffer from, "want - it - now - itis". This is not necessarily bad, except when the numbers are very large and the impact significant. My suggestion: be alert to timing the investment dollars and make sure that the focus of the CEO is not just on achieving a given facility or other accomplishment but doing it in a way that preserves financial integrity.

Profit Opportunity

I don't know if you have been reading and picking up in the general business press the amount of attention being given to 'profit opportunities'. A lot of companies are very concerned at this time about maintaining or achieving record profit and earnings for their equity holders. Health care practices, of course, have profit opportunities too and most doctor CEO's want to maintain and grow net. New materials, expertise developed by a doctor or practice and in some cases whole new approaches to care provide examples of the opportunities in health care. But this is also where health care practices and general business part company - or should. In health care it is the duty to the patient "to do no harm" that must first be the guideline that rules providing care. Although there is the possibility to treat similar patients in the same way, like what some industries provide in a product based environment, this is generally not acceptable for most service based health care practices and practitioners. As the doctor CEO, my view is that you should welcome having your practice guided in all care delivery instances by what is best for the patient. Profit opportunities examined in the context of what is best for your patients will shield you from misguided practice development.

Calling All Oral Surgeons New CE Course

Are you interested in advancing your practice growth and development? It all starts with stating your practice strategy. A well developed strategy is built on the dynamic of your practice, your referral sources and your patient population. Now you can learn and understand the development and then application of strategy to your practice. The American Association of Oral and Maxillofacial Surgeons is offering my course "The OMS as CEO", Saturday, April 21, 2007 in Chicago. To learn more and see the course brochure, click here. Http://www.aaoms.org/docs/events/oms_as_ceo.pdf See you there!

CEO Dreams Do Come True!

It is always wonderful to hear of doctors really getting all they want from practice and from their life. Here is an excerpt from a recent email I received.

Hello Randy,

Nice to hear from you!! All is well. I bought a large practice in June of 2006. 100% boutique
financing, and I'm making significantly more money in dentistry than I had at any time previously in 10
years!! I do owe a good deal of thanks to you and your lecture at Wired For Success... when you spoke of "The instant doctor". You're lecture inspired me to make a wonderful choice for me and my family. So, I've only been at the practice for 7 months but still managed to increase production over the year by an additional 500,000 dollars, than was projected previously by the old doc and his team. My monthly production averaged 110,000-120,000 before I came and now it is about 180,000 (per month)! I can't tell you how exciting this is! Imagine... I came from nowhere... 1000 miles away - doing medicaid dentistry in Pittsburgh ... I have no special abilities or techniques... I do just plain general preventative
dentistry. This is a dream for me! And every staff member stayed! -And I love em all! The funny thing
is.... there was nobody in line for the practice. (Except for the usual management companies) I did
however locate it, pretty close to the instant that it went on the market... I do confess that I had started
my search as you suggested 1 1/2 years before the practice actually closed. Since June of 2006...
dentistry has realized for me every promise I could have ever imagined. Man I'm lovin' life... and
FLORIDA! Thank you for your help. Now my wife is just beginning her search... but she is ortho and we are tied now to a specific area... but I'm sure something will surface!

Randy, Have a wonderful new year. And thanks again for being a friend and pointing me in the right
direction!

Sincerely,
Joe Shrager

Beware Worthless Growth

Too many doctor CEO's think that the big emphasis in the practice should be placed on growing gross collections year after year. One doctor in a midsized specialty practice just told me in a a Tackle It Consultation that is her sole measure of quarterly success. In fact is fine to have that as one emphasis area but far more compelling is to oversee the growth of both top line (gross collections) and bottom line (real adjusted net). If those two grow in tandem over a fiscal year with a recognition that even with less than desired top line growth the profitability of the practice can be excellent with attention to careful attention to growing net.

CEO's Watch Patient Financial Arrangements

A recent news story related that although consumer bankruptcy filings are at a historic low, they are rising, according to data released Tuesday by Lundquist Consulting Inc., a financial research firm based in Burlingame, Calif. Every region of the country is affected. This comes one year after the US Bankruptcy Code was overhauled to make personal bankruptcy harder. Any doctor CEO needs to be alert to this information and pay attention to the credit picture of patients that are part of the practice. From NBC5.com http://www.nbc5.com/money/10150773/detail.html