Why Be Profitable ?
When I was working at Align Technology, I was surprised at how many dentists and orthodontists shied away (okay, more like recoiled) from conversations about profitability. The topic was so wholly taboo that my clients didn’t even allow themselves to think about being profitable, let alone talk about it out loud.
This made no sense in my mind. For me, profitability was just basic math: i.e., Revenue – Expenses = Total Profit. Given that profitability is one of the most basic principles of business, I couldn’t understand why dentists and orthodontists remained reticent about it.
What was so “wrong” about profitability? Why was there an air of secrecy around the topic in most of my clients’ offices?
It was when I reflected on my M.B.A. program that I finally understood what my clients were feeling. Most of us grow up with the idea that money (like politics or religion) is an off-limits topic—that can be a hard attitude to shake. In fact, if I hadn’t gone to business school, I’d probably consider financial discussions taboo, too.
But I did go to business school, and one of the first things we learned was that we needed to change our conception of profitability. Profitability isn’t wrong. It’s not evil or shameful. It’s not the result of taking advantage of customers. And profitability is never taboo. The reality is, all business owners need to openly discuss money—especially profitability.
The Importance of Profitability in Your Dental Practice
What does all this have to do with dentists and orthodontists?
Simple. As a dentist or orthodontist, you’re in a unique situation: you’re a medical professional, but you’re also tasked with running a business. More than likely, dental school didn’t teach you about business, or how to run a successful practice.
So let’s take a look at a couple of business basics that will help you understand the importance of profitability to your practice. Consider these key facts:
- Profitability is the foundation of any business. In fact, profitability is the basic requirement for a business to exist. (Even non-profit companies need to be profitable in order to stay afloat!) When dentists and orthodontists don’t openly talk about profitability, they’re sidestepping one of the most important discussions about the health of their practice.
- Profitability changes over the life of a business, but it should always be a primary goal. In the early stages of a business, it takes time to become profitable. Later, when things are paid off and the business has grown, profits will likely be higher.
- You need to focus on making your dental practice profitable at every stage of the business.
You already know that the medical care you provide is important–now you need to give profitability that same level of importance.
If you don’t, your practice may not survive.
Sound a little dramatic? It’s not. Think about the seriousness of profitability in your practice:
- How could you take care of your patients if you couldn’t pay the rent on your office?
- How could you pay your team?
- How could you keep up with advancements in the industry if you can’t afford new tools and instruments?
- How would your most loyal patients feel if you had to close your doors because your business wasn’t profitable?
So, while it may be common for dental professionals and orthodontists to shy away from the money discussion, your business requires you to face this issue head-on.
Dental Treatment and Patient Skepticism
Why do so many dentists and orthodontists keep quiet when it comes to profitability, anyway?
It actually runs deeper than our societal rules about openly discussing money and finances.
Part of it is a high amount of patient skepticism. You’re in a health care profession, you’re treating patients, and you’re running a business. Patients pay more out of pocket in dental than many other areas of medical, and on top of that, many things you recommend are preventative and not because they’re in severe pain.
Every day, patients walk in your door expecting you to recommend crazy-expensive treatments they don’t need.
With so much patient mistrust and push-back, many dentists don’t want to get caught thinking about the profitability of their practice: this leads to an imbalance, with too much focus on the medical aspect and not enough on the profitability of the practice.
That said, it’s far worse to have the opposite kind of imbalance, where your drive for profitability overshadows your focus on patient care.
Here’s one quick tip to reconcile the two: simply act with honesty and integrity with each patient. Doing so quickly builds patient trust–and that trust is the cornerstone of your profitability. By acting ethically and professionally, you create loyal patients who will accept your treatment recommendations. What’s more, they’ll also evangelize about you to everyone they know, which brings in more business — and that increases your profitability.
More Profitability Basics for Dentists and Orthodontists
As I said earlier, you went to dental school to become a dentist, but you probably weren’t taught how to run a business.
Not to worry. Check out my list of business basics below.
This will help you better understand profitability, plus give you some tips for increasing the profitability of your dental practice.
Revenue is all the money you collect from your customers.
Expenses are everything you pay to keep the business open.
Profit is what’s left over.
Now, remember my basic math formula above? Revenue – Expenses = Profit. To have a successful practice, you need to increase profitability.
Here are a couple of ideas you can start working on today to increase profitability.
- Raise your revenue
- Evaluate the profitability of each procedure you provide. (Quick hint: clear aligner therapy and implants tend to be the most profitable per hour for general dentists). How can you draw more of these procedures into your practice? Is there any new technology that could help you streamline your procedures?
- Lower your expenses
- The scourge of most dental practices is combating high overhead. It’s a very challenging business to run with all the equipment, materials, and people you need to run a successful dental office. How can you lower your overhead to be more profitable?
That’s just a basic overview, but if you keep the simple principles of profitability at the forefront of your mind, you can make better business decisions for your practice.
There are many other factors that you should discuss with your business manager, such as when to take a short-term loss to make an investment, and which investments will pay off in the long-term.
Just don’t fall into that “profitability = taboo” trap, and remind yourself that staying profitable means you can keep caring for your patients.
How Do You Deal with Profitability in Your Dental Practice?
Are you a dentist or orthodontist who’s reluctant to discuss profitability? Or do you have all sorts of tips and tricks to keep profitability at the forefront of your mind?
We’d love to hear your experiences! Feel free to send us a shout out in the comment boxes below.
Ready to Continue the Discussion? Let’s Talk about the Profitability of Your Practice
If you’re ready to learn more about the profitability of your practice, plus the inside secrets of increasing your profits, reach out to us today.
We can’t wait to work with you!