Many dental practices have seen a surge in patient demand from June last year when dental practices could re-open following Covid lockdown v1.0.
This surge has enabled practice owners to help recover losses sustained from earlier in 2020 and, for many, to re-organise their way of working to meet this new demand.
There are clearly some unanswered questions as to whether these new levels are going to continue or a spike. If a spike, then practices could return to pre-Covid levels of income, but, it could be a new pattern of higher income and profit levels.
For those with one eye on selling their dental practice in the next couple of years the underlying profitability matters. This is what your buyer will be taking over and feeds heavily into the goodwill valuation of your dental practice.
Whilst you cannot control the market, you can control your own practice and ensure your practice is in the best financial shape possible.
Whether you are looking to restore, maintain or grow your gross fees, doing so in a profitable way is the priority. This will ensure you will get the very best goodwill value for your practice.
Here are five key steps to positively impact the goodwill value of your dental practice.
- Pace of work – with new work flows you may not get back to seeing the number of patients in a day that you did pre-Covid. If you typically saw 13 patients a day pre-Covid, this could drop to 9 going forward – a drop of 30%.
If your ability to see patients has been constricted there may be the opportunity to review your opening hours. For example, a practice open Monday to Friday from 9am until 5pm with an hour for lunch, operates for 35 clinical hours in a week. A 30% gain in clinical hours would mean opening for 46 hours a week or opening from 8am until 5pm, introducing a rota to stay open through the lunch hour and opening on a Saturday morning from 9am to 11am would be 47 clinical hours a week.
By flexing your opening hours, you can mitigate the pace of work issue. I appreciate this will mean longer hours, but an option to mitigate the new way of working.
- Engage your team – you are not going to build a sustainable recovery alone.
Your new patient experience must quickly become part of the new daily work pattern. Now could be a good time to re-state your practice vision and goals. Outstanding teams have excellent leaders and now is a good time to bring everyone back together with that common purpose. Regular team meetings will play a big part is achieving this.
- Productivity – this is planning what you will do in each day.
Going forward there are financial gains to be had by being much more structured in your approach to diary management. Scheduling patient appointments so that surgery time can be maximised will improve your profitability. Treatment scheduling, triaging patients prior to appointments to minimise downtime in the practice and accepting online payments will all positively impact on the total practice productivity over the day.
- Pricing – I appreciate this is a delicate subject given all that has gone on. However, it is an economic reality that increasing prices will boost profitability. I encourage prices to be reviewed, every year, and some slight adjustments made to treatment prices. It is not unusual for the fee guide to be left for five years or more without review.
Delivery costs spiked in 2020 and early 2021 due to the increased requirement for PPE and other related costs. To preserve your profits these additional costs need to be covered out somehow.
Part of the consideration will be when you last increased prices and identifying treatments that are not so price sensitive. For example, the price of a routine examination or hygiene appointment will be more sensitive to change than less routine treatments such as a crown.
- Boost your marketing – recruiting new patients will add revenue and (assuming you run a profitable practice) will add to the bottom-line profit. I appreciate that marketing is a cost, but flip this and call it an investment. If you don’t invest in your marketing (social media, video marketing, local community initiatives) then you won’t be visible to new and existing patients. By focussing on these five elements of your practice you can seize control of your environment. This will ensure you add to your profits.