Dental Practice Production…the Ego Number

As an analyst here at The Schuster Center, I speak with many dentists every week. The very first thing we discuss is where the dental practice is currently, relative to the goals they want to achieve. During this first conversation, the number one most common goal I hear is that they want to increase their production. Why wouldn’t they… right? If I am a $750,000 dental practice and I take home $225,000 per year (30%), doesn’t it stand to reason that if I increase the practice production to $1,000,000 practice I will be taking home $300,000 per year? Interestingly enough, the usual answer is “NO”.

In 99% of these conversations the standard answer is, “I have grown my practice production from $750,000 to $1,000,000 but I am still taking home $225,000.” If that isn’t frustrating enough, they go on to explain that in order to get production to $1,000,000 they are working much harder. So the bottom line is they are working harder, have less time and energy, for the same money. This certainly is not the business model they set out to achieve.

Don’t misunderstand me, in business we have to produce in order to grow. However, once your time and energy becomes overly focused on production, it becomes easy to lose control of other aspects of the business. How much time and energy is left for developing organization? How much time and energy is left for building trusting relationships with the patients? How much time and energy is left for building relationships with our families? It is easy to become focused on the production number. After all it is the ego number. It feels good to say we produced 1.5 million in 2008. It feels good to say we increased production 20% from the previous year. But what good is that moment of feeling good if we are not sleeping well at night.

The real number to look at is net profit. Practice profitability is what generates growth. Profitability is what generates wealth. If dentist “A” produced $700,000 and had a 52% overhead, he/she would be $116,000 more profitable than dentist “B” who produced $1,000,000 and had a 78% overhead. Who do think feels better about their effort at the end of the day? Who would have more time and more energy? Net Profit is the wealth number. Net Profit is the growth number. Focus on increasing net profit. You will sleep much better at night.

Contact me about quality dental practice management at www.schustercenter.com or 1-800-288-9393. Or email me at grant@cfpd.com.