Change your service mix

Dr Smith had a problem. He wanted to increase profitability but wasn’t sure how he could. His schedule was booked two weeks out and he had a good flow of new patients. His overhead numbers were good and he had a long-term, loyal staff in place.

His practice was healthy although very busy and stressed. The stress was getting to Dr Smith as well – when he looked at the numbers, he wasn’t seeing the kind of income he felt he should be seeing. He was entering his late 40s, with two children off to university and a new summer house in the country to pay for. Now, more than ever, Dr Smith needed to see his practice grow. . .

This dentist’s dilemma is a typical one. Many like Dr Smith struggle to grow their practices. ‘Why can’t my practice do better?’ is the common cry. What is the obstacle to growth? Like many of his colleagues, Dr Smith performs too many single-tooth procedures; in fact, these procedures constitute nearly 90% of his schedule. This high-production, low-profit combination is a recipe for a stressed environment and a practice that is clearly underperforming. Only by expanding his service mix can Dr Smith hope to realise the kind of production he desires.

Expanding the service mix

Many practices group procedures arbitrarily rather than according to services offered. Once this highly inefficient method becomes the norm, it is extremely difficult to change. From that point on, the practice is on a treadmill that never stops, much like Dr Smith’s office.

One suggestion is to stop the treadmill temporarily and consider redesigning the service mix that is offered to patients. A high-volume practice has the best opportunity to change the service mix, because volume allows a practice to reorient itself towards many different elective services, including cosmetic and implant restorative dentistry.

I would suggest that practices begin to develop models with the ideal service mix they would like to provide patients. For example, any practice could develop a model where 50% of the dentistry is in basic services, and 50% is in higher-level procedures. The higher-level procedures can include comprehensive and elective dentistry. We can further break down the model by recommending that at least 20-22% of practice revenue be in elective services.

The future of dentistry for successful practices will include increasing the number of elective services. For example, practices that increase the amount of cosmetic or implant restorative dentistry offered would find that they have higher profit margins with lower volume than practices that are maintaining a high volume with or without dental insurance factors.

The future of dentistry must include a significant level of elective care in each practice. The higher the levels of elective care, the higher the profitability. It is also important from a practice protection standpoint. Should there be declines in dental insurance reimbursements, the elective side of the practice will maintain high levels of

profitability. Practices that do not have a reasonable amount of elective dentistry may experience a decline in overall production as changes take place in the profession.

Conclusion

Every practice, including Dr Smith’s, should analyse a model concerning the service mix. The mix represents one of the best methodologies to increase practice production while making dentistry productive, profitable and enjoyable.

Cosmetic dentistry, for example, represents one of the strongest elective services that will experience a natural growth in the future.

All practices should take advantage of this trend. The key factors are to identify the right service mix for your particular practice and to begin presenting cases and schedule to make it a reality.

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