Michael Abernathy, D.D.S.

Living above your means puts you on a fast track to financial ruin.

Regardless of your age, money mistakes can sneak up on you. 

Statistically, only 5 to 6 percent of dentists ever become financially independent. Starting late, being inconsistent, and spending more than you save will move you into the 95 percent of dentists who at 65 will be dead or dead broke.

You may not realize how much of an effect these mistakes can have on your finances until you’ve already lost a pile of money. Take note of these common mistakes and don’t make the same mistakes of dentists that have come before you. I have the opportunity to research dentists of all ages. In this process, I keep seeing mistakes that even the best dentists continue making.

Here are the top six mistakes that will cost you thousands.

. Well thought out financial goals, along with a consistent execution for them, is the only way to ensure financial security and a stress-free retirement. Where do you want to be in 10 years, financially speaking?  If you don’t have a goal, you’ll have a hard time coming up with a successful plan. If you set reasonable financial goals, and have a plan to meet them, you can accomplish amazing things. Always begin with the end in mind.  Ask yourself these two questions:  How much is enough, and how long do I want to take to accomplish it?

Not saving at least 20 percent of your income

. Setting aside a reasonable chunk of your income on a regular basis can reap huge rewards for you. This strategy has to begin in the first year out of school. After paying your debt each month, save 20 percent of what is left after taxes. It is a huge myth that you will ever be able to retire by saving 10 percent of your income. This is a quarter-century-old failed practice that will not meet the actual needs you will have in retirement. Currently, you can plan on spending 4 to 5 percent of the money you save for retirement each year without running through it prior to your death. For most dentists, that total savings plus being completely out of debt will run between $3,000,000 and $6,000,000.  Start early and stick with it.  Here is another strategy: Save your age in thousand dollar bills each year, and you will be one of the 4 percent of dentist that can retire by 62.

. Everyone knows what a great financial asset a home can be. However, buying a house is not like buying some shares of stock. It’s a huge investment of money, time, and energy. If you overextend yourself financially to buy that house (the epitome of the entitlement syndrome), it will most likely end up being a pretty lousy investment. It often comes down to this: It isn’t the price of the house but the ancillary expense of not belonging to the right country club, not driving the right car, sending your kids to private schools, etc.

. A buy and hold investing strategy has a lot of advantages, not the least of which is that it requires far less time and effort on your part to maintain. However, that doesn’t mean you can set up an automatic investing plan and then ignore it for the next 30 years. At a minimum, you should review your investments once a year and decide whether you’re happy with their performance. This engagement with where your money is going and what kind of return you are getting is the only the start of replacing your current income with an equal or greater passive income someday.

. If you just stick all your money in your savings account, your bank will love you, but inflation will eat away at that money over time until you have nothing left. Because inflation averages about 3 percent over the long term, you need to make at least a 3 percent return on your money just to break even. It is safe to say that there are no savings accounts in existence that pay even 3 percent interest. 

. I suppose it is possible to time your investments perfectly — however, it’s also possible to make a fortune by winning the lottery. Timing the market turns investing into gambling, pure and simple. Every year, Fortune magazine contacts the top asset managers and ask them to pick one stock for the coming year that they know will outperform the pack. Next, they have a monkey throw a dart at the Wall Street Journal’s S&P 500 page. In 20 years, no one has beat the monkey. If the smartest people in the world can’t be reliable enough to pick one winner, how do you think you will fare? 

The secret to wealth building and financial success is to start early, be consistent, and don’t spend it. That is how you Summit.

Michael Abernathy, DDS, is the author of “The Super General Dental Practice” and the owner and founder of 

Discover more Dentist’s Money Digest® news here

How to Calculate the ROI of your Dental Software

4 Regrettable Times Dentistry Made the News

Articles

Dentists are known for their high income, but what many lack the know-how to manage their money. Michael Abernathy, owner and founder of Summit Practice Solutions, knows a thing or two about avoiding financial disaster. Continue below for the six big mistakes Abernathy sees the most from his clients.

6 Money Mistakes that Cost Dentists Thousands

No matter what stage of your career you're in, it's never too late to find growth.

	At 40 years of age, I decided I would retire from dentistry in 15 years with $6,000,000 in assets and be debt free.

Weekly Tech: Is Ozone Therapy Too Good to Be True?

Six Key Questions to Ask During Software Demos

Set Yourself Up For Financial Success After Graduation

I had just read Bob Buford’s book “Half Time.” In it, he tells how his son dies a few days before joining him in running his very successful business. It traces his thoughts and grief as he tries to make sense of life. His conclusion was that he had spent the first part of his life trying to be successful. He felt he needed to spend the last stage of his life trying to do something significant. He referred to this point of transition as half time — kind of like a football game where you go into the locker room with the first half over and having to reassess your strategy for the second half.

I came away from that book with a renewed purpose and a new plan to make my dreams come true. The trouble was that I didn’t know anything other than dentistry. I had to make dentistry fun and profitable for the next 15 years. During that time, I sold partnerships for fractional ownership of my practice to three doctors, grew the practice an average of 15 percent a year, lowered my overhead to the 50 percent range, added nine hygienists, a commercial lab, one more location, started Summit with my partner Max Gotcher, and eliminated all of my debt. I have tried to add significance to every day of my life since that turning point. It is this sense of purpose and significance that continues to drive me today in my sixties.

There are five stages of a dental practice, and no matter what stage you’re in, there is always hope to find the renewed sense of purpose that keeps me going.  

1. We all start day one with no money and we’ll call this the 

of dentistry. We will do whatever it takes to make a living: We are real short on experience and long on persistence. We start out doing whatever it takes. Dr. Gordon Christensen says that, “Our diplomas are just learner’s permits. We are just barely, not dangerous.” The great thing at this point of our careers is that we don’t know what we don’t know. We are pretty clueless about the business of dentistry. We are just looking for a chance to get into the game. â€¨

. This is the most exciting time for most of us. We start practicing as a dentist, get an apartment or home, get married, and even start a family. We are gradually increasing our clinical, business, and financial skills, usually by trial and error. Everything is looking up. At almost every turn, we run into something that is a challenge. The trouble with growth is that it ends far too quickly for most of us. Very few of us are able to keep adding challenges, clinical skills, and sustain growth in our practices. Without continued growth and profitability, we are doomed to languish in mediocrity. Note: This is the time you want to consider an associateship, or no later than the beginning of a Plateau stage.

. You could find that you hit several different plateaus during your career. Slow down, plateau, and then you market more, add a procedure or even another provider, grow a little, and then hit another plateau. It is kind of like failing. You really only fail the last time you stop trying. As long as you fail forward and keep getting up after a challenge knocks you down, you have not failed. You may currently struggle with some challenge, but it will not make you fail.

4. Patient numbers drop, production barely covers expenses, staff turnover is high, and the inevitable slowdown into the 

begins. The name leisure probably doesn’t do it justice. It is more of a decay of attention and profitability — a time when stress is the constant and profit is elusive. You begin to think of patients as the problem. You arrive late, never really are fully engaged during the day, leave early, and try to occupy your life with something other than dentistry.

: the very worst time to try to sell a practice or bring in an associate or partner. Your systems are in shambles, there is little or no profit, and not even enough energy to lead the practice. You will receive the least amount of money for your practice and have little or no time left to act on an investment strategy to help it grow. At the time in your life when you need money the most, and should be able to cut back, you find yourself back at the 

. This is a vicious circle that captures way too many of the dentists I encounter. Great opportunity, plenty of time, but a complete failure to follow through. You become a thermometer instead of a thermostat. You sense what’s going on around you, but you never control your environment. A young doctor should never buy a practice in its lowest stage, unless it is a fire sale.

Not a pretty story and not the path that you want to take. That is why you are reading this. As a new graduate, you will be looking for a practice with the goal of a career-long 

with huge financial gains, less stress and a renewed enthusiasm for life.

It is this sense of purpose and significance that I hope to give you as you read this book. This book will change your life if you will just act, and act today.

You can read a free copy of Dr. Abernathy’s book, “The Super General Dental Practice,” 

Any career comes with trials and tribulations, and dentistry is no exception. No one knows this better than Dr. Mike Abernathy, who has spun his life experience into a helpful, relatable guide to find happiness and stay motivated in a dental career. Continue below for an adapted excerpt of his book, The Super General Dental Practice.

The 5 Stages of Dentistry According to Dr. Abernathy

What you want is not necessarily what the patient wants, according to Abernathy. 

I received four separate questions in my emails reading something like this: 

How is it that my practice last year was busy and scheduled, and now there are lots of holes? What is wrong?

 Could be a number of factors, or it could be just the season, but there are several places to look first to find an answer.

The 4 Perks of Direct Ownership Investment

For Women Over 50, Estrogen Could Help Prevent Gum Disease

Not actually pre-booking patients in hygiene.

  I would have to say that if I had any office’s hygienist in front of me when I asked if they pre-booked patients for their future appointments, I would have a 100 percent of them answer,  

Absolutely.” When I asked, they would all say more than 90 percent of their patients were pre-booked. So, go to your office computer and take a look at, say, four to five months, and tell me what you see.

There will be two possible results:  One, we look, and low and behold, the entire day is filled, which is bad because there is no room for new patients.  Secondly, we look and see that there are only three or four scheduled in an 8-hour day, and those are booked either early or late. These peak demand times are the very hours that a new patient will insist on, and boom, no place for a new patient.  Your goal should be to pre-book 100 percent of these recall visits, but only fill 70 percent of any future day while guarding the peak demand times (7 to 9 AM and after 5 PM) for your new patients. So, if we do book 100 percent of today’s patients in the future, but only fill 70 percent of any one column, where does the other 30 percent go?

They go in another column, knowing that when this time comes around in 6 months, you will need to hire another hygienist. The average hygienist can only see 450-550 patients in a year — if they see them two times &mdash; while still seeing new patients and doing some scaling and root planing. If they see them three times, even fewer can be seen. So, if you have 30 new patients a month, or about 360 a year, you should need to hire an additional hygienist every 1 1/2 to two years. If not, you have as many patients leaving your practice as there are coming in. This is the number one symptom of a donor practice.

Not having consumer hours and/or multiple doctors for expanded hours

.  I practiced for over three decades in a small town that grew about 30 miles north of Dallas, Texas. It literally went from a county seat for farmers to a bedroom community for high-income, young, college-educated, middle class, dual-income families.

. Only the patient gets to decide what they want and when they want it. The mistake would be thinking the patients want what you have to sell.

Not coming across as caring and compassionate

. Every staff member should have been hired for their people skills and self-motivation. Everything else can be taught. You will never come across as caring and compassionate unless your staff and systems put the patient first, and it shows.

. Violate the one dentist for about 2,000 potential clients, and you will struggle your entire career. Location will be the top determinant of whether you are successful.

Not budgeting for marketing correctly and consistently

. It is not a throw-money-against-a-wall-to-see-what-sticks or a one-and-done strategy. If everything you do is marketing, it is show time all day, every day.

. If you are not getting at least a 50 percent direct referral percentage from your existing clients, there is something they don’t like.  Remember that you can’t get better at giving people something they don’t want.

Not fitting treatment into the patient’s budget

. This will require several outside lending institutions, various finance options, and helping the patient understand what their budgets will allow. It is OK if it takes years to complete a comprehensive treatment plan.

. The phantom patient’s wants list that we never get to see is killing our results with most patients. This is why staff synergy and great systems hinge on your ability to ferret out what the patients really want and need to stay with you for a lifetime.

Wanting the dentistry more than the patient does

. If you come across as wanting the dentistry more than the patient, you will have crossed a line that can never be taken back. Patients today are educated consumers. They know about insurance, and the cost of doing dentistry. They have compared and contrasted various offices and options, and most of us come out wanting.

. More than 8 percent. Cancelations and no-shows are symptoms of poor scheduling, poor financial arrangements and a disregard for what patients want.

Not addressing the patients concerns about money, time, fear, or a lack of trust for your office

. Each member of the staff, including the doctor, must be sensitive to the desires and needs of patients. It is that commitment to excellence defined by the patient’s wishes and needs that defines the 

Regardless of your success or challenges, it is time for each of us to look in the mirror and actually see where we fall short. Asking the right questions is the start of every solution. This is how you summit.

Michael Abernathy, DDS, is the author of The 

The business side of dentistry can be a struggle to get a handle on for many practice owners, and when patients aren't flowing in, it can lead any dentist to self-doubt. What am I doing wrong? Why aren't my patients returning? Dr. Mike Abernathy, a veteran of dentistry, has a few pointers on how to fix your patient problems. 

Openings in Your Schedule? Here's Why

Dental practices seeking higher patient return rates should look to embrace consumerism.

There is a dentist on every corner, and every potential patient has an invisible checklist of what they are looking for in a dental office. So what are you willing to do? What are you willing to change?  How will you adapt to this ever-changing consumer demand? In the end, success in dentistry will be defined by the relationships you can make and keep with your patients. Embracing consumerism should be job one in this new dental economy.

Giving people what they want, when they want it at a price they can afford.

You can’t get better at giving people something they don’t want.

It is a huge mistake to think that patients need what you have to sell.

 What do they truly want? Can you give it to them? Will you give it to them? Because if you are not growing, you are not giving patients what they want. Consumers vote with their feet so if you constantly see the back of their head you are doing something wrong. If you have plateaued you are not inspiring the patients you have and you are trying to give them something they don’t want.

Consumer oriented hours are not 8-5 Monday through Thursday.

: 7-9AM, 3-5 or 6 PM, Saturdays and yes, Sundays. I had a call the other day from a doctor who told me that Sundays have become their busiest day.

: If a lot of the population around your office drives somewhere else to work, you will find that a majority of them will have their dental work done nearer their work address than their home address.

Corporations and other Patient Alternatives

: Potential clients have more options and based on the 7% annual increase of national corporate-owned practices, people have decided that the convenience provided by these corporate practices best satisfy their needs.

 Just adding some late hours to your Monday — Thursday schedule won’t work either. Families have obligations with their kids and spouses after 5 PM. They will look for an office that fits their busy schedule. The consumer will ultimately define what works for them and where they go.

: Try to keep your fees comparable for your zip code.

: Fitting patients dental needs into their already overloaded budgets is the key to case acceptance. Just keep in mind that you need more and better options than just Care Credit. One choice is really no choice at all. 

Taking years to finish a treatment plan is OK:

 I always felt guilty that I didn’t have loads of patients willing to plop down thousands of dollars for a full mouth rehab. Come to find out, I did more crowns, implants, and bridges than the famous “cosmetic” speakers. I just took several years to do it and at the same time created a lifetime patient that referred everyone they knew because we were sensitive to their budgets as well as caring and compassionate.

In Dentistry, we have should have a specific goal. We need to produce this goal in a consistent manner over the life of our practices. The sooner we realize what a consumer wants, the more of these we will accumulate. 

Someone that shows up, pays for treatment, and refers everyone they know.

: This means that they respect you. You have validity and a great reputation within the community.

: You have fit their treatment into their budget. It’s not always about cost. It is how they pay for it over time if they trust you.

: The number one key practice indicator is the percentage of direct referrals you get. Your systems are precisely designed to give you the results that you are getting. We call this your 

: Case Average times the Number of Direct Referrals/100= PMI. This formula gives you a “batting average." Anything over 300 is great. Anything less indicates an area that you need to work on.

“Most ailing organizations have developed a 

functional blindness to their own defects.

 They are not suffering because they cannot resolve their problems but 

As I look at the numbers, trends, and results in various practices, I see a curious phenomenon.  It is called the “

). It’s as if we all know we need to act or do something different (read a book, listen to a lecture, etc.), yet still fail to act. It is this lack of implementation that will define you and limit your success. 

There is no real learning without application.

As each of us look for direction and begin to look at the changes we need to embrace in this new Dental economy, we should realize that true leadership is not a matter of saying things right. It is actually a matter of consistently 

So, how are you self-sabotaging your practice?  What is keeping patients from saying yes and referring everyone they know?

Could it be that despite the time, effort, and money we spend to improve, the first place we should look is in the mirror? It takes intentional living to become the catalyst in your office that will take your practice to the next level. Far too often we put our attention on marketing or advertising and forget that advertising brings patients in, but if we do not deliver they won’t return. (Front door/Back door both wide open). Practice growth is the natural result of practice health.  Growth occurs when our message and our methods are balanced.

Consumerism is delivering what the patient wants, when they want it, at a price they can afford.

Dentistry is just a small consumer driven business.  Consumers today decide where they go and where they spend their money and you as a dentist are no different.

Consumerism in Dentistry

Early in my career, I realized my best referral source wasn’t the direct-response mailers, new-resident programs, website, care-to-share programs, signs, or even location. To my surprise, it was the orthodontist and two other general dental practices down the street.

In a town of 19,000 people, 35 miles north of Dallas, we were getting 15-20 new patients per month from our competitors. How could that be? Why would so many patients in a town where everyone knew each other decide to leave their long-time dental practice to come to the new kid on the block?

RELATED: More Dentist’s Money Digest® Practice Management Coverage

Dental Practice Success Starts with the Morning Huddle

Who’s Handling Your Dental Practice Finances?

The DMD Check-Up: Booze for Nervous Dental Patients?

Maybe what I had been taught in dental school wasn’t true, that patients will bond to a dental practice for life. In fact, Fortune found that 87 percent of patients will change their physician over a $5 difference in fee. Is it any surprise that they would leave a dentist for money, lack of concern, poor hours, location, lack of competence, or a single bad experience?

Welcome to the era of donor and recipient dental practices. Fail to inspire your patients, and they will seek treatment elsewhere. Make every step of the patient experience perfect, except for the last one, and they’re gone. Patients today vote with their feet. If you are seeing the back of their heads, you are doing it wrong.

There is no way to get better at giving patients what they don’t want.

The worst thing you could ever do is to push treatment on patients without happily giving them what they want. Let that small fact elude you, and you will find yourself on the fast track to a mediocre, unfulfilling career.

You need to realize that if you are not growing, then you are not meeting your patients’ needs. If you cannot inspire your patients or if you are not growing, then you become the donor practice in your area. Take a moment and see if you can name a practice in your area that is a donor practice. If you can’t think of one, then it’s 

. The donor practice has no idea that they have this effect on their patients. It is always the poor economy, terrible location, poor dental IQ, or the inability to find quality staff that is blamed for lack of growth.

I expect that all my practices should grow regardless of the economy, and they do. The recipient practice grows, inspiring their patients to refer everyone they know. 

An increase in cancellations and no-shows

. Your goal should be less than 10 percent. What’s causing this? You are not convenient, and did not sound caring and compassionate over the phone. Maybe you have unappealing hours or days. Or your fees create such a hassle that patients make an appointment never intending to keep it.

 Your goal should be 60 percent minimally. This is the one black or white symptom. Few referrals spell disaster.

This is usually the result of being too assertive, instead of giving a balanced case presentation. If you want the treatment more than the patient, you have crossed the line. There should be no selling in dentistry. Give them what they want and tell them what they need.

You spend a greater and greater portion of your income on external marketing to maintain your numbers. Recipient practices do not need to market and donor practices should not market. Don’t look for an external solution for an internal problem. Spend money and time on marketing when you have few internal referrals.

Click to the next page to continue reading.

 You must keep comparables comparable when it comes to fees. Stay in the 80 to 90 percent for your area. Always give the patient what they want first, then, work at giving them what they need. Bundling your fees and treatment plan incorrectly make you look like a dentist turned time-share salesman.

. Our office was fortunate to average more than 14.5 years for each employee. High turnover is a symptom of lack of leadership and systems. Get it right and the patients and staff will stay. If your patients see a different face every six months, they will wonder why, and they are right.

. Assisted hygiene does work to ramp up the hygiene department, but make sure you have the right assistant in that role. It should be the best assistant in the office. Maybe even the one you can’t work without. If done incorrectly, you will see fewer patients following through with treatment plans because of a lack of trust that was once created by your hygienist spending the time to adequately explain treatment and listen to what the patient came in for. I have seen few offices that do this correctly.

. The largest and most-used health care patient financing company is not the best just because they pay the ADA hundreds of thousands of dollars a year to receive their endorsement. Add Wells Fargo, and Chase to your options and watch the acceptance rate soar.

. These can be produced by most dental software and allow you to follow each patient through the office. Patients may first contact you by phone and then arrive at the office for the first time. The routing slip follows them through your office. At some point, you will find a point at which the patient does not go to the next treatment step. Identify this point and you can correct the system or staff member and eliminate the blockage. Don’t and it is “Donor Doomsday.”

. Whether it is with a staff member that does not work out, or a patient who to a different practice, you can benefit by taking the time to call and find out why. Great leaders find the problem and deal with it immediately.

. These anonymous cards allow you to learn of potential problems from every patient you see. Email me (

) and I will send you one. Assume that if one patient mentions a problem, there are 100 more patients who were silent and felt the same way. Ninety-six percent of patients will leave without saying anything if dissatisfied. Learn of and deal with the problem and most will stay.

Create a system for cancellations and no-shows

. Email me and I will send you our cancellation and no-show system that we have used for over 30 years.

 This applies to calls inside and outside of your office. The No. 1 piece of technology in your office is the phone. If the staff does not come across as caring and compassionate, the patient will never show up to let the doctor mess up the relationship. 

Spend the time to create great systems and inspire your patients and staff, and there is no limit to practice growth. 

Michael Abernathy, D.D.S., is the founder of Summit Practice Solutions in Dallas, Texas. He founded Summit Practice Solutions in 1991 to help other dentists duplicate his success. Abernathy also runs a multi-office dental practice based in McKinney, Texas. He can be reached at 

One dentist explains how early in his career, he came to the realization that his most powerful referral source wasnâ€™t any of his external marketing efforts, but rather his competitors. Either your practice is a recipient practice, like his, or itâ€™s a donor practice. You definitely donâ€™t want to run a donor practice.