Expanding into a multi-location is every bit as challenging as it sounds, so preparation is key.
Dentists have to wear many different hats. On top of being skilled at the craft of dentistry, they also must be a manager, marketing expert and business professional. And when they consider growing into a multi-location practice, they must embrace a new skill set: that of an entrepreneur.
Before you start scouting out real estate, ordering new equipment and hiring associations, you must first make sure you’re prepared to make such a leap.
Click through the slides to learn more.
Knowledge and vision
Dr. Marc Cooper, DDS, president and founder of the Dentist Entrepreneur Organization, a national consulting and training firm based in Portland, Oregon, that works exclusively in the group practice space, says the journey starts with an understanding of the differences between solo and group practices and what the doctor ultimately expects to achieve.
“In the classic sense, it would be education,” Dr. Cooper says. “We see this space of emerging group practices as a very fertile ground for the work that we do. They have to understand, what is a managed group practice? How is it different from a solo practice? What are the legal components? What are the physical components? Who are the people that man it? They have to get a sense of that whole world and understand how it works. Education is something that they really need. And there are courses out there, besides the ones that our DEO company provides, and it’s becoming so much more popular.”
In addition to a basic knowledge of what to expect, Dr. Roger Levin, DDS, CEO and chairman of dental practice consulting firm, the Levin Group, in Owings Mills, Maryland, notes that the doctor should have some sort of philosophical perspective on what he or she wants.
“By the time you start expanding, you should have a vision of where you want to go,” Dr. Levin says. “Do you want three, six, 20 practices? What’s the vision? You can’t build a strategic plan without having a vision.”
Their philosophy must also be in line with and embrace an entrepreneurial mindset.
“The resolve to get through the numerous problems and breakdowns that happen as you move forward,” Dr. Cooper adds. “That’s where we are talking about that philosophical bent. You must have the capacity to relate differently to certain things that are happening. Dentists are trained and cultured into what I call the ‘Beginning, middle and end model.’ Here’s a cavity; I’m going to drill it. I am going to do a perfect box on the distal of it. I’m going to fill it. I’m going to polish it. I’m going to check the occlusion. And I’m going to go. A beginning, a middle and an end.
“So, they like to do their world that way, too,” he continues. “A beginning, a middle and end. If you get into the top business people, and I have consulted a few of them, they don’t do things that way. They have something called ‘Forward the action.’ It doesn’t need to be completed; it needs to move. So, from a dentist’s mindset, that it’s not complete, but from a corporate leader viewpoint, where we are moving forward, it’s a different view of how things are conducted on the field. It’s not a touchdown, it’s, ‘We got our five yards. Let’s get another five yards.’ There’s just a different mindset that needs to be instilled to be able to move from one practice to multiple practices.”
The value of advisers
While it is cliché recommending “not reinventing the wheel,” there’s priceless value in tapping into the knowledge and expertise of others.
“Dentists are not really entrepreneurs,” Dr. Levin observes. “An entrepreneur is defined as somebody doing something that has never been done before or is doing something that has been done before, but in a different way. And that doesn’t fit most dentists. Most dentists go into practice. I am a dentist. We were wildly successful because of supply and demand. Now we are in a highly competitive environment. We are only starting to see small groups competing with each other, and that’s going to grow.
“So, the first thing I would do is put together a three- to four-member advisory board,” he continues. “People who have expertise: a management expert, a financial expert and a legal expert are three of the obvious choices. You might want an HR expert or a training expert. Dentists have no familiarity with the concept of advisory boards. I sit on several; they are very, very powerful. And you do have to pay them; no one’s doing this altruistically. These are people who can advance you by light years because of their expertise, but you should be prepared to pay for advisory board meetings, which you probably need four to six times a year.”
Consultants and personal coaches are other valuable sources of professional advice and guidance.
“If someone is really motivated to expand a business, reach out to an executive coach,” Dr. Levin says. “I personally handle a certain number of clients every year because I enjoy it. I love executive coaching. These dentists are going to go through a transformation process, but they may not know it. It’s the difference between making mistakes and having a guide to get it right. So, having an executive coach helps people who want to grow, personally or professionally, identify what they want to accomplish, how they’re going to get there and helps them through it.”
There’s also value in working with a friend or colleague who has taken this journey in the past or is undertaking it at the same time.
“They need to have a peer-to-peer relationship with somebody who has gone through this before or is going through it with them,” Dr. Cooper says. “So, if I have a problem and I am working on this, and there’s a guy over there who’s working on the same problem that I am, I can talk to him about how we are approaching the problem. I don’t have to figure it out in my head. So, having some level of peer-to-peer advisory relationship we feel is important as well.”
Beyond an advisory board to help with some of the major business issues, expert advisers can be brought in for specific, specialized needs.
“Identify areas where the practice has weaknesses and bring in expert advisers for that,” Dr. Levin recommends. “Not for the advisory board, but there might be an expertise that’s needed that does not exist, such as HR manuals, sexual harassment training. These are all things that dentists don’t do that become critically important when you’ve got 30, 40, 70 employees.
“It’s the transformation from a mom-and-pop, where the owner is there every day, watching the practice, to a well-run business,” Dr. Levin continues. “There are endless courses, business schools, books and articles on that topic.”
Knowing that you don’t know everything can be one of the best realizations on the journey.
“Don’t try to go it alone,” Dr. Levin advises. “Because when you do, you make mistakes, waste money, lose time, and everything is easier and better when you have people who have seen it and done it before.”
Get your finances in order
Money, of course, matters, and aspiring DSO owners need to know where that money is coming from – and where it will go.
“Most dentists have no idea how to do a budget,” Dr. Levin says. “They get with their accountants at the end of the year, they barely look at it, all they worry about is, ‘How did my income play out?’ ‘How is my overhead?’ So, in this case, you need a real financial plan, as part of your strategic plan, with projections and budgets that you can measure against.”
Unless money is not an issue (most likely it will be), Dr. Levin says that doctors must identify where funding will come from.
“Most dentists don’t come from well-to-do parents, and nobody else is racing to give them money,” he says. “Where are they going to get capital? Are they going to have investors? Are they going to have partners? Are they going to give up stock? Are they going to borrow from a bank? Are they going to try to go to private equity when they get large enough? But at some point, you’re going to get capital to function.
“Dentistry has been lucky so far,” he continues. “Many of these small groups, at some point, are going to run into financial trouble, and when that happens, that’s just normal business. You need capital and a line of credit.”
Know your skills
Self-awareness as a businessperson is a value that entrepreneurial dentists must embrace.
“I think another big mistake for a lot of dentists is their business skills run out as they expand,” Dr. Levin says. “A dentist realistically looks at himself or herself and evaluates two steps: Step one, what level of competence do they have to be the de factoCEO or business manager of this expanding group practice? And they should determine whether they can handle it. If they can, then the next step is: Are they now an owner or a dentist? There’s a difference. I meet a lot of dentists that are trying to expand while there’re seeing patients 35 hours a week. It’s very, very difficult. It’s frustrating for them and the team.
“If you’ve gone past your competency, you need to bring in professional management,” he continues. “I see other groups where the owner, founder is no longer in charge. Maybe chairman of the board, but they’ve got a CEO running the organization because the dentist who goes past his or her business skills will end up hurting their group practice.”
Expanding into a multi-location is every bit as challenging as it sounds. Taking the time to prepare and get ready for the impending challenges is key to helping the entrepreneurial dentist succeed.