Plot your practice's position on the provided graph to plan your next action steps.
There was a time when practices automatically grew every year. This was due more to supply and demand than any great business acumen from dentists, but it worked well nonetheless. Today’s dental practices can’t count on consistent demand. They'll go through cycles like most small businesses - there will be up and down years, challenges, wins and frustrations. Do you know what stage your practice is in?
The Practice Career Cycle
We created a concept called The Practice Career Cycle to help doctors understand the stage of their practice, their options for the future, and whether or not the practice is in danger.
The four stages of the Practice Career Cycle
Stage 1: Start. While many young dentists purchase a practice from a senior doctor, many start their own practices. These startups represent the first stage of the Practice Career Cycle. In the past, the start phase required approximately five years to move through; it was almost a certainty. Today this is no longer the case. The length of this stage is much less predictable. Like other types of businesses, dental practices can take shorter or longer to move through a start phase.
Stage 2: Growth. The growth stage begins when a practice starts getting patients. Each year the practice will continue to grow and move along the curve from rapid growth, to medium growth, to slower growth. It’s a time when practices need new systems, staff training, and possible investments in new technology, marketing, or new services. Growth can come from a number of different venues including patient referrals, participation in insurance plans, social media, reviews, or community marketing. Howeve,r at some point growth begins to significantly slow down or stop.
Stage 3: Plateau. In the plateau stage the practice production is relatively flat with minor growth or decline. A plateau indicates that while the practice is temporarily stable and might be very successful, without some intervention it’s likely that production will decline. The plateau stage is the first sign that a practice is no longer enhancing performance.
Stage 4: Decline. According to the Levin Group Data Center, before 2008 91 percent of practices grew every year. Unfortunately, since 2008, 75 percent of dental practices have experienced some level of decline. A practice in the decline stage is no longer performing at the level it did in the past and it’s likely that it will continue to decline if no action is taken.
Analyzing your practice
Every dental practice should regularly plot their position on the Practice Career Cycle. This is a clear indicator of what stage the practice is in and what actions can and should be taken to ensure continuing success. The most critical stage to address immediately is the decline stage. There are three phases of decline. Low growth - a production rate of 0.1 percent to 4 percent - represents early decline because the practice is no longer keeping up with dental inflation. Middle decline is a production rate of -9 to -18 percent, whereas late decline is a production rate of -19 percent or more. Each of these stages requires different levels of action. Early decline is easy to turn around, but middle decline and late decline will most likely require expert strategic management and marketing intervention.
The Practice Career Cycle is one of the best ways to quickly assess the status and current position of a practice. Plotting the position of the practice on The Practice Career Cycle curve creates an immediate visual that identifies the current stage of the practice and what action plan should be put in place. A startup needs patience, growth should be stimulated, a plateau represents a danger sign that should be reversed, and decline is a very serious stage that should always be immediately addressed. Understanding the current state of your practice will allow for realistic decision-making and ensure ongoing success.