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The competition in the dental practice market has greatly increased. Dental school education debt is skyrocketing. Practice growth is the biggest challenge facing dentists today. Dentists should increase their fees annually, according to John K. McGill, C.P.A., who will be speaking at the upcoming Hinman Dental Meeting, which takes place in Atlanta from March 23-25.
To be successful today, dentists “must do a lot of things right,” says John K. McGill, C.P.A., M.B.A., J.D.
He should know. McGill has been working with dental professionals on achieving “financial freedom” since his graduation from law school more than 35 years ago when he started a financial consulting business with Charles Blair, D.D.S., a dentist from his hometown in Charlotte, North Carolina.
McGill, who is also the editor of The McGill Advisory newsletter, sees both challenges and opportunities ahead for dentists. He will cover some of those challenges and opportunities at the Thomas P. Hinman Dental Meeting in Atlanta on March 24, where he will speak on the topic of achieving financial independence.
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“The margin of error in dentistry has been dramatically reduced since the time when dentists graduated with little student loan debt and the competition was a whole lot less,” McGill said. “Fast forward to today and the amount of education debt has skyrocketed and the competition level is significantly greater.”
McGill said the oral healthcare field is much more competitive because older dentists are practicing longer (70 is now the average retirement age) and a rising number of dental school grads are joining the field each year. A big rise in corporate dentistry has also heightened dental marketplace competition.
The average dental school graduate has about $200,000 in student loan debt, McGill said, and specialty school grads sometimes face up to $600,000 in debt. For those dentists whose entrepreneurial spirit maybe zapped by the large debt, McGill advised: “the fastest way to get out of debt is to make more money.”
The top challenge facing today’s dentist is practice growth, McGill says. He believes that success comes in finding and reaching optimal capacity for a practice. To be as busy as you want to be.
“As quickly as possible you want to get to 100 percent of capacity,” McGill said. “We’ve found that the fastest way to get there is to buy a practice or if you have a practice that is at only 50 percent of capacity, perhaps merging with another practice.” McGill has guided more than 300 dentists in taking this approach and “all of them were making more profits just a year after they did it,” he said.
Through his work, McGill has learned that having a staff that is committed to the practice can make all the difference. Surprisingly, McGill says, the secret to building a superior staff is not to “throw money at them” but to get them more involved, value their contributions, and recognize their efforts. “Dentists who do this will succeed,” he said, “but few do.”
To increase patient traffic McGill says the best way is by internal marketing. That is, referrals from existing patients. However, when asked this, just 10 percent of dentists felt they were good at it.
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“They’ll spend thousands a year on external marketing when the answer to real growth is right under their noses and costs nothing,” he said.
To maximize internal marketing efforts, the practice must offer superior customer service — the doctor and staff must be personally engaged in the effort.
“Take the time to get to know the patient and find out their personal concerns — dental and otherwise,” McGill says. “The smart doctors understand it’s a people business. We’ve found that even a mediocre clinician can build a million dollar practice with the right personality.”
To better control overhead, doctors should raise their fees annually, McGill says, but only about 50 percent do so. He also said that while participation in managed care programs may be necessary, dentists must be very selective in how that is done.
“Be sure to take time to evaluate every plan to determine what the write-off percentage is,” he warned. “Sometime you work harder to make less money. It’s a hidden threat.”
As for retirement, McGill said many dentists are good when it comes to the finances of their dental practice, “but I’ve seen just as many go from the penthouse to the outhouse when it comes to their personal finances.” He said real contentment “starts with tracking personal spending habits, but sadly, half of the dentist we talk to don’t have a clue of how much they spend each month.”
With just five percent of dentists able to afford retirement at age 65, McGill believes that the foundation of personal financial security comes with how much you can save. He says it’s vital for doctors to determine a monthly savings goal and then set up an automatic contribution out of the practice into an investment plan. One dentist told McGill this was the best thing he ever did for him.
“He told me: ‘If I can’t see the money, I can’t spend it.’”