206 Why Not Understanding Your Profit Margins is Costing You Too Much

The Delivering WOW Dental Podcast

Hi everybody, and welcome to the Delivering Wow Dental Podcast. I'm your host, Dr. Anissa Holmes, and wow, it feels really good to be here podcasting. It has been far too long as many of you may have noticed. We haven't had an episode in a while, and honestly, it has been a very busy last four months. I have been focusing on quite a few things. Number one is just building out the most incredible experience for our platinum practices that are in our platinum mastermind. We have been focused on our dental entrepreneur Facebook group, by the way, if you're not yet in that group, I definitely recommend that you get in there. It's a great place to be able to connect with other doctors, to be able to have a great community of people who are there inside of your back pocket, cheering you're on and really being there to help support you.

And we've also spent the last six months actually building out our CE modules and our messaging platform for our Dental Boss Academy. And so it's been a really, really great last six weeks. Some of you guys might have even been in our boot camps. We had our first business acceleration Bootcamp, free Bootcamp back in November. Had it again in February and so that was honestly one of the most impactful feelings I had. We had about 300 practice owners that joined us on both bootcamps and a few nights we were on until 10 o'clock, 11 o'clock at night, and it was just pretty special. And so today what I'm actually going to be doing, and what I'm going to doing over our next episode is I'm actually going to be answering questions that were asked inside of our Dental Boss Entrepreneur Facebook group. And so the question that I ask is that, if I had a magic wand and I can give you anything inside of your business, anything inside of your practice, or if there's something that you would want to learn, what would that be?

And so we actually had a ton of responses. And so over the next episodes, what I'm going to do is I'm actually going to take time and I'm going to help you to understand what it really means to be able to grow your practice, or how do you build a business that scales? And so if you are a beginning practice owner and you know, I want to be able to take my business to the next level, I don't want to take a lot of time, I don't want to make mistakes or if you are a practice owner that's been practicing for 20 years, maybe you are not where you want to be yet still, or maybe you've even had some coaching in the past or a lot of coaching in the past. And you want to learn new things. This is definitely going to be a really great episode for you.

So today we're talking about profit margins and how do you understand profit margins? And so before we even get to understanding profit margins, I really want to help you to understand why this is so critical. Now, as many of you guys know, as many dentists are coming out of school or starting their practices or acquiring practices, one of the first things that oftentimes people do is say, "Well, how do I get new patients?" And so what I want to do is go ahead and sign up with a bunch of insurances because now I will be able to have patients and I can go ahead and have an opportunity to treat them, to be able to help patients and to be able to earn income for the business. One thing that I say to coaching clients inside of my Platinum Coaching Program, and also within our Dental Boss Academy, one I teach inside of the academy is that, what's most important inside of your business is having information.

When you have information, then now you can make decisions that will allow you to scale, make decisions that there are certain things that you may want to stop and you can actually create a roadmap and plan. And so, as it relates to profit margins, I'll tell you a quick story. So one of the doctors that I was looking at her last year's revenue, her last year's production, collection, her profits, we were actually having a circle of focus call. This is something that I feel is really important to be able to look back at your last 12 months to be able to say, "Okay, well, if we want to grow by 40% this year, or 100% or 30%, or if we want to come off of PPOs, how do we actually create a strategy and a roadmap to do that?" So looking back at again, the last 12 months saying, "Okay, well, we said we wanted to do sleep, but we only did four cases."

What if we really focused on it and we focused on case acceptance and we focused on making sure that our team had the verbal skills and we had the verbal skills. What if we were tracking it on a whiteboard? What if we made sure that everybody really had clinical competency, what would be the outcome? And so we start looking at that. We start looking at where revenues coming from. And so I had a doctor and we were doing a call, circle of focus call and when I looked at her production, it looked really amazing. In fact, she had about $2 million in production for a practice. Now, for many dentists, if you or a practicing as a solo practitioner, or maybe even with an associate, you'd say, "Wow, that's great. I'd love to have a $2 million practice," right. But what was really interesting is that I looked at it and I said, "Oops, uh-oh we got to talk about this."

And she's like, "What?" And I said, "I am so excited that you did 2 million, but your collection is only in relation to the production, only 1.3 million." And so before I give you the strategy based on what I see from last year, to be able to increase your revenue, we've got to fix this because if you're making $2 million, that means that your marketing is probably working and your case acceptance is working, right? Patients are accepting treatment. In fact, your team probably thinks that you're super rich, as well as your friends and family who come to the practice because the practice is really, really, really, really busy. However, based on this, I know that the financials are not exactly matching up. In fact, you might, based on what I see here, not be taking home much money. And she said, "Yes, I agree."

And so what we did was I said, "Okay, before we look at anything, I need you to understand what your profit margins are for your procedures. In fact, let's just start with something simple, like a filling." And so we went through this process of having her to be able to lay out all of her fixed expenses, all of the things that you have to pay, whether you see a patient or not. We taught her what all of those different items were. We went into looking at the team costs, not the doctor and hygienist, because we're looking at a filling. And then from there, what we did was we actually came up with a cost per hour for the fixed expenses for the team cost. And then what we did was we now looked at the cost of supplies. And so one of the things that we provided, in fact, if you're in Dental Boss Academy, if you navigate to the resources and go to forms, you'll actually see the profit margins template there.

But inside of that template, what you'll see and what she saw was a sheet like an Excel sheet or a Google Sheet where I actually did the work because I'm a geek like that and actually made a sheet and put in the materials that we often use for filling where you put in the cost of that material that you're using. And then it actually puts in how many uses you have for that material and the costs per use. And so based on that, adding that up with the cost per hour of your team cost per hour of her fixed expenses, again, that is your rent, that is your phone bill, your power bill, all of those different fixed expenses, what she noticed is that it was actually costing her about $110 to actually do a filling. And so my next question to her was, "Okay, well, how much do you charge?"

And it was really interesting because for the PPO that she was on, she said, "I'm actually only making $108, or maybe it was 120, I can't remember, but essentially either she was upside down or she was only making like 8 or $10. And so my next question was, "Okay, well, let me ask you a question. How many of your PPOs are you on?" And she said, Anissa, I'm only on one." And I was like, "Okay." Right. It's really interesting because you look at that and many people, I don't know about you, but there was definitely a time in my practice when if a patient balance was less than $10, I didn't send out a statement. And there was definitely a time where if somebody came to the office and I knew them from outside of the practice, maybe they were a parent of a child that my kids were friends with.

Or maybe I saw them out at the supermarket, right. Any reason I was giving people a discount. Why? Not that they asked for it, but I felt in my mind I was supposed to, or I needed to, or I felt bad until I learned profit margins, right. And so all of a sudden, you start to say, "Well, if you're giving a discount and also worst case, you're not sending out statements, you really, really are upside down." And so again, really powerful to be able to understand your profit margins. Now, in this case, she's like, "I do want to become fee for service," and so now we can say, "Okay, let's create a plan. Let's look at the services and decide what we're going to focus on for Q1 and what we're only going to focus on."

So it might be clear aligners that the practice is actually very comfortable doing, but if you focused on it again with your verbal skills, with learning our case acceptance frameworks with focusing on, also the marketing, maybe you do an Invisalign flash sale. I know recently we helped a practice. They actually showed up to our marketing office hours for Dental Boss Academy and they were like, "Well, we want to do an Invisalign flash sale." And we're like, "Okay, well, we can help you. I mean, that's what we do." And so we actually shared how to be able to do the campaign, how to market the campaign. We actually provided even templates to post around the office from CAMBA, emails to send out to the patients. And that practice did about $90,000 within one day and became a platinum Invisalign provider, right? So now as the practice says, "Well, I want to come off," we can create that plan. Or we can say, "What else do we want to implement this year?"

And perhaps it might be something like sleep, right? There are so many patients in our own practice that's snoring and if we're able to provide an opportunity to be able to help them with sleep appliances, then now we have the ability not just to be able to help patients, but to be able to bring in that additional revenue, which, sleep appliances is about $8,000 on average, right? So as we started looking at the gaps in the practice and looking at the circle of focus, now we are able to create an opportunity for the doctor to actually collect and not just produce $2 million. So it's pretty exciting stuff. And I'll say this, like knowing your numbers, knowing your profit margins could also help you in a different way. I had a practice that interestingly helped that was a $2.5 million producing PPO practice, which is a great PPO practice.

And what was interesting is that when we did their profit margins, they actually had an orthodontist that came in a few days a week. And so even though the fee was low for a filling because they have expanded services and do ortho, one of their insurances had a very high benefit for ortho. And so it made sense to keep that particular PPO because of the ortho benefit. Okay. So as I'm speaking, I want you to start thinking like, "Do you know your profit margins?" Because it is very frustrating as you know to put effort into growing your business and go to work every day and finish seeing patients and then you have to focus on running the business as well. And at the end of the day, you're tired, exhausted, and you're not sure where you are. And again, this is something that I feel is incredibly important for you to understand and it is a game-changer.

I have been fortunate enough to have been able to help many, many, many practices to understand our profit margins and when you get to this point, all of a sudden you become more confident when you discuss your fees, because you know what your fees actually are. You have accountability for your collections. Your AR is no longer a problem because you and your team really get it. So hopefully this has been an informative episode for you. And I can tell you, profit margins are extremely important for you to understand for your practice. Once you do, then it actually allows you to unfold other things, for example, looking at your schedule, because if you are scheduling a patient for fillings and they have, for example, four or five, six fillings, you can do it in one visit instead of four visits.

Then now you're able to decrease the supplies so you have more profits, or as you start focusing on training for you and your teams, again, learning case acceptance frameworks, then now you'll be able to have an increase in your doctor production per visit. And of course, using the tools, the whiteboards, the scorecards that we do provide inside of our academy are going to be extremely effective for you to be able to set your goals, to be able to look at what's happening from week to week and month to month so that things are not slipping through the cracks. All right?

So hopefully that was super helpful for you. Guys, if you know that you are needing help with profit margins, I'd love to be able to help you. This is something that we do every single day inside of our Platinum Coaching Program, as well as inside of Dental Boss Academy.

And if you've not yet gotten your four weeks for your access to Dental Boss Academy, I encourage you to go to Dental Boss Academy now, and go ahead and claim your free access. We actually are not only providing training for you and your entire team with individual training tracks, but we also have a monthly systems call, a monthly marketing call, as well as group coaching. We also have a bonus call for startups, full marketing content, and over 150 hours of included free CE. And again, as a listener of this podcast, we'd love to be able to help you to understand your profit margins, getting access to our templates and our training so that we can help support you as you're growing your dental practice.

All right? So thanks again, guys, for listening to this episode. It was amazing getting back on this microphone, I have really missed it, and I look forward to chatting with you in our next episode. Thanks for listening to today's episode of the Delivering Wow Dental Podcast.

Now your next step is to claim your four weeks free access to Dental Boss Academy by going to dentalbossacademy.com. We look forward to seeing you in our next episode.