Latest / The Millionaire Dentist™ / Crush High Overhead: Smart Strategies for Your Dental Practice

Transcript

Crush High Overhead: Smart Strategies for Your Dental Practice · The Millionaire Dentist™

• 0:03
  Hello, everyone, Welcome to the Millionaire Dentist Podcast, brought to you by
• 0:07
  four Quadrants Advisory. On this podcast, we break down the world of dentistry,
• 0:12
  finances, and business practices to help you become the millionaire dentist you deserve
• 0:16
  to be. Please be advised we do speak with an honest tongue and may
• 0:20
  not be safe for work. Hello and welcome. This is Casey Hires back
• 0:27
  at the Millionaire Dnist Podcast in studio with co host Jared Bridgeman. Casey,
• 0:31
  Bud, how are you doing well? I love that shirt? Man?
• 0:34
  What is that a two can? What kind of bird is that? Yeah?
• 0:36
  I think it's a two cam? Gorgeous, Yeah, nice and blue.
• 0:39
  It's we had a situation where we had you had taken um, maybe
• 0:44
  not you, but we had taken some clients golfing and they want to be
• 0:47
  to go out and do some photos. And I have no golfing clothes because
• 0:50
  I don't golf, and so I went and bought the shirt and I was
• 0:53
  like, that's actually not half bad. You look like like a scratch golfer
• 0:57
  almost all right. Yeah, I'll take it. It makes me want to
• 1:00
  kind of learn enough to just you know, out there if you want to
• 1:03
  be frustrated. Yeah, it's like eating um the Saint almost shrimp cocktail.
• 1:08
  It makes you cry and you come back for more. Yea for those out
• 1:12
  of state right set, almost shrimp cocktail has so much horse radish in it
• 1:17
  that your sinuses magically open up and you ry. But it's tasty. That's
• 1:21
  how golf is. Yeah, I can see that makes you cry and you
• 1:23
  come back for more. Um. Casey. When you are you know,
• 1:26
  speaking with these practice owners and these people sometimes you know before sometimes after these
• 1:33
  people dentists and specialists, practice owners. Yeah, I didn't want to you
• 1:37
  know those people. Yes, when you're speaking with dentist and practice owners and
• 1:42
  specialists, um, and they hear you speak what is one of the big
• 1:46
  things that they end up coming and talking to you about and asking you about
• 1:49
  what's what's a big for them that they can see it is like a big,
• 1:53
  a big factor they can try and take care of. Now. Yeah,
• 1:57
  those typically launch into people going, hey, really enjoyed the content,
• 2:00
  thank you for that. It sounds like you work for a firm that might
• 2:05
  master this. Yes, that's correct, and they want to engage later that
• 2:08
  month and maybe have a one off conversation or you know, private conversation on
• 2:13
  the sense sensitive topic. And ultimately when we get into them understanding the full
• 2:16
  bandwidth of kind of what we do and and what all we do to help
• 2:22
  practice owners, they want to know the how, and typically it gets to
• 2:24
  overhead. Right, I've got overhead. I've got high overhead for the ones
• 2:30
  I know it. Yeah, so something I don't know what I'm overhead is,
• 2:31
  but I feel that it's high. Like, how do you lower overhead?
• 2:36
  That's the That's what I'll hear a lot if you just what fire people
• 2:38
  and quit buying nice things. Yeah, that's what they's that's the first place
• 2:44
  you go and ultimately stop buying avocado toast, stop going to Starbucks, right
• 2:52
  the Yeah, you don't want your own barista in your practice. I mean
• 2:53
  people would love it, but no, high overhead it's hard. And going
• 2:58
  back to golf, it's We've said this before, it's like a high handicap.
• 3:01
  If your handicap's a twenty five in golf, that means you're not very
• 3:05
  good. Well, if you take some lessons and go to the driving range
• 3:07
  and work at it for a season, you'll get that twenty five handicap down
• 3:10
  to like a fifteen or a sixteen, and it's not too terribly hard.
• 3:14
  But go to a fifteen or sixteen to like an eight, it gets way
• 3:17
  harder handicaps, I'm sorry. Overhead is similar. Some people have seventy eighty
• 3:23
  percent overhead, but there are some things you can do to get that down.
• 3:27
  But then once you get it down maybe sixty sixty five percent, it
• 3:32
  can be more challenging. But yeah, how do you do it? There's
• 3:36
  only three ways to effect overhead. We've said this before on this podcast.
• 3:39
  You can increase revenues, you can decrease expenses, or a combination of both.
• 3:45
  What a lot of people don't realize is learning a new procedure, dropping
• 3:49
  an insurance. You're not working more to increase your revenues, but you're increasing
• 3:54
  your revenues, right, And so instantly people go to I got to work
• 3:58
  more in fire people that it's not a formula for a world class firm like
• 4:01
  ours to help our clients, nor the best way to lower overhead. Now,
• 4:06
  let's say you, you know, have fifty employees and two chairs.
• 4:11
  Maybe you have too many employees, but that's not the thing. You run
• 4:14
  first two right, no, no, And actually today we've got eight yeah,
• 4:19
  eight areas that you know, if you have a high overhead in the
• 4:23
  dental office, here's some things to be aware of. And one of them
• 4:26
  I just mentioned overstaffing. Yep. And that's that's a tough one. That's
• 4:31
  an emotional one, yeah, because I mean a lot of times, you
• 4:34
  know, you may have been working, you know, having these people work
• 4:38
  for you for for years potentially, or they've been they've been the front the
• 4:42
  front desk lady for two decades, you know, the overstaffing. There's a
• 4:45
  lot of variables that goes into this. But number one, what is the
• 4:48
  benchmark for you and your practice or that you should have, um, what
• 4:54
  are your employee wages percentage versus revenues? Right? And some people don't know.
• 5:01
  Some people it's twenty eight percent, some people it's forty five percent.
• 5:05
  Some people it's fifty five percent. They typically all say the same thing,
• 5:10
  we're like family. And I can never imagine reducing anybody or you know all
• 5:13
  that stuff. I'm gonna tell you this right now. Any company that tells
• 5:15
  you we're like family here, it don't work there. That's a big red
• 5:18
  flag that once you drink some kool aid. Yeah, Now I don't know
• 5:24
  that that's a big red flag. That's a cute goal to have in a
• 5:26
  catchphrase. But but from overstaffing, it just comes down to what is the
• 5:31
  benchmark and where are you at? Now? Could overstaffing That doesn't just mean
• 5:38
  having too many people. If you have a bunch of people that are producing
• 5:43
  a lot for you, then that then that could work, but also can
• 5:45
  also be right like like you know, you're one person who's getting let's say
• 5:48
  overpaid, would that fall into overstaffing as well? Like maybe that? So
• 5:53
  I for me, that's more getting into the weeds, right, That's where
• 5:55
  a lot of people take their minds to. But the biggest picture is are
• 5:59
  my employee wages percent of revenues around twenty percent? You know, having a
• 6:03
  benchmark? What is the bench what's the goal? And where are you?
• 6:08
  Most people don't know those two pieces of data. That's the first thing with
• 6:11
  overstaffing. It's not getting emotional about somebody who's been there or couldn't imagine that
• 6:16
  is what is good? And where are you? Then you look to see,
• 6:21
  okay, what decisions could be made. I've told this story before,
• 6:26
  but working with somebody at the beginning, and they said, we're like family,
• 6:30
  My people are I think underpaid. We live in an expensive area.
• 6:34
  That's off the table, and it's like, that's great. The benchmark should
• 6:38
  be twenty percent. I know in this day and everything's eb and flow.
• 6:41
  But right now that's a little higher because people are having trouble finding good people,
• 6:46
  right, but yours is forty five percent. Well, he didn't know
• 6:50
  what the benchmark was and also didn't know what there's were correct. Those are
• 6:55
  the first two steps, so they already hadn't reached a conclusion without the two
• 6:58
  pieces of data the most important. Yeah, right, and so people go
• 7:02
  to the emotional I don't want to fire anybody, right, So just to
• 7:06
  repeat it for the fifth time, know what the benchmark is right here,
• 7:10
  it's twenty percent. Generally speaking, there's always a lot more data that goes
• 7:13
  into it. Generally speaking, twenty percent is what employee wage used to be
• 7:16
  as a percentage of revenues. And what are what is your percentage? Right?
• 7:23
  That's the first one. So that's what the overstaffing one is. Gotcha?
• 7:28
  Gotcha? All right? That that covered it pretty well? Casey um.
• 7:30
  Next up, I would say let's dig into um. It can kind
• 7:34
  of tie in in some ways, but like overspending, right, so this
• 7:39
  would dive more into um. You know, any cost that could be associated
• 7:44
  with like borrowing money to buy things that you may need or you know you
• 7:48
  thought you needed for tax purposes, but like equipment and new technology and things
• 7:53
  like that. I feel like you're you're just throwing the softballs here. I
• 7:55
  am over overspending, right, So this comes onto a couple of things.
• 8:01
  Number one, having a custom dental chart of accounts that your external team has
• 8:05
  created for you that shows you and tells you things like are you losing money
• 8:11
  on a procedure? Are you using six different points of advertising but yet you
• 8:18
  dump in an advertising versus have six line items? In that way you can
• 8:20
  tell if there's two losers there, right, So the overspending comes from knowing
• 8:26
  those pieces of data you mentioned equipment Section one seventy nine. Please don't let
• 8:30
  your equipment reps come in at the end of the year until you do you
• 8:33
  want to pay taxes or do you want to shine a new piece of equipment?
• 8:35
  They if you actually need it, that's a different conversation, correct,
• 8:39
  And if they have an intimate view of your personal financial situation, your profit
• 8:41
  and law statement, your balance sheet, your tax situation, then they might
• 8:46
  be able to help you with that decision. News flash, those people don't
• 8:48
  have access to that stuff, nor have any lens to be able to analyze.
• 8:52
  No, they're trying to make money a lot of times. Ye,
• 8:56
  So a second section one seventy nine that can lead to overspending going into debt
• 9:00
  is a terrible tax strategy, right. And then it's just the again the
• 9:03
  shiny thing mentality yep, yep. And then supplies everybody thinks they're getting a
• 9:09
  great deal. Not everybody's getting a great deal, right. I mean,
• 9:11
  you rep will tell you that because again sales well and the and the person
• 9:16
  who does the buying is going to tell the practice owner, I'm getting the
• 9:20
  best deal possible. Right. Okay, say now that when we're vetting out
• 9:24
  potential new clients, one of the things we really can dig into is their
• 9:28
  fees and how much they charge for their fees. Sometimes there are situations where
• 9:33
  they are not that's too low, right, Like maybe they haven't updated it
• 9:37
  in a decade in inflation, this it this is low hanging fruit. Yet
• 9:41
  so many practices miss on this. Do you think they're afraid if they raise
• 9:46
  their fees people will stop coming because they're that kind of fear of well that
• 9:50
  you hit on it again. That is the first emotional thought that comes.
• 9:54
  So a couple of things. Number One, we use the Wasserman feet study,
• 9:58
  but there's different feasts studies out there. You should know where you are
• 10:03
  to be in the eightieth percentile within your zip code using a whole bunch of
• 10:05
  variables. It's adjusted for all sorts of things, cost of living, this,
• 10:09
  that, and the other. But that will tell you we were just
• 10:13
  going through our process. We do that for people. Some people are three
• 10:16
  percent low, others are right on target. Other people are twenty thirty and
• 10:20
  forty percent fees low, to which they say, what, well, I
• 10:22
  could never raise my fees. Listen, there's a strategy. It's three percent,
• 10:26
  it's five percent. You know annually, you've got to do those things
• 10:30
  well. And that's what what kind of practice do you want? Some of
• 10:31
  our best clients they know we're not cheap and they go well, as a
• 10:35
  practice owner, I'm not cheap either. I'm providing excellent service and I charge
• 10:39
  for it. And by doing that, I also keep sorry to say it
• 10:43
  undesirables out of my practice, I've had people say, well, what happens,
• 10:48
  They're not going to be able to afford dental service. There's two hundred
• 10:50
  thousand dentists in the country. Yes, you're not the only game in town.
• 10:54
  For the most part, they're going to get their dental done. So
• 10:56
  don't don't use sentimental emotion as an excuse. If you are if you have
• 11:01
  passion, if you have a passion for any amount of charity work, there's
• 11:07
  always options for that too, under your own terms. Suit, Yeah,
• 11:09
  do it on your own terms. But all the excuses I hear are just
• 11:13
  that they're they're unfortunate. But yeah, know where your fees should be,
• 11:18
  and unapologetically you should think you are an eightieth percentile good or best performing dentist
• 11:26
  charge accordingly, Casey. Sometimes one of the things that can be an issue
• 11:28
  that's I think a harder subject to tackle or correct would be location and capacity
• 11:35
  issues, possibly due to just the building you've rented is only X big.
• 11:43
  Are you trying to tie together the fact that location and building in capacity issues
• 11:48
  can screw up overhead? Thanks? Oh yeah, yeah, this is interesting
• 11:54
  right. Um, A lot of variables. If you're in New York City,
• 11:58
  it's going to be a little different than you're in Omaha, Nebraska.
• 12:01
  Right. But unfortunately, what we have seen sometimes are dentists will want the
• 12:09
  practice of their dreams, not using much data. Get that taj Mahal practice
• 12:13
  you talk about sometimes, Yeah, not using data to drive that decision,
• 12:16
  but instead of motion, you know, buying a big space, blowing it
• 12:20
  out, decking it out, and you know it's just beautiful. So potentially
• 12:24
  it could be it's you know, it's a situation where you've made you've made
• 12:28
  it too big, like you don't there's not enough patience or you know,
• 12:31
  people around to actually fill the space you need in you're paying for. Yeah,
• 12:35
  it comes back to data. You know, how far are you booked
• 12:37
  out? What's your capacity? What's your vision? Do you want and associate
• 12:41
  down the road? Do you need space for them? Are you referring out
• 12:43
  a bunch of stuff or are you learning new procedures to do it yourself?
• 12:48
  How far you booked out, how far hygiene booked out? If you're a
• 12:50
  GP, there's so much data with that. But but unfortunately, too many
• 12:54
  people think if they get this big, sexy office on the you know,
• 12:56
  the best corner in town and it just looks good. You know they're going
• 13:00
  to come and feel to dreams as you know, if you build it right
• 13:03
  outdated, but you know, you build it and a lot of times the
• 13:05
  only team that comes as high overhead, you know. So again you've got
• 13:11
  to have good data, um, and ultimately a good team to help you
• 13:13
  guide that. Unfortunately, we've seen way too many people that just go ahead
• 13:16
  and make that jump or maybe it's a second location. Their overhead is going
• 13:20
  to be high and um, you know they they've used two pieces of data
• 13:24
  instead of sixteen pieces. That's a really hard one to bounce back from.
• 13:28
  Yeah, it's such five to eight years for sure. Right. Obviously we
• 13:33
  talk about this, you know often, and it's a thing we really focus
• 13:37
  on here at four quadrants. But poor insurance adjustments to reimbursements. That's one
• 13:45
  I hear you know as a patient. Yeah, insurance seems like something you'd
• 13:50
  want from from the owner dock side. Sometimes these insurances, uh aren't the
• 13:56
  greatest. Well this is probably a one on one level bullet point. But
• 14:00
  if you take a lot of insurances and you're and you're producing two million you're
• 14:05
  staffed up for two million, you have a building that's the sized up for
• 14:09
  two million, you've got supplies for two million of production. But let's say
• 14:13
  you are collecting I don't know, one point three million, your your insurance
• 14:20
  adjustments are seven hundred thousand dollars. That f's overhead. Obviously that would be
• 14:28
  a thirty five percent insurance adjustment right there. Number guy, I take no.
• 14:33
  Uh, I don't know if you're right or wrong on that, but
• 14:37
  I'm I'm gonna say I am. Um. It's just like it's like my
• 14:41
  every argument I have as my wife, Like remember that time I was right?
• 14:45
  That's what I say. But you're right, insurance adjustments and insurances when
• 14:48
  you talk about you know, increasing revenues, decreasing expenses. If you're if
• 14:52
  you're an insurance shop, um, you know the productions high, the collections
• 14:56
  are low, and your revenues and profitabilities not great. Right, So I
• 15:01
  mean that's an entire podcast or more. Oh that's big, that's probably a
• 15:05
  ninety minute presentation. But yeah, insurance, you know what is your insurance
• 15:09
  situation? Um, that that's going to affect overhead greatly. You know,
• 15:13
  unfortunately you'll have big offices with big staffs and many associates, and you know,
• 15:18
  again a lot of production, not a bunch of collections, a lot
• 15:20
  of insurance right offs, and massively high overhead. And that's a poor combination.
• 15:24
  Have you when you when you were talking to some some of the dentists
• 15:28
  and specialists out there, you know a lot of them will say that,
• 15:31
  yeah, my insurance, the insurance sucks, and this kind of thing.
• 15:33
  But have you seen any legit horror stories involving insurance reimbracements? Yeah, I
• 15:41
  mean that, Yeah, there's I was at a state meeting recently and talked
• 15:45
  to, you know, some people and that's what they said. They they
• 15:46
  said, I've I've looked. You know, I started in dentistry and I
• 15:50
  loved it, and I got into it for these reasons. And you know,
• 15:52
  I started with insurances just to get the patients up with the intention of
• 15:54
  backing off. And I look up six years later and I'm in the same
• 15:58
  spot or worse, and it's just it can be really hard and challenging.
• 16:03
  And again that's why for our clients, they have a full team to help
• 16:07
  them navigate these stormy waters of insurances, because they're a necessary evil that being
• 16:14
  said, they will control you unless you control them. And we've worked with
• 16:17
  people who used to get smoked with insurances and now they're making two hundred thousand
• 16:21
  dollars more in income than they were already making before and they're not and tend
• 16:26
  to be working less. Yeah. Yeah, another I would say, I
• 16:32
  mean this seems really obvious. This one ties a bow on it. It
• 16:36
  ties the bow on everything. Um, Bad decisions, bad decisions all around.
• 16:41
  What are some specific bad decisions you've you've you've seen or heard of or
• 16:45
  come across that have led to high overhead Well practice owners aren't potentially going into
• 16:51
  something like man, I'm gonna screw this up, make a bad decision,
• 16:53
  but unfortunately what they settle for, and we've said this before, their taxes
• 16:57
  have been extended or late, they're delayed, or quick books or months and
• 17:02
  months and months behind. Their profit and loss statement and balance sheets are months
• 17:06
  behind, and so they're making decisions with incomplete or incorrect data. And so
• 17:11
  they're not intentionally making a bad decision, they just don't have all the information
• 17:15
  and then then go ahead and make a decision that the bad decision is making
• 17:21
  a decision if kind of a mind pretzel, right, Like, they're not
• 17:26
  trying to make a bad decision. No, but there's a crossroads. But
• 17:29
  they shouldn't be making that decision, so it could be bad or ignorant decisions,
• 17:33
  just uninformed, right, Like you walk into a dark room with a
• 17:37
  dart and you throw it and you're like, well, why wasn't that a
• 17:38
  bull's eye? Well, because because it was dark and you couldn't see.
• 17:41
  If you don't have your data and your information and really some people to help
• 17:47
  walk through, here's what I'm thinking, tell me the good and the bad.
• 17:49
  I need to tell me what I need to hear, not what I
• 17:52
  want to hear. Because a lot of these bad decisions, you know,
• 17:57
  staffing and spending and fees and location. You've got a lot of cheerleaders trying
• 18:02
  to, you know, almost help you along, right because they assume you
• 18:04
  was the brilliant practice owner has already looked at all the data and has a
• 18:08
  good decision. They don't know you're dirty little secret that you're kind of going
• 18:11
  on a motion Casey, thank you so much for stopping by today and helping
• 18:15
  me work out some of these reasons for high overhead and practices UM and I
• 18:18
  know you're heading back out soon. You're always on the road. Uh,
• 18:22
  you see me just just like you know, two days, one night.
• 18:26
  Yeah, and you send me some pictures and I'm like, dang, oh,
• 18:29
  it's nice. I like that hotel right there. Um, don't forget,
• 18:32
  folks that we were going to be in Saint Louis um in the beginning
• 18:34
  of April apri I'm sorry, in the beginning of August. Um. We
• 18:38
  still have a just a handful of spots available for our avoid cash flow traps
• 18:44
  in your dental practice. It's a top golf in the Saint Louis area.
• 18:48
  After that we will be tasting the night before is overbooked. Yeah, we've
• 18:52
  got a clear spots for the top for the top Golf UM. And then
• 18:55
  if you're in the Minnesota Minneapolis area, we'll be having a tasting event and
• 19:00
  a top golf event there as well. That will be in the August seventeenth
• 19:03
  and eighteenth. So visit our site at four Quadrants Advisory dot com slash events
• 19:07
  and if you're in that area, sign up. It's it's free and there's
• 19:10
  a lot of great education. You get to chat with Casey and there's also
• 19:15
  things to do with it some fun things, So thank you Casey. Excellent.
• 19:21
  That's all the time we have today. Thank you to our guests for
• 19:22
  their insight and for sharing some really great information, and thank you to you
• 19:26
  the listener for tuning in. The Millionaire Dentist podcast is brought to you by
• 19:30
  Four Quadrants Advisory to see if they might be a good fit for you and
• 19:33
  your practice. Going over to four Quadrants Advisory dot com and see why year
• 19:37
  after year they retain over ninety five percent of their clients. Thank you again
• 19:41
  for joining us and we'll see you next time.