Latest / Hey Docs! / Navigating Your Orthodontic Practice in Today’s Economy - Just Jill

Transcript

Navigating Your Orthodontic Practice in Today’s Economy - Just Jill · Hey Docs!

0:05
Speaker 1: Welcome to the Hey Docs podcast. I'm your host, Jill Allen.
0:10
Speaker 1: It's time for another Just Jill episode with me behind
0:14
Speaker 1: the mic. Yes, just me. Once a month, I've decided
0:18
Speaker 1: that we're going to take a break from our usual
0:21
Speaker 1: guest interviews and dig into the questions and challenges and
0:25
Speaker 1: conversations I'm having with doctors every single day. And lately,
0:29
Speaker 1: there's been one topic, that keeps finding its way into
0:33
Speaker 1: those conversations, the economy. There's a lot of noise out
0:37
Speaker 1: there right now, and I know it can be hard
0:39
Speaker 1: to separate what you're hearing in the headlines from what
0:43
Speaker 1: actually is happening inside your practices. Do I need to
0:47
Speaker 1: change my payment options? Should I still be investing in technology?
0:51
Speaker 1: Should I be offering more discounts? What numbers should I
0:55
Speaker 1: be watching? So today I've pulled together some of the
0:58
Speaker 1: questions I'm hearing most often from our doctors, and we're
1:01
Speaker 1: going to talk through them one by one. I'm going
1:04
Speaker 1: to cover everything from third-party financing and payment structures to
1:08
Speaker 1: technology investments, discounts, and the KPIs that can help you
1:13
Speaker 1: understand how your practice is really doing. Because the goal
1:16
Speaker 1: isn't to react to everything happening around us, but it's
1:19
Speaker 1: to know your practice well enough to make smart decisions
1:23
Speaker 1: about what's happening inside it. So let's get started. And
1:27
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3:20
Speaker 1: to learn more. So the first thing that I want
3:26
Speaker 1: to talk about today is I feel like we have
3:28
Speaker 1: been spending a lot of time talking about making orthodontic
3:33
Speaker 1: treatment accessible. We hear it all over the Facebook groups.
3:36
Speaker 1: We hear it up on stage at lectures. But I
3:40
Speaker 1: think that right now, affordability is becoming an even bigger
3:45
Speaker 1: part of our conversation when we are looking at the
3:48
Speaker 1: ins and outs of our daily practices. And I think
3:52
Speaker 1: Families right now, 2026, are really watching their budgets. They
3:59
Speaker 1: are trying to make decisions on, is now the right
4:02
Speaker 1: time to get started? Do I make a decision between
4:06
Speaker 1: going on a vacation versus doing a down payment for
4:10
Speaker 1: an orthodontic treatment for myself, for my child? And I
4:13
Speaker 1: think that families are really trying to protect their cash flow.
4:18
Speaker 1: And there is more evidence financing options available, I think,
4:24
Speaker 1: more than ever. And so what I want to do
4:27
Speaker 1: is just talk a little bit about how third-party financing
4:32
Speaker 1: may fit into our orthodontic practices right now. And again,
4:37
Speaker 1: when I talk about what I hear from practices and
4:41
Speaker 1: doctors that I'm working with, whether it's a startup practice
4:45
Speaker 1: or whether it's an established practice, is I keep hearing
4:48
Speaker 1: doctors bringing up Jill. Should I be considering third-party financing
4:53
Speaker 1: right now? And how does it make sense for my
4:57
Speaker 1: practice and my patients? And I really want to break
5:00
Speaker 1: this down because I think that this is such an
5:03
Speaker 1: interesting concept. Now, me having been in the industry for
5:07
Speaker 1: over 30 years now and been a consultant through working
5:12
Speaker 1: in a practice and then starting my own business during
5:15
Speaker 1: the recession back in 2006, 2007, 2008... I can tell
5:20
Speaker 1: you that right now, in my Jill opinion, our economy
5:26
Speaker 1: is so running parallel to what we saw back in 2006, 2007, 2008.
5:32
Speaker 1: And I do think that we really need to be
5:34
Speaker 1: thinking about other options for our patients today. to say
5:39
Speaker 1: yes to treatment. I do feel like over the years,
5:43
Speaker 1: especially for any younger doctors that are out there, we
5:45
Speaker 1: have gotten into this comfortable spot where we've kind of
5:49
Speaker 1: need to only offer or maybe have only ever thought
5:52
Speaker 1: about offering two different options for patients to say yes
5:56
Speaker 1: to treatment. Either some type of a pay in full discount,
6:00
Speaker 1: get a little discount, take care of things in full,
6:03
Speaker 1: or do some type of an in-office finance plan with
6:07
Speaker 1: the practice no interest. I think for so many years
6:10
Speaker 1: when the economy has been so well, we have really
6:12
Speaker 1: not had to think about a third option. Or if
6:16
Speaker 1: we have thought about it, it's kind of been a
6:18
Speaker 1: fringe idea because why would somebody need a way to
6:22
Speaker 1: say yes to treatment and have to take on the
6:26
Speaker 1: debt of some type of a credit card or whatnot
6:29
Speaker 1: to get started in treatment? But I think that as
6:32
Speaker 1: I've been working with practices and I counsel and talk
6:35
Speaker 1: with doctors, I think that this is something that we
6:37
Speaker 1: really need to be considering. And I think there are
6:39
Speaker 1: seasons in our practice life where we may lean into
6:45
Speaker 1: strategies a little bit more than others. And I do
6:47
Speaker 1: think that right now we should be really considering a
6:51
Speaker 1: third option for our patients to say yes to treatment.
6:55
Speaker 1: And that is some type of a third-party financing. My
6:59
Speaker 1: rule of thumb or what I tell doctors when they're
7:02
Speaker 1: asking about this is, first and foremost, find out what
7:06
Speaker 1: your general dentist or your pediatric dentist are doing in
7:09
Speaker 1: the area. Almost all dental practices are offering some type
7:14
Speaker 1: of a finance plan that allows a patient to get
7:17
Speaker 1: started A lot of times that can be a care
7:20
Speaker 1: credit or a cherry or whatever that is. But the
7:23
Speaker 1: reason I like for docs to kind of lean into
7:25
Speaker 1: that and find out what their referring docs are doing
7:29
Speaker 1: is because if a patient is already used to using
7:33
Speaker 1: a third-party company in their dental office, in their veterinarian office,
7:39
Speaker 1: in their specialty office, it's going to be very easy
7:42
Speaker 1: for them to say, hey, I think I might want
7:46
Speaker 1: to use that system that I've already got set up
7:49
Speaker 1: for me saying yes to orthodontic care. So when I
7:54
Speaker 1: look at these third-party companies and what is the impact
7:58
Speaker 1: on an orthodontic practice, I think the biggest thing that
8:01
Speaker 1: we need to think about as orthodontic practices, as treatment coordinators,
8:05
Speaker 1: as doctors is first, What's our first goal? Our first
8:08
Speaker 1: goal is to take away the obstacles of a patient
8:13
Speaker 1: and get them to yes. So is the obstacle the down?
8:16
Speaker 1: Is the obstacle the monthly payment? Is the obstacle, should
8:20
Speaker 1: I pay you in full? Am I going to make
8:22
Speaker 1: more money leaving my money in my high yield savings account?
8:25
Speaker 1: Or is your pay in full discount big enough to
8:28
Speaker 1: offset that I'm actually going to do better to pay
8:32
Speaker 1: my treatment in full? Or when we look at the
8:35
Speaker 1: third party financing, when we're looking at how do we
8:38
Speaker 1: get them to yes, is there an obstacle of no
8:42
Speaker 1: matter how much we're trying to make that down work
8:44
Speaker 1: and that monthly payment with no interest work, it's just
8:47
Speaker 1: not going to work for a patient. And we need
8:50
Speaker 1: to move them into, is there a way that they
8:53
Speaker 1: can say yes, maybe with no down payment. and longer
8:57
Speaker 1: payments over a longer period of time, but keep you
9:00
Speaker 1: safe as a practice owner. So when we look at
9:03
Speaker 1: this third-party financing, I'm always coaching my docs on, you know,
9:06
Speaker 1: there's kind of two sides that you need to be
9:08
Speaker 1: looking at. The first one is, is a patient able
9:12
Speaker 1: to maneuver their way through the options that you're putting
9:15
Speaker 1: in front of them? And I always say, I want
9:19
Speaker 1: you and your team, if you are going to lean
9:22
Speaker 1: into this, every option is the best option for a patient.
9:25
Speaker 1: If they want to pay them full, fabulous. That's a
9:28
Speaker 1: great option. If they want to do a down payment
9:31
Speaker 1: and monthly payments over a set period of time, great.
9:34
Speaker 1: That's the best. If they want to get started with
9:36
Speaker 1: no money down and payments over a longer period of
9:39
Speaker 1: time through a third-party company, that's great. We just want
9:43
Speaker 1: to lean into and not put our own biases in
9:46
Speaker 1: front of having a patient say yes to treatment. The
9:50
Speaker 1: second part that I think we have to think about
9:52
Speaker 1: in a practice, and I get this all the time
9:54
Speaker 1: from docs, is, well, what is the impact on me
9:58
Speaker 1: going to be as the business? owner? Because we've got
10:01
Speaker 1: that unsexy side of the business that we always have
10:03
Speaker 1: to be talking about. And that is, how does this
10:06
Speaker 1: affect me on the business side? So if I... choose
10:10
Speaker 1: to work with one of these third-party companies, there's usually
10:13
Speaker 1: always going to be a percentage of your income that
10:19
Speaker 1: is going to be taking away in some type of
10:22
Speaker 1: a transaction fee. So depending upon the company, you may
10:26
Speaker 1: have anywhere between 3% and 5%, 7% of that that
10:31
Speaker 1: is going to go into some type of a transaction fee.
10:34
Speaker 1: So you may be getting $ 5, 000 for the treatment, but
10:38
Speaker 1: on the back end, you're paying 5% of that to
10:41
Speaker 1: that third-party company. And the way I look at that
10:44
Speaker 1: is it's kind of like us using credit cards in
10:47
Speaker 1: an office. I can remember a time way back in
10:50
Speaker 1: the day where nobody paid with a credit card and
10:53
Speaker 1: everybody paid with cash or check and coupon books. And
10:56
Speaker 1: the thought of letting a patient pay and the impact
11:01
Speaker 1: of merchant service fees was so crazy back in the day,
11:06
Speaker 1: but now that's just commonplace. And I think that we
11:09
Speaker 1: just have to think about this and kind of shift
11:13
Speaker 1: our mindset a little bit as a business owner when
11:16
Speaker 1: we're thinking about this from our P & L side
11:19
Speaker 1: or the business side of the practice and think about okay,
11:24
Speaker 1: if I can have a patient use one of these
11:28
Speaker 1: third-party companies that I've invested, gated, and decided that this
11:33
Speaker 1: is going to be the one that works best for me,
11:35
Speaker 1: and there's a reasonable finance fee that I know I'm
11:40
Speaker 1: going to have to pay, but it allows my patient,
11:43
Speaker 1: and it's going to be a small portion that want
11:44
Speaker 1: to do this, but it allows maybe an extra 3%
11:49
Speaker 1: of patients to say, or 5% of patients to say
11:53
Speaker 1: yes to treatment that allows me to possibly, with most
11:57
Speaker 1: of these companies, get paid in full. And now I
12:00
Speaker 1: just get to focus on treating the patient, and the
12:04
Speaker 1: patient gets to deal with their finances with that third-party company.
12:08
Speaker 1: In my opinion, it becomes a win-win. So to wrap
12:13
Speaker 1: up my thought on should practices... be thinking about using
12:17
Speaker 1: third party. I absolutely think we should. I think especially
12:21
Speaker 1: with where the economy is at right now, I think
12:23
Speaker 1: that it is a lever that we can pull when
12:27
Speaker 1: we're putting on our business ownership hats and saying, Is
12:32
Speaker 1: there something else that I can do besides just extending
12:37
Speaker 1: payments over a longer period of time or besides just
12:41
Speaker 1: taking super low downs? Is there one other lever that
12:45
Speaker 1: we can pull that will help us help our patients
12:49
Speaker 1: say yes to treatment? And I do. I think there is.
12:52
Speaker 1: And I think that is investigating using third-party financing methods.
12:56
Speaker 1: at least for this season and our practices where the
13:00
Speaker 1: economy is a little tight, where patients are really thinking
13:04
Speaker 1: about cash flow. This could be a lever that we
13:07
Speaker 1: turn off and change when the economy is doing really well.
13:10
Speaker 1: But I think it's something that as business owners, we
13:13
Speaker 1: should be thinking about and doing. Another thing I think
13:15
Speaker 1: a lot about is when we think about these third-party
13:18
Speaker 1: companies and do we pull this lever? Do we bring
13:22
Speaker 1: them into our practice and start utilizing them? The first
13:25
Speaker 1: thing you have to think about as a doctor is
13:26
Speaker 1: you have to understand that not all third-party companies are
13:29
Speaker 1: the same. Everybody's going to have some different ways that
13:33
Speaker 1: they pay out, some different ways that they mitigate risk
13:37
Speaker 1: for you, or that you mitigate risk in looking at
13:40
Speaker 1: the way they handle the patient account and delinquencies. And
13:45
Speaker 1: I think that as doctors, what you need to be
13:48
Speaker 1: thinking about if you are thinking that you might go
13:51
Speaker 1: about maybe using a third party company is I think
13:55
Speaker 1: first and foremost, as a consultant, the thing that I'm
13:58
Speaker 1: looking at for you, and I think you need to
14:00
Speaker 1: be thinking about is ultimately how do we mitigate delinquency risk?
14:08
Speaker 1: And what I mean by that is if with most
14:12
Speaker 1: of the companies, now, again, they all are not the same.
14:15
Speaker 1: If we are able to have somebody else take on,
14:20
Speaker 1: a third-party company take on the risk of that debt
14:24
Speaker 1: load and the risk of that possible delinquency in the
14:29
Speaker 1: event that a patient does not uphold their side of
14:32
Speaker 1: the bargain and paying back that, and yet you are
14:35
Speaker 1: still able to be paid in full upfront, less whatever
14:41
Speaker 1: those transaction charges are. I think that that's a really
14:44
Speaker 1: important thing to think about because it's allowing you to
14:48
Speaker 1: just be in the driver's seat of a clinician and
14:51
Speaker 1: helping a patient get from point A to point B
14:54
Speaker 1: on their treatment journey. But yet you aren't having to
14:58
Speaker 1: deal with the risk of delinquency like you would if
15:02
Speaker 1: a patient were in your practice. on some type of
15:05
Speaker 1: a payment plan. And so when we think about this
15:08
Speaker 1: with a third party company, I want you to think
15:11
Speaker 1: about how does this company help me mitigate that delinquency
15:16
Speaker 1: risk and just keep in mind that not all companies
15:21
Speaker 1: are the same. And so there are some that are
15:25
Speaker 1: out there kind of new on the scene that may
15:27
Speaker 1: pay you a portion in the beginning. And if the
15:31
Speaker 1: patient is keeping up with their payment plans, you will
15:35
Speaker 1: get another portion along the way until eventually you're paid out.
15:40
Speaker 1: That may be a good option for you. But it
15:43
Speaker 1: may not. And again, what does that do to your
15:45
Speaker 1: risk tolerance there where you may say, hey, it may
15:49
Speaker 1: be worthwhile to investigate other ones out there that are
15:52
Speaker 1: just going to pay me up front. I get to
15:54
Speaker 1: be the doctor. I know I'm going to take a
15:56
Speaker 1: little hit in the merchant service fee or whatnot or
16:00
Speaker 1: the transaction fee. But yet now I don't have to worry.
16:04
Speaker 1: I don't have to worry about any of that delinquency risk.
16:07
Speaker 1: So there's some thoughts there. Now what I want to
16:10
Speaker 1: do is I want to get into something that I
16:12
Speaker 1: am constantly talking about with practices. And I think that
16:16
Speaker 1: there is, again, with the economy where it's at, I'm
16:20
Speaker 1: constantly having discussions about down payments and monthly payments. And again,
16:25
Speaker 1: when patients are feeling that financial pressure, I think it
16:30
Speaker 1: can be really tempting for practices to immediately jump to
16:36
Speaker 1: discounts or immediately jump to lowering that barrier to entry
16:41
Speaker 1: with our down payments or whatnot. And I think that
16:45
Speaker 1: we have to really think about as practice owners, you know,
16:49
Speaker 1: we really need to think about cash flow in your practice,
16:54
Speaker 1: which are those receivables that we're getting in. And what
16:58
Speaker 1: does that do to the long-term health of your practice?
17:04
Speaker 1: And the answer you're going to be kind of surprised
17:07
Speaker 1: by this isn't necessarily one size fits all. Because again,
17:12
Speaker 1: when I'm coaching with a startup practice, it's going to
17:15
Speaker 1: be a very different answer and strategy that we're going
17:19
Speaker 1: to be going after than maybe an acquisition or an
17:23
Speaker 1: established practice. So again, I have a lot of doctors
17:26
Speaker 1: that come to me and all three of the different
17:29
Speaker 1: stages that I'm working with. And probably their biggest question is, hey, Jill,
17:34
Speaker 1: How should I be doing my down payments and my
17:38
Speaker 1: monthly payments right now, especially when the economy is tough
17:41
Speaker 1: right now? And do you think that that strategy should
17:45
Speaker 1: change as I grow my practice or I'm looking ahead
17:50
Speaker 1: at the future? And so I'm going to break this
17:52
Speaker 1: down into what I'm seeing right now as a consultant,
17:56
Speaker 1: how I coach in those three different areas. First and foremost,
18:01
Speaker 1: the biggest thing that we have to think about, and
18:03
Speaker 1: I want you thinking about as business owners, is I
18:06
Speaker 1: think sometimes we have this scarcity mindset that we have
18:10
Speaker 1: to get everybody in the door that comes through our door,
18:14
Speaker 1: especially in a startup. But I think as our economy
18:17
Speaker 1: gets tighter, even my established practices start to feel that
18:22
Speaker 1: crunch of, oh my gosh, my start numbers are down.
18:25
Speaker 1: We're not converting the way we used to. People aren't
18:28
Speaker 1: just saying yes to treatment so easily. And so when
18:32
Speaker 1: we think about the down payments and the monthly payments,
18:35
Speaker 1: when I'm thinking about a startup, first and foremost... I
18:39
Speaker 1: think about the hardest thing about doing a startup is
18:41
Speaker 1: the fact that you have, you know, zero money. You're
18:44
Speaker 1: starting with nothing. You've got maybe 75 to 100,000 in
18:48
Speaker 1: working capital. And that's got to be what you have
18:52
Speaker 1: to work off of. You know, when you've got your
18:54
Speaker 1: expenses and you've got your income, it takes a long
18:58
Speaker 1: time to have your receivables build up to to offset
19:02
Speaker 1: the expenses that you have on a monthly basis. And
19:06
Speaker 1: so we really start at this really big deficit and
19:09
Speaker 1: we have to bring that to level to hopefully then
19:13
Speaker 1: bring that to a point of excess where we are
19:16
Speaker 1: receiving more than our expenses going out. And so when
19:20
Speaker 1: I'm talking to a startup practice, the biggest thing that
19:23
Speaker 1: we really work on is setting really good boundaries for
19:27
Speaker 1: for how do you pay your monthly expenses until our
19:31
Speaker 1: receivables start to build up. And so when I'm coaching
19:35
Speaker 1: with startup practices, we've got some very specific boundaries that
19:39
Speaker 1: we set in place on how much we'll take for
19:41
Speaker 1: downs with certain more analog cases, fixed bracket cases, versus
19:48
Speaker 1: if we are using some and leaning into some of
19:51
Speaker 1: our digital technologies, aligner treatments, custom brackets, where we may
19:56
Speaker 1: be adjusting our downs to be, you know, a lot
19:59
Speaker 1: of times I coach on, you know, within about $ 300
20:02
Speaker 1: of wherever our lab fee is going to be. Because
20:05
Speaker 1: what I need you to hear as startup practices and
20:09
Speaker 1: as startup doctors is if you accept a very low down,
20:14
Speaker 1: you're going to do one of two things. You're either
20:16
Speaker 1: going to pay for that lab fee on a credit
20:18
Speaker 1: card where you're putting off the inevitable that you're just
20:21
Speaker 1: kind of building debt, or you're going to pay that
20:26
Speaker 1: out of your working capital and just continuing to draw
20:28
Speaker 1: down on your working capital. So, you know, if we
20:31
Speaker 1: can keep startups, you know, as I'm coaching, if we
20:34
Speaker 1: can keep you safe in where your downs are and
20:39
Speaker 1: negate to make sure that we're coming close to any
20:43
Speaker 1: expense in that start that we're covering that you are
20:48
Speaker 1: going to be a healthier practice long term where you
20:51
Speaker 1: are not just running yourself into the ground. Now, I
20:55
Speaker 1: will tell you, not a lot of people like hearing
20:58
Speaker 1: me say this, and I'm putting this out there for
21:00
Speaker 1: anybody to hear, but that isn't always what some of
21:04
Speaker 1: the third-party companies want us to do, or that isn't common.
21:08
Speaker 1: I hear a lot about the Facebook groups out there,
21:11
Speaker 1: and people will coach on $ 100 down, $ 100 a month.
21:15
Speaker 1: And we got to just always be mindful about it's
21:19
Speaker 1: not one size fits all. And I think depending upon
21:22
Speaker 1: the age of a practice, you have to be very,
21:24
Speaker 1: very careful. A solution like $ 100 down, $ 100 a month
21:30
Speaker 1: sounds great if you've got somebody else funding your practice.
21:34
Speaker 1: Sounds great if you've got receivables that are already covering
21:37
Speaker 1: your expenses. But if you don't, that's not a good move.
21:42
Speaker 1: So when we think about these finances and how does
21:44
Speaker 1: it change, my coaching changes as we move along. Because again,
21:49
Speaker 1: if we're an established practice that already has receivables, we
21:54
Speaker 1: are already covering our expenses. Hopefully, we're already covering doctor's income.
22:02
Speaker 1: An acquisition is a perfect one where we may be
22:06
Speaker 1: covering expenses and receivables are coming in, but we haven't
22:10
Speaker 1: quite covered what a doctor is looking for for their income.
22:14
Speaker 1: We still have to be careful about how we're doing
22:17
Speaker 1: those down payments and those monthly payments. I'm going to
22:21
Speaker 1: talk a little bit about the established. I think that
22:23
Speaker 1: as our practices go through their practice life cycle from
22:28
Speaker 1: startup to kind of midlife to eight years to retirement,
22:33
Speaker 1: there are different strategies that we can kind of employ
22:37
Speaker 1: to have patients say yes to treatment. So If we've
22:42
Speaker 1: got an established practice that's got good receivables, I think
22:45
Speaker 1: it makes it much easier for us to maybe take
22:49
Speaker 1: a bigger risk on a lower down or a bigger
22:52
Speaker 1: risk on extending payments out over a longer period of
22:57
Speaker 1: time because we've got that safety net of receivables. But
23:04
Speaker 1: The downfall that we can run into when we're taking
23:07
Speaker 1: lower downs and taking payments over longer periods of time,
23:10
Speaker 1: especially in established practice, is if we don't have a
23:14
Speaker 1: strong financial system in place for tracking delinquencies, it can
23:20
Speaker 1: come back to really bite us because basically we're allowing
23:24
Speaker 1: patients to have brackets now, but pay for that treatment later.
23:29
Speaker 1: And although we've got our safeguards in place, get everybody
23:32
Speaker 1: set up on ACH payments or some type of a
23:35
Speaker 1: credit card payment or whatnot. And I think that most
23:38
Speaker 1: of that works most of the time. If you don't
23:41
Speaker 1: have a good either third party company that's managing your finances,
23:45
Speaker 1: you don't have a good team member in place that's
23:47
Speaker 1: keeping your delinquencies where they need to be. I say
23:50
Speaker 1: in a healthy practice, we want to have our delinquencies
23:54
Speaker 1: no higher than 5% as a whole, ideally at 3%.
23:58
Speaker 1: So if we aren't paying attention to those things and
24:01
Speaker 1: we're just letting our TC start everybody for $ 100 and
24:06
Speaker 1: $ 100 a month for eternity, and we don't have somebody
24:09
Speaker 1: strong financial position, we will in turn run into problems.
24:14
Speaker 1: And I think the biggest financial indicator for a practice
24:18
Speaker 1: when we start to run into problems is when we
24:21
Speaker 1: start getting to a point where we're collecting more than
24:24
Speaker 1: what we're producing in a year. That means that our production...
24:28
Speaker 1: is coming down and we are basically not moving in
24:32
Speaker 1: a right direction. And so when we start to see
24:35
Speaker 1: those delinquencies creeping up and we start to look at,
24:38
Speaker 1: oh my gosh, we're 90 days past due. Here's the reality, guys.
24:43
Speaker 1: If you have allowed a patient or your practices to
24:46
Speaker 1: get to a point where you've got a significant amount
24:48
Speaker 1: of money and passed due 90 days, 120 days, the
24:52
Speaker 1: chances that you're going to collect that are going to
24:54
Speaker 1: be really low unless you've got somebody on the front
24:56
Speaker 1: end working that. So we just have to be really
24:58
Speaker 1: careful that it doesn't mean that we can't think about
25:02
Speaker 1: if we're going to lower our downs and lower our monthlies,
25:04
Speaker 1: we have to, especially in an established practice, we have
25:07
Speaker 1: to have a really strong plan. coordinator in place or
25:11
Speaker 1: third party company that really understands the importance again of
25:16
Speaker 1: keeping us safe in our receivables so that we don't
25:20
Speaker 1: get ourselves upside down. And now a word from the
25:24
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25:29
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25:33
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25:38
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25:42
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25:47
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26:04
Speaker 1: discount exclusively for my listeners. All right, guys. So here's
26:13
Speaker 1: the next one. I get asked this all the time
26:15
Speaker 1: in practices. When should I be thinking about discounts in
26:21
Speaker 1: a practice? And I think that so many times... Again,
26:25
Speaker 1: going back to this thought as practice owners, we want
26:27
Speaker 1: to get everybody to start in our practice and we
26:30
Speaker 1: want to meet each patient where they are at. But
26:34
Speaker 1: I think that we have to be really thinking about,
26:37
Speaker 1: are there times, just like we think about with our
26:40
Speaker 1: downs and our monthly payments or strategies that we take
26:43
Speaker 1: to get patients to say yes, are there times that
26:47
Speaker 1: we should be thinking about when do we lean into that?
26:52
Speaker 1: discounts and when we need to be careful to protect
26:57
Speaker 1: the value of what we do. So again, I have
27:01
Speaker 1: a lot of doctors that are constantly asking me, you know, hey, Jill,
27:06
Speaker 1: how can I offer a discount or financial flexibility without
27:11
Speaker 1: discounting the value that I am delivering in my treatment
27:16
Speaker 1: with my practice and with patients seeing the value in
27:19
Speaker 1: what we do? And this is a good one because, again,
27:23
Speaker 1: I think that we have to approach this very differently
27:27
Speaker 1: when we're thinking about this from a startup practice versus
27:30
Speaker 1: when we're thinking about this from an acquisition or an
27:34
Speaker 1: established practice. And for sure, when we're doing a startup practice,
27:38
Speaker 1: It's about butts in the chair starts in the books
27:40
Speaker 1: in our first year. And I know that's a really
27:42
Speaker 1: crude way to say it, but that's what it's about.
27:44
Speaker 1: And so it will make sense that we are doing
27:48
Speaker 1: some type of discount, maybe a grand opening discount or this, that,
27:52
Speaker 1: or the other when we're getting started. And we may
27:56
Speaker 1: at certain times of the year implore a different discount
28:00
Speaker 1: because it's a slower time of the month or slower
28:03
Speaker 1: time of the year. And We're just trying to keep
28:05
Speaker 1: the momentum going because let's face it, when you're a startup,
28:09
Speaker 1: it's about brand awareness. We just need people to be
28:13
Speaker 1: aware of you when you're a startup. And sometimes that
28:16
Speaker 1: brand awareness and people saying yes to treatment is what
28:20
Speaker 1: we need. And we needed a discount to help us
28:23
Speaker 1: with that. So I think that there will always... be
28:28
Speaker 1: times where we should have discounts in a practice. And
28:31
Speaker 1: when we look at that from, and I get this
28:34
Speaker 1: a lot with doctors, especially my startups who are like,
28:38
Speaker 1: but I don't want to discount my treatment. So I
28:42
Speaker 1: feel like I'm discounting what I do by offering a discount.
28:47
Speaker 1: And I think that that's a hard thing to put
28:48
Speaker 1: your mind around sometimes that we're not discounting the value
28:53
Speaker 1: of what you're doing. But there may be times where
28:57
Speaker 1: we do need to think about discounting. helping patients say
29:02
Speaker 1: yes to treatment or get that momentum moving. And it
29:06
Speaker 1: isn't a long-term strategy. That's what I guess I want
29:10
Speaker 1: you to hear. Even if we are doing some type
29:13
Speaker 1: of discounting, it isn't a long-term strategy. It's usually a
29:17
Speaker 1: strategy that we are leaning into to get volume up
29:22
Speaker 1: with patients or to get things moving as we are
29:25
Speaker 1: growing a practice. Now, when we think about this in
29:28
Speaker 1: regard to Established practices or doctors that have done an acquisition.
29:34
Speaker 1: I think that that's where we really have to start
29:37
Speaker 1: thinking about, are there times? where it's more of a
29:42
Speaker 1: marketing strategy than anything when we think about discounts? And
29:46
Speaker 1: I'm not talking about the pay in full discount or
29:48
Speaker 1: the family member discount. I'm talking about Are there times
29:53
Speaker 1: that we are going to look at our year and say, hey,
29:58
Speaker 1: I know in general, I'm just going to very generically
30:01
Speaker 1: say for most states, you know, maybe May and September
30:05
Speaker 1: are going to be a slower month. I can just
30:08
Speaker 1: historically see that we're going to have slower months and
30:10
Speaker 1: busier months. And I know that patient starts kind of
30:15
Speaker 1: ebb and flow depending upon what month of the year.
30:19
Speaker 1: So when we think about discounts in that way from
30:22
Speaker 1: an established practice or an acquisition, I say think about
30:26
Speaker 1: it more as a marketing strategy. Is there something that
30:30
Speaker 1: you can do to encourage starts in months that may
30:35
Speaker 1: be slower months? So may we run a small discount?
30:40
Speaker 1: I always say if we're going to run some type
30:42
Speaker 1: of a marketing discount. We're going to have a start
30:45
Speaker 1: and an end to it. We're going to have some
30:47
Speaker 1: restrictions apply because you may be an insurance. You may
30:50
Speaker 1: not be able to discount your fees, but we're looking
30:53
Speaker 1: at it very strategically and we're not being reactive to, oh,
30:57
Speaker 1: we're slow. So therefore I want to give everybody that
31:00
Speaker 1: comes in X amount of dollars off. It's part of
31:02
Speaker 1: our marketing strategy on when we may run discounts. Another
31:07
Speaker 1: tool that I think a encouraging those same day starts
31:14
Speaker 1: or same day scans. And even though we may look
31:17
Speaker 1: at doing a, hey, if you get started today, if
31:20
Speaker 1: we get a scan today, depending upon what your verbiage is,
31:23
Speaker 1: and there's a lot to unpack there, but I'm not
31:25
Speaker 1: gonna get into that. I have a lot of practices
31:27
Speaker 1: that will in the moment say, hey, and if you
31:30
Speaker 1: wanna get started today, we're doing an additional $ 300 off.
31:33
Speaker 1: If somebody says no, great, no problem. But that can
31:36
Speaker 1: also be a strategy that is like a discount, but
31:39
Speaker 1: it's more of an incentive to make a decision to
31:43
Speaker 1: move forward with your practice. So I think that my
31:46
Speaker 1: take home message about discounts is that I do think
31:50
Speaker 1: that there is a time and a season for when
31:54
Speaker 1: we should be doing them. We may do them a
31:56
Speaker 1: little bit more in startup practices when we're in growth mode.
32:00
Speaker 1: We may do them more strategically when we're in an
32:06
Speaker 1: established practice or an acquisition practice when we're looking at
32:11
Speaker 1: trying to even out cash flow through the year. And again,
32:15
Speaker 1: we're looking at that more as a marketing strategy and
32:19
Speaker 1: less as a we're taking away from the overall profit
32:24
Speaker 1: of the practice because, of course, it's not a good
32:26
Speaker 1: long-term strategy. Well, some people may think of it that way.
32:30
Speaker 1: I don't, to just always have a discount running. I
32:33
Speaker 1: think that it's more of a lever that we can
32:35
Speaker 1: pull together in certain months to get movement in cash
32:38
Speaker 1: flow and maybe pump up slower months when we see
32:42
Speaker 1: an ebb and flow in our historical data. So here's
32:46
Speaker 1: another one that I think a lot of doctors are
32:49
Speaker 1: wrestling with right now. And I think I especially see
32:52
Speaker 1: this in my startup practices, but it is not exclusive
32:56
Speaker 1: to startups. I see this with my acquisitions. I see
32:58
Speaker 1: this with my established practices. And that is when expenses
33:02
Speaker 1: are up, Our natural reaction a lot of times, I
33:06
Speaker 1: think as doctors, as consultants, as anybody who's kind of
33:11
Speaker 1: looking at the back end side of a business, is
33:14
Speaker 1: to pull back or stop on spending. But at the
33:19
Speaker 1: same time, technology is moving incredibly fast. And some of
33:24
Speaker 1: these tools... that we actually need to spend money on
33:29
Speaker 1: actually help us make more money in the long run
33:33
Speaker 1: and make us more efficient as we are moving through
33:37
Speaker 1: our treatment planning and working with patients. And so the
33:41
Speaker 1: question that I am continuing to get is, hey, Jill,
33:46
Speaker 1: is this a good time to introduce new digital technology
33:52
Speaker 1: into my practice? And what should I be looking at
33:56
Speaker 1: if I decide whether the investment is actually worth it?
34:00
Speaker 1: And I think this is really something that as doctors,
34:04
Speaker 1: you really should be wrestling with. Now, I'm going to
34:08
Speaker 1: tell you, any of you that's listened, that is a
34:11
Speaker 1: startup practice. I'm going to talk about it for each
34:14
Speaker 1: of the practice segments that I work with. But when
34:17
Speaker 1: we're looking at startups, and this is going to probably
34:21
Speaker 1: sound very maybe counter to popular thought is I feel
34:27
Speaker 1: like for a startup, there is never a better time
34:31
Speaker 1: to lean into technology, especially digital workflows, but technology than
34:37
Speaker 1: in a startup because you will never have more time
34:42
Speaker 1: to invest into your steps and your processes than when
34:46
Speaker 1: you're slow. The hardest thing that I see for an
34:49
Speaker 1: established practice or a practice that's really going and growing
34:53
Speaker 1: is for them to introduce in a new technology. And
34:57
Speaker 1: we see this all the time where a doctor tries
35:00
Speaker 1: to introduce and it just falls flat or it never
35:03
Speaker 1: goes anywhere. And I think that has to do so
35:06
Speaker 1: much with there's so much that goes into it when
35:09
Speaker 1: you're already busy, unless you're very purposeful and really intentional,
35:14
Speaker 1: I guess is the word I'm looking for. with how
35:16
Speaker 1: you're going to introduce technology, it's going to be a
35:19
Speaker 1: very difficult thing. So when I think about digital workflows
35:24
Speaker 1: and digital technology and customized brackets, I think for a startup, absolutely,
35:31
Speaker 1: you should be leaning into those and introducing those. The
35:35
Speaker 1: other thing I think about is that You are setting
35:39
Speaker 1: up your future practices for how you will treat in
35:44
Speaker 1: the future. And what I want you to be thinking
35:48
Speaker 1: about is we are most profitable in a practice when
35:52
Speaker 1: we can control the amount of visits that a patient
35:56
Speaker 1: comes into your practice. And what I mean by that
36:00
Speaker 1: is if we see a patient 20 times or we
36:03
Speaker 1: see a patient 10 times, if our fee was $ 5, 000,
36:07
Speaker 1: we're going to have more profit per visit if we're
36:11
Speaker 1: able to see a patient 10 times and be very
36:14
Speaker 1: efficient with what we're doing. And we're going to lose
36:17
Speaker 1: profit if we see them 20 times. So we have
36:21
Speaker 1: to really think about that. Now, when we think about
36:24
Speaker 1: this from digital technologies in a established practice, or I
36:29
Speaker 1: have a lot of docs that we're working with them
36:32
Speaker 1: in an acquisition where they are a new doc coming in.
36:35
Speaker 1: And let's talk about the acquisitions first, you know, new
36:37
Speaker 1: doc coming into a practice and they've got this vision of.
36:42
Speaker 1: I want to introduce new technology, but the senior doc
36:47
Speaker 1: and the practice that I just bought into may be
36:49
Speaker 1: very analog, very old school, works well, but just is
36:53
Speaker 1: not functioning at the level that the new doc coming
36:57
Speaker 1: in is. I think that there's this delicate balance there
37:01
Speaker 1: of we need to be able to step into a
37:03
Speaker 1: practice and get a hold of how do we understand
37:07
Speaker 1: how to take over and run a practice, but also
37:11
Speaker 1: have the vision in mind of where are we moving
37:14
Speaker 1: that practice into a digital realm. So again, that new
37:19
Speaker 1: doctor who's purchased the practice is going to be able
37:23
Speaker 1: to be more efficient and with what they are doing
37:27
Speaker 1: in the practice. And again, change is hard. Change is
37:30
Speaker 1: one of the hardest things. It's hard to get team
37:32
Speaker 1: members behind you. But I think especially in an acquisition,
37:36
Speaker 1: you know, I usually tell docs, definitely by month six
37:39
Speaker 1: to nine, if you're thinking that you're wanting to introduce,
37:43
Speaker 1: if it's not already there, digital into a practice, you
37:46
Speaker 1: really need to start doing that because we're already changing.
37:49
Speaker 1: We're changing the dynamics of management. We're changing the dynamics
37:54
Speaker 1: of leadership. We may be shifting the culture of the practice.
37:58
Speaker 1: We may have transition. between team members already. So again,
38:03
Speaker 1: we're doing the hard, why not do the hard and
38:05
Speaker 1: start introducing the digital in? Because in the long run,
38:09
Speaker 1: the goal is about you as a doctor being able
38:13
Speaker 1: to make money, make up that deficit of expense to income.
38:17
Speaker 1: And when you're a new practice owner, whether it's an
38:20
Speaker 1: established practice or not, you've got more debt than the
38:23
Speaker 1: previous doctor and we need to move you into that
38:26
Speaker 1: digital realm. So again, I am a huge proponent for
38:31
Speaker 1: moving into that digital. And then I'm going to speak
38:33
Speaker 1: to my docs that have established practices. I really feel
38:37
Speaker 1: for any of my established practice doctors, because one of
38:41
Speaker 1: the hardest things you will do is introducing a new
38:45
Speaker 1: technology into your practice. And my suggestion with established practices
38:53
Speaker 1: is pick a new digital system or pick a system
38:57
Speaker 1: and maybe introduce one thing a year. Know what your
39:01
Speaker 1: end goal is. Maybe it is to completely switch out
39:05
Speaker 1: your bracket system and to have completely customizable brackets. Maybe
39:10
Speaker 1: it is to move from an analog way of placing
39:13
Speaker 1: brackets to an indirect way of placing brackets. Maybe it
39:17
Speaker 1: is to really focus on more shared chair work. between
39:22
Speaker 1: fixed brackets, whether they're custom or not, and aligners in
39:27
Speaker 1: your practice, but choose one movement a year and have
39:33
Speaker 1: a group within your team that you're going to work
39:37
Speaker 1: with to help you move in that direction. So it's
39:40
Speaker 1: just not sprung on everybody. It's, you know, have your
39:43
Speaker 1: core team that you're going to work with. Have your
39:45
Speaker 1: core team members that you're going to, if it's on
39:47
Speaker 1: the clinical side, that we're going to work with that
39:50
Speaker 1: are going to be working alongside you to, before you implement,
39:55
Speaker 1: think about all of the disruptions that it's going to
39:59
Speaker 1: cause within your practice. So is this going to affect
40:02
Speaker 1: us in the TC room? Is this going to affect
40:04
Speaker 1: us in our fees? Is this going to affect the
40:07
Speaker 1: way we bill insurance possibly? Is this going to affect
40:10
Speaker 1: the way we do our starts? Is this going to
40:13
Speaker 1: affect the way we do our same day starts? Are
40:15
Speaker 1: we going to be doing scans versus placement of brackets?
40:19
Speaker 1: Whatever it is, think about, have a think tank almost
40:23
Speaker 1: about what it's going to take to invest into this
40:27
Speaker 1: new digital strategy or this new technology that you're going
40:32
Speaker 1: to implement. And then have a strategy for how you
40:36
Speaker 1: are going to move through that in that next year.
40:39
Speaker 1: I think one of the biggest obstacles that doctors tend
40:43
Speaker 1: to do is they come in and they think that
40:46
Speaker 1: everything is just going to happen overnight and we're going
40:48
Speaker 1: to quickly move in. And I saw this new technology
40:52
Speaker 1: and we're implementing it. And I'll tell you, the salespeople
40:54
Speaker 1: want you to do that. Absolutely. But you need to
40:57
Speaker 1: be strategic about about what you are doing so that
41:01
Speaker 1: it can be successful. Strategic equals success. And that's what
41:06
Speaker 1: I think we need to think about when we are
41:09
Speaker 1: introducing digital technology. So as kind of a recap, if
41:12
Speaker 1: you're a startup, 100% lean into it from the beginning.
41:15
Speaker 1: We want lean, mean orthodontic offices. Even if we've got
41:19
Speaker 1: a little higher cost on our expense piece of it,
41:23
Speaker 1: if we're better on our efficiency, we're going to be
41:26
Speaker 1: lower on our HR. So I think that we need
41:29
Speaker 1: to just really think about that. If we're an acquisition...
41:32
Speaker 1: We need to be thinking about where am I going
41:35
Speaker 1: and at what point do I need to start setting
41:37
Speaker 1: the steps in place? And if we're an established practice,
41:40
Speaker 1: we need to be thinking about what is the one
41:43
Speaker 1: technology I'm going to bring in? Who's my team? How
41:46
Speaker 1: are we going to vet this? How are we going
41:48
Speaker 1: to think about all the impacts that it has on
41:51
Speaker 1: the practice? How are we going to train on it?
41:54
Speaker 1: And how are we going to start to implement so
41:56
Speaker 1: that we have success? All right, guys, last thought for
42:01
Speaker 1: this episode here. And I think that part of being
42:05
Speaker 1: a consultant is not only am I and my team
42:09
Speaker 1: constantly coaching on the how and the why of what
42:13
Speaker 1: we do in our orthodontic industry, but a lot of
42:18
Speaker 1: my role working with doctors is kind of working on
42:20
Speaker 1: that behind the scenes. I joke, you guys have heard
42:23
Speaker 1: me say this before, that unsexy side of the business
42:26
Speaker 1: is The numbers, the P & L, the things that
42:31
Speaker 1: we have to be paying attention to as business owners
42:34
Speaker 1: that a lot of times, you know, a lot of
42:36
Speaker 1: you as doctors, like you got into this because you
42:38
Speaker 1: wanted to be really great clinicians. You wanted to be
42:42
Speaker 1: able to use this very specific skill set. to help
42:46
Speaker 1: people have a better life and have better smiles and
42:49
Speaker 1: all the things that get you really excited. A lot
42:52
Speaker 1: of you didn't get into this because you were like,
42:55
Speaker 1: I cannot wait to dive into my reports in my
42:58
Speaker 1: operating system or to slave over percentages in my profit
43:03
Speaker 1: and loss statements. But these are things that as business owners,
43:07
Speaker 1: we really have to think a lot about. And I think, again,
43:11
Speaker 1: going back to just where we are in the economy,
43:14
Speaker 1: I think that we are just so bombarded with, are
43:18
Speaker 1: we in a recession? Are we not in a recession?
43:20
Speaker 1: Are things good? Are things bad? Should you be fearful
43:23
Speaker 1: that your patients are going to stop coming through the
43:25
Speaker 1: door because the general dentist down the street is doing
43:28
Speaker 1: all the Invisalign cases or Whatever it is. And ultimately,
43:32
Speaker 1: it causes a lot of, I think, struggle and panic
43:35
Speaker 1: with doctors out there on what should I be paying
43:39
Speaker 1: attention to? How do I know if I've got a
43:41
Speaker 1: problem or if I don't or if this is something
43:44
Speaker 1: that will pass? And so... What I get a lot is, hey, Jill,
43:47
Speaker 1: what are the KPIs, key performance indicators that I should
43:52
Speaker 1: be watching in my practices to make sure that we're
43:55
Speaker 1: healthy and that our numbers are telling us what I
43:59
Speaker 1: need to know so that as a business owner, as
44:01
Speaker 1: a leader... If I need to be making adjustments, I
44:04
Speaker 1: can do that. And again, it's hard for me because
44:08
Speaker 1: I work with doctors in such different stages of their practice.
44:12
Speaker 1: And I think what a startup doctor is looking for
44:16
Speaker 1: in their numbers is going to be very different than
44:19
Speaker 1: a midlife doctor to that eight years to retirement doctor.
44:23
Speaker 1: So I'm going to speak more to that startup and
44:25
Speaker 1: that midlife acquisition slash established, you know, kind of the
44:29
Speaker 1: eight years to 15 years in. And so for a startup,
44:32
Speaker 1: I think the biggest thing that we have to understand
44:35
Speaker 1: is it is about growth in a startup. In my opinion,
44:39
Speaker 1: when we're working with startup practices, the hardest year you're
44:42
Speaker 1: going to do is your first year. You have to
44:44
Speaker 1: put up a certain amount of number in production. You
44:47
Speaker 1: have to put up a certain amount of number in
44:49
Speaker 1: collections in order to know that you're going to be
44:51
Speaker 1: able to keep moving forward with your practice. Year two
44:55
Speaker 1: is probably the most pinnacle year in a startup because
45:00
Speaker 1: anything that we do in year one, we have to
45:02
Speaker 1: double in year two. And that can just feel so
45:06
Speaker 1: hard in that year two, but it really sets up
45:10
Speaker 1: where a practice is going for year three and on.
45:13
Speaker 1: So when we peel that back and look at that
45:15
Speaker 1: from the financial side, this unsexy side of our business and,
45:19
Speaker 1: you know, startup doc is looking at their P &
45:21
Speaker 1: Ls with their CPA and they're like, oh my gosh,
45:24
Speaker 1: you know, I'm easily over 75% in overhead, probably more
45:29
Speaker 1: like 80 to 90%. And my expenses are out of control.
45:33
Speaker 1: The thing that we have to think about is really
45:36
Speaker 1: with the startup practice, and I would say your first
45:39
Speaker 1: five years of business, you guys are just coming into
45:42
Speaker 1: a line with the norms of established practices, kind of
45:46
Speaker 1: that five years and on. And so you're going to
45:50
Speaker 1: be very upside down in your expense to income because
45:54
Speaker 1: you're starting from all expenses and no income and moving
45:57
Speaker 1: to write that. And so, of course, it's going to
46:00
Speaker 1: be natural that your overhead is going to be very high.
46:04
Speaker 1: So all of your percentages that you would look at
46:07
Speaker 1: if you were trying to compare yourself to industry norms
46:10
Speaker 1: are just not going to make sense because you just
46:12
Speaker 1: are not there yet. But as you are moving along,
46:15
Speaker 1: you're going to be working differently. to shore up those
46:18
Speaker 1: buckets and to bring yourself into alignment with where we're
46:21
Speaker 1: at in the industry. And I think that the biggest
46:24
Speaker 1: thing that you just have to really be paying attention to,
46:27
Speaker 1: I think in a startup practices, and I said this earlier,
46:32
Speaker 1: are you producing more than you're collecting each year? You
46:36
Speaker 1: should be. What we know is that in orthodontic practices,
46:39
Speaker 1: as we get started and get going and growing, What
46:42
Speaker 1: you produce in one year, you should collect over two.
46:45
Speaker 1: After years and years and years of data, I can
46:48
Speaker 1: see this over and over again, is that if we've
46:50
Speaker 1: got good healthy boundaries with our downs, if we've got
46:53
Speaker 1: good healthy boundaries with our monthly payments, when we look
46:57
Speaker 1: back at a year, In a startup, what we produced
47:01
Speaker 1: in that year, we should have collected about half of that.
47:04
Speaker 1: If we're collecting more than half of that, probably had
47:07
Speaker 1: a lot of pay in fulls. That's okay in our
47:10
Speaker 1: first year, but that's not a long-term strategy for practices
47:14
Speaker 1: in the future. If we weigh under collected from what
47:17
Speaker 1: we produced, that means that we may not have some
47:20
Speaker 1: safe boundaries in place for our downs and our monthlies.
47:24
Speaker 1: And as a doctor, you may be backfilling in to
47:28
Speaker 1: cover those expenses, or you may not be moving in
47:31
Speaker 1: the direction that you want towards eventually taking a paycheck
47:34
Speaker 1: because you're allowing the cash flow to be too low
47:38
Speaker 1: in a practice. So those are some things we need
47:40
Speaker 1: to be thinking about in startup practices. Now, when we're
47:43
Speaker 1: looking at established practices, whether it's an acquisition or whether
47:49
Speaker 1: it is a startup, one of the things that I
47:51
Speaker 1: always am looking at is historically, when a year ends,
47:56
Speaker 1: did we produce more than we collected? Because kind of
48:00
Speaker 1: going back to that startup scenario, over time, what we're
48:04
Speaker 1: producing and what we're collecting over a two-year span is
48:08
Speaker 1: is that a lot of times what I see is
48:12
Speaker 1: when we look historically, especially with acquisitions, is when a
48:16
Speaker 1: practice or this eight years to retirement, when a practice
48:20
Speaker 1: starts to slow down, Usually production slows, but we don't
48:26
Speaker 1: see that initially in the P & Ls when we
48:29
Speaker 1: look historically because that practice is still collecting off of
48:34
Speaker 1: a previous year's production and then half of, you know,
48:38
Speaker 1: if they've got good boundaries in place. half of that
48:41
Speaker 1: next year's production. So I think that one of the
48:44
Speaker 1: key indicators, and I think when we had the recession
48:47
Speaker 1: hit back in 2006, 2007, 2008, one of the things
48:52
Speaker 1: that caught so many doctors on their back foot, especially
48:56
Speaker 1: ones that weren't paying attention to the numbers, is that
49:00
Speaker 1: cash coming into their bank account was still really good.
49:04
Speaker 1: But what they didn't catch was that production was slowing
49:08
Speaker 1: and the starts were slowing. and that we weren't producing.
49:12
Speaker 1: And it took about two years to really hit and go,
49:16
Speaker 1: oh my gosh, I don't have the collections that I've had.
49:20
Speaker 1: I feel it now in my bank account. I can't
49:23
Speaker 1: pay my employees. I need to downsize, you know, all
49:26
Speaker 1: the things that happened back in the day. because they
49:30
Speaker 1: weren't paying attention to, am I producing more than I'm collecting? Now,
49:36
Speaker 1: I just want you to hear me that I look
49:37
Speaker 1: at this as a year on a year, not necessarily
49:41
Speaker 1: on a monthly, because there could be months where we
49:44
Speaker 1: have better collections monthly. Then maybe it could be a May.
49:48
Speaker 1: I'll use May again. We're just riding on our receivables,
49:52
Speaker 1: but we aren't doing a lot of starts in May.
49:55
Speaker 1: So when we look at it on that very micro level,
49:58
Speaker 1: month to month, we can see a little fluctuation. But
50:01
Speaker 1: when we look at it quarter to quarter and then
50:03
Speaker 1: year to year, that's where we start to see trends.
50:07
Speaker 1: So I think as doctors, whether you're doing an acquisition
50:10
Speaker 1: and you're coming into a practice and you're saying, oh,
50:13
Speaker 1: but hey, I bought this practice and I looked at
50:16
Speaker 1: all of these collections that the doctor had and it
50:18
Speaker 1: looks good. Then you start getting in and you're looking
50:21
Speaker 1: at the operating system. I think especially for acquisitions, everything
50:26
Speaker 1: is based on collections. It's not based on production. And
50:29
Speaker 1: you have to look at that production piece to have
50:32
Speaker 1: a good understanding of receivables and what was happening in
50:36
Speaker 1: the production and the receivable pieces. And then for my
50:39
Speaker 1: established docs, you just always, this is the part as
50:43
Speaker 1: a business owner, none of us like to do it,
50:45
Speaker 1: but we have got to always have our eyes on
50:48
Speaker 1: those numbers. And I think when we're in that five
50:51
Speaker 1: years to 15 year stage, that's really where you guys
50:56
Speaker 1: as business owners should be really dialing it in to,
51:00
Speaker 1: are my overhead expenses sufficient? to my income? Is that
51:05
Speaker 1: percentage where I want it? Even if I'm using digital technology,
51:10
Speaker 1: am I really paying attention to those micro levers that
51:13
Speaker 1: I can be pulling? And what I mean by that
51:15
Speaker 1: is you may be leaning into digital technology, but if
51:20
Speaker 1: you're still running with an oversized team, ideally what we
51:25
Speaker 1: want is a lean, mean office. So we may be
51:27
Speaker 1: moving some of that HR expense down into expense and digital.
51:31
Speaker 1: It doesn't mean that we still don't have an expense,
51:33
Speaker 1: but it may be changing where we're at. And if
51:36
Speaker 1: we're not adjusting, maybe we're bringing in this new technology,
51:39
Speaker 1: but we're still seeing patients back every six or eight weeks,
51:43
Speaker 1: which in turn makes us have to have more team
51:45
Speaker 1: members or whatnot. All of those little things are the
51:47
Speaker 1: things that when we're in that midlife cycle, we're we
51:50
Speaker 1: need to be paying attention to. And I highly suggest
51:53
Speaker 1: that doctors are leaning into really experienced CPAs and people
51:58
Speaker 1: that can really help you understand the data to understand
52:02
Speaker 1: how do you shore up your practice so you aren't
52:05
Speaker 1: caught on your back foot, especially now when we've got
52:08
Speaker 1: things really going on in our economy. You know what
52:12
Speaker 1: you're looking at and you know what levers you can
52:14
Speaker 1: be pulling. I do want to just say this. I
52:17
Speaker 1: don't want anybody to hear what I just said about
52:19
Speaker 1: team members and think, oh, Jill's against having team members
52:22
Speaker 1: in the practice. I'm not at all. You can have
52:24
Speaker 1: the best doctor ever, but if you don't have a
52:26
Speaker 1: good team surrounding you, you'll never have a successful practice.
52:29
Speaker 1: Or you can have a really successful practice. I hate
52:32
Speaker 1: to say this, docs, but maybe have not as great
52:34
Speaker 1: of a doctor because it runs on our team. But
52:38
Speaker 1: what I want you to hear is that I do
52:40
Speaker 1: believe that if we're going to marry technology and efficiency...
52:45
Speaker 1: We have to make sure that we're being smart with
52:48
Speaker 1: the team members that we have on our team. And
52:51
Speaker 1: we aren't just, especially in established practices, we aren't just
52:55
Speaker 1: holding onto people just to hold onto people. Do we
52:58
Speaker 1: have very specific roles for everybody in the practice? And
53:02
Speaker 1: are we being efficient with the team members that we have?
53:06
Speaker 1: Or are we kind of holding on to old ideas
53:08
Speaker 1: or old thoughts just because, and that's keeping you from
53:12
Speaker 1: the goals of where you're wanting to be and running
53:16
Speaker 1: a very efficient, lean, mean orthodontic practice for the future.
53:23
Speaker 1: And now a word from the sponsors who make this
53:26
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53:43
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54:15
Speaker 1: every smile deserves a suite of excellence. So guys, you've
54:20
Speaker 1: got to listen to me talk for the last 40 minutes.
54:23
Speaker 1: And I really hope that you've enjoyed just kind of
54:26
Speaker 1: hearing my thoughts. These just Jill talks. My thought behind
54:30
Speaker 1: this was that you kind of get to hear some
54:32
Speaker 1: of these conversations that I have over and over again,
54:35
Speaker 1: or I may have over a glass of wine at
54:37
Speaker 1: a business meeting or, you know, on my Zoom calls
54:40
Speaker 1: with all of my doctors. But here are my closing
54:42
Speaker 1: thoughts on all of this. And that is that the
54:45
Speaker 1: economy is always going to be changing. Again, I've been
54:49
Speaker 1: in this industry for over 35 years now. I have
54:52
Speaker 1: been through the highs when it was so easy for
54:55
Speaker 1: a practice to just truly put their name out. and
54:59
Speaker 1: have more patients than they know what to do with,
55:01
Speaker 1: to the lows going through COVID and recession back in
55:05
Speaker 1: the early 2000s, to coming back out of COVID. And
55:09
Speaker 1: we've got all these patients with all this money and
55:12
Speaker 1: interest rates lower than we'll ever see them. to where
55:15
Speaker 1: we're at right now. And I just want you to
55:18
Speaker 1: hear that this is part of our industry. This is
55:22
Speaker 1: part of our society. This is something that as business owners,
55:27
Speaker 1: we will always be dealing with. And it's something that
55:30
Speaker 1: we can't control. But what we can control and what
55:34
Speaker 1: you guys can do is you can control how well
55:39
Speaker 1: you know your business. When we can recognize as business
55:45
Speaker 1: owners that we can make small pivots to deal with
55:50
Speaker 1: what is happening in the economy. It doesn't mean that
55:53
Speaker 1: it's a pick it and stick it decision, but I
55:56
Speaker 1: love that thought of pivoting for what is happening in
56:00
Speaker 1: our economy. It really will make you better at weathering
56:05
Speaker 1: whatever is going through. And I always say, you can
56:08
Speaker 1: tell something is happening in our economy just by looking
56:11
Speaker 1: outside of our industry. When we see McDonald's bringing back
56:15
Speaker 1: the dollar menus and lowering and saying, hey, I'd rather
56:18
Speaker 1: sell a hamburger for a dollar than no hamburgers for $ 5,
56:24
Speaker 1: we have to start paying attention to those things. And
56:26
Speaker 1: I know that's a crude analogy, but I think it's
56:29
Speaker 1: something that we have to understand. And so what I
56:31
Speaker 1: want you thinking about as you maybe reflect on this
56:35
Speaker 1: episode is really looking think about how you can really
56:40
Speaker 1: try and understand what's happening inside your own four walls
56:46
Speaker 1: and make the decisions that are right for your practice
56:49
Speaker 1: based on where you are at in the lifestyle stage
56:53
Speaker 1: of your practice versus leaning into just, well, on Facebook,
56:58
Speaker 1: they said that I should take $ 100 down and $ 100
56:59
Speaker 1: a month or I heard that I should never discount
57:04
Speaker 1: my fees or I heard that I have to be
57:06
Speaker 1: running at a 55% overhead or I'm a failure as
57:10
Speaker 1: a business owner. You really have to take everything that
57:13
Speaker 1: you hear, even what I say, and really scrutinize it
57:17
Speaker 1: against your own practice, where you're at, the life cycle
57:20
Speaker 1: of where your practice is at and make the best
57:22
Speaker 1: decisions for your practice and know that pivoting is okay.
57:26
Speaker 1: You're never making decisions that are pick it and stick
57:28
Speaker 1: it or forever decisions. We're trying to make the best
57:32
Speaker 1: decisions for our practices, for where we're at. And I
57:35
Speaker 1: think especially right now in economy, you may need to
57:38
Speaker 1: be doing some pivoting right now. All right, guys, it
57:41
Speaker 1: has been great. Thank you for being here just with
57:44
Speaker 1: me on this episode. And I look forward to talking
57:47
Speaker 1: to you next week. Are you ready to start a
57:51
Speaker 1: practice of your own? Need a new fresh set of
57:54
Speaker 1: eyes or some advice on your existing practice? If so,
57:57
Speaker 1: reach out to me, Jill Allen, at www.practiceresults.com. If you
58:04
Speaker 1: like what we're doing here on Hey Docs and want
58:06
Speaker 1: to hear more of this awesome content, be sure and
58:09
Speaker 1: give us a five-star rating on your preferred listening platform
58:13
Speaker 1: and subscribe to our show so you never miss an episode. Remember,
58:17
Speaker 1: new episodes drop every Thursday. See you next week.