Podcast: Differences and similarities of patients VS customers

In this episode Dr. Coughlin discusses the differences and similarities of patients versus customers.

Hello and welcome to Ascent Dental Radio. A program dedicated to the balance between the clinical aspect of health care and the business of health care. And now here is your host, Dr. Kevin Coughlin.

kevin-headshotMy name is Dr. Kevin Coughlin, owner and creator of Ascent Dental Solutions. The following podcast is a discussion of the difference and similarities of patients versus customers.

For those of us in the health care industry, my particular expertise is dentistry. For over 34 years I have been practicing dental care in Massachusetts with 14 offices and over 140 employees. I would like the health care professionals, but those particularly associated with dental health to consider patient versus consumer. Is there a difference and should there be a difference? In most cases, I believe the dental profession considers when the mouth is open you’re a patient and when your mouth is closed, you’re a consumer. If you don’t treat both of these in the correct and accurate way, your results to your organization and practice, in my opinion, will suffer.

First during this thought conversation is to consider the patient types. There are generally five types of patients. There are the event-driven, there are the reactive-driven, the proactive-driven, the discretionary-driven and the regenerative-driven.

Of these five classes, the event-driven is when something happens they seek care. If a tooth breaks or they have pain, they come in for a visit. If there is no event, they avoid health care and in particular, dental care.

The reactive-driven patient is they know they should and if something precipitates an issue, they will seek care and treatment. They are simply reactive. They are not proactive.

The proactive-driven patient is tooth-based. The decisions are prioritized one tooth at a time. This tooth is a problem, this area of my health is a problem, I will address it, but they don’t treat themselves systemically or in a whole person type of manner.

The discretionary-driven patient simply says I want to look or feel better and if I have the discretionary income, I will move forward. And the regenerative-driven type patient simply says to themselves, “Is it worth the investment? And if I find value, I will proceed with care and treatment.”

In my opinion, the event, reactive and proactive types are driven by insurance. These patients are a necessary part of a practice but you should understand that in most cases what you will hear for them is the first thing they will say is what does my insurance cover. What is my financial responsibility? If my insurance doesn’t cover it, then I am not going to proceed with care.

The last two groups of patients, which I refer to as discretionary and regenerative types, are non-insurance driven. If they have a problem, they would like to seek care and help and the insurance is just an insularly part of care and treatment.

The following statistics are of interest. The average patient in the United States over 20 years of age spends between $500 and $10,000 per year. If we looked at 1,000 patients, that would equal approximately $500,000 per year. Out of every 1,000 patients approximately 20 patients will say yes to your treatment plan and recommendations. If you could focus on your ability to increase the yes number of patients from 20 to 60, you could increase another $22,000 a year to your organization.

Basically what it boils down to is when you evaluate many organizations and offices particularly in health care, the treatment plan in most cases is acceptable. However, the problem is case acceptance by the patients or i.e. customers, is low. In most cases the poor case acceptance is extremely important for you to focus on to improve the delivery of health care and your overall bottom line to your office and organization.

In the end, it doesn’t matter how well you treatment plan. If your patient or customer is not accepting that treatment plan, your outcomes are going to be poor and your patients and organization will suffer.

In 2009 through 2011, during those two years, approximately 73 percent of the United States’ population saw a dentist. Those between the ages of age 16 and 25 were missing three teeth, and this includes wisdom teeth. Those over the age of 65 were missing nine teeth.

With the population between the ages of 16 and 90, that comes to approximately 60 million missing teeth. In 2011, it was recorded that only 2.1 million implants were placed in the United States. This means that 58 million people, customers, patients missed the opportunity to replace these missing teeth. Again, this is a glaring amount of evidence indicating that the treatments were planned but patient acceptance of doing the treatment was certainly lacking.

You should understand vision and purpose. What is actually in the best interest of your patients or customers; their oral health, systemic health, social health, lifelong health?

In my opinion, when you start as a practitioner or a health care provider and your goal is to focus on lifelong health rather than just oral, systemic, social, you will get a better outcome. Patients or customers will be moved when they understand the value and the value is the goal of lifelong health.

When you evaluate consumers in the United States, data indicates that the majority, 80 percent, will finance purchases over $1,000. If your practice or organization is not offering adequate financial arrangements, whether it’d be through CareCredit, Wells Fargo or other opportunities, this could possibly be part of the reason why case acceptance is poor.

You should also be able to understand and distinguish trust and value. As I like to say, if your patients do not believe, like and trust, or BLT with you, then it is very difficult to get case acceptance. And when you do get case acceptance and the patient does not believe, like or trust in you, I question whether you should provide care and treatment because ultimately it will lead to problems.

My suggestion is you should be focusing on aesthetics, function and structure. If you combine these three elements, you will significantly see an improvement in case acceptance. Understand that some of your patients will do nothing, some will do something and others have to do something.

In the end, to determine whether your case acceptance is adequate and you’re doing a good job communicating and your patient base actually believes, likes and trusts in you, you have to provide tracking. You must understand are your patients making an appointment, yes or no? Are they accepting your treatment, yes or no? Are they referring family and friends to your practice or organization, yes or no? Are they paying for the care and service on the way out of your office, yes or no? What is the revenue that you are generating per day? This data will tell you whether you’re heading in the right direction and whether you’re moving forward in the direction you should be.

In the end, health care providers are held in high esteem. Keep in mind that selling is not negative. If the product has value and service and you’re providing value to your patients, then it is your utmost goal to make sure that not only is your treatment plan acceptable, but your patients are accepting your treatment plan and moving forward.

I hope you’ve enjoyed the podcast. You can get more information on my website www.ascent-dental-solutions.com. My name is Dr. Coughlin and thank you for listening.

Podcast: Good Profits and True Growth

In this episode Dr. Coughlin discusses good profits and true growth, why do we do it and how should it be done.

Hello and welcome to Ascent Dental Radio. A program dedicated to the balance between the clinical aspect of health care and the business of health care. And now here is your host, Dr. Kevin Coughlin.

kevin-transparentWelcome. My name is Dr. Kevin Coughlin, creator and owner of Ascent Dental Solutions, with a focus on developing your team, product and service, education, knowledge, training and the creation of the appropriate processes and procedures to make your product, service or organization better.

The following podcast talks about good profits and true growth, why do we do it and how should it be done.

The first step is understanding the culture of your organization or business. That culture may be focused only on money, working faster, working harder, seeing more clients, more patients, more customers. Your company many deal with problems rather than avoiding them. Individuals or team members may do a job but don’t understand their job.

You should next, understand the strength of your company and hopefully the single largest strength should be the great people that make up your organization. And if you don’t have great people, it is your responsibility as leaders and management to improve your team members’ strengths and decrease their weaknesses.

The next is focusing on your infrastructure, the location. Make sure you have committed leaders who really understand leadership and they understand the difference between leaders and managers. You need a team that is hardworking, dedicated and motivated. I suggest that a varied ethnic group and leaders in the field that you’re promoting and in the services you’re recommending be part of your team.

Next, understand weaknesses; the weaknesses in your products, your service or your organization. Almost all weaknesses can be overcome by extensive and correct training and complete and total understanding of the correct processes and procedures to deliver a final valuable product, service and getting the message out clearly and consistently. Over and over I have seen organizations that their single weakest link is poor or limited communication. I wished organizations could work on autopilot, but in the real world, excellent and consistent communication is necessary. Failure to provide it will be a guaranteed failure in your organization, products or service. You have to understand how to achieve these goals and you must be motivated to want to achieve these goals.

Start by looking at all your processes and procedures and in almost all cases it should start with the first point of contact with your customer or patient base. Review, assess the strengths, the weaknesses. Review, review again, train and improve until the process and procedures are perfect.

What’s most important for your business to succeed are the relationships amongst team members, leaders and managers. This relationship also must extend to your customer base or patients. How do you cultivate this? It usually occurs with time, but in most cases it will occur with excellent processes, excellent procedures and outstanding communication.

What are bad profits? These are profits that are earned at the expense of a customer relationship. Whenever a customer or a patient feels misled, mistreated, ignored or coerced, then the profits from that customer or patient are considered bad profits. They arise when a company tries to save money by delivering a lousy customer experience. The company extracts value from customers instead of adding value to their customer or patient base.

Companies that focus on bad profits will have growth suffer, reputations will become hurt, customers and patients become alienated and employees become demoralized. You become vulnerable to your competition and over and over I have seen competition will win out. Your business, many times, when it focuses on short profits or bad profits will not succeed in the long term. They may get initial success in the short term but ultimately failure in the long run. In order to avoid bad profits, leaders, managers, team members, all have to focus on aspects of the organization that create an excellent customer or patient experience. This comes once again with outstanding communication and outstanding leadership.

In the end, what you really want to do is treat your customers the way you’d want to be treated and that’s the same for products or services. What can we do? Start by changing the message and sometimes it’s necessary to change the messenger. If the culture is bad, action steps must be taken. Know and understand not only your job but the jobs of the team members around you. Be not just good but attempt to be the best and a relentless effort to excel at whatever product, service or organization you’re in. It’s critical not only to know your strengths but understand your weaknesses and get help with those weaknesses.

What are good profits? Good profits are earned when customers or patients become enthusiastic and cooperate. They occur when their customers or patients want to continually come back for additional services and products. They can’t help but want to tell friends and family and acquaintances about their excellent experience. They become what we refer to in business as promoters. Promoters are individuals that market your business, product and services. They are loyal individuals who you see over and over again. They believe, like and trust in you, in your organization and they provide the most cost-effective growth for your company. They are loyal.

Bad profits create what we refer to in business as detractors. Detractors hurt you, your company, your services and your products. They drive up cost by reporting numerous problems and wasting company time. They bad-mouth your company and your company’s reputation. They strangle growth, they demoralize an organization and the people in it. How can you avoid detractors? Service, better service and even better service and communicating clearly. This comes with written processes and procedures that if proven over time to be successful and that all team members, managers and leaders understand what these processes and procedures are and what the ultimate goal is, is to provide a high final valued product. Once this is achieved, you will not only have a promoter but you will have an extremely successful business.

There’s a third group of customers or patients and they are called passive groups. The three groups; promoters, detractors and passive individuals. The focus of the passive individual is someone who is not really a detractor but not really a promoter. They can be satisfied but they are unenthusiastic. They can be easily wooed to one or your other competitors and can easily be moved into a detractor or promoter category if not handled carefully. Most businesses should understand what their Net Promoter Score is or NPS. This is simply promoters minus detractors will equal Net Promoter Score. The goal of all organizations is to attempt to have 100 percent promoters which is unrealistic or worse 100 percent detractors, which is almost impossible because you will no longer be in business. Most companies fall somewhere between 40 and 80 percent. The closer you can get to 100 percent, the better your processes and procedures are, the better your organization is and the better your long term success will be.

The ultimate question is how do you create the appropriate processes and procedures? You must review not only your organizations, but your leaders, your managers and your team members’ strength and weaknesses and understand your company’s strengths and opportunities. The goal is to create a high Net Promoter Score. This will create for your business high retention rates, high margins, high annual spending, cost efficiencies, excellent marketing through word of mouth and an increase in market share.

Start by measuring what matters. Understand what makes your customer or patient satisfied and happy. This comes with quality assurance and quality assessment on every point of service. Start by reviewing and improving your existing processes and procedures and not only focus on your customers and patients, but focus on your team members and leaders and managers. All areas of an organization need constant improvement and that will come with constant communication, improved communication.

If you’ve enjoyed this podcast and you are interested in more information, please go to my website www.ascent-dental-solutions.com or email me at info@ascent-dental-solutions.com. Thanks, I hope you enjoyed the podcast and I look forward to speak with you in the future. My name is Dr. Kevin Coughlin.

Podcast: The Administrative Scale

In this episode Dr. Coughlin discusses The Administrative Scale: goals, purposes, policies, plans, programs, projects, orders, ideal scenes and statistics.

Hello and welcome to Ascent Dental Radio. A program dedicated to the balance between the clinical aspect of health care and the business of health care. And now here is your host, Dr. Kevin Coughlin.

kevin-transparentWelcome. My name is Dr. Kevin Coughlin, creator and owner of Ascent Dental Solutions, with a focus on developing your team, product and service, education, knowledge, training and the creation of the appropriate processes and procedures to make your product, service or organization better.

I hope you enjoy the following podcast, which I’ll refer to as the Administrative Scale. This is basically a scale or a system for success. It is made up of goals, purposes, policies, plans, programs, projects, orders, ideal scenes, statistics.

All of these processes and procedures are to create a valuable final product, whether this is a product, a service, but ultimately the goal is to improve your organization and help your team members for success. The final valuable product can be either good services, but the ultimate goal is a total package or end result that provides value.

My expertise in health care is simple patient satisfaction, which is based on a high quality and a valuable final product, which in all cases simply means your patient or customer has found value in your care, service, product or some combination.

The final product has a series of sub-products that can either make or break you for success. Whether it’d be a patient or a customer, value is simply something that is worth something to someone and exchange is the process of offering something valuable in return for some other valuable product or service. Sales and delivery, always deliver what you promise. And finally agreements, always honor what you’ve agreed upon.

To emphasize this, focus on value, exchange, sales and delivery and agreements. In most cases, there are four basic conditions of any exchange. There is a criminal exchange, a partial exchange, a fair exchange, and the ultimate best is an exchange in abundance, which is almost unknown in today’s society but is the key to success and expansion not just in your business, but in your life. There are similar scales for various conditions and these conditions have power, power change, affluence, normal, emergency, danger and non-existence.

In non-existence, this is an area that doesn’t produce any valuable final product. The group, the organization, the product, the service is not producing, it is non-existent and it means your business has failed.

Prior to this you go through a stage of danger. Danger simply means the end is near and immediate action is needed. Things must be handled now and immediately. Statistics show a continually steady decline in product, service and ultimately the decline in your organization. Statistics will plunge down very steeply. Senior executives or so called leaders find themselves doing the job of another activity because the areas are in trouble.

Following danger is emergency. You know the production and the collection is not what it should be. Stats are unchanging and the trend is going downhill. If no action is taken, things will fall apart. Always remember that nothing stays the same. They are either expanding or contracting.

Normal conditions, things aren’t neither stellar nor poor. They’re fairly normal or static. And keep in mind that this condition is rare. In most cases, a business is either expanding or contracting. And normal conditions are, in my opinion, a thing of the past.

We then move through affluence. This is a steep increase in statistics, whether it be the number of new patients, increase in valuable final products, an increase in revenue, things seem to be going very good. This is important. You and yourself, and your organization should strive to maintain affluence and push above and beyond this particular condition.

The next is a power condition. This is even better than affluence. The statistics have gone into a very high range. There is such an abundance of production that the momentary halts and/or dips cannot pull it down. Your business and organization is flowing quickly and successfully.

The next condition is power change. There are only two conditions for a change when you are so successful. One change is it’s time to turn over to someone else, or you’re so very successful that you’ve decided it is time to sell or retire.

The next condition is formulas. The emergency formula is to create a better product, a final product that offers value. You must constantly, when you evaluate your business, promote it, continue to produce, look to change your operating basis, economize, deliver and stiffen discipline.

If you follow these rules of engagement, your business will always stay in a state of affluence or better than affluence. And that is the goal, not only in life, but in business.

If you’ve enjoyed this podcast and you are interested in more information, please go to my website www.ascent-dental-solutions.com or email me at info@ascent-dental-solutions.com. Thanks, I hope you enjoyed the following podcast and I look forward to speak with you in the future. My name is Dr. Kevin Coughlin.

Podcast: Following the bottom line right to the bottom

Description: In this episode Dr. Coughlin explores what it really takes to be a leader, and shares a story about what can happen when there is a lack of effective leadership.

In this episode Dr. Coughlin discusses how focusing on the bottom line can shatter lives and the business itself.

Hello and welcome to Ascent Dental Radio. A program dedicated to the balance between the clinical aspect of health care and the business of health care. And now here is your host, Dr. Kevin Coughlin.

kevin-transparentWhen does bottom line sometimes make your business reach the bottom? My name is Dr. Kevin Coughlin and welcome to the next podcast. One of my recent podcasts dealt with a series of factors that in my opinion create great leaderships and great leaders.

In truth, leadership is simply influence. The ability to influence people in your organization to go in a specific direction. The significant factors are motivation, tolerance, trust, purpose, vision, attitude, awareness, determination, commitment, tenacity, belief, faith, inspiration, self-control, willpower and patience.

I’d like to share with you a story of a recent transaction where there was a change in leadership and the corporate leadership felt that the bottom line was critical. Actions were being duplicated, people were being duplicated. And best friends who were excellent employees were terminated, lives were terminated, parents were terminated. In the end, reaching the bottom line also caused the business to reach the bottom.

Sometimes leaders, and in my opinion, the term leader is sometimes misused. Many times individuals are place in leadership position but lack the skills, knowledge, ability and personalities to truly be leaders.

In many cases, these individuals are rather small people who have little confidence and are many times blinded by power and greed. Ultimately, things have a tendency to self-correct, and those people that are put in leadership either by lack, financial reasons, or serendipitously by simple mistakes, those businesses will ultimately be destroyed.

The true success of any business is not the dollar bottom line, but the ability to create a service and a product that people clamour for and they want, and knowing that that organization is doing the right things at the right time for the right reasons.

Failure to follow those basic tenants will ultimately lead to self-destruction and ultimately to the ruin of a good business.

Sometimes I think that people are clouded many times by greed and lack of support or confidence. In this particular situation, I watched a family be ruined. I watched individuals who have developed over time a magnificent business with trust, belief and likeability, I saw individuals hurt and I see the business being destroyed piece by piece.

For those of you that think you’re leaders or those of you who hope to be leaders, or those of you who have been put in leadership positions, consider what your ultimate goal is. Your goal should be to build a great business, not for the short term, but for the long term. Your goals should be to bring the people around you up, not down.

The ability to be constant in your commitment to communication, fairness and honesty. Following these basic tenants will not only make you feel better, but will ultimately create an excellent product and excellent long term success.

If you’d like to listen to additional information, you can hear it and see it on my website www.ascent-dental-solutions.com or you can email me at info@ascent-dental-solutions.com. Thanks for listening and I look forward to sharing with you additional podcasts in the near future. My name is Dr. Kevin Coughlin. Thank you for listening.

Podcast: Lessons for Effective Leadership

In this episode you’ll discover the traits and skills that you need to be an effective leader. Dr. Coughlin shares his insights based on decades of experience.

Hello and welcome to Ascent Dental Radio. A program dedicated to the balance between the clinical aspect of health care and the business of health care. And now here is your host, Dr. Kevin Coughlin.

kevin-transparentWelcome. My name is Dr. Kevin Coughlin. I hope you enjoy the next following words of wisdom over the next few minutes. We will discuss certain things to think about as it relates to leadership. I’m an owner of a small business in Massachusetts with approximately 150 employees. And over the last 33 years, I’ve learned an awful lot and have made an awful lot of mistakes.

At this time, I would like to discuss factors that affect leadership. Many of these ideas have been taken from other authors and experts in the area of leadership and business ownership and some of my own thoughts. What I’ve developed over the last 33 years are generally 17 factors that I think directly affect successful leadership. Failure to address and become an expert in each of these 17 areas can significantly decrease the success of your leadership. These factors are motivation, tolerance, trust, purpose, vision, attitude, awareness, determination, commitment, endeavor, tenacity, belief, faith, inspiration, self-control, willpower and patience.

Businesses are very similar to relationships. The best of businesses and the best of relationships are successful because of excellent communication, what I refer to as BLT. Generally the pattern is Believe, Like and Trust each other and I feel the same thing occurs in relationships. When that believe, like and trust has broken down or has failed, then generally partnerships similar to relationships end up in either divorce and dissolution or just a failure to thrive.

I’d like to first talk about motivation, which I place as number one. It is a huge key to success in my opinion. Remember, an important concept when it comes to discussing motivation is what motivates one person may not motivate another. It’s necessary to be a successful leader to find the switch so that you understand what’s motivating the individuals around you and it’s critical to learn how to use that switch.

The second point, tolerance, basically involves respecting other’s views. That doesn’t mean you have to agree with their views, but you should respect them. I strongly suggest you never sell yourself out. Respecting and listening is different than agreeing. You should try to understand where the individuals are coming from and hopefully try to provide information so they know where you’re coming from. In the end, realize that they may not understand exactly how you feel and unless you can articulate it well, it will be a huge stumbling block in order to achieve excellent leadership.

Trust; trust is necessary in order to create the correct environment. Remember the triangle that I speak of in most of my podcasts, BLT. It is critical in almost all things that will continue to be successful that you believe, like and trust in the individuals, the memberships, corporations or businesses you’re involved in. Keep in mind that it’s easy to say believe, like and trust, but in most cases it must be earned. As I review relationships and business practices that have failed and partnerships that have gone in a negative direction, in almost all cases, the believe, like and trust was not earned.

Next, there is purpose. It is what we should be driving or what should be driving every aspect of your life and your business. What is your ultimate purpose? That question you should ask yourself and you should write down what your thoughts and answer should be. You should know what the purpose is of the people around you, which many times is just as important as what your purpose is. It can make a big difference if your team is not all striving for the same purpose.

Vision is also important. By definition, vision is your ideal future. It should include your values and remember what you want your organization to be may not be in agreement with all your team members. It is critical that once you’ve explored your vision, you understand your vision, that the people around you also have the same vision. Many times what I’ve seen in partnerships is one partner would like to expand and another partner does not. That doesn’t mean that one is right and the other is wrong, it just simply means their visions are different.

Attitude; attitude is critical. It’s a small thing but can make a huge difference. It is difficult, particularly for me to be positive but many times being positive, although it is hard, is extremely important.

The team members, employees or the people that you have relationships with will feed off your positive energy and it’s also true that they can feed off your negative energy. Although sometimes it’s impossible to always be upbeat, quite honestly the people around you are in most cases really only concerned with what works for them and what’s best for them and in most cases, they want to feed off your positive energy.

Number nine is awareness. It is a personal understanding of not just your identity, but the people around you and their identity. At the very core, you should know what your team members and individuals around you, what their core is made of, what makes them tick.

Number ten; determination. I cannot emphasize enough. After being involved with hundreds, perhaps thousands of employees over the last three decades, we could take an individual who’s determined, strong willed and make them a superstar, but if the determination is not there, the drive is not there, the wants are not there, then it’s extremely difficult to bring an average team member to a higher level of success.

You cannot become a leader yourself without determination. When the determination disappears, your organization and yourself will start to fail. Determination never takes a vacation, it never seems to get sick, and it has to be working every day. Business, like relationships, are difficult and enormous amounts of determination are necessary to make them both successful.

Commitment simply means you say and do what you mean, and you do not deviate from it. If I have seen time and time again amongst employees, team members and partners, they make a commitment but the commitment is not strong. As a matter of fact, it’s not even sincere. You have to talk the talk and walk the walk. You’re setting an example and people will respond. When you make a commitment, make sure you can keep it.

Endeavor; a successful business will take on its own endeavor. Your personal endeavor is what will make it successful. Keep in mind that these 17 traits are difficult to obtain, but if you understand what each one is, you will ultimately find your leadership and management skills will improve greatly.

Tenacity; simply means no matter what the challenge, you will never give up and you try to instill this tenacity in the people around you. So often today, my experience indicates that people lack tenacity. They’ll try hard for a few days, maybe a few weeks, maybe even a few months, but year after year, you have to constantly push yourself to be successful in leadership and management.

Belief is critical for success, but most important when it comes to belief, you have to first believe in yourself or others will not be able to believe in you.

Next comes faith. Again, similar to belief, you have to have faith in yourself before people will have faith in you. You must also show faith in the people and team mates around you and understand that in many cases they are working as hard as they can and trying to do the best they can.

You have to have faith in your team members and if you lose that faith in your partners or team members, then in general your business and your partnership and your leadership is going to be on the skids.

Inspiration; where do your ideas come from? Where do your team members’ ideas come from? In business you will always need new and fresh ideas. They could come from all walks of life, all different types of people, all different types of ideas, but you constantly need to renew your ideas and come up with new ideas.

Many times I find, personally, I get inspiration from the people around me. Many times it’s a certain story or something that I’ve learned about a team member or a partner that I fully didn’t understand or was unaware of. Think about those others, the people who inspired you and why they inspired you, and try to create that same atmosphere so that the people around and near you walk away inspired.

I cannot emphasize enough that self-control is critical. In the heat of battle, many times it’s difficult, some would say almost impossible to have self-control. But it is a part of success and leadership that is necessary. In most cases what I find is individuals will allow people around them to influence themselves.

Self-control starts first by understanding yourself, knowing the buttons that can trigger your reactions, and trying to maintain your personal self-control.

And in the end, it’s willpower, similar to determination. The constant drive to be the best at what you’re doing and to instill that willpower in the team members around you.

I hope you enjoyed this podcast. For this and additional information, please don’t hesitate to join www.ascent-dental-solutions.com for other information on business aspects, relationship aspects and how to improve your team members and your workforce.

I hope you enjoyed the presentation. My name is Dr. Kevin Coughlin.

Podcast: Selling your practice

E03: Selling Your Dental Practice

In this episode you’ll discover 3 basic rules to consider when selling your dental practice. Discover what to consider and what to avoid. To learn more about Ascent Dental and the services they provide.

Read the transcription…

kevin-transparentHello and welcome to Ascent Dental Radio. A program dedicated to the balance between the clinical aspect of health care and the business of health care. And now here is your host, Dr. Kevin Coughlin.

Welcome. My name is Dr. Kevin Coughlin. I hope you enjoy the following podcast. In previous podcasts, I discussed some options and considerations for selling your dental practice. Unfortunately as we all know, we cannot take our dental practice with us. And eventually it will passed on to family members or sold to a corporate entity or ultimately and more commonly, sold to another practitioner, usually someone who’s been an associate in your dental office for the previous two to three years. There are some basic rules, what I call three simple rules when considering selling your practice.

Rule 1: Value does not equal price. Value is an estimate of the financial worth of a practice determined usually by formulas. Price, however, is determined by how determined the seller is to sell and the buyer wants to buy. At present time, most of the dentists that I know above the age of 60 cannot wait to sell their practice. Typically, the dental practice is considered one of the largest assets and is generally considered one of the best assets to help you retire into the near future.

Rule 2: Gross production is not what you want to purchase. That is a huge mistake. And many times I see this, over the last 35 years since 1983, of watching people deal with the selling of such an important asset. Gross production, remember, is not what you want to purchase. A much better determinant of value of a practice is really net income, as shown on your tax returns. So whether you’re considering selling your dental practice or considering making a purchase, it is critical that you look at net income from that individual’s tax returns on that particular practice. What a buyer should look to purchase is the dental practice’s ability to make a profit. This is perhaps the most critical point I can make in today’s podcast. The seller, if they understand this, would make this their number one goal and that is to make their practice as profitable as possible. The more profitable it is, the more valuable it will be to the would-be purchaser.

Rule 3: Never buy a practice potential. Only purchase what the present value is or historic value is. The future profits can be uncertain. So many times I see an individual say, “Dr. Coughlin, I’m thinking about buying a practice. It has a great potential.” You really want to make your purchase price based on today’s value, not what tomorrow’s value might bring or might not bring.

There are several methods of evaluating different assets. There is the fair market value, replacement value, book value and economic depreciation value. There are generally four asset classifications. There are considered tangible or physical assets such as consumables, supplies, furniture, fixtures and household physical assets. There are intangible assets which are generally considered goodwill, restrictive covenant and ongoing concern value. There are financial assets, which is the cash on hand, security deposits and accounts receivable and the real estate or land or building. These four asset classifications in general will make up the purchase price that you should consider for either selling your practice or buying your practice.

Remember that tangible assets are usually just a small part of the value of a practice. In most cases, a reputable equipment dealer or expert can put a price or fair market value on the equipment and supplies. In general, consider approximately a $5,000 expense per doctor. If the practice you’re considering has two, three or four doctors, just multiply the number of doctors times 5,000 and that will give you an average cost of supplies and equipment.

As far as methods of valuating assets, remember that most assets would depreciate over time. In general dental concepts, most of the cases the depreciation will occur in one to seven years. I cannot emphasize that even if you feel you’re not interested in selling your practice or you’re not considering buying a practice you should be prepared to sell it at any point in time. You should fully have an understanding of your four asset classifications; tangible, intangible, financial assets and real estate. You should have a pretty good idea of the ongoing concern or value of your practice. So in case of a mishap, a disability, some kind of illness, you are able to put your practice on the market and get the best price that you deserve and also a fair price for the potential buyer.

The stress and strain of owning a small business, operating a business is difficult at best. To get the best return for this investment, be prepared, be wise, whether you are the seller or the purchaser. Understand that the net income, the net profit is what will be used to determine the value of the practice. After you’ve agreed on a price, you will generally finance this practice anywhere between five and ten years. The cost each month of financing that practice should allow the net profits from that practice to not only pay that debt but offer you a profit besides. If this is unable to be obtained, then either you’re doing a poor job managing and marketing your practice, or you overpaid for your practice.

Thank you again for listening to this podcast and I look forward to talking to you in the near future. If you’d like additional information, you can reach me on my webpage www.ascent-dental-solutions.com. Thanks again and I hope you enjoyed today’s podcast.

Podcast: New dentists’ first steps

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Hello and welcome to Ascent Dental Radio. A program dedicated to the balance between the clinical aspect of health care and the business of health care. And now here is your host, Dr. Kevin Coughlin.

kevin-headshotToday’s podcast involves those young dentists getting ready to graduate from the 60 dental schools in the United States of America. As you’re preparing to graduate, almost all of you will be unprepared to purchase a dental practice. This is brought about by many of the following points; one, the vast majority of dental students will be approximately $250,000 in debt from their dental and undergraduate education. The vast majority of you will be lacking basic business knowledge to run a small or medium size business because since the ninth grade, you’ve been focused on the sciences and over the last four years of an intense dental education, the focus has been primarily on clinic.

I’m happy to say that in 2016, most dental schools that are going to continue to be accredited must provide at least sixteen hours of practice management education in a formal sense to prepare the students, not only to be highly in debt, but to make sound business intelligent type decisions on whether they will join a group practice, join corporate dentistry, join a solo practice as an associate or open up their own practice and de novo sets. All of these options can be exceptionally successful, however, based on your personality, your drive, your determination will more than likely guide you to one particular area or the other.

I suggest that when considering starting your own practice, this process should be occurring while you’re in dental school. In most cases, you are overwhelmed, not just by debt and time constraints, learning a new profession and gaining experience clinically, however, you should understand that there are several stages that a practice goes through when you’re looking to either purchase or start your own.

Stage one is simply opening up your own practice de novo. This means you’re just going up, put a shingle on the door, market the hell out of the practice and yourself and hope to God you have a patient base to support your debt and your income that’s necessary for you to survive. In general, you will need approximately 1,800 active patients, meaning that the patients come to your practice at least every 18 months to support this type of practice.

Stage two; you enter into the growth of your practice. Understand that patients will select for or against your practice based on your style and type of dental practice that you begin.

Stage three; when your practice reaches maturity, the practice reaches its intended goal and objectives.

And finally stage four is the redevelopment of your practice, which means you either let the practice die a natural death or you take steps to maximize its value and continue its growth.

In any type of business, but in particularly a dental practice, you will have to deal with external environment, socio-cultural environments, economic and regulatory along with ethical environments. You also need to focus on operating environments such as suppliers, patient influence groups, along with allies and competitors. The internal environment or internal organization will generally revolve around hiring the right personnel, marketing, production, financial and personal concerns. They generally will be focused on the clinical and financial aspects of the practice.

I suggest you consider whether you are buying an existing practice or starting your own practice, eventually it will start by developing your core values. This is what your patient care objectives will be, the quality of care you hope to perform, the type of work environment that you want for yourself and your team members, the management style, whether you’ll be a top-down, bottom-up or somewhere in between type of management system. You’ll also determine your team members, the number, the types and the responsibilities that they will undertake. You will also need to chart your professional growth for not just yourself, but your team members. Which means continuing education, not just clinically but also from a management and business standpoint. And lastly, the type of relationship you’d like to develop between your practice, yourself and your community.

Step two; you must establish your practice mission. Basically, core values are what you believe in. The practice mission statement describes what you want your practice to accomplish. It is really your practice philosophy. Your mission statement should be written down and should coincide with each of the core values you possess. Your mission statement will be based on your attitudes in your background, along with your wants and needs.

Step three; you must assess your environment. In business they call this the SWOT analysis. The S stands for Strengths, the W for weakness, the O for opportunities and the T for threats. It is critical as you assess your internal and external environment issues that we discussed earlier that you look at the strength, weaknesses, opportunities and threats of each of them to make an informed, intelligent decision.

Step four; spend time determining your strategies. Are you going to accept third party insurance plans? What will your credit and collection policies be? Do you understand what a fair and reasonable fee schedule should be to accommodate and reward you for your expertise and services? What kind of dental operatories will you be constructing or working in? The type and number of hours of operation you plan to be open. The number and types of continuing education that you will take and offer to your team members.

What type of staff compensation, what rate, what percentile of overall revenue will your staff consume for compensation? Will they be on bonuses, will they share in profits or will they be hourly rates or will they be salaried or some combination? What will be your practice style? Will you focus on prevention, aesthetics, high end, care for all? What type of advertising will you pursue? Will you look at internal marketing, external marketing, a combination of both? And what is your loan structure or debt structure? Is it set up correctly to provide the most favorable environment for you to pay down debt as soon as possible so that you can increase profit and reduce the stress and strain from a financial standpoint?

Step five; you must start setting goals and objectives. You want to make sure that your practice is always profitable. You want to make sure you’re dealing with a reasonable overload so you don’t burn out. You want to make sure that you’re adequately financially and personally rewarded for your expertise and time. You want to make sure that your staff and your patient base is happy and satisfied. And in many cases, I think it’s important to offer something tangible to the community where the people come to your practice and you support them in some kind of tangible fashion.

Step six; you must develop methods to achieve your goals. You must try to improve or increase marketing depending on your wants and needs. You may want to consider hours of operation should you shorten them or expand them. You may want to consider accepting additional insurance plans or eliminating certain plans. You may want to determine whether you should be hiring or terminating team members, whether you need to add or reduce dental operatories, whether you should be increasing or lowering your fees, tightening or easing your credit policies, increasing pay for team members or decreasing team members, evaluating your benefits for your team members and do you have a secure financial capital. Are the banks working with you so if an opportunity exists you have the working capital necessary to expand if necessary?

Step seven is you must set up systems or metrics to measure your success. I suggest you consider knowing the number of new patients each month. You must know where these new patients are coming from, what’s the source of these new patients. Are they coming from insurance websites, are they coming from specific internal and external marketing sources? You must also know how many patients are leaving your practice and why each month. You must also know the number of procedures you’re doing each month. I see over and over again many times dentists make determinations on increase or decrease in fees and sometimes it’s more important to take a look at the number of procedures you’re doing to determine which fee should be increased or decreased.

You must know your net production, your net collection. You should, either yourself or your accountant, be able to determine EBITDA, earnings before interest, taxes, and depreciation. You should have a firm grasp of your accounts receivable, zero to 30, 30 to 60, 60 to 90 and those over 120 days. You must also have quality assessment and quality assurance for not just your patients but your staff to make sure you’re providing the highest level of care and service on a daily basis and you must have this written down so that you can follow and track your progress, not just as a clinician, but a business man and woman.

You must also take a look at the number of treatment plans that have been completed versus those that are incomplete. This will give you an idea of how successful you’re communicating with your patients to your side or your staff is communicating to your side. And lastly, you must fully understand and appreciate what your profits are. Are they increasing or decreasing, and what factors are affecting them.

I hope you enjoyed this podcast. For this and other information, please turn to my website www.ascent-dental-solutions.com. My name is Dr. Kevin Coughlin and thanks for listening.

Podcast: DSOs are neither friend nor foe

In this episode you’ll discover what what a DSO and MSO are, and the implications for the dental professional.

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kevin-headshotHello and welcome to Ascent Dental Radio. A program dedicated to the balance between the clinical aspect of health care and the business of health care. And now here is your host, Dr. Kevin Coughlin.

Thanks for listening. My name is Dr. Kevin Coughlin. Over the next several minutes, I hope you enjoy the following podcast. This podcast is meant for dentists, for the general population and it’s a combination of insightful information to inform you of a monumental change that is occurring, not just in health care but in particular, dental health care.

I’ve been practicing general dentistry since 1983. And I remember in the early 80s the influx of individuals that had dental insurance. At that point in time, dental insurance was a minor part of dental health care. Our organizations, our profession were promised more patients, better access to care, increased amounts of dental treatment being performed and completed because dental insurance would provide a better access to care and lower fees. We can argue whether they fulfilled their commitment or not, but clearly today between government programs and dental insurances, depending on the region you practice in the United States, between 60 and 80 percent of the population has some form of third party payment, whether it’s PPOs, dental HMOs, indemnity insurance plans, the list goes on and on.

What’s occurring now and has been occurring quietly is corporate dentistry. At this point in time in 2016, it is the fastest segment of the dental health care program. Corporate dentistry is growing at almost 40 to 45 percent each year. Corporate dentistry is a catchall term. It can mean many different things and it can come under many different headings. Some have positive and some have negative connotations. My job is not to tell you whether it’s right or wrong for a profession, but to provide knowledge and information so as clinicians you can make informed consents and decisions based on accurate information of whether you feel it is best for your practice and teach you how to compete with these corporate entities.

At present time, besides corporate dentistry, they many times go under the name of a Dental Service Organization or DSO. Sometimes they’re referred to as an MSO, which stands for Managed Service Organization. I don’t want you to spend too much time getting bogged down with the particulars of the name, although they do have different definitions. In general, a DSO can operate as a standalone entity. A Managed Service Organization can only operate if there is already in existence a DSO or Dental Service Organization.

The critical point, in my personal opinion is, are the DSOs or MSOs influenced, owned or invested by venture capitalists or equity type firms. This is not to say it’s good or bad, but to understand that when a venture capital company or equity firm has dollars invested or actual ownership in these corporate entities, there can perhaps be a conflict of interest. This conflict of interest is brought about because in many cases, equity firms have a much shorter lifespan for investment. In general, dealing with the dental profession, there are trying to triple or quadruple their money in a three to seven year timeframe, then generally they leave that organization and look for other business opportunities or investment opportunities and a different group will take over that initial corporation. They may have the same wants and needs or they may need to modify or change.

As a patient looking for dental care or as dentist looking to invest in Dental Service Organizations, perhaps sell their practice to a Dental Service Organization or perhaps even join a Dental Service Organization, it’s critical that you understand some of the fundamental dimensions that make up a Managed Service or Dental Service Organization. First and foremost, the Dental Service Organization can be formed by a group of dentists. The company is usually owned and operated by practicing dentists, although they don’t necessarily have to be licensed in the state that they’re practicing, in most cases they are large group practices that are run and operated by dentists and your goal is to provide a high level of care and service and to maximize a profit, like any business, within the ethical standards of our profession.

In many cases, these Dental Service Organizations will lack expertise particularly in the management of small, medium and large businesses and will hire what is referred to as a Managed Service Organization. This Managed Service Organization may or may not be run and owned by dentists. Many times there are entrepreneurs and business men and women that are part of the board and the controlling aspect of this aspect of the Managed Service Organization. The critical aspect as discussed earlier in this podcast is, is that Managed Service Organization have an investment firm such as an equity firm or a venture capitalist investing money in that Managed Service Organization, or do they have some kind of ownership in it? My personal opinion is that is the most critical factor in determining whether it may be the right entity for you to join or receive care and service from.

Please keep in mind that like with all things there are excellent corporations, less than excellent corporations and poor corporations. Never lose sight of the fact that corporations are run by men and women. To me the critical aspect is what is their short and long term goal, and what is ultimately their desire. And in most cases venture capitalist firms provide capital but they provide it with one thing in mind, to make a profit. And in my personal opinion, in most cases they’re in it for more of a short term than a long term.

Presently in the United States, the largest corporate entity in dentistry and dental health care is called Heartland Dental, the second largest is Aspen Dental, the third largest is Pacific Dental and the fourth largest is DCA or Dental Care Alliance. These corporate entities have different general philosophies. The two basic philosophies are, one; more or less like a franchise. They go under a specific name like Aspen, Heartland or Pacific, and they are run very much like any franchise. There are specific set of guidelines, rules and regulations that must be followed to maintain any franchise. And there are advantages and disadvantages. The public certainly knows who’s involved and they understand what in most cases they are going to get under those particular types of franchises.

The second group is a little bit more of a gray area. They are the same type of corporate entity but they allow the dental offices to maintain generally their own being, their own essence. They will go under the same company name as Dr. Smith & Jones. The public doesn’t necessarily know that they are owned and operated by a corporation and it’s much less not a franchise but it gives the appearance of being locally owned, managed and operated. This is not to say it’s good, bad or indifferent, there are just two philosophies to care. My personal opinion again is over time more and more will try to consolidate the cost of supplies, laboratory procedures, different aspects of managing and operating a dental office such as billing, infection control, office supplies, clinical supplies, ordering, IT and IS, human resources or HR departments to consolidate costs.

Obviously the single largest expense in the dental profession or running a dental office is employees. Although on the surface many of these corporate ideas may make sound economical sense, you have to understand that generally supplies business and clinical supplies will range between four and six percent. In most cases these corporate entities are able to bring down and reduce those costs by between ten and twenty percent, which is better than no savings. However, in many cases, the single largest way to reduce expenses is to eliminate individuals or team members.

So for those dentists contemplating selling their practice and joining a corporate dental facility, understand that in the short and long term, employees in most cases will be cut or removed to reduce expenses and increase what we refer to as EBITDA which is earnings before interest, taxes, depreciation and amortization. It is an accounting term that is critical for you to understand, not just in your own individual dental practices, but particularly if you get involved with corporate dentistry. Basically you take all of your earnings and then you eliminate taxes, interests, depreciation and amortization.

For those less business minded dentists and health care professionals, the major difference between amortization and depreciation is as follows; depreciation is usually a scale or formula based on government and the life expectancy of hard tangible assets, such as dental chairs, dental equipment. Whereas amortization is the depreciation of intangible or soft assets and most critical is the term goodwill.

And these numbers are how they calculate the actual purchase price of your particular practice if you’re thinking of selling to a Managed Service Organization or corporate entity, or if you decide to partner up in many cases you will receive a percentage of EBITDA on a quarterly basis to offset some of the money lost by joining these companies. In general, you can expect to be paid anywhere between 25 and 40 percent of net collected money. The remainder of profits, if you continue to be somewhat of an owner in these Managed Service Organizations, will be spread out quarterly based on an increase of EBITDA on a set amount.

I hope you enjoyed the following podcast. For this information and additional information, don’t hesitate to look at my website www.ascent-dental-solutions.com. My name is Dr. Kevin Coughlin and thanks for listening.