Are you volunteering in your own practice?
Jane Lelean explores why some practice owners are remunerating themselves at a lower percentage than they pay their associates.
Money is a potentially contentious issue in dental practice. The balance between being a healthcare service and a profitable business is a fine line that many find challenging, and others have strong philosophical beliefs about.
The NHS started in July 1948, with the ideal of treatment free at the point of service. Charges for dentures were introduced in 1951 and for other treatments in 1952.
Our current struggle with healthcare and fees has existed for a long while. You as a practice owner, practice manager, clinician, will therefore have to square your own circle.
In this article, I would like to introduce some ideas on the things that you may find useful to consider.
Space for everyone
In broad terms, the only source of revenue for your practice come from patient fees. Whether your patients are treated under the NHS, privately or via a payment plan; capitation, or membership.
Therefore, how much you pay your team, yourself, the quality of materials, equipment, time with patient’s, treatment care provided, is all determined by patient charges, which are determined by your hourly rate.
Your standards are a choice and not an accident determined by circumstances.
You can choose to use the discount retailer’s approach: ‘Pile it high and sell it cheap’. Or you can choose the Stella Artois approach: ‘Reassuringly expensive’. It is for you to choose your position in the marketplace.
But if you don’t like where you are at the moment you can make a different choice. A browse amongst your local supermarkets will show you that there is space for everyone. Waitrose is more expensive than Aldi and it is still full of customers.
What type of dentistry and customer care do you want to offer?
The key foundation stones to any decision you make about your practice boils down to knowing and understanding two things:
- Your values and culture
- Your budget and management accounts.
Today I want to introduce you to your budget and management reports. We will cover values and culture in a separate article.
Your budget and management reports are a series of spreadsheets and graphs that tell you the story of what is happening in your practice.
If you don’t have one, you must create a budget projection, from which you can calculate your hourly rates and then patient charges.
First look back at every penny you have received as income and spent in the last 12 months. Allocate it on your budget projection sheet.
If you are using a computerised software accounting system this may export the data into a spreadsheet for you. But if not, you need to find an alternative source for all the income and spending.
Having looked back you can use these figures to look forward. Create an accurate guestimate as to the costs of the practice you want to create.
Finding the time
‘When am I going to do this?’ I hear you ask. This is the nub of this article.
You can delegate and never abdicate this to a trusted practice manager/book-keeper who you meet with regularly, to look at the figures.
Then consider the story they tell you, decide on an action plan and set the time scales, deadline and accountability. Or you can do it yourself. Whatever you choose, you engage with the process.
As a practice owner hopefully, you realise that you have several roles;
- Business owner
Each of these roles also has its own skill set, areas of responsibility and accountability.
- As a clinician you are generating income
- As a business owner you are thinking about the practice, the visoneering, responses to market forces and economic climate, the values and also the culture you want to create, the type of dentistry you want the practice to offer in the future. Big picture strategy
- As the leader you are the inspiration, empowering, inspiring the team. Defining and demonstrating the values and culture in the practice, developing yourself and your team
- As a manager you will look at numbers, reports, audits, making decisions. Small detail tactics.
My curiosity is how much time are you spending in each role and how are you remunerated?
In 15 years working as a business coach and trainer, my overwhelming experience is that the majority of practice owners pay themselves a lower percentage of gross for the clinical work they do than they pay their associates. Even though they generate more income.
Moreover, they are not remunerated for the work they do as the business owner, leader or manager. Sound familiar?
Consequently, the tendency is for the principals to work harder and harder, longer and longer clinical hours to keep the practice afloat financially, subsidising their associates.
This often leads to abdicating responsibilities to practice managers without any vision, guidance, support, or encouragement, because they don’t have time.
Before long, the principal is burnt out, fed up, resents their practice, feels a failure, and considers selling or other ways out.
I would like to suggest there is another way.
Pay yourself first
What do I mean by this? Recognise your additional roles as a business owner, leader, and manager. Then work with a coach and trainer to develop the skills you need to do these roles well.
Schedule the time each week, taking time out of your clinical diary to dedicate to the non-clinical aspect of being a dental practice owner.
Create a remuneration package for yourself in the roles as business owner, leader and manager. Then build this into the fixed costs of your budget, and ultimately your patient fees.
This is the only way that you can spend the time you need to work on your business, not in it, without compromising evenings, weekends and also your financial stability.
Now is the time to stop volunteering in your practice. Step up and do the roles that need doing and get paid for them. Your family, your team, your practice and also your team are depending on you.
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