Clear and present danger – Chris Barrow comments on increased financial anxiety in the dental community and explains how he plans to help.
You will have recently noticed an increase in the number of conversations in dentistry expressing concern about finances, cash flow and profitability.
With clients and online, I’ve been talking about key performance indicators (KPI), operating cost per surgery per day (OCPSPD), average daily yields (ADY), associate profitability, splitting dental plan payments between practice, associate, and hygienist, splitting FTA/DNA fees – the list of topics grows.
The increased commentary is a direct reflection of the fact that many more members of the dental community are asking me to help them analyse their own numbers. Because they are worried.
Why are dental practices worried about their financial security?
No wonder people are worried.
- Variable expenses are up (lab and materials)
- Operating expenses are up (day to day running costs)
- Wages are up (and more demands arriving)
- The cost of servicing debt is up (albeit easing)
- Self-employed clinicians are asking to be paid more (for doing nothing extra).
This reveals the crushing logic that the only way to maintain profit margins is to:
- Increase average daily production
- Increase prices.
And there’s the rub.
Clinicians increasing their average daily production? That’s a big ask for the majority.
Patients paying more for their dentistry? Many clients are afraid to ask.
So, the ‘clear and present danger’ mentioned in my title is what happens in the event of either:
- Not looking at the numbers (think ostrich in sand)
- Looking at the numbers but not acting (think rabbit in headlights).
Taking action
Thankfully, I’m banging the drum so often on this with my own community that they are looking (at least that’s step one). But getting them to take the action? That’s another story.
Necessity is, as ever, the mother of invention. When you can’t make payroll because there’s no cash in the account, the motivation to keep count more accurately and to analyse becomes more important.
In my 31 years dealing with dentists, I’ve never done as much financial analysis. Perhaps with the exception of the post-lockdown period.
This is keeping me very busy. Yet I recognise that the financial emergency is affecting many more besides my client base.
It is heart-breaking listening to a business owner in tears on a Zoom call, describing how they haven’t been able to sleep with worry and exhaustion. I’m wondering how many others out there felt the same?
Introducing financial crisis week
One of the benefits of the work I do is the opportunity to spot trends in the business of dentistry very early on – simply because my clients and the wider dental community let me know what’s working and what isn’t!
I believe that we are at a very dangerous moment in the business of dentistry, one which requires a concentrated focus on business finances, on making sure that the numbers add up.
This is the biggest challenge we have faced since lockdown and the return-to-work cycles in 2020/2021.
Such is my concern as to the sheer volume of questions that I’m fielding. With the co-operation of Dentistry magazine, I’ve decided to offer my answers to these questions free of charge to the entire dental community.
You’ll remember our Facebook Live broadcasts during lockdown – well now…
Dentistry Webinars will be helping me to offer a unique and one-off series of webinars, on three consecutive evenings:
Dentistry Webinar - On-demand
Financial crisis week – part three
Speaker: Chris Barrow
Catch up on previous Dental Business Coach columns:
- Don’t hide from financial planning
- Is your list half empty or half full?
- Planning for a profitable exit when selling your business
- A guide to setting your goals for 2024
- Dealing with pay rise demands – from drama to empowerment.
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