3 Warning Signs of a Dying Practice

Whether you’re looking for a new job or are already established in a practice, it can be difficult to “take a pulse” of an office.  Sure, the annual gross and net revenue might be nice.  Maybe there’s fancy new dental equipment.  At face value the practice might look perfectly healthy.  But lying underneath lurks a terrible disease that is waiting to lead the business to an early grave.

First and foremost, we should ignore the “busyness” of the schedule.  Yes, it’s always nice to see a nearly full appointment book, but that can be very misleading.  Here are the three trends that will give you a true picture of health (or sickness)…

(1) New patients

This one is pretty obvious.  The number of new patients that an office can expect will vary geographically, of course.  But you at least want to see the stats on a par with the other practices in the area.  A schedule can be full of existing patients and turn a nice profit, but it isn’t truly thriving unless it’s attracting new patients.  The existing population will slowly be eroded due to patients passing away, moving, being disgruntled, etc.  It happens to all offices!

Look at the number of new patients brought in on a monthly basis for a couple of years.  Look for overall trends and cycles and find explanations for what you discover.  Also ask for the number of patients who were made inactive on a annual basis.  If the practice erosion is greater than the new patient flow, you have a sign of a dying practice regardless of how busy it may seem.

(2) Recall patients

General, pediatric, and periodontists need their hygiene systems to be a well-oiled machine.  Patients should be returning for maintenance on regular intervals with very few hiccups.  Sure, occasionally a patient will skip a recall visit, but there should be a series of checks and balances in place to keep the patient base coming back in.

If the hygiene department is finding more and more free time in their schedule, that is a very bad sign.  Either the recall system is broken or patients are quietly leaving the practice.  It doesn’t matter how many charts are on the wall, so to speak.  In other words, don’t ask how many patients are in the practice, ask how many patients came in for comprehensive and recall exams.  THAT is your true patient base.

(3) Overhead

Even a bustling practice with a growing patient base can be forced to close its doors if it can’t pay the bills.  It’s rare to find, but some dentists are so out of touch with their cash flow that they get into serious trouble.  Causes include hiring more staff than necessary, unregulated spending on dental materials and technology, and drawing too much of a salary for yourself.  You can only delay paying bills for so long before a debt avalanche crushes any hopes for recovery.  It’s nice to drive a fancy car, but sometimes your business has to come first.

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