From Dentist to Leader: Navigating the Path to Dental Practice Success
We interviewed Christopher Achkar from Achkar Law to discuss what dentists need to know regarding employment laws and contracts and what they can do to make sure they protect themselves and their practice, questions and answers below:
Chris: Generally, yes. But you should let your employees know in advance for both quality control and safety reasons. There are also privacy concerns; employees expect some measure of privacy in the workplace.
If an employee expresses discomfort with being recorded, it’s important to get to the root of the issue. Why are they uncomfortable with being recorded? Is there an issue with their performance that they don’t want you to see? Discuss this with them, but don’t record them in secret.
Chris: Always. If and when litigation does happen, written documentation is some of the most solid proof lawyers look for. It’s not that advantageous to get other employees to testify against the employee in question, because they tend to side with the employer out of fear of losing their job.
Documented evidence is important, whether the employee has signed the documents or not. Put the date, when, why, and what you’re going to measure next time– these are performance improvement plans to get yourself out of lack of performance or toxicity. You should document every time you have an employee review or a meeting.
Some documentation happens unintentionally over texts, social media, and messaging apps. This sort of documentation is a double-edged sword. It could prove that you’re being reasonable and trying your best to work with someone. But, if the employee is looking for you to say something wrong, they can also take these words out of context and use them against you.
Chris: My advice changes depending on who I’m speaking with. From an employer perspective, I don’t encourage using WhatsApp or any other form of written communication. I prefer communication to take place in person, and for notes to be taken. There are multiple reasons for this. One of the best reasons it’s easier to interpret words and intentions in person. But they must be put down in a document. Try to get the employee’s signature on the document, whether or not it includes a performance improvement plan. If they refuse to sign the document, you can write down that they refused to sign it, but that it took place on a certain date. As long as there is something we can point to that indicates the date and explains what happened, it can save you a lot of money if it goes to litigation.
It’s good practice to have the documents so that even the employees know that you are holding down the fort in an administrative sense.
Chris: One common misconception dentists have is that they can fire someone within the first three months without cause. That’s not true unless there’s a contract that allows for a probation period, and states that an employee can be terminated within that period without being given anything. A probation period is a creature of the contract. If people look up the Employment Standards Act, they’ll find that there is no probation period. There is, instead, a period within which an employer can terminate someone and not pay them anything. But that is only if a contract limits entitlements to the Employment Standards Act.
Otherwise, if you terminate an employee without a contract, it’s fair game for the employee to claim that they’re entitled to a lot of money.
Chris: Downloading a contract without reviewing it with a lawyer is like buying a car that looks good on the outside without bothering to see if it even has an engine!
One of the most important terms in an employment agreement is the termination clause. You may think that you’ve put everything you want in an employment agreement and that you’ve done a terrific job, but without an enforceable termination clause, the length of time someone works for you becomes a factor in deciding their entitlements.
A termination clause limits how much you have to pay an employee upon termination. Without a termination clause, an employee will cost you more money the longer they stay. And I don’t mean only upon termination, but also constructive dismissal obligations.
If an employment agreement does not include a termination clause that minimizes entitlements upon termination to the Employment Standards Act, employers don’t automatically have to pay the Employment Standards Act. So one misconception people have is that “I hired someone and I’ve worked with them for two years and I’m going to fire them now and pay them for two weeks because that’s what the Employment Standards Act says.”
But if they don’t have an enforceable contract, that person’s entitlements are far more than the two weeks. If they go to the Ministry of Labor, the entitlements are two weeks because the Ministry of Labor only enforces it to the point that the employment standards allow for it, not more than that. So, employees generally go to lawyers because they can get money exceeding employment standards.
In short, termination clauses are a catch-all. So whether an employee makes false allegations, or an employer decides to terminate someone, having an enforceable termination clause minimizes the amount of money that needs to be paid.
So, let’s say an employee alleges something that’s not true. Fine, let’s now look into the termination clause. Well, guess what? The termination clause says the employer only has to pay the employee X amount. So the false allegations make no difference. The termination clause allows the employer to limit entitlements to the Employment Standards Act and not exceed that rate.
Chris: No one should be allowed at any employer’s facilities to start working without having first signed an employment contract.
If an employee starts working one day, then signs the agreement the next day, the agreement is unenforceable. So there must be an agreement given to every single employee before they start working, whether they’re part-time employees or contractors. Without a contract, someone could go to a lawyer or the Ministry of Labor and allege something like, “I worked overtime hours and wasn’t paid for them.”
Even if the employer classifies the employee as a contractor and they paid an invoice that clearly states the hours worked, the employer still has to justify any overtime hours that the employee claims to have worked.
So, whether the employer paid an invoice or not makes no difference without an enforceable contract. The degree of control that you have with your employee or a contract is worth putting in writing before anyone starts working to prevent these kinds of problems.
Chris: To motivate employees to sign a contract, you can always introduce the new contract with the caveat that you have to give them an added benefit along with the new agreement. This benefit will be given if and when they sign the new agreement. You don’t want employees to start working again until the agreement is signed.
It would be a mistake to tell them: “Look, this week I will pay you under the new rate. Just sign the agreement and give it to me at the end of the week.” Then suddenly, you’re paying them a higher rate under the old contract, and there’s no motivation for them to sign the new agreement. There’s no consideration to make the new agreement enforceable even when signed because that employee got that benefit before they even signed it.
The motivation doesn’t necessarily have to be a raise. It could be a $100 signing bonus. It could be a $50 signing bonus. It could be an added day of vacation for the whole year. It doesn’t need to be monetarily huge. It could be one to five extra cents an hour. It could be in the form of prolonged monetary payment in a change of rate.
Chris: Before buying a practice, determine whether or not you plan to keep the employees.
If you don’t want to keep the employees, then you want the seller of the practice to terminate and pay entitlements to those employees before you buy the practice. There’s always a risk when taking on new employees, but you want to try and limit how many things can go wrong.
If you want to keep the employees, I advise the purchasers to have the current owner introduce the new contracts before selling the practice. These new contracts should limit entitlements to the minimum so that if the purchaser wants to terminate people, they only have to pay the minimum entitlements under the Employment Standards.
You can’t terminate people by simply handing over the minimum entitlement and saying “Goodbye.” The dentist must have a signed release before they give the employee money. This ensures that the employee doesn’t go to the Ministry of Labor or a lawyer and say: “Sure, they gave me some money. But I didn’t sign anything that stops me from speaking with anyone or filing a lawsuit.” Simply giving them money does not guarantee that they’ll go away.
Chris: A standard yearly raise does not require a new employment agreement. But a promotion would– as that means you’re moving someone into a new position or shifting their roles. You’ll want to outline the new pay properly to show that their new duties correlate with the new pay rate. You’ll also want to include termination clauses in the new agreement that limit entitlements.
Unfortunately, the law changes on termination clauses a lot. But we do know what the Supreme Court has said, and it’s going to be pretty tough to say no to certain things in a termination clause.
All that said, the risk is always there. So make sure that, once a year, you spend a couple of hundred dollars to make sure that the contract is updated. You don’t want to rock the boat every few months by introducing a new employment agreement. But periodically reviewing contracts helps to determine when to introduce a new agreement along with with a promotion to limit liabilities.
So no, an agreement is not necessary with every raise. But, if you make a significant change to an employee’s duties, or the pay increase is more than 5%, then you may want to draw up another agreement. Always gauge if you’re only giving a raise to someone as part of their regular salary and bonus, or if you’re shifting the role. If you are, it’s a good time to introduce the new duties in writing.
Chris: Often, employers think that because they have a previous agreement with an employee that was drafted by a lawyer, they can just change the number and add some language and it will reflect the new role. But this new agreement will not be enforceable if the employer doesn’t introduce it properly within a given timeframe of the salary change.
Now, a lot of the time these new agreements will have a probation clause. These probation clauses allow a period in which an employee can adjust to the new role, receive a little training, and see if they’re a right fit for the position.
Unfortunately, sometimes employees don’t try hard to succeed in a new role. If they get a nice promotion, they may think: “Now that I have more authority, I don’t have to be such a nice person.”
If the employee fails in the new role, the employer has to bring them back to the old role under the old agreement, a new agreement, or an agreement that is a blend of both. And sometimes, performance improvement plans are introduced to monitor and help the employee succeed in that new role.
Chris: It’s a tricky time for recalling employees. Some businesses may not be at capacity or only need an employee part-time. Sometimes, an employer may have to choose who to recall. Maybe you want to recall everyone and apply a 10% wage reduction, or maybe you need to lay someone off, or terminate one person and bring back the remainder of the staff.
Say you have a staff of four and only bring back three people. What if one out of those three people decides that their kids need to go to school and they can’t work anymore? How do you recall that fourth employee at that point? There are a lot of moving parts here.
The first thing I’d suggest is to keep an open line of communication with your employees. The more transparent you are with your plans, the more confidence employees will have in your ability to bring them back, even if you bypass some timelines that you were not supposed to pass. Employees are more forgiving when they feel that their employer is working with them to bring them back.
In theory, if you only bring back some employees, any one of the employees you didn’t recall can allege that they have been constructively dismissed. So, ideally, you either want to bring everyone back at the same time or not bring them at all.
Right now, some people are happy to come back to work, while others are scared. So, be mindful of health and safety issues in your practice. I know that dentists are more careful than most in terms of health and safety. But they need to outline to their employees the measures they’re taking to keep everyone healthy and safe.
If an employee says, “I don’t feel safe to return,” ask yourself, “Why does this person feel unsafe?” If the employee does not have a legitimate claim as to why they feel unsafe, then an employer is within their rights to potentially allege that this employee has abandoned their job.
If an employee is unresponsive, make sure that they haven’t simply missed your calls or emails. You don’t want someone to lose their job simply because of one call they didn’t answer. So, proceed carefully.
On the other hand, because people are happy to go back to work, they’re often happy to sign a new agreement. So now is a great time to clean up those problematic people. If they’re neglecting work without reason, this is the perfect time to let them go. And then one would have to figure out how to structure an offer and negotiations in a way that keeps their bottom line low in that regard.
Chris: It doesn’t matter if an employer is large or small. If one or two of the receptionists answer calls in a practice of only three or four people– that’s a big percentage of calls that each receptionist handles. It only takes one of the people answering the phones to do a bad job and end up losing a significant number of patients.
The law doesn’t separate the mom-and-pop shops and big telecom companies. An employer is an employer. So, unfortunately, it only takes one bad employee out of two or even one to trigger issues that can snowball out of control.
So what got you here is the entrepreneurial spirit that you started with, but that alone won’t get you to the next level. To get there, you need to make sure that your practice is standing on proper foundations. If your employees are holding you back, you have to address that before you can get to that next stage.
We interviewed Timothy Brown, the CEO of ROI Corporation, one of the largest dental brokerages in Canada, and talked about what dentists should consider when looking to buy a dental practice, questions and answers below:
Timothy: So let’s go back to what dental schools teach about selecting a place to practice dentistry. They’ve always bandied about some slide rule formulas and quick calculations regarding the ratio of dentists to patients. The gist is that dentists should set up their practices where there are about 1500 people to 1 dentist because that means there are more people to treat, right? While that’s still a good rule, any place today within 2 hours of any major city is oversaturated with dentists. So, while those ratios still matter, they don’t matter as much anymore because there are too many good dental offices everywhere.
And by the way, here are other calculations we can make for equivalent full-time dentists. You could count the number of dentists in the book in a town like Brampton– but if some of them work one day a week, and others work two days a week, that’s not equivalent to full-time capacity. Our company does those calculations.
But, as I’ve said to dentists over the years: “Sure, there’s high growth in Milton, Ontario, or Ottawa. There’s new housing and new populations. But when that happens, there are new plazas. All of those plazas contain a new dental office that does not have any patients at the starting date. Those empty practices are trying to absorb the new population as much as any other dental practice in town is. So, why don’t you practice where you want to practice? Why don’t you consider practicing where you want to live?” There are a couple of good reasons for that.
First of all: commuting. The less a dentist commutes to work, the more time they have for business and family. I know dentists who commute at least an hour a day each way. That’s 10 hours a week to go where the money and opportunity are. But they’re not happy. They don’t like spending 10 hours of their life driving. Sure, they can talk on the phone to make their drivetime more productive, but no one wants to do that.
So, practice and live in the community where you want to be first. Then, if you’re patient enough, the right opportunity will eventually become available. Also, if you can’t find a practice to buy, you can start one where you live and be happier.
Secondly: If you dedicate your non-practice hours to living, working, shopping, and supporting a community, the patients will see that. They’ll know that you’re part of their area and will support you much more than the Monday to Friday dentist who drives into town in the morning, drives out at night, and is never seen on the weekends.
Timothy: Much of the conversation around search engine optimization concerns organic visits and organic views. Organic engagement refers to people who are seeking you, finding you, liking you, reviewing you, and commenting on you. If you want true organic engagement, you need to be involved in your community.
A successful dental practice in Canada needs somewhere between 1500 to 2000 reliable, high dental IQ patients. From those 1500 to 2000 patients, referrals will come. 80% of your new patients come from your existing patients. 20% of your new patients will come from other outreach methods, including marketing services.
So, the more time you spend investing in your existing patients and supporting your community, the more your practice will grow.
Leaving town at 5:00 on a Thursday and not coming back until Monday morning– I don’t think that’s cool anymore. However you measure your community, your town, your city, or your block, you have competition. There will always be competition. So, living and working immediately in the area where you wish to practice dentistry, in my opinion, is the best investment you can make to drive referrals for new patients to your practice.
Timothy: Return every phone call and text the same day, within reason. I know sometimes they come late at night, but always strive to return phone calls and texts within 24 hours.
Even if you don’t want to respond to somebody, you should always respond. If you don’t have anything to report, let the patient know you don’t have anything meaningful to report, but that you’re working on it, and you will get back to them when you do have something to report. And that goes for any salesperson in any organization.
I know there are times when you have to have some difficult conversations with people. My advice is to go ahead and have those conversations and get them over with. Apologize if you’ve made a mistake. Most importantly, be human. I think we’re forgetting to do that with all of this automation and technology. I miss meeting people in person. I don’t do anywhere near as much of that as I used to. I miss that dynamic.
Timothy: I don’t like to use the term “social media” anymore. I like to call it “reputation management” because you will be rated and reviewed whether you want to be or not. Reputation management means a great deal. We don’t appraise reputation; we appraise revenue and profitability. A dental practice with a stellar reputation, lots of five-star reviews, and great commentary on all social media will have more referrals, revenue, and profit.
But people have made some very bad comments about dental practices on social media. Comments like that may cause existing patients to lose confidence in a dental practice and not come back. That’s a drain on the practice and can dramatically cut off inbound referrals. Sooner or later, that will reveal itself.
It usually takes between six months to a year for a crisis to reveal itself financially. Sometimes, it takes longer and we call that a latent revenue loss. It could take up to a year before you realize that your practice is not doing well. And if that drop in revenue was due to a silly reputation challenge that you could have addressed head-on by dealing with it, you might have prevented that continual loss. In the end, great practices with great reputations sell for higher prices.
We interview Timothy Brown, CEO of ROI Corporation one of Canada’s largest dental brokerages and get some down-to-earth advice on what dentists need to consider when buying or selling a practice, questions and answers below:
Nick: So, Tim, right now with COVID everything’s up in the air. Is it a good time to buy a practice or a good time to sell? What’s going on with the dental market in Canada?
Timothy: Nick, I work with sellers, and now is a great time to sell because we’ve had an incredible surge in the number of buyers entering the purchase marketplace. We have persistently low interest rates and most experts predict that they’re not going up for a year or two because the government wants to stimulate the economy.
So, from a seller’s perspective, it’s a great time to sell because we have more buyers than ever, including corporate buyers, and hands-on owner-operators– buyers with access to very, very low cost of money. And when the number of purchasers in any marketplace increases, values usually increase as well. The residential real estate market is a perfect example of that.
For the buyers, it’s also a great time to buy a practice because you can be an owner. Many associate dentists in Canada have not been called back to their previous schedules pre-COVID because the owners are working more hours. So, there are a lot of young dentists in Canada who are a little frustrated because they’re not getting as many new patients as they used to receive, and they’re not getting the same hours from the principal. So they’re saying, “Look, I have two choices here: I can set up a brand new practice in a highly competitive, oversaturated market, or I can go buy a practice. Yes, I may have to pay a premium compared to what values were a year ago, but I’ll be an owner and the banks will give me ten-year financing.”
So it’s a great time to sell and it still is a good time to buy because at least you can be an owner and be in charge of the destiny of your dental career.
Nick: If I’m a young dentist and I’m trying to buy my first practice, what are your thoughts about buying in a big city versus buying in a small town that has less competition?
Timothy: The primary motive for most purchasers is to practice close to home. If you live in downtown Toronto or Vancouver, for example, you’ll probably want to buy a practice there so you’ll have a short commute and you can be at the ready when patients need you for emergencies. The problem right now is that a lot of the downtown cores are ghost towns because a lot of the patients that were attending those practices were office workers. If they’re working from home, Canadians are voting with their feet and saying, “I don’t want to drive downtown and pay for parking just to see the dentist.” And it looks like the work-from-home phenomenon is here to stay for upwards of 50% to 60% of Canadians.
So, downtown is great, it’s dynamic, but if there’s not enough patient flow because of the migration back to the suburbs, I think that the suburban dental practice is probably a better investment. You’re still close to the city, but you have patients.
When it comes to buying in rural and remote Canada, setting up a brand new practice is a risky proposition because there are so many people in those communities who are probably loyal to the existing dental practices. Instead, I would recommend buying an existing practice in a small town.
Rural Canada is a wonderful place to raise a family. It’s a simpler lifestyle. I live 3 hours north of Toronto right now in a very small town. I love it here. I’ve got to know everybody in six months. It’s peaceful, it’s safe, and the kids are running around. So, from a business perspective, I think rural Canada is a better investment overall. Also, if you don’t own the building, you generally have slightly lower wages because people in rural and remote Canada don’t earn as much as people do in more urban areas. If you buy an established practice, you probably have a lower overhead.
I’m quite worried about the big downtown core locations in the long term. I just don’t think that’s the place to buy right now.
Nick: If I’m planning to sell a practice in the next five or ten years, what are some metrics I should focus on as a dentist? What are some improvements I should make to my practice that a buyer would care about? And consequently, what are some things that buyers don’t really care about?
Timothy: First, let’s first talk about financial metrics. The most important metric of all is bottom-line profitability. That’s what drives value in any business. And any business appraiser, like our company, focuses primarily on the bottom line. There are many other factors, of course, such as managing your overhead, keeping your wages in line with provincial standards and norms, and managing your dental supplies. But you should always pay attention to the bottom line. A metric that will impress buyers today is the total revenue produced by the prevention programs in the practice. They like to see the hygiene department producing 30% to 40% of total revenue. That’s good recurring revenue. That indicates a loyal, educated patient base, and people are always impressed by higher hygiene numbers compared to the practice’s total production.
Another thing that matters significantly in dental practice appraisal is collection policies and accounts receivable analysis. Some practices accept assignment; that’s fine, there’s nothing wrong with it. Some practices are paid a fee for service at the time of treatment. But we have seen practices where the accounts receivable are, quite frankly, out of control. I think that’s a function of educating the person doing the collections, which is almost always the receptionist.
Purchasers are turned off by receivables that are out of line with the industry norms. The industry norm for the production of receivables is 30 days or less. When we see receivables down to 1 to 2 weeks for production, that impresses us. We factor that into our appraisal and that impresses the buyer, the buyer’s accountants, the buyer’s banker, and, of course, the ever-critical new patient count.
The new patient count refers to the number of new patients appointed to the practice. And that’s a function of marketing, social media, and search engine optimization. Various reports suggest that up to 80% of new patients are being driven to your practice by existing satisfied patients. And I think the practice of focusing on encouraging satisfied patients to refer friends and family will yield a good quality patient flow.
Patient flow isn’t just a head count. Yes, new patients matter, but what kind of new patients are they? Are they coming to receive treatment planning? Are they capable of paying their bills through insurance or private pay? Those are some of the key financial metrics.
I’ll talk very quickly about plant and facility– the office itself. There is a concept in real estate I call the kitchen and bathroom conspiracy. Many homeowners preparing a home for sale will invest in a new custom kitchen and upgrade the bathrooms and other features. But the National Association of Realtors in the States has done a very thorough survey of this and has found that you don’t make any money off of that.
Of course, if you invest 100,000 in kitchens and bathrooms, that should raise the value of the house by at least 100,000 and make it more attractive and salable– I get that. But, after you pay commissions and factor in all of the grief you have to go through, I just don’t think that’s worth it.
The same thing applies to a dental practice. Be careful about technology and toys and improvements. Buyers are more focused on profitability than they are shiny dental practices. There’s nothing wrong with having a beautiful dental practice. And if you’re going to work there another 5 to 10 years, by all means, you deserved to have the equipment that you desire. But slow down on the toys and the things that you think will impress a buyer. If they don’t generate revenue and they don’t generate profitability, you don’t need the gadgetry and the technology. Focus on profitability and the quality of new patient flow.
Nick: I’ve been to events where I’ve met young dentists who are thinking about buying a practice. Some of them want to buy a practice without patients, thinking it’s a little bit cheaper. Others think, “Hey, maybe it’s better to just do a startup.” So, what are the pros and cons of buying a practice with patients, buying a practice without patients, or doing a brand-new start-up?
Timothy: Whenever I’ve had the opportunity to give some consultation to a young dentist in this regard, one of the first things I ask them is: “What are your personal lifestyle expenses?” Some have student loans, mortgages, families, or other obligations. Those dentists need cash and they need immediate cash flow. For them, it’s probably best to buy an established practice. Even after paying the bank loan and the additional cost of purchasing established practice, you’ll have an income, you’ll be busy the first day you go in there, you’ll have a full book, and you’ll have the cash flow you’ll need to support your lifestyle.
Meanwhile, other dentists in Canada have no student loans. They might be single and live alone, they don’t have children. So, they’re in a better position to buy that same brand-new practice that was built by someone else with very few patients because they have time on their side. They can afford to subsidize their lifestyle while waiting for the practice to grow.
And that’s a very similar calculation to the brand new start-from-scratch practice. When you get the design, you get to pick the paint colors, the cost, and the equipment. Building from new is fun, but people need to look at their personal financial needs more than anything.
If you have to pay more to buy a practice with 1000 or 2000 patients, there will be an additional cost to buy that patient list. But you’ll have cash flow and you’ll be busy and you’ll be able to perfect your competency and take on challenging cases. And, in your first six months, you get to meet a thousand or 1500 people who are all basically new patients to you. They’re not new patients of the practice, but you might uncover treatments the previous owner didn’t recommend or was not comfortable performing. Maybe you have a skill set the previous owner didn’t, and you can probably grow the practice.
Surveys show that one year after buying an established practice with a patient list, most of the purchasers generate more money because they’re younger, they have debt, they have energy, they work through their lunch hours, they come in early, they stay late, they take emergencies on the weekends, and they generally grow in the business because the previous owner was perhaps a little more set in their ways.
They didn’t want to do the evenings and weekends, and maybe they were starting to refer out complex cases that they might have performed when they were younger. It’s about cash flow, and this is where you as a dentist start from scratch or buy a turnkey practice for very few patients or buy the larger, more expensive practice for, say, 1000 or 2000 patients.
A lot of dentists will build a brand new dental practice, but they’ll go associate someplace else to subsidize their income. There’s nothing worse than having a practice without a doctor when a patient walks in out of the blue. Maybe it’s an emergency. I always use the analogy of a mother with five kids in the car. She walks in and the doctor isn’t there that day. There goes a minivan of five people right back out of the parking lot. They’re going down the road to the next practice.
That’s a bit of an exaggeration perhaps, but if you open a practice from scratch, you need to be there. And sometimes you’re going to be sitting on your hands because you don’t have enough patients in the beginning. And most dentists are not happy not making any money, using their line of credit on their Visa card to subsidize their household expenses. I think cash flow is king, and we all want to be busy and make a living right away. That’s why people buy established practices.
Nick: In your experience of auditing you’ve seen countless different practices, what were the practices that increased their value doing differently? Were they focusing on events, or focusing on existing patients? Did they buy new equipment or are they spending money on marketing? What are some effective strategies that you’ve seen used to ramp up the value of a practice a few years before they plan to sell?
Timothy: There are a couple of key leading indicators of the top 20% of dental practices. When we’re appraising, we look back 3 to 5 years, and sometimes we see phenomenal growth, great revenue trajectories, and higher and higher profitability. So we ask the doctor, “What did you do to accomplish this? You’re doing better than the rest.”
One of the things that many of these dentists did is invest in continuing education for procedures that they were not comfortable performing. They took the courses and invested in proper training. The doctor is improving his or her skill set and they’re taking proper courses from the most respected training institutions, so they’re able to perform more procedures. And that grows the revenue.
The second thing that we see is when revenue is growing, it probably means you’re not just performing more treatments on patients, but you’re receiving more patients. That new patient count is growing steadily and consistently. And it’s not just a couple of good months with some extra patients. It’s a very solid, steady lot. And 80% of those new patients are probably coming from existing patients. What these practices are doing is giving those patients an exceptional experience.
The dental experience needs to be viewed like going to Tiffany’s or a Mercedes-Benz dealership or staying at the Ritz Hotel. We have to think that way as business owners so that when that patient is appointed, when they’re received, when they’re treated, when they’re released from the practice, or when they’re reminded of the next appointment, it’s a smooth, elegant process. But some dental offices are just too busy to stop and provide good customer service.
Dental offices can be stressful environments. And with all of the donning and doffing of gowns and the current sterilization and COVID protocols, it adds a whole extra layer of responsibility which prevents dentists from spending time with staff. Some very successful dentists have purposely taken 10 to 15 minutes every hour or two a day to stop.
You don’t always have to be in the operatory treating a patient. You can stop and call a patient. “Hi. We did a procedure yesterday. How are you feeling? Is everything okay?” I know most doctors try to do that, but you can always do better. I can do better about calling and following up with our existing clients to say, “How did we do today? Did you have any great experiences you want to share and maybe put a post on our Facebook page or give us a Google review? Did you have a bad experience that you want to share with me as the owner responsible for everything that happens here? Did we let you down? Did we just support you? Tell me, please. I want to improve my business.”
This is what great companies do and we as consumers experience that. And there are other great companies out there where we appoint as a customer or client or a patient, and we leave and say, “Wow, I just felt good. I spent my money on whatever the product or service was, and I feel good about it. I got an elegant, handwritten note with a first-class postage stamp” Oh, my God, does that go a long way! A telephone call from somebody in the office also goes a long way. It doesn’t have to be the doctor, it could be any staff member. “How are you feeling? Is everything okay? Do you happen to know a friend or family member that might benefit from the experience you just had with us here?”
You have to ask for a referral. So those are the two things that I think are making the exceptional practices exceptional and very valuable: increased treatment skills by the doctor and increased patient flow from a referral from existing patients.
Nick: We work with some practices that bring in $500,000 in revenue, while others bring in over $5 million in revenue. I’ve got some opinions on what I think differentiates these two types of practices. But I want to hear from you– what are the key differentiators between a practice that brings in $500K and one that may bring in five or ten times as much revenue?
Timothy: I think it comes down to leadership and the principal dentist, or dentists. If they’re great people to work for, they always show up with a positive attitude, and they’re great at recruiting, rewarding, and retaining excellent staff– those factors make a huge difference.
Two of the key things that cause dental practices to struggle are culture and staff turnover. Patients pick up on that. They are aware of that. They think, “Oh, they got another new receptionist there. I don’t even know this person. I can’t remember her name.”
Some of these practices have several associates working in them, but some of these practices don’t have great leadership and they have associate turnover. They come in, work there for a bit, then decide to get another job someplace else. So culture, leadership, and preventing employee turnover are critical.
Steve Jobs said, “The customer is not number one. Your employee is number one because your employee will help you look after the customer.” That quote goes around on LinkedIn and Facebook quite often, and I happen to believe that it’s true. What we try to do at our company is focus on culture and morale. Sometimes it’s high, and sometimes it gets low. And quite often the analysis will show that there’s one toxic employee that’s dragging that whole place into negativity because they’re just having a bad time in life or a bad time with family or marital situations, etc.
I get that sometimes people have a tough time in life, but they can’t bring it to the office. You have to leave that at the door. Every single team member needs to walk in with a bright, sunny smile and give patients an exceptional experience. And it’s not about the dentistry at that point; it’s about creating a place where people like to go. They get their treatment and they go tell their friends and family and colleagues about it. Those are the exceptional practices. Great leadership. I own a small personnel agency that does some temping and some full-time employee recruiting and our model is very simple: Great staff, great day.
We interview Bill Henderson, former president of Tier Three Brokerage before being acquired by Henry Schein in 2021, and discuss effective strategies for buying or selling a dental practice in Canada, questions and answers below.
Bill has years of experience in the dental industry. He and his team have sold thousands of dental practices across the country and have worked with some of the most successful dentists in North America. He takes the time to share valuable insights on buying, growing, and selling a dental practice.
Nick: Bill, right now we’re in the middle of COVID. The whole economy is up in the air. But what’s going to happen from a dental industry standpoint? Is it a good time to buy a practice? Is it a good time to sell?
Bill: So this may shock and amaze you, but the answer is: it depends. There is a very robust market for selling a practice right now. One thing that hasn’t changed is that there are far more buyers than practices for sale. So, it is still a great time to sell a practice.
But a deciding factor in how well a practice will sell is how well it recovered from COVID closure. If the practice has come racing back from July to February, it should sell for the same price, or an even higher price, than it would have pre-COVID.
On the other hand, if a practice has struggled to come back, it’s important to bring it back to where it was pre-COVID. At that point, it should sell for around the same price it would have sold for before COVID. If profits have dropped significantly, the practice probably won’t go for the amount it would have before COVID.
In short, it’s very situationally dependent, but there are some buying opportunities. Let’s face it, COVID has not changed the incidents of carries in the population. COVID doesn’t prevent the need for root canals, and it doesn’t prevent abscesses. On the contrary, it’s probably contributed to dental problems, because fewer people have been going in for routine care. So there are opportunities to gobble practices that are underperforming simply because of the approaches the offices have taken.
Nick: Let’s say I’m a young dentist buying my first practice. Maybe I’ve been an associate for a couple of years. What I’m hearing now during COVID is the principals are taking on more work and they need a bit more security. So as an associate, I don’t get as much work thrown at me. I start thinking that now is a good time to buy a practice. As a young dentist, should I buy a practice in a big city like Toronto, or is it better to buy a practice in a small town?
Bill: The most important thing is to buy the right practice. That consideration overrides the practice location. Small towns tend to offer better business opportunities than big cities. The defining issues of dental practices today are the oversupply of dentists and patient scarcity.
Often, small towns offer a better ratio of patients to dentists. You want to look carefully at the transition plan because, in small towns, everyone knows the other person’s business. But with the right transition plan and a supportive owner, small towns are generally better opportunities. There may be lifestyle trade-offs. But, you know marketing costs in a small town can be quite different than marketing costs in a big city.
Nick: In cities, people move in and out all the time. That’s especially true in Toronto, where many young professionals live. So when you open a practice, while many patients are looking for dentists, they might not be there in two or three years, because they move on to another job. So you’re always having to spend more money to acquire new patients.
In small towns, the cost to acquire new patients is more favorable, because people in small towns tend to stay there. But the problem is that there aren’t a million people looking for a dentist. In a small town, people have lived there for multiple generations. Many of them already have a family dentist.
So, unless a dentist is retiring, there isn’t a flood of people looking for a brand new dentist every week. However, if you can ride out the lack of patients in the beginning and establish yourself in that community, you’re going to have a thriving practice for a very long time.
Bill: Yeah, and I would also distinguish between buying a practice and setting up a practice. Some of the happiest purchasers we’ve seen are the ones who have bought a practice in a small town and established themselves.
If you’re looking at setting up a practice, the key is to find an opportunity where there are a lot of new potential patients. Try to find a place with a lot of new home construction. Unless a town is severely underserved and people are looking for a new dentist, you’ve got to pick a location with many potential new patients.
Nick: I’ve seen dentists buy an existing practice and take over the patients, while other dentists create a brand new practice from scratch. Often, they pick one of those options without really understanding what they’re getting themselves into. There are advantages and disadvantages to each situation. From your perspective, what are the pros and cons of each approach?
Bill: The number one success factor for every dental practice in the country is patients. You either need to already have patients or be able to attract them in large numbers if you want a dental practice to succeed. The defining issue in the industry is that there are too many dentists and not enough patients to go around. So buying an existing practice with a large, robust patient base is a much lower-risk approach than starting a new practice.
If you plan to start a new practice, you need to be confident in your ability to attract large numbers of patients. Dentistry is not like running a restaurant. No one has ever looked at their spouse and said: “Gee, honey, a new dentist opened up around the corner, let’s go try them out.”
The other mistake I see young dentists make is worrying too much about the practice’s assets and not enough about the patient base. I tell people all the time that you can buy a practice with beautiful new equipment and wonderful leasehold improvements, or you can buy a practice with a lot of patients and old equipment. The practice with a lot of patients and old equipment might be a bit rundown, but you’re going to be busy from day one.
If you focus on the assets and not the patient base, after you’ve treated your cousin and your mother, you’ll be sitting there twiddling your thumbs, worried about when the bank is going to call. So it’s all about patients.
Nick: I agree with that. I’ve seen many startup practices spend a lot of money on building a beautiful office, thinking that once they put the open sign up, there’s going to be a line of people the next day. There aren’t a million people looking for a dentist every day.
If you spend money on marketing, you will acquire patients at a lower cost compared to buying all the patients outright. But it might take you two, three, or even four years before you reach the same level of a dental practice with 1500 or 2000 patients. From a marketing perspective, it’s easier to take an existing practice with a decent patient flow and start marketing to existing patients.
So you’re right, you will be busy from day one. On the other hand, If you start up a new practice, you’ve got to have the cash to sustain your lifestyle for two or three years until the practice can start paying you a good salary.
Bill: Yeah, when you’re modeling for a start-up, you need to model in a lot of money for marketing. And you need to work with someone with a proven ability to attract new patients to a practice.
The only reason I’m doing this Q and A is that I’ve seen Revup Dental do that again and again. So, to anybody reading this, if you can build a practice from scratch and rapidly fill it with patients economically, you’re better off than buying a practice from me. But that takes a unique skill set, a solid business plan, and a great location. And you’ll need the backing of someone who knows how to market to attract new patients in big numbers. Otherwise, you’re going to have empty chairs.
Nick: Yeah, we drive a lot of patients. But we tell everyone that if they have a choice, they should buy a practice with existing patients. It is much easier to take a practice that has 1000 to 1500 patients and ramp up to 2000 or 2500 than to start with a brand new practice where nobody knows you and Google doesn’t trust you.
There’s no magic marketing pill. We can’t simply come in and sprinkle some marketing dust on your start-up and make it successful overnight. It usually takes quite a bit of time.
Bill: If you start with a patient base of 1000 or 2000 patients, your main source of new patients is going to be referrals from those satisfied existing patients. That’s also the cheapest way to acquire new patients.
So, if you get started with a patient base of 2000 and you get referrals from 5% of that patient base, that’s 100 new patients a year right out of the gate. If you’re starting with zero patients, that’s zero referrals right out of the gate. So, it’s much easier to start with a patient base and layer an effective marketing plan on top of that.
That’s how people buy older, tired practices with 1000 patients and double the patient base in three or four years. A new dentist arrives and starts to drive referrals from the patient base before bringing in a marketing agency to get an effective marketing plan in place.
Nick: Let’s say I’m looking to sell my practice in the next 3 to 5 years. As a dentist, what should I focus on? What are the metrics that a buyer values that will give me a higher valuation on my practice, versus things that nobody cares about?
Bill: There are two factors that every buyer is going to look at before purchasing a dental practice: the size and nature of the patient base and the quality of earnings. So, if you want to build up the value of a dental practice, start by increasing the patient base and increasing the earnings.
Increasing your patient base doesn’t just mean attracting new patients, but also ensuring that your recall system is working effectively. When it comes to building earnings, a mistake I see many dentists make is thinking that a dollar is a dollar. Every incremental dollar of hygiene adds more to the value of a practice than a dollar of dentistry.
The wonderful thing about building a stronger hygiene program is that it improves the patients’ oral health. It also improves your business and the dental practice resell price for as long as you own it. But, most importantly, it improves patients’ oral health.
I would not advise anyone to invest in a lot of new equipment. Earnings drive the value of your practice. If the chair in op four is 20 years old but still serviceable, replacing it won’t add value to your practice.
The things that can add value: cleaning the place up, and doing some leasehold improvement. Curb appeal is a factor. I tell people $10,000 for a new coat of paint and floor coverings can add way more value than $50,000 in equipment.
That’s not going to change earnings. Instead, look for equipment and approaches that will build earnings. So, if you’ve got a big practice with the big lab bell, consider adding in-house crown milling. That can add huge value to our practice. Introduce clear aligners, because, whether you like it or not, groups like Smiledirectclub are causing you to lose that revenue.
What does it take to build an All-Star dental practice? We interview Alex and Heather Nottingham from All-Star Dental Academy on how dentists can create a practice that delivers exceptional customer service and new patient experience, questions and answers below:
Nick: One thing we deal with all the time is dentists coming to us to do marketing because they want to drive more patients. The problem is, on the marketing side of things, it’s usually the customer service: how the phone calls are handled.
Alex, you have done marketing. Your father was a dentist and you helped him grow his business. Could share that story? What did it take to increase patient flow? Because I think a lot of dentists are under this illusion that if you just sprinkle some SEO on your business, it will somehow change everything.
Alex: Thanks, Nick. I think you’re describing the model of pay and pray. “I spent a lot of money, so maybe I’ll make a bunch of money.” It doesn’t work that way. With my father’s practice, I was the Tony Robbins coach. My father’s business was facing financial difficulty. It was, quite frankly, heading toward bankruptcy. The office manager made a lot of mistakes and he didn’t run the business very well.
My father was a great dentist. He had all these accolades and fellowships. But just because you’re a great dentist doesn’t mean you’ll get a lot of patients. “If you build it they will come,” doesn’t work. So I asked my dad, “Can I help your business? I help a lot of other people.” And he said, “Sure. Please help.” So the first thing I did was take over his marketing.
Again, he’s got all these accolades. He had a relationship with the Extreme Makeover Lab, and he was one of their top dentists. I wanted to get that message out there. So I revamped his marketing. I hired SEO consultants. This was the golden age of SEO, and nobody was doing it. So we ranked number one for everything and we were getting calls through the roof– but there was no change.
I said, “Something’s wrong here. The phones are ringing, I’m on the first page of every SEO word you can imagine, and the website’s phenomenal, but it’s not working.” So Heather, my wife, was my girlfriend at the time. She was a Bloomingdale sales manager. She had a multimillion-dollar climb book, and she wanted to get out of retail. So I brought her into my father’s office. She was exclusively on the phone. Nobody else wanted to touch the phone; they just wanted to do insurance or whatever. So she filled that role. And they were so happy. They were passing all the new patients to her and she was phenomenal.
She had no experience in dentistry whatsoever, but within 18 months we took a 1 million dental practice and brought it to over 2 million. And I don’t mean to suggest that the marketing wasn’t important; if we hadn’t had the marketing, we wouldn’t have had the opportunities. But, you have to convert patients. And Heather did that.
Heather: Right. And one thing we knew before I came into the practice, as Alex said, “Something’s not right. We’re doing all this marketing and calls are coming in, I see the tracking, and all the leads, but we aren’t getting new patients. What’s going on? Can you listen to the calls for me?”
And that’s when we discovered the big problem: the calls were coming in, but they weren’t converting. There was no process, there was no system, and there was no customer service. The phone call is a patient’s first impression. A practice may have a beautiful website, but if the impression of the office when somebody calls doesn’t match their expectation, you’re going to lose them.
Nick: Absolutely. You can make your practice look like a Ritz-Carlton hotel. But if I pick up the phone to call you and the person answering says something like, “Hello?” with no customer service or enthusiasm, you feel like you’re wasting their time. You can’t give them the Motel six experience and expect people to come to your practice. It’s not until dental practices tackle the internal customer service issues that they see a significant jump in revenue. Without that, you’re only doing one piece of the puzzle.
Alex: Nick, you’re one of the few marketing geniuses with the ethics and integrity to say, “I’m not going to take your business if you’re not going to do what you need to do to be successful.”
You’re not like, ”Give me your money.” You want your clients to be happy. That’s very rare. That’s why we really love working with you. There’s a statement I’ve heard: If you want to be successful, you have to do the things that other people are not willing to do. Sorry, but economically, not everybody is going to be the best or wants to put in the effort to be the best.
You can dump a lot of money into other marketing companies that will be happy to take your money and build you a nice website, but it creates this lie because social media and your website are not reality. The only time a patient knows reality is when they pick up the phone and when they come into the office. What’s even worse is if you put the image out there online that you’re this wonderful place and you really aren’t. You’re going to start racking up negative reviews.
Everybody wants that silver bullet; everybody wants that edge. But you can’t just buy yourself out of it. You have to do the hard things. And that starts with dentists and their leadership.
Nick: Absolutely. Leadership is a key part of it. Everyone would love a service where they can just sign the check or tell their staff to do some magic bullet type of formula, and then everything is fixed. But the reality is that the vendors that are doing really well have outstanding leadership. People love working for them. They’re positive. They’re always investing in their team. They’re trying to wow their patients. People want to work hard for them because they want to see them succeed.
On the flip side, you also have dentists who are always searching for that magic pill solution. And they’re always surprised when they hire a company that tells them what they want to hear. But then a year goes by, and nothing really changes. What did you expect shopping around for a quick fix?
Alex: You have to be open to coaching. What I love about RevUp Dental is that you coach your dentists. I had this realization recently. You have to go in with proper expectations. You have to understand that to be successful, you have to grind. But the trick is to try and enjoy the grind. Enjoy the journey; enjoy that it’s going to take work and personal development. It’s going to be hard at times, but you have to be willing to take that.
You have to have a growth mindset. There are a lot of books coming out now about growth or expansion mindset. That’s what you have to be ready for. And if you do that, not only will you have the success that you want monetarily, but you will also improve your happiness. You’ll increase your love for what you do and your love for the people around you.
Nick: When many dentists are hiring staff, they primarily look at the potential hires’ technical skill set. They ask questions like, “Do you know how to use my patient management system?” or “Do you know how to process insurance?” Then they throw them into the job without stopping to ask themselves “Is this person warm and friendly? Do they have good customer service skills?” I feel like that’s setting people up to fail. What are your thoughts on that?
Alex: Well, you’re speaking to a few issues. The first is the issue of recruitment in general. It is difficult right now in dentistry to hire new team members. It was difficult to find talent before COVID, but it’s even harder now. Through our research pre-pandemic, we found that sufficiently onboarding and training employees improves employee retention by 25%.
So, it’s important to consistently train your team. And by training, I’m referring to customer service, but also training them in your vision and forming a bond. You want to hire for the personality and train for the skill.
So, you may be wondering “How can you do that?” Well, when my father hired Heather, she had zero dental experience. She worked in retail. I love hiring from retail for an office because of Heather– she crushed it. Now, if you have an assistant or hygienist, they have to have certain skills. But even those can be developed. You could potentially hire somebody in the front office that you can cultivate to be a hygienist or assistant in the future if you’re patient enough because they can go get the training. In the meantime, have them learn customer service because everybody in the office should be trained in customer service.
Heather, tell us about the Ritz-Carlton– about how they bring employees on. What does the Ritz-Carlton do?
Heather: Yeah, the Ritz-Carlton focuses on finding the best people with the best attitude. I mean, they’ll pay people to not take the job. They’ll give people money and say, “I’ll give you this money if you don’t take it,” to see who really wants to work for them. And that’s the type of people that we want. We want people who want to work for our practice, and who are excited about the vision of the practice. That’s why it’s so important to have a vision for the practice.
I’ve met many dentists who say, “Oh, it’s hard to fit training into the schedule. We’re so busy.” And I tell them “The Ritz-Carlton and Chick-Fil-A are super busy too, but they always make it a priority to train. They won’t let anyone even touch the phone or interact with customers until they’ve had about 21 days to three months of training and onboarding on their systems, and familiarization with their vision.”
If you go up to somebody at the Ritz-Carlton, every single one of them carries this little card with the company’s vision, and they can recite it to you, and they’re proud of it. Every year, they train everybody from the janitor to senior management for around 250 hours. There’s training is a priority, you make the time.
Nick: Yeah, it’s that sharpening-the-saw problem, right? I read in your book that Ritz-Carlton had done a study to try and figure out why one group of longtime customers had decided to start going to other hotels.
They interviewed hundreds of thousands of people, and they found that in the vast majority of cases, the leading factor that caused customers to leave was that someone with whom they had interacted on their last visit made them feel like the company was indifferent to their experience.
It wasn’t that the service or the room was bad. Somebody that they interacted with made them feel like they didn’t care. The reason was that simple. In dental practices, I’ve seen cases where people come in and no one even looks up to greet them, because they’re preoccupied. You see a lot of cases like this where the practice is investing so much money in marketing, but no one’s paying attention to what is happening on the phones.
Heather: As you said, you can’t train on personality. And what happens when you hire people who want to focus specifically on technical tasks, is you end up with task-oriented people instead of people-oriented people. I’d much rather talk to somebody on the phone than process insurance or do a spreadsheet. Give me all the people, I want to talk to them. I want to help them. Those are the types of people that you want to have front and center in the office.
Alex: Yeah. What Nick is showing is any break in the chain messes up the whole operation. You can’t just train your front office, because if the patient gets a bad experience somewhere else, it’s not going to work. You can’t just say, “Well, there is good customer service on my website.” That’s not enough. It’s got to be everywhere.
We launched a recruitment service. We recruit for positions in the United States, but we also run quarterly live H.R. hiring courses. And we also have people all over the world that we teach the hiring process, including personality profiles and all those sorts of things. Part of the reason we did that is that many people said, “Well, I can’t train because I don’t have the right staff.” That’s an excuse.
So we say, “Okay, well we’ll help you hire them.” Because dentists are always going to hire again. It’s an ongoing thing. That’s running a business. There’s no emotion necessary. It’s a business decision. And we look forward to the challenge of perfecting and improving our team through training and onboarding.
Nick: One thing that gets a lot of dentists stuck is that they can’t visualize the patient journey. I can come in and build their website so that their conversion rate might go up from 1% to 5%.
But, if you start tackling the internal issues like the phone conversion rate and the new patient experience, you’ll see that you get a bigger bang for your buck further down the funnel than if you just try to focus on the website.
There is a great example in your book where you break down the math to show how you can improve the website conversion of AdWords and other SEO tools that will have an impact on the revenue. But then you compare that to what happens when you improve the phone conversion rate or you improve internal issues, and the revenue increase is substantial. Could you go through that example now?
Alex: Yes, I can. I call it the all-star business growth formula. It’s something I adapted from my time with Tony Robbins. There is one way you’re going to start a business; you’re going to get some form of marketing– internal marketing, external marketing, referral marketing, or insurance.
The first step in the funnel is converting the phone call. Whoever is not converted drops. Whoever is converted, we move to the next step, which is when they have to show up for their appointments. So, we have to have some systems in place to make sure they show up.
Then, hopefully, they accept some sort of treatment. And, if we did a great job on customer service, they will make referrals to us. And then the process repeats. That’s the only way you make revenue. You can make little slivers like collection and this and that, but I’m speaking in broad strokes.
Now, from our research, we found that 35% of phone calls will convert to appointments. From that 35%, about 85% of patients will show up. Of that 85%, 60% of patients accept treatment and 15% will refer. We’re aiming for a revenue goal of $1 million.
So, if we’re only converting 35%, to get to that $1 million, we need to start with $5 million a year in potential opportunities. Because if only a third of our patients get converted, we’re at 1.75 million potential. The vast majority, as you can see, is gone. Clearly, marketing isn’t your problem. We need to focus on customer service.
So, now we’re at 1.75 million, and only 85% convert. That means we’ve dropped 15%. So now we’re at 1.5 million. We’re going down. Now only 60% of patients accept treatment. These are pretty good numbers. We’re at $900,000. Then, about 15% of patients from that base refer other patients. That puts us back at $1,000,000.
So, we started with $5 million in opportunities and we only got one-fifth of it at the end. So we decide to focus on incremental improvement. Let’s say we can improve 5% net each area. Our call conversion goes up to 40%, we’re at 2 million. Our show-up rate goes up from 85% to 90%, we’re at $1.8 million. Our acceptance rate went to 65%, that’s $1.2 million. Our referrals went from 15% to 20%, we’re at $1.4 million.
So, by incrementally improving each area of our customer service practice management skills, we increased our business by $400,000, or 40%. And then, just for fun, let’s say we improve 12% in each area. Call conversions are now 47%, and we’re a 2.4 million. But we can do even better than that.
If 97% show up, that gives us $2.3 million. If 72% accept treatment, we’re at 1.6 million. And if 26% of patients refer, we’re at $2 million. By incrementally improving each area by 12%, we’ve doubled our business without spending a cent more on marketing.
When dentists or business owners say, “I don’t have time to train,” they should consider this. We showed that you can double your business incrementally, or even go up hundreds of thousands of dollars, by making customer service a priority.
Nick: One thing I’ve seen with a lot of other training companies, is that they teach the Always Be Closing formula. It’s like the scene from Glengarry Glen Ross. That’s how these companies approach sales: get the client to say yes to the appointment at all costs. But every time I’ve seen practices work with companies like this, they’ll get a few more people to book appointments in the beginning.
But, inevitably, six months later, bad reviews start coming in and things start to dip. This is what happens when you try to push treatment on people.
What I like about you guys is you’ve made it clear that you’re not teaching sales. It’s not about sales or converting the patient. It’s about customer service. Could you talk a little bit about that?
Heather: For me personally, I love helping people and connecting with people. I feel like, first of all, you have to love the dental practice that you work for. You must understand the doctor, look at their work, and believe in it. And when it comes to doctors, I always tell them, “Make sure your team knows what you do and how well you do it.”
If a person doesn’t feel comfortable going to their own practice or their family practice, then they’re not going to be a good person to talk about dentistry. But I think that rapport is the first thing for sure. You have to have a rapport with the patients.
We’ve seen practices that went with the “Always Be Closing” philosophy and they did get a ton of patients. They might have had 150 new patients in a month, but then they had a ton of cancellations. They weren’t converting those appointments. So, you have to look at all that.
When we tried that philosophy in our practice, it didn’t work. We saw many new patients come into the office, but they weren’t converting, they weren’t accepting treatment, and they weren’t showing up. And at the end of the day, the months that we had 50 new high-quality patients were some of our highest production months. And some of the other ones were some of the lowest production months.
I think that the focus needs to be on polite pre-qualification. There are different things that we do during the call to get to know the patient and make sure we understand their needs. We’re not just booking people and saying, “Come on in, we’ll take care of you.”
This way, if we don’t take their insurance or we’re so far out of their budget that they wouldn’t even consider coming to the office, we can go ahead and clear that up before we waste their time and ours by bringing them in.
Nick: Yeah, from listening to calls, you see a lot of examples where your staff must know what you do. That sounds obvious, but you’d be surprised how often we encounter this issue. We’ve had dentists who’ve taken Invisalign training courses, and then, four or five months afterward, when people were calling for Invisalign, their staff would tell the patient, “Oh, I don’t think we do Invisalign here.” And they would refer them to other practices down the street.
So, this is where a lot of the problems happen. Dentists aren’t even sure what their staff is saying to their patients.
Alex: They’re not prepared for the phone calls. They’re just winging it. And you can’t wing it. You have to prepare for every step. I love to compare this to professional athletes and great artists: every step is prepared. And if you look at any successful business or person, every step is orchestrated again and again until it’s right.
To be honest, those examples tell me one thing: that’s an amateur practice. Essentially. We’re talking about being a professional. So to answer something like that is a great undermining of the potential of that practice.
A lot of sales training companies will show the dentist how terrible their people are. But it’s not them; it’s the dentist. The dentist hasn’t made it a priority to train their team. In truth, it’s very rarely the team member’s fault, unless they have a crummy attitude, or they don’t want to learn anything.
Nick: One thing that we see Stump 95% of dentists is people will call and say, “Do you guys do Invisalign?” or “Do you guys do dental implants?” And the staff member says, “Yes, we do. Are you looking for Invisalign?: And it’s like, well, they didn’t call to order a pizza.
But they don’t know what to say. So the patient inevitably asks, “Okay, what do you guys charge for implants?” And it’s at this point that, you know, 95% of dental staff have no idea what to say.
They either just flat out give them a random price and the person says, “Okay, thank you,” and hangs up, or they say something like, “I can’t tell you anything. You have to come in for a consultation,” and it makes the person feel like they’re not being honest with them.
The call process that the two of you teach is a great formula for how to tackle these sorts of situations. Could you talk about how to handle these types of calls?
Alex: Essentially, this goes back to the importance of rehearsing and training. Even if I gave you the exact thing to do, it’s not going to work unless you practice it. One thing we talked about is that sales don’t work because sales can be manipulative.
When I say sales, I don’t mean that sales in general is bad, but it has a negative connotation, especially in dentistry. So that’s why we avoid that word.
The other issue is the script. Some dentists give employees a script, so they know what to say. The problem with scripts is that they sound scripted. Also, if you give an employee a script and then change the process, you’re in trouble, because now the employee is giving people the wrong information.
Have you ever spoken to someone on the phone who is using a script? If you ask them a question off their script, they don’t know what to do. They’re not trained for that.
Instead of scripts, employees should learn a process for handling questions. And Heather can review the Great Call Process momentarily. You can learn more about it in the webinar and in great detail in the coursework that we provide.
There’s also the situation where you don’t immediately answer someone’s question, but you have to answer it because they called and asked a question. So, people usually do one of two things: answer it to get them off the call, or don’t answer it because they’re trying to manipulate it. There’s got to be a middle ground. So, Heather, tell us a little bit about that and the Great Call Process.
Heather: I think a lot of offices get caught in that limbo situation where they’re either like, “I can’t give you a price,” or they just act completely robotic. Either way, there’s an issue.
When you tell a potential patient, “I can’t give you a price,” then you’re basically telling them No right off the bat. That breaks the rapport immediately. People get defensive and they don’t understand why you’re refusing to answer their questions. The trust is broken.
And then there’s the other extreme, where every answer is short and transactional, and there’s no rapport whatsoever. It’s like the team is almost robotic. I think there is a misconception when an employee hears someone asking the price. They assume the person is shopping around for the cheapest price, so why should they even bother getting to know them? But the thing is, most patients don’t know what else to ask. They think that dentistry is a commodity. So when they call, the only question they know to ask is: “What do you charge for this?”
Until we find out what their needs are, how can we help them serve them? Maybe sometimes they call and ask about insurance and we might not take their insurance, but we find out through conversation that they don’t care about that. There are many variables like that to consider. The Great Call Process helps us find out who patients are and how we can best help them.
If someone calls in asking about a specific service, that’s great. But first, let’s get them to pause and back up a few steps. We can say something like, “Thank you so much for calling. I’d be happy to help you with this. Can I ask you some questions so I can better assist you?”
That allows us to take polite control of the call. Then, we can ask them some important qualifying questions like: “Who is this for?”, “How do you know you need this service?”, etc. Because maybe they’ve been to five other dentists and they just want to get another opinion, or maybe they’ve never even been to a dentist before and are just guessing about what kind of treatment they need.
I’ve had people that would call our office all the time and say, “What do you charge for an extraction?”
And I would say, “Well, what led you to think you needed to have your tooth extracted?”
“I don’t know. It just hurts.”
“Well, if we can salvage the tooth, would you rather keep your tooth?”
And they’re like, “Yeah, I’d rather keep it.”
They didn’t even know that keeping their teeth could be an option. So, we start talking and I say, “Let’s get you to come in and we’ll take a look at it.” We don’t necessarily want to give them exact prices because we don’t know if that’s what they really need.
We don’t know if they need one veneer, an implant, or something else entirely. And when you start giving them prices, they start fixating on those prices. Then, when they come in, if that price isn’t congruent, you just lost their trust. So, we do what’s called the show and tell process, where you show the value of what your office can do for them.
This is about sizzling your practice: talking about the highlights, and how they pertain to them. It doesn’t have to be a price. If you don’t give out prices for specific treatments, you can at least tell them the cost of the examination and x-rays. If they can’t afford that, they’re likely not going to be a good candidate for your office anyway.
Alternatively, you can give them a price range. But before giving them the range, you should build rapport with them. Make sure you understand what their wants and needs are. You’ve talked about the value of your practice and how it pertains to them, and then you’re giving this range so it puts everything in context for them.
Nick: One situation we’ve seen is dentists who want to train their staff, but the staff is resistant to it. We often see this among young dentists who buy practices from retiring dentists.
When you buy a practice, you don’t get to interview the staff because the staff doesn’t know the practice is being sold. Often, this staff has been doing things a certain way for 20 or 30 years. They’re resistant to change.
So, let’s say the dentist is on board with training., but they’re getting pushback from the staff. Do you fire them? Is this a leadership issue? How do you tackle this?
Alex: I’d be interested to know what you think, Nick. If you want to do training and your team doesn’t want to do training, what happens?
Nick: I’ve never defaulted to the position that, if they’re not going to be on board, they should find another job. I can’t turn you into something you’re not. It’s like I’ve heard you say: “You can’t turn a donkey into a racehorse.”
Alex: It’s more like “Don’t expect a donkey to be a racehorse.” The little nuance is important because we want to approach this with compassion. Racehorses and donkeys serve different functions and one is not better than the other. You should always try to build someone up from where they are. But, if someone is adamant that they won’t do something, or they’re not willing to try, then it may not be a great fit. It becomes a trial of leadership.
So, the first question you have to ask yourself as a leader is, do you really want to train in customer service? Is it really important to you? And if so, how much? Is your fear of addressing the team greater than your fear of losing tons of money because you don’t have good customer service?
If you would rather not train your staff and risk losing up to a quarter million dollars or more from your business, that’s your prerogative. Your fear of not being good enough or being rejected is so great that you’re willing to accept mediocrity.
And it’s not for me to judge what’s better. Some people are very nonchalant. They want to practice like that. But don’t call me and say, “I want to make more money,” “I want my team to be more responsive,” or “I want to provide better customer service,” when you’re not willing to train your team.
You can’t have both. You can’t have a team that is not willing to do it with you. Something’s got to give. That’s why I always come back to leadership.
As a leader, you have to make it clear that this is the way things are. Your new philosophy is 20 minutes of training a week for the rest of your career. You’re always training. And, though it’s rare, if somebody tells you, “I am not doing that,” that’s essentially a resignation from your company. That’s a situation where I would let that person go.
The more difficult employees are the ones that say they’re going to do the training, but they don’t, and you end up having to keep track of them to make sure they’re doing the training. That is going to make your life difficult, and you’ll probably conclude that it’s not worth it. But how badly do you want it?
This is a question of leadership. The answer isn’t to fire everybody, but you better get your act on straight as a leader and understand what’s important to you. That’s when the answer becomes clear. You don’t have to be mean; you can have lots of compassion for all your people. But, if you’re going to have a business of racehorses, it’s not efficient to have a bunch of donkeys.
Nick: So, you guys have worked with a lot of different dentists all across the U.S. and Canada. What are some effective ways that you’ve seen dentists continuously motivate their staff?
Alex: There is a great quote that goes something like: “You want to pay your team enough so that money is no longer an issue.” Money is not the ultimate motivator. I heard a study recently that suggested that money was number six or seven in terms of motivators.
People don’t simply want a job. People want camaraderie, acknowledgment, appreciation, and a sense of belonging. They also want to feel inspired, especially the new generation. The newer generations are less motivated by money. They want to be a part of something, to have ownership of something.
In the end, it comes back to the whole leadership issue. It is about effectively communicating your vision with your team, and understanding emotional intelligence and human psychology.
A staff will view bonuses sometimes as these games of manipulation that the owner is doing: “I give you this for this, I give you that for that.” I do that with my son sometimes. And eventually, I find that I’m in ten manipulations with him and it gets very confusing. That’s when I have to say, “Okay, enough of this. I love you, but you just have to do what I’m asking.”
One office we work with is implementing this system of little magnets that show where people are on their coursework. It’s fun for the staff, and people are talking about it, and they even turn it into a kind of competition where sometimes the winner might get a Starbucks gift card. But the larger point is that the whole team is having fun together.
So I thought that was cool. One part I thought was a problem was that if you won, you had to do a five-minute speech in front of your peers. To me, that’s not a good motivation because very few people enjoy public speaking. But things like gift cards are fun. Recognition and appreciation are key. If you can gamify it, and play with your team to make it fun, that’s a great motivator.
But stop with the manipulation. You have to step back and say, “What is going on with my practice? I see a vision and I want to do this. Why are they not motivated?”
We talked before about the racehorse and donkey example. The problem could be that you have the wrong team. But it’s more likely that you set it up wrong. Maybe you created the monster.
Now that we’re all together and we’re on the same page and we all love each other, we’re going to have a fun time together. We’re in training to have fun. We’re going to make more money and as we make more money, guess what? I’m going to increase your salaries. And I’m a big fan of group bonuses. As we all do better, we all benefit. Maybe we’ll go to Hawaii.
To summarize: set your vision, be committed to it, have fun, and let your team have fun with you. The staff at great companies are proudly part of those companies. They would love to train. If you don’t see that love, you probably set it up wrong. If you didn’t set it up right, you have to go back and start at step one. You say, “This is what we’re doing. Let’s set it up right.”
The team at RevUp is passionate about problem-solving. We really do love finding out the best way to reach people online and connect them with the services they need. Most of all, we love dental practices.
Want to know more about what we can do for you and your practice? Reach out to us. We’d love to have a one-on-one conversation with you to see if we’re the best fit for your needs.