13: Planning the Dental Practice

Chapter 13

Planning the Dental Practice

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of ­incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way—in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.

Charles Dickens
A Tale of Two Cities


Objectives
At the completion of this chapter, the student will be able to:
1. Describe external environmental factors that affect dental practices.
2. Describe internal environmental factors that affect dental practices.
3. Describe the amount of control the practitioner has over the various factors.
4. Describe an environmental analysis.
5. Describe how a SWOT analysis can be applied to a dental practice.
6. Describe several environmental trends that are important for planning in dentistry.


Key Terms
allies
competitors
economic domain
environmental analysisvenvironmental planning process
ethical and professional domain
external environment
general environment
influence groups
internal environment
internal management
legal and regulatory domain
opportunities
patients
personal position
personal style of the dentist
professional strengths and weaknesses
risk aversion
sociocultural domain
strategic issues
strengths
suppliers
SWOT analysis
technological domain
the operating environment
threats
views of dentistry
weaknesses


Goal
The purpose of this chapter is to acquaint the student with the internal and external factors that affect the planning and operation of a dental practice.

Starting a practice is much like having a child. A practice must be birthed, allowed to grow, and helped through problems before it becomes a fully functioning mature practice. The problems and opportunities faced by a child are different from those faced by an adolescent. Similarly, a start-up practice faces different challenges from a mature practice. With both children and dental practices, a well-articulated plan must be in place to move to the next level of development. In both instances, change happens regardless whether there is a plan. Nevertheless, having a plan helps to guide the process and maximize opportunities that occur.

Practice Stages

Dental practices typically develop through several stages. Depending on where a dentist is in the practice development stage, planning needs and practice profile will be different.

There are four stages in a practice’s growth (Table 13.1). During the first phase (start-up), the practitioner is concerned with getting warm bodies in the door. Marketing efforts become critical. Practitioners often use managed care, welfare patients, emergency call, or other methods to increase the number of patient visits. Efficiency is not as much of a problem as in later stages because there is often slack time. The growth phase sees an acceleration in patient visits. Schedules begin to fill, and the practitioner begins to “weed out” managed care and other less profitable patients. The maturity phase sees practitioners concerned with making the practice efficient from a production, cost, and revenue basis. Finally, during the development phase of practice, the dentist readjusts the practice to meet long-term personal and professional life goals. The practice is concerned with different problems in each phase of its development. Different problems and solutions will then be more important at different phases as well.

Stage 1: Practice Establishment

This initial stage begins with the set-up, buy out, or ­buy-in of the practice. The practitioner’s main concern is to increase the patient base and to acquaint those patients with the style and personality of the practice. To this end, he or she will see virtually anybody, any time. Marketing and advertising are important to attract people into the practice so that they may be won over as regular patients. Profits are low or nonexistent because revenue is low and slow to be collected whereas debts and start-up costs are high. Operational efficiency is not a big problem because there are often extra appointments available and the practitioner is increasing his or her clinical and management skills. During this time, the practitioner develops operational systems and management skills that will be the basis of later practice efficiencies.

Table 13.1 Stages of a Dental Practice

Stage Major Concern
Establishment Warm bodies
Growth The right warm bodies
Maturity Becoming efficient
Redevelopment Personal goal attainment

Stage 2: Practice Growth

The growth stage occurs when the practitioner continues to acquaint the patient base with his or her individual practice style. Because of the unique style, patients begin to self-select for or against the practice. This leads to patients leaving the practice to find a ­dentist who is more compatible with their needs and wants or patients who enjoy the style of practice and refer patients with similar wants and desires. This internal referral process allows the practice to approach a “critical mass” of patients that will help the practice to sustain itself from internal referrals.

Many marketing efforts begin to pay off as well. There is often so much new and previously deferred work that the practice begins to run the practitioner, rather than vice versa. This can leave the practitioner with little time for personal growth or family interests. Although a large amount of money comes into the ­practice, there is low profit because overhead is still high because of loan pay offs and personal debt associated with typical family start-up expenses. This often leads to a “cash crunch” in which the practitioner has trouble paying the bills each month, though production reaches an all-time high. Operational efficiency becomes a large problem as the number of patients increases. The practitioner needs to assess carefully when to add ­additional staff, change hours, or make other critical operational management decisions.

Stage 3: Practice Maturity (Realization)

The practitioner reaches his or her intended level of practice busyness during the maturity stage. Referrals increase as the dentist concentrates on the types of work that are of greater interest to him or her for personal, professional, or financial reasons. The dentist takes control of the time spent with the practice and balances this commitment with personal and family time uses. Involvement with professional societies and organizations increases as the practitioner gains professional and personal stature. Profits increase as fixed costs decrease from loan payoffs. Production peaks and fees increase so that this stage becomes the most profitable. The dentist’s time is the limiting factor to production, so office operational efficiency is vital to maximum profitability. Many dentists’ goal is to maintain a mature type practice for many years.

Stage 4: Practice Redevelopment

This stage of practice can take two different paths. One group of practitioners is content to continue the existing practice pattern. The patient pool begins to contract as patients move away, die, or have decreased need for dental care. If the practitioner has not encouraged children into the practice, the patients age with the practitioner as the patients’ families grow and move away. Often the treatment scope is fairly limited, especially if the prac­titioner has not incorporated the newer techniques, methods, and materials. The practitioner takes more time off for outside pursuits. Profits continue to be high because the overhead is low, although profits and revenues are decreasing as a result of the shrinking patient pool. Operational efficiency is not important if the practitioner is satisfied with the profit and workload of the practice.

The second group of practitioners wants to maximize the value of the practice. To do this, they take in associate dentists, sell part to a new partner, or merge their practice with another. They find ways to continue to develop and grow the practice so that the practice becomes more of the focal point, instead of them. As the practice grows, they often require additional, specialized staff to run the practice. Office manager, sterilization clerks, and insurance management staff members do tasks shared in smaller practices. Operational efficiency is paramount to these larger practices maintaining profitability in the face of this increased bureaucracy needed to run the practice.

The Environment of Dental Practice

A dental practice does not exist in a vacuum. It exists in an environment that affects the practice either directly or by influencing the climate in which the practice ­operates. These environmental forces may be external to the practice or may exist internally as management-related concerns or as personal positions taken by the owner–dentist. But each of these factors may profoundly affect the way a dentist structures the practice. The individual practitioner should identify these forces, anticipate their effects, and use this information to plan practice growth in the most advantageous manner. An “environmental analysis” assesses the practice’s environment so that the dentist can ­anticipate problems and make changes in the practice’s direction to increase the his or her chance for success. This becomes the framework for planning the successful practice.

External Environment

The external environment, by definition, lies outside the practice itself and is composed of both specific individuals and general groups. It includes those people who influence the practice and those whom its actions affect. This is obviously a large, diverse, and complex group of factors. For that reason, external environmental factors generally fall into two categories, general environment and operating environment.

The General Environment

The general environment includes the business, regulatory, legal, technological, cultural, and social factors that affect the climate in which dental practices operate (Box 13.1). It includes factors that affect both the number and types of patients and the number and types of inputs into the practice (labor, supplies, etc.). The general environment is divided into several domains.

Sociocultural Domain

The sociocultural domain consists of the demographics (e.g., age, education level, income level, etc.), values, customs, and historical interests of the people within the society served. Because dental practices exist to serve the needs of the population base, it is no wonder that these cultural factors should influence the organization and operation of the dental practice. The people whom the practice employs bring many of those cultural factors with them as background knowledge on the job. Social and cultural roots, for example, may in part determine an individual’s “work ethic” on the job or affect their personal interactions with the clients of the practice.

Dental practices face a host of sociocultural influences. Demographic changes in the population will affect the practice’s future productivity. The US population, overall, is aging, becoming more affluent and better educated. Twenty percent of the population moves their home in any given year. People value ­preventive health care and practice more “self-help” than ever before. Ethnic and racial composition of communities and the population at large are rapidly changing. The myriad ways, both positive and negative, that these factors might affect the dental profession overall (and a specific dental practice) are considered the sociocultural factors of the external environment.


Box 13.1 General Environmental Factors
Sociocultural
  • The graying of the United States
  • Social attitudes toward health behaviors
  • Rise of consumerism
  • Changing character of dental needs
  • Quality of life issues
  • Decline of the traditional family
Economic
  • Inflationary trends
  • Interest rate changes
  • Specific local employer changes
  • The decrease of unionization of workers
Technological
  • Nonsurgical periodontal techniques
  • Caries “vaccine”
  • New materials and techniques
Legal and Regulatory
  • Changing governmental spending for health care
  • The tax status of health benefits
  • Ethical/Professional

Economic Domain

The application of sociocultural factors requires an exchange by both the dentist and the population. This process results in the economic domain. On a macro level, general economic conditions such as inflation, unemployment levels, and benefit packages negotiated by workers affect the number and type of dental services demanded by patients. Interest rates, resource prices (e.g., gold, silver, computers, and dental instruments), and alternative employment possibilities all affect the general atmosphere that in part determines practice costs. Although the individual practitioner has little control over economic environmental factors, understanding how these factors can affect the practice is still important. In this way, a dentist may anticipate future effects and react appropriately to developing trends by anticipating the outcome and planning accordingly.

Technological Domain

Technology is the third major general external environmental domain that affects dentistry. Technology is the means, knowledge, training, and systems used in the delivery of dental services. Just as robotics has revolutionized the manufacturing sector, research and technological changes have as dramatically influenced dental practices. A few of the new dental technologies from the past 25 years that have dramatically influenced dental practice include community water supply fluoridation, the high speed handpiece, four-handed auxiliary skills, fiber optics, lingual braces, castable ceramics, desktop computers and supporting software, light cured compo­site restorations, spherical cut alloys, implant materials and techniques, CAD/CAM restoration formation, laser cutting, electronic insurance filing, improved nonsurgical and pharmacological periodontal treatments, and newer filling and cementing agents. The rate of change of technology is accelerating rapidly. Future dental practices will be vastly different from today’s in materials, techniques, and information processing. This will affect the nature and character of dental practice. A dental practitioner must constantly monitor the technological domain of the external environment for developments. He or she then decides how those developments might affect dental practice and to incorporate those developments into the growth plan when appropriate.

Legal and Regulatory Domain

The sociocultural environment strongly influences the legal and regulatory domain. In a sense, they are outgrowths of our cultural norms. They define what is acceptable and unacceptable behavior by members of the society and translate into laws and regulations aimed at controlling them. In this country, laws are formed by the legislature, enforced by the executive, and ­interpreted and judged by the judicial branch. As such, they are closely tied to the will of the society. The legal and regulatory environment has obvious and profound impact on the dental practice. Every dentist remembers the state board (“trial by fire”) clinical exam required for licensure. State Dental Practice Acts define limits of auxiliary duty delegation and practice ownership. Through legislation and regulation, Congress affects how much money is spent on indigent care, workers’ health benefits (and tax deductibility of those benefits), and inclusion or exclusion of dental care in health policies. The Occupational Safety and Health Administration (OSHA) and the courts are presently redefining the dentist’s responsibilities to employees and patients while handling potentially infectious materials. The litigious nature of today’s US society has caused many dentists to change the way they practice dentistry. The individual practitioner should monitor the political and regulatory system closely to anticipate shifts in ideology and priorities among regulators.

Ethical and Professional Domain

The profession of dentistry is relatively autonomous, in that dentists decide the prevailing entrance and educational requirements of its members, set the practice and technological norms, define behavioral expectations, and discipline members who do not adhere to their norms. Society grants the profession this autonomy with the understanding that the professional abuse the power and that they look out for the best interest of the public and individual patients under their control. So individual practitioners must respond to and follow a set of socially and professionally determined ethical norms. These ethical expectations change slowly over time as new influences in the other environments change public and professional expectations and opinions.

The Operating Environment

The operating environment is the direct influence that the general environment makes on the dental practice (Box 13.2). It is the environment in which the dental practice actually operates. In a sense, it is the concrete embodiment of the abstract general environment. As such, these are factors that the practitioner contacts and c/>

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Jan 4, 2015 | Posted by in General Dentistry | Comments Off on 13: Planning the Dental Practice
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