We receive many calls at Levin Group from dentists who want to add practices. The majority of calls come from veteran doctors who want an opportunity to get involved in the recent craze of practice leaders owning multiple offices, expanding their practice location footprint, and selling their practices for a large profit.
As with any investment, opening more practices can involve both great opportunity and great danger. Even without excellent systems, one location is certainly manageable and so are two.
However, it seems that the break point for having a chaotic environment starts at around the third practice. This is when it becomes harder for the dentist to micromanage, oversee, course-correct, and clean up mistakes.
We regularly receive calls about situations such as these and the commentary often goes like this: "I have three practices, I'm exhausted, and I've lost staff members," or "Overhead is high, and we need to get some level of organization and control."
My advice to you is to get your house in order before expanding. There's nothing wrong with wanting to have three, seven, or even 10 or more practices. However, what is wrong is for practice leaders to build multiple practices based on their first practice if that first practice was not built particularly well.
So, you may be wondering, "What is the definition of getting your house in order?" In terms of dentistry, I like to think of it as the following:
- Creating a solid business model with documented systems that have been proven and can be used to train the team
- Having a human resource process where your staff does not need a revolving door
- Having a profit model where overhead is under control, profitability is in place, and each practice is maximizing the opportunities for overall income and profitability
- Having a strategic plan rather than simply reacting to something that happens
- Having just about everything in the practice running properly by developing excellent systems, meeting targets that are measured, and making course-corrections if needed
This is a general overview of what an excellent practice model looks like. Practices that aren't running like this should not consider expansion.
Create a strategic plan
There are several steps to creating an excellent strategic plan. Below is an explanation of the phases involved in executing a successful plan.
Phase 1: Data collection
You don't start strategic planning simply by brainstorming about how many new offices you might want. You start by looking at the state of the situation.
For example, a current state might be that you have a solo practice producing $1.6 million per year, four days a week, with seven staff members. That may give a top-line overview, but it does not give the details and data necessary for creating a good plan.
The next step in this phase is to collect and analyze data, including profit and loss statements, expenses, team performance, locations, etc. Start by crunching numbers over the last three years and then look for patterns.
For example, has the practice grown every year, or is it flat or declining? Practices should also consider whether it is likely that their new patient flow would gradually support a second, third, or fourth practice. These are all critical questions that can be answered by analyzing data and the current state.
The final aspect of this phase is interviewing key players. This includes the dentist and partners, office managers, key staff members, and any outside advisers who can provide beneficial information. The interview should focus on the current state of the practice with a discussion of potential desires and goals.
Phase 2: The all-day meeting
Although it is always better when it is facilitated by an objective outside expert adviser, the strategic planning meeting can be hosted by you, but you must be as objective as possible. The meeting agenda should include evaluating the current values of the practice, setting at least 10 goals for the future, and creating a growth plan. You can then establish the actual strategic plan by developing the steps it takes to get there and adding the steps to a calendar over the next five years.
For example, you might decide you want to open another practice 12 months from today. You must then decide what large steps must happen for that to occur, put those steps on a calendar, hire a real estate broker, find the location, select the design company, purchase equipment, and so on. There is no need to get ultradetailed in the strategic planning calendar, but you need to know what steps have to happen, when they must occur, and what parties are responsible for their completion.
Phase 3: Follow-up and check-in
The truth is that most strategic plans end up in a binder on a shelf and are never looked at again. Companies do strategic planning but do not always commit to anything beyond the planning process.
To avoid this, we suggest that you review the calendar at least once a week to determine if you're on target. You want to analyze anywhere that you feel you're falling behind and then meet with the individual responsible for that particular step or task and find out what the current situation is and how to bring it back in time to meet the overall deadline of the strategy of opening a new practice 12 months from today.
In addition to performing a weekly review, update your strategic plan when needed. This might require a two-hour meeting or slightly longer to review all plans, see if they're still valid, update the calendar, and include individuals who could be beneficial in the planning process.
You are not starting an entirely new strategic plan, but you are doing a deep dive review to make sure it is exactly what you need. Keep in mind that there will always be obstacles along the way, and you will at times need to reschedule certain tasks, activities, or the deadline of the actual strategy itself.
Summary
Multiple practices can be greatly beneficial and lucrative. Growing a business is exciting; however, executing it in the right way is important.
Start by having a practice model that is at the highest level of performance before you open additional practices. Once you have the model in place, then it is a matter of setting a strategic plan as to how you will open additional practices. There will still be many considerations and questions that need to be answered, but as you answer these questions, you can design a growth plan for multiple offices that will be extremely beneficial, both professionally and personally.
Dr. Roger P. Levin is CEO of Levin Group, a leading practice management and marketing consulting firm. To contact him or to join the 40,000 dental professionals who receive his Practice Production Tip of the Day, visit LevinGroup.com or email [email protected].
The comments and observations expressed herein do not necessarily reflect the opinions of DrBicuspid.com, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.
