Are you operating above or below the "dead spot" in your dental practice? Or are you running on dead center? Why is it important to know the breakeven point of our business? If you are in the phase where you want to create or renew the professional profile of your dental practice, then the following approach can help you.
In the field of health services there are two terms that need clarification and are of particular importance for the economic survival of businesses, individual or corporate. It is the term costing and the term pricing. The first term - costing - refers to the determination of the operating costs during the performance of a service, while the second - pricing - refers to the amount of money charged to the patient for the service as a whole or otherwise, the set of values that are waived by the patients to obtain the benefits of owning or using a product or service (Armstrong & Kotler, 2009). Historically, price has been the single most important factor influencing patient choice and the only marketing element that generates revenue for any healthcare business. In general, in the modern market, costs can change quickly, while the price of the service remains relatively stable for longer periods of time, something that significantly characterizes dental services in Greece (Antoniadou 2018, Section 8, in "Management and organization of a dental office" by Toutzas I). In times of recession or pandemic like the current one, the cost may readjust upwards, but the prices of the services may not follow this increase, instead they may decrease in order to accept the service, with the result that the net profit also decreases. of the business.
Pricing is the number one issue facing the new healthcare professional starting out. It seems, however, that it also employs more experienced colleagues, who are unable to operate flexibly and adapt to the new market data. A common problem seen is that new dentists drop prices too quickly or work at a very low profit in the first place, aiming to "sell more services" rather than convincing patients that the greater value of their services is worth a higher price ( Haws & Bearden 2006, Antoniadou 2018). But this leads to passive operation when it is done even by the most experienced and long-standing dentists. Certainly this tactic does not allow the clinic's finances to breathe.
Other common mistakes are pricing too much on cost rather than customer acquisition value, and pricing that doesn't take into account the other elements of a marketing process set that have to do with competition or quality assurance of the dental business (Tischler 2003). However, because for some it is considered a difficult or even repulsive element in their activity, the costing and invoicing of their services, doing it arbitrarily and unsubstantiated or even imitative from information converged by other professionals, often give strongly decreasing or strongly increasing trends which eventually both become ineffective. Smart entrepreneurs, however, treat pricing as a key strategic tool for creating and capturing customer value and building a pool of people who can advertise the business and increase the customer mix. A positive increase/improvement in value of 1% is reported to produce an improvement of 12.5% for most organisms (Hunt 2005). Of course, it is part of the company's strategy to reduce the price for specific periods or specific patients if it is done consciously or in the context of a specific campaign.
If dentists acted as the marketers of their business, instead of avoiding billing, they should embrace it. They should also be seriously concerned with the fluctuations that can result from an ongoing economic crisis like the one that Greece has been experiencing for the last ten years, but also the pandemic period, for the benefit of the survival of their business. In general, it seems that the price charged by a dental health facility in our country for a service usually ranges between a price that is too high to generate any demand and a price that is too low to generate a profit (Antoniadou 2018).
It is good to know that patients' perceptions of the value of the product or service effectively set the price ceiling. If patients perceive that the price is greater than the value of the service then they will obviously not "buy" the service. On the other hand, the cost of service sets the price floor. If the company prices the service below cost then the profits of the practice will have a hard time! The healthcare business in setting pricing between these two extremes must take into account a number of other internal and external factors, such as the overall strategy and overall marketing processes of the area, the nature of the market and demand as well as the strategies and competitor prices (Kendy 2006).
Initially, however, all health professionals are recommended to become familiar with the term "Dead spot". Break even point is called the exact amount of "sales" (turnover), with which a company covers all its expenses, fixed and variable, without realizing either a profit or a loss (Papadopoulou & Dimitriou 1983). The breakeven point of a dental practice business is expressed as:
1) value on sales/transactions (it shows us how much is the monetary value of sales/transactions (e.g. 10,000 euros/year) that the company must do in order to have neither a profit nor a loss for example in one year) ,
2) percentage of sales/transactions (shows us at what percentage of sales/transactions (e.g. treatment of chronic gingivitis) that the company has done or is expected to do, it has neither a profit nor a loss),
3) quantity of sales/transactions (shows us how many pieces of the produced product/service (eg endodontic treatment of an anterior tooth) must be sold by the company in order to make neither a profit nor a loss),
4) time (how long it is expected that the company will need to sell the necessary number of units of product/service (e.g. restoration of composite resin), such that it has neither a profit nor a loss.
So we understand how important it is to determine this break-even point of the business and how important it is to have a plan and a strategy in place to quickly achieve within the financial year the coverage of the break-even point. Based on unpublished personal research data, the most profitable dental businesses in Greece are estimated to work 3-4 months to break even, so from May (max) and for the rest of the financial year they operate profitably. Moderately profitable businesses operate well into August to break even, while low and very low profitable businesses operate almost year-round trying to break even! And since "the best time to fix a roof is when the sun is shining" it is important during times of good dental practice to see in which ways one will be able to work above break-even and proceed with flexibility and confidence in the appropriate adjustments.
This is what I am trying to do, more openly now and with more conscience and a sense of duty towards my colleagues. I want to help new and more experienced colleagues develop modern marketing practices of their dental practice and improve their dental profile. I have been in the field for over 25 years in various roles, being a combat dentist and academic. Seasons are changing drastically these days. No profitable business can operate profitably if it does not identify its own "dead spot" and take timely actions. And this requires flexibility and adaptation to new data.
And really in my career it's not uncommon to see the most disciplined and dedicated and studious dentists standing still in time when it comes to running their dental office, facing an empty waiting room or operating close to bankruptcy:
• do everything in their power to keep their practice alive, bills paid, and patients happy at minimum cost to them but maximum to the business
• taking on any patient that walks through the door just to make ends meet
• see on social media the posts of some other famous perhaps colleagues and wonder why they too cannot have such a profile and gain the admiration of others.
And why after all this time that they have been in the profession and have put their souls or sacrificed large sums of money have they not been able to break free from mediocrity in a profession that was considered eminently highly profitable?
Are they not born leaders as they thought they could be? Has some bad karma or "eye" haunted them into mediocrity? 😳
I've been in that position and I don't hesitate to admit it. I tried hard to overcome my limiting thoughts of what I could and could not achieve until I broke free and created a profitable practice. A practice that I would actually choose my patients. But I understood how the system works. Of course, my studies through my university role also helped me in this.
All dentists need to understand that it is not our fault or the dental school's fault for not preparing us to run a dental business. It's not our fault if we thought there was only one way to operate until we became established dentists in our neighborhood, town or even the country or beyond. Even if we had learned some things when we got the degree, the changes that are taking place at the level of technology, communication and networking media or society in general, would certainly have made this knowledge inapplicable in today's reality. Again there would be some room for profit! And satisfaction from our work!.
Of course we shouldn't blame ourselves. No one was prepared when he opened his dental office and no one is prepared now. But if today's definition of owning and operating your dental practice doesn't serve the ideal version you had in mind when you started, then ..
I'm sorry to disappoint you but only you are responsible for giving the new definition, the new dimension, the new vision for your business! A vision that will inspire you! Which will allow more freedom! That will drive you to excellence!…..and work through modern marketing strategies that have helped other professionals before you. You are responsible for learning a new method of approaching the most suitable patients, the ones who NEED you… instead of passively waiting for them to find you. And there's a lot you can do about it!
We have all been trained hard and worked hard. We know what it means not to give up but to welcome changes and new seasons!❤️
Dr. Maria Antoniadou
PS: Now you can take the next step. and change your professional profile based on modern data! See the Timebooster dental program that I offer as a version of the Greek and Cypriot dental reality and current affairs so that you can make the necessary realizations and operate your business in a more efficient way. Timebooster_2dental is now closed for new registrations. God willing and weather permitting, Timebooster_3dental will run for 5 weeks from October 18, 2021-November 22, 2021.
You can join the Timebooster_3Dental waiting list here.
https://forms.gle/cLExK3AUvu3RPKUQ8
Dr. Antoniadou Maria, Assistant Professor of the School of Dentistry, EKPA
YOUNGSPIRIT-GALLERY, Dentist DDS, MSc, PhD, Academic Professional at Athens University, ICF by HRE and AC Accredited Coach. On a mission to help young adults thrive through positive psychology and signature strengths enhancement.
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