dentistry unplugged
dentistry unplugged
Since 1984 Warren Bobinski has been involved in every aspect of the business of dentistry. From owning a dental supply house to starting a scratch dental clinic. Operations, marketing to managment and investment.
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Is Dentistry in a race to the bottom?

Is Dentistry in a race to the bottom?

3/23/2019 8:15:42 AM   |   Comments: 0   |   Views: 25
In my previous blog "Protect the house" I discussed how to protect your biggest asset, your lifetime investments....most likely your business!  Security of your business comes from continual improvement and wise investments.  

Security for some people means taking less risk.  The value of risk can be measured with investing! When you were a kid, you took that "tooth fairy" money and stuck it in the piggy bank to save for something.  Or maybe you took that money you earned from chores and went to reward yourself right away.

As you grow up, we all start to value money differently.  When you grow up with little, and credit was scarce, everything you were going to buy had a HIGH value!  To this day I think about how many hours I have to work to pay for something.  Even more - I think of what it costs me "after tax" - for easy math I basically double the cost.  A pair of jeans for $60 is actually $120...that is 4 hours at $$30 an hour!!....the ones I have now will last a little longer.

Put an electronic toy, a motorcycle, or a car in front of me and I lose my mind.  Instead of "weighing" the costs - I "rationalize" the costs.  If I put this on my credit card it's only going to cost me an hour a day to pay for this item....and I will use it much more than that! Or maybe it's a "zero interest" thing - so why wait when I can enjoy it now?

Don't we all do some form of "weighing" the cost versus "rationalizing" depending on our own personal values?

Marketing practices - good for the public, or a race to the bottom?
Where is the eye protection bub?
Where I live in Saskatoon, Saskatchewan there are strict guidelines for marketing.  

Many of my successful dentist friends have countless hours, extended degrees and many hundreds of successful procedures outside the normal scope of what they learned in school.  

We CAN NOT market this fact here.  If you want to provide orthodontics, implants, periodontal procedures.  Perhaps you have spent many years learning advanced restorative procedures, costmetics, botox.....unless you have gone back to school and earned a recognized degree, you can not advertise this fact.   In Saskatoon, you can't even say you have "free" parking or you will be getting a warning letter from the college (not kidding!).

This is the beginning of the race....

The argument is if we are too liberal with marketing the general public will be hurt.  In the "old days" I would concur.  20 years ago it would be more difficult to expose the shysters.  Is that the case in todays social media ratings world?

WE DEFINITELY need to keep the shysters out of our business.  Todays BBB is called Facebook...Yelp...Twitter...."".  If someone wants to offer "free parking" and it influences the public to visit that clinic - who has been hurt?  What if a new clinic opens and the GP has actually spent another several hundred hours learning a new is the general public protected from marketing this procedure? 

Would it not be argued that society will NOT advance if we don't encourage competition?  If the medical procedures on one side of the street offered are "straight out of the 80's" and the other side of the street has spent hundreds of hours and hundreds of thousands to offer a more advanced procedure - is it protecting the public to not be able to advertise the differences?

We all fear...competition is a race to the bottom

To make sure we are not racing to the bottom, our system puts in place a fee guide that is compelling.  Benefit plans finds ways to keep patient care affordable.  The governing bodies introduce procedural regulations and force dentists to market internally. 
What happens is that you simply must be good in order to succeed.  The ratings, the social media, everything has to happen the old fashioned way - referral.  Only a patient can tell someone else how good you are.  How you have offered to perform that procedure that helped rid them of migraines.  Dramatically improved their smile.  
They will tell others about the patient education you provided - they may even show the pictures of the xray and teeth with the treatment plan you uploaded to the "patient portal" you provided (Check out Lighthouse 360).
The only way to prevent patient from heading out your door and going to that new, more convenient location is to realize this is a business.  A business that is built on your skill, your continual improvement.

How to race to the top - learning appreciation so that others appreciate you!

I got into a great debate many years ago on Dentaltown (who doesn't) about the cost of supplies.  In particular, comparing newly developed Micro Brushes to toothpicks.  The idea being that it only costs a penny to produce and they sell for .15 each.

The summary of the argument is the door is always open for any entrepreneur who thinks they can do better.  Go ahead and invent something, then watch what it costs to bring it to market and try to recover your investment before you are knocked off or knocked out.  Think of any manufactured good - the shirt you have on.  The tool you use to fix your house.  The cost of product to provide a dental procedure....

The markup is not much different for anyone that has overhead.

What competition is SUPPOSED to do is help drive innovation.  Health care is VERY GOOD at driving innovation.  It's so competitive, as a matter of fact, that the products that took millions of dollars to develop may have very short shelf life before something better comes along and knocks it off the shelf.  The cost of the product, just like yours, must ALWAYS be investing in upcoming opportunities - or the product will die.

In order to stay competitive in any business, you either get cheaper or get better.

I would rather get better.  So would you.  Yet we are becoming our own worst enemies.

We are all paid from profit.  If your clinic is succeeding, you will gain more patient base.  You will find ways to be more efficient.  You can afford to invest more. Invest in team to be more efficient turning over chairs.  Providing a better experience.  Investing in equipment that increases efficiency.

You will find ways to capitalize on a FIXED PRICE guideline! Hopefully by realizing this is mostly LABOUR based and you can EFFICIENTLY provide services.  Instead of being focused on the COST of providing a service like "cleanings" - you will be focused on where you can increase your gross revenue from the door being opened.  

You will learn to INVEST and make sure that patients' routine visit now offers a myriad of possible treatment plans (your new treatment co-ordinator is incredible at education.)
Statistically there is a large opportunity for extended services.  I have spent 35 years watching my partner/clinics succeed!

I built a career helping doctors understand the value of dental products versus the "cost" of labour.  TIMEfactors. 

Dental products are an investment - when used properly, they will generate revenue...products that generate MORE REVENUE in LESS TIME than others are called TIMEFACTORS!

You know this.  You have had fails with cheaper materials!  I have consulted with so many practices that are looking to cut costs, yet still want to eat steak.  It's that "steak" that makes you money! It's ok to be "lean" and find value - but don't go overboard and cut the cost so much that it puts a cog in the system.

Is Dentistry facing a race for the bottom?
-Do you practice KAIZEN? Continual Impovement - something I wrote about many years before I ever heard the term. Kaizen is CRITICAL to success!

-Do you value TIME vs PRODUCT?  If an 8% cost of product yields DOUBLE the production, is this a good investment? Procedure "A" gross $300 and takes one hour.  Cost of supplies $12 (4%).  Using product "B" for 8% cost yields $600 in one hour.  

Procedure "A" net is $300 - 4% supply cost = $288 per hour
Procedure "B" net is $600 - 8% supply cost = $552 per hour.
Which investment would you make? Who is showing you how to do this? Your accountant would argue with your for scenario "A" - yet it's the smart accountants that are buying businesses that understand concept "B"!!

Race to the bottom - for you and for me?

 Wikipedia defines "race to the bottom"....The principal effect and intent of these actions is to make labor rates "more competitive" (i.e. lower), the principal cost of business, together with other factors (pensions, environmental protection and other externalities), and thus the metaphor where the bottom is the lowest wage that can be paid for that labor. 

Who wants to work for less? The net effect of corporations driving down labour is less skilled workers.  Health care is suffering from a "race to the bottom" because we DO NOT seem to be able to see the intrinsic value of people.  

Instead of learning to compete by continual improvement we continue to push away all the people that make health care great.  Team members with great ideas and skills...but we don't want to pay them to be great.  You think I am talking about your team - but I am talking about YOU as well.  

If you compromise all the innovative products that help you achieve your goals (products and technology) then you are pushing down your own business.  Learning HOW to value them is KAIZEN.  

If we want to watch dentistry deteriorate, keep pushing the good people away. Pay them smaller associate fees.  Reduce the fee guides.  Cut costs on materials, labour, everything that is actually in place that drive entrepreneurs.  Take away the profit. 

We will all end at the bottom of that race.  Our current state of Health Care may be the best example.

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