I opened my first practice 20 years ago in Totnes, Devon. It was housed in a Tudor building, located over a shoe shop in the High Street. It was compact and rickety, but full of character.
I installed state-of-the-art dental equipment into two surgeries, and as soon as we found a way to stop the intra-oral X-ray arm from falling off the funny old walls, we were in business.
Once I had installed a nurse, a receptionist and later a hygienist, the patients couldn’t come in fast enough. A small marketing campaign and the offer of private dentistry, unusual in Devon at the time, allowed me the chance to make a comfortable 45 per cent net profit.
I experienced some discomfort from other practitioners in the area, who were unsure about the marketing practices I employed. Anything other than a brass plaque was unheard of at the time. In 1992 everyone became irate about the NHS contract. Sensing an opportunity I resigned my NHS number and went fully private; the only practitioner locally to do so.
With little in the way of competition and relatively high fees, it was a comfortable life seeing around 12 patients a day. By 1999 the building was overflowing, and I made the move to an old warehouse beside the river where I set about building a bigger, truly boutique practice. I sold this four years later to focus on coaching instead.
My story alone proves what a difference a couple of decades can make. Many of my clients now have practices around the size of the one that I sold, usually with a turnover of around £500K, two dentists, two hygienists, and 2,000-3,000 patients. However, in 2009 they are struggling to make 20 per cent profit, and would die for the 45 per cent profit we were enjoying 10 years earlier. What has happened in the last 10 years to help suck the profit and fun out of being a dental principal?
I believe that some of the smallish private practices are hurting because:
- Practice fixed costs have gone up.
- Private fees haven’t kept pace with increasing practice costs. Dental inflation has run at nearly 10 per cent for many years, and again in 2009 with the devaluation of the pound against the euro.
- Associates and hygienists are asking for too big a share of the gross fees they generate. This is particularly true of associates who gross less than £1,500 a day, who want to be paid on 50 per cent contracts, and hygienists who want in excess of £30 an hour to preside over chair occupancy of just 75 per cent (or less).
- There is far more dental competition. My practice was one of just a handful of private practices in Devon, which made it easy for us to differentiate our practice from the competition, which mostly operated NHS or mixed NHS and private practice.
- There are ever more hurdles to jump through to comply with employment laws and health and safety guidelines.
- Practices must ensure they are completing clinical compliance/best practice/NICE and CPD thoroughly.
- The recession. I know, it is blamed for everything, but it really has had an impact.
- ‘Pay as you go patients’ have (even temporarily) stopped going and paying.
Things are changing though. New and radical decontamination regulations are being introduced and will be rolled out across the board by 2011.
The Care Quality Commission has cited dentistry as one of its primary targets. Furthermore, corporates, both established as well as the many new smaller ones, are relentlessly increasing their market share through acquisitions.
So as we progress into 2010, what key attributes do small private practice owners need in order to prosper? By far the most important attribute that will lead you to success during and after all this change is without doubt your own attitude. Dentistry is constantly evolving, which makes way for lots of new opportunities. Maintaining a positive, flexible attitude and focusing on giving the market what it needs will help ensure your continuing success.
To ensure this is possible, you will have to maintain a strong and enthusiastic leadership of your team, and offer your clients a very clear, branded differentiation from your competition. You have to design and run a business that is resourced enough to withstand a few weeks a year of poor trading: after all, every year will serve up its own version of swine flu, snow and strikes. This is not the time to hunker down and hide. Not if you want a business to pay you well and one day sell well.