How to get passive income from your largest investment duh.
“A smart man makes a mistake, learns from it, and never makes that mistake again. But a wise man finds a smart man and learns from him how to avoid the mistake altogether.”
~Roy H Williams
It took me a decade of “university of life” and countless mistakes to learn TIMEfactors. That was 25 years ago too!
The smartest thing I learned is that I’m dumb!
My Dad had a set of Encyclopedia Britannica. This is how I first learned to be dumb. I would ask my family to query me, then I would run to the encyclopedia to find the answer. This was incredible! The many answers of life could be found in books! Good thing the answers were just around the corner at the library since this brain was not a sponge (like yours is likely). I just wanted to go outside and play - no point in absorbing all these books since I knew how to find the answer to any question in life!
Un(fortunately) this race track mind went to high school with the same attitude…but the teachers wouldn’t have any of it! It bothered me that they wanted me to memorize answers under the premise that they were teaching me something. The only parts of an answer that I would remember is how to get that answer in the most efficient manner.
There were many debates with my teachers about the purpose of this education. I asked if they wanted me to be a walking encyclopedia, or if they would rather have me find all the different ways to come to the same conclusion as they did. The answer was always out there, I just argued the way to get to that answer didn’t lie in me memorizing the answer…it was all about understanding how to use the resources! The cocky youngster would argue I would simply hire people to work for me if I needed that type of answer...sorry about that! Time for an ego check Warren!!
The only interest I had in these days was learning math and the books my mom gave me about entrepreneurs (who were also mostly dumb like me)
Here we are many decades later.
There are SO MANY financially stable clinics in dentistry. It’s a fantastic business…if you understand the principals of fixed expenses and variable expenses. If you understand the fees, and how they are set based on “averages”.
Someone that is obviously WAY SMARTER than me has come up with a “price book” that accounts for your costs of business. They somehow figure out what an average labour cost should be, the cost of your supplies, the cost of rent and all that other stuff. Then they give you a price book to follow. For EVERYONE to follow.
Soooo….if you are “average” you should be able to make an “average” profit.
Most of the fees are based on labour, obviously!!
Labour is YOU and YOUR TEAM. LABOUR for your team is likely to account for 30% of the cost in the fee guide. The remainder of the LARGEST VARIABLE EXPENSE is YOUR labour!!
Out of $100 you generated - $30 went to your team likely. After all the other stuff, I hope you made about 30 – 40% some are even at a fantastic 50 – 60%!!
That means that at least 60% of the price that someone else figured out for you is based on what they think an “average” person should make.
What if you could do a few things that many others have proven work very well? What if you could hire some people to do the work for you? What if you can find TIME efficiencies? Understanding that the costs are only relative to how much they can produce in any given TIME. Because LABOUR is the largest cost in a clinic!! 60-80% of the cost actually (remembering that YOU are on the clock too)!!
Here is a bit of simple math that is currently working at some of my friends clinics. The established clinics that have figured out TIMEfactors.
#1 – Rent for their space is the same and guaranteed to be the same for the next 10 years. $8000 a month
#2 – They have a 10 chair office. 3 hygienists, 3 dentists.
#3 – All Team Members are EXPERIENCED and WELL PAID as they are incredibly efficient and the doctors compensate and pay bonus based on performance
#4 – There is VERY LITTLE referred out of the office. The business has added highly trained doctors and pays for all CE for these doctors. They have a clinician who loves oral surgery and have provided excellent equipment in order to perform most surgeries efficiently. Every doctors has extensive training as they believe “you don’t know what you don’t know”….meaning that they can diagnose xrays and issues that may seem complicated to many that haven’t invested another several years of their time to learn. Advanced procedures. Continual improvement – not just for the doctors bur for EVERY team member. They are confident in their abilities as they have invested TIME and EFFORT to become skilled.
#5 – They have invested in marketing and mostly PATIENT EXPERIENCE. This means they run on time, have enough chair TIME to schedule a patient in a reasonable amount of time and can ALWAYS find time for their family of patients when they need to. They have a treatment co-ordinator to take care of the patient education and scheduling. They have an office manager to take care of the every day issues.
Basically all the crap is taken care of so they can focus on dentistry!!
This clinic is now grossing over $4,000,000 a year. Simplified gross income and expenses:
Hygiene production is $1,400,000 – hygiene wages and supplies $364,000
Dentist production is $2,600,000 – They pay 40% associate fees resulting in wages and supply costs of $1,196,000
$4,000,000 less $1,560,000 wages and supplies= $2,440,000 for all other expenses.
The rent is fixed. They are open extended hours and weekends in order to accommodate patient requests but also to make the MOST EFFICIENT use of equipment and rent!
Here is what they learned to do that many others have learned before them.
FOCUS ON THE DENTISTRY AND PATIENT EXPERIENCE!
Every dentist and team member is highly trained to PERFORM AT ELITE LEVELS!! The only way this works is with CE. Finding every efficient manner to make the most of every square foot of space and equipment.
This is about EXCELLENT DENTISTRY first and foremost.
TIMEfactors is a NO COMPROMISE performance of predictable outcomes. They can’t afford to have patients never come back. They can’t afford to have patients never refer to their office. This can only be accomplished with EDUCATION and SKILL! Not just the dentist – EVERY TEAM MEMBER needs to know how to keep the machine working!
Here is what they do.
The office manager is an experienced assistant with knowledge of procedures. They can train almost every position, and have attended courses on practice management. Human resources. The basic business of dentistry.
This office has a part time hygienist to extend hours and cover for sick leave. Hygiene is running at over 90% efficiency. Every hygienist uses intraoral cameras as part of treatment.
Intraoral cameras in every operatory with images sent for treatment plans directly to the patient after the patient schedules treatment with the co-ordinator. The images are linked to patient education via their website.
Chairside reappoint on a 6 month schedule and use automated recall programs. There is a short notice recall list, and they keep enough extended hour chair time to accommodate new patients and short notice reschedules.
The average tenure of the hygiene staff is over 7 years. The average tenure of the dental team is over 6 years. Reception and managers are also 5+ years on average (many team members have been with this clinic since day one). Every team members CE is paid and encouraged to be challenging courses. The doctors attend courses and bring team members whenever possible.
The clinic offers advanced procedures in surgical, cosmetics, orthodontics, perio, lasers, implants.
Adding associates and team members with experience was never viewed as an expense. It was always viewed as opportunity, and ALL team members were carefully selected with complimentary skills. This clinic pays VERY well, but you need to be able to perform.
The end result is a clinic with overhead that nets the owner dentists 100% of any service they perform. If they are not working, the clinic is still able to net them $50,000 per month with minimal effort.
This is a machine. This is possible. This is an understanding of TIMEfactors and how LABOUR and FIXED COSTS matter more than VARIABLE expenses!
The patients leave and get a survey asking about their experience. They are asked for a google review (so the experience had better be perfect!). This clinic has an almost perfect rating from several dozen patients that took the time to fill out the google review - more importantly, these people SEND THEIR FRIENDS!! The NET new patient flow for this ESTABLISHED office in an established part of town is still over 25 people a week (net).
My teachers would be very disappointed. When I need answers, I look to my network of several thousand people I have met over the years that are ALL SMARTER than me. This little “smart phone” in my hand provides solutions that people with genius IQ have provided. Artificial Intelligence is going to bring about answers to problems in even less time, making me even dumber than ever before.
Guess I will just have to keep looking for answers from all the people way smarter than I am and just do what they do.