Thriving vs. Surviving…The High Cost of Complacency

Dr. Richard Boyd, in private practice in Columbia, South Carolina for 12 years, has
established a reputation for applying sound business principles and practices to the
profession of orthodontics. The following is a discussion with Dr. Boyd on his
approach to running a successful orthodontic practice in the '90s and beyond.

Q: Where does one begin to assess how well a practice is running?

Dr. Boyd: First do yourself the biggest favor you possibly can…get to know your
bottom line real well. You can use a worksheet like the one I use (ed. note, see
below) or develop your own. In my opinion, every orthodontist in private
practice should be working towards a 45 % overhead level without sacrificing quality
clinical delivery, though a range of 48-53% is certainly acceptable. A good financial
worksheet can help you see how close you are to this goal.

Q: What about the doctor who says, "I'm a clinician, not a business person. I just want to practice great orthodontics."

Dr. Boyd: Clinical excellence remains our primary mission. However, the quality of
customer service remains the essential issue in any business and I do think that
individual style should be the determining factor in your decision-making. Only you
know your professional comfort levels, but why not work as efficiently as possible
once you've established the level where you want to be? One thing is certain…today's
graduating orthodontist has to be business savvy to thrive.

Q: Is that in part due to the increasing role of HMO's and PPO's in healthcare
delivery?

Dr. Boyd: I can't predict what's going to happen, but I can guarantee you that things
will change. To survive and thrive, when you're clinically efficient and well-run you'll
be better positioned to weather the currents of change represented by managed care.

Q: In evaluating the well-run practice, what do you feel are the three most critical
factors impacting the bottom line?

Dr. Boyd: Staff expenses, appointment reduction, lab costs. Those are without a
doubt the big three.

Q: Okay, "I've done the P & L, I know where I'm off-course, now what?"

Dr. Boyd: First ask yourself if you're willing to change. If so, then use the detailed
P & L to identify the areas that need work. Concentrate on two or three areas to start
with and prioritize those so that it is manageable. Be realistic about the pace of change.
For example, your staff is your most important resource but also your biggest expense.
Are you over staffed? Could you consolidate positions or better utilize existing staff?
There are lots of strategies to reduce staff expenses. Remember, however, that lots of
things that effect your bottom line aren't listed on that P & L. For instance, are you using
today's technology with yesterday's appointment schedule? Have you critically assessed the
intervals between patient visits? Is an appointment necessary or are you caught in a
pattern of habitual inefficiency? Old habits die hard…and it's these same advances that
make running a practice today a lot different than it used to be.

Q: What do you feel holds people back from changing the way they run their practices?

Dr. Boyd: Many people are impoverished by their own skepticism. You just have to be
objective in analyzing your practice and prepared to change based upon the information
you receive. Success is about the transformation of sound information into practical
reality. The old wisdom says that numbers don't lie. I've found they usually don't.

Q: What does the future hold for the orthodontic specialist?

Dr. Boyd: As I said earlier about managed care, I definitely can't see into the future.
But you can look at things that already have happened to the pharmacist…the days of the
independent specialist are nearly over. The same thing is happening today with optometry.
Why not be positioned to adapt to change? There is one very promising demographic
fact of which we all should be aware. The next 5 to 10 years should be some of our best
years in orthodontics due to the 4 million plus births in the late 1980's.

Q: One last question, what if a doctor doesn't want a mega practice?

Dr. Boyd: Hey, that's great. It's not a matter of how much you gross. Maybe you want
to go fishing 2 days a week. Again, your personal style and interests should remain the
determining factors in how you run your practice. But why not make those three days a
week you spend in the office as efficient as possible? It becomes a matter of quality of
life. Remember, no one can be a success in life and a failure at home!

Editor's note: The spreadsheets below require a forms capable browser. It looks good in Netscape(TM) and Cyberjack(TM) but not so great in the early version of MS Explorer(TM). Maybe the newer version. Let me know how your browser worked.

The information is extremely useful, so it may be worth your while to try to sort it out even if the browser tends to scamble it.

Worksheet

Get to know your own practice in detail.

Summary Worksheet

Income and Expense Summary that helps you measure YOUR practice.