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May 12, 2008

By Amy Morgan

One of the hardest things to do as leader is to recognize the problems of your practice when it comes to staff, systems, and cash flow issues and not take those challenges personally but objectively so that you can be proactive instead of reactive. There are so many elements to a small business that a woman dentist can easily get lost in the emotion and histrionics of managing and lose her perspective by focusing on what's happening, not why or how it's happening.

As a dentist, you should be able to diagnose your business as if you were diagnosing a full-mouth reconstruction (without blaming patients or their circumstances). Luckily, the business world has already done the research and come up with a protocol to diagnose organizational challenges. To use this model, you need to understand there are several key developmental cycles (transitional, organizational, and team) that are continuously processing within your practice. The reason it is vital to know this is that each stage of these business cycles has its own unique symptoms, including both strengths and challenges. If you are able to recognize the symptoms up front (and not get bogged down in the details), you can control and handle each particular stage of development, maximize potential, and move on to a new level of organizational success.

To start proactively understanding your business cycles, you need to know where your practice has been and where it can go, so you can create a navigable road map to get there. One of my favorite mentors, Ken Blanchard of "One Minute Manager" fame, has studied this throughout the years and he states: "No development stage is bad; each stage is part of the journey toward production, balance, and fulfillment." What that means is though some of the development levels carry more stress than others, they are all an essential part of the cycle of continuous improvement and success for your business. What professional woman on planet Earth isn't interested in becoming more productive and achieving balance and fulfillment?

To begin your journey, it is important to know that the first business development stages a practicing dentist goes through are the stages of transition. The transition cycle starts with a practice phase called Growth. A practice in growth is defined as any office that is within zero to five years in business start-up, with an active patient base (anyone seen in the last 18 months) of zero to 800 patients. In growth, the operating systems (scheduling, F/As, marketing, etc.) are in the process of being organized, and therefore task load is not always consistent or effective. There is high debt due to the entrepreneurial risk taken to begin the practice, and inconsistent cash flow. Focus must be on marketing to address the perceived scarcity and financial demands.

Stress to the dentist and team comes as a result of establishing new systems and processes and driving practice profitability until the doctor is at least breaking even on her original investment and drawing a consistent paycheck. Team members in this phase are breaking old habits and learning new skills, and this creates a lot of chaos and change resistance.

Let's take the case of Dr. Mary Sievers. She has been in practice for 19 months. She purchased the building at the same time that she opened her practice, so she has approximately $735,000 of new debt. She also has been using a credit card to cover payroll on down months and hasn't been able to pay the balance off completely. She has not taken consistent pay, so she is thrilled her husband is an engineer at a good company with great benefits. She has three staff members who are frustrated by what they feel is lack of progress and consistent success. They have good months, followed by really bad months in production and collections. Their patient flow has not been able to get above 10 new patients per month. The team has yet to receive a salary increase and is getting "antsy" per the doctor. Though the symptoms in this phase can cause a lot of emotions (frustration, fear of failure, polarities between hopes and realities), if you understand that this stage is finite, and continue to focus on systems organization and marketing, it will help you to stay positive, focused, and productive.

Once a practice has cycled past growth and is stabilizing, it goes into my favorite phase of the transition cycle called Peak Performance. Peak performance as a stage is defined as a practice that is in business from five to 25-plus years, so it's the longest phase in the cycle. For a solo practitioner, the active patient base can be anywhere between 800 to 2,500-plus active patients, and it is what we consider to be, here at the Pride Institute, the Renaissance period. This means that the doctor is in peak performance and is creating a practice that thoroughly supports, promotes, and personifies her vision, values, and goals. A practice at this stage has returned the initial investment on all practice purchase costs and the dentist is reinvesting in retirement savings, new technology, team members, continuing education, better facilities, and leasehold improvements. This is why we call this the Renaissance period of a practice.

Now, there is still stress in this high-performing, creative stage because it lasts a long, long time (remember, 25-plus years?). As a result, burnout, balance, and loss of focus issues can occur. Team members can become complacent or stuck if they feel micromanaged or held back in growth. For women dentists, this is right about the time when the fight between family and profession takes place, and it is hard to stay engaged and growing.

Take, for example, Dr. Janet Blunt who has a very successful practice in its sixteenth year. She has more than 1,800 active patients and consistently produces more than $100,000 per month and collects at 97%. She has been fully funding a pension and loves to invest in her team. They take lots of continuing education and participate in creative rewards and recognition programs. Janet has decided to adopt a baby — her first. To prepare for the adoption she is wrestling with a reduced schedule. How will her patients continue to get ideal care? How can she afford to continue to motivate and compensate her very loyal team? So the key to being successful in peak performance is to embrace the idea of continuous improvement and creatively upgrade your practice systems and staffing models to meet the evolving needs of your practice. Stay flexible and don't get stuck in the status quo and you will love the Renaissance.

If you make it through the peak performance phase and you have 10 years or less left before significant downsizing or a practice transition, congratulations! You are in the Conversion stage of the transitional cycle. The conversion stage is often given little attention but it is essential if you want to transition your practice with a full range of options available. We call the conversion stage the "getting-your-ducks-in-a-row" phase, because this is where you are staging your practice — like staging a house when you are selling it — for maximum purchase value and ROI. The active patient base in conversion is whatever it actually is, because you can't cheat time or physics. The good news is if you have 10 years left before a practice transition, you can still proactively address just about any nonoptimum situation and successfully turn it around. Any mistake that might have been made, whether it is a small patient base, poor or limited facilities, insurance mix, amount in retirement savings, or production or collection levels can be handled with a good decade still running on the meter.

This can create stress for a dentist who doesn't know what she wants or what needs to be changed to accomplish the desired outcomes. It also can create stress for the team because it arouses feelings of insecurity about their own future. Dr. Elizabeth Moore isn't prepared for conversion. She is 52 years old and has only $225,000 in a qualified pension plan. She has a good-size patient base, but takes a fair amount of reduced fee insurance plans, which reduces her profitability. She works in only three operatories and has no room for expansion. Elizabeth has to do something differently to get a different result. A doctor must assess her practice and be willing to expect eye-opening moments in this phase. Readiness to take prompt, decisive action is the solution to surviving a successful conversion stage.

Once the dentist has maximized the potential of the conversion stage of her practice, she is officially in the Exit stage when there are three years or less before a significant downsizing or an actual exit. If the conversion stage is the "ducks-in-a-row" stage, the exit stage is the "lock and load" stage. This is where your transition choice has been set and you are actively engaged in making it happen, whether it is an outright sale, associate buy-in, or simply locking the door and throwing away the key. Dr. Terry England attempted to bring in two different associates in the last 10 years. Both stayed approximately two years and both left unexpectedly right before the buy-in. Terry has decided that she doesn't have the heart to invest in mentoring a third associate, so in two years she is going to sell her practice outright.

The stress of the exit stage comes from becoming comfortable with your transition choice, involving your team appropriately, and finding the proper expert advice to make the actual baton pass as seamless and as effective as possible. By investing some time and money upfront to educate yourself about your transition options, you will be able to manage the stress of the exit stage and leave your professional career the way you choose.

Understanding these four transitional stages, even at the minimum, should immediately be freeing to a woman dentist because it gives you a black and white guideline to diagnose why you are experiencing what you are experiencing that feels unique to your practice. Above and beyond that, it is important to understand that whether you are a dentist, accountant, or the owner of Microsoft, all businesses go through these same four transitional phases.

Now, for those of you who say, "Why can't my practice stay the same forever and ever?" this is bad news. Anyone who has ever studied organizational development will tell you a business gets better or gets worse, and the only time it ever stays the same is when it no longer exists. The reason I am such a fan of understanding the transitional and organizational stages of a business is because it gives you a framework in which to solve problems. A dentist who keeps in mind the blueprint of these cycles can look at an upset staff member, a broken system, or an incomplete goal, and diagnose the appropriate stage and solution. So if you want your practice to flourish and prosper, you must be willing to cycle through these development stages for your entire career.

Amy Morgan is CEO and lead consultant and trainer of Pride Institute, the practice-management firm helping dentists better their lives by mastering the business side of their practices. Amy leads a team of Pride consultants who work one-on-one with dentists and their teams on an ongoing basis to bring cutting-edge business solutions to their practices. To begin this process of implementing these essential leadership skills, Pride Institute offers several seminars to facilitate the process: The Dentist's Voice, Team Extreme, or individual consulting services. For information on Pride's seminars and services, call (800) 925-2600 or visit www.prideinstitute.com.

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