Profit-First Dentistry: Escaping the Production Hamster Wheel

Are you producing more than ever, but somehow still not seeing it in your bank account? If so, you're not alone. More than 60% of dentists say that they feel like they're living paycheck to paycheck even though they own their own practice. That's a startling statistic for business owners who are doing so much good in their patients health to feel that way, to be living paycheck to paycheck. But dentists across the country are stuck in the same hamster wheel. They're working harder, they're producing more, they feel like they're doing everything right, but they're wondering where their money is actually going. And here's the truth. If your relationship with money is off, off, your practice will never truly be profitable. So what if your mindset, not your overhead, is what is really holding you back? Trust me, you're going to want to hear this, because we're covering a lot today on what could be a turning point you've been waiting for. Welcome to the Next Level Practice podcast where we don't just talk about the business side of dentistry, we fix it. I'm your host, CEO of Next Level Practice, Kelly Damer, and today we're going straight into one of the biggest practice killers hiding in plain sight, which is your relationship with money. You might think that you have a production problem, but more often than not, you have a collection problem, a utilization problem, or even a mindset problem. I was speaking with a doctor this morning who we started working with less than a year ago. And when she and I first met, she was so busy. But at the end of the month, she could not figure out where her money was going. The key thing here is that there is a difference between being productive versus being busy. Being busy is running around like a crazy person, putting out fires all day long, seeing patients, and then at the end of the day you're like, wait, I produced $300? Obvious. Obviously that's extreme, but you know, that's the difference between productive versus busy. Now don't get productive confused with production. Because she was producing 2.1 million per year, but barely taking home $150,000 for herself, she thought the answer was more. More apps, more hours, more patience. But she was burned out and barely keeping her head above water. When we helped her shift her mindset from working harder to working smarter, everything changed. Everything really started to fall into place. She actually kept her same daily hours. She's taking more time off, more vacation. But she was able to tight her financial systems. She stopped undervaluing and undercharging for treatment. And finally, she's keeping what she's actually earning. So let's dive into how she's doing it and how you can do it, too. Here's what we're going to cover on today's episode number one, why most dentists are addicted to production and how it's killing their profitability. How to shift from doing more to earning more with the same or even less effort. And last, the three money beliefs that keep practices stuck in survival mode. If you've ever felt like you're working too hard for too little, this episode is your wake up. Here's the deal. Dentists are trained to produce, not trained to profit. And that's a trap. Especially as a business owner who spends years training clinically, and then you receive the keys to a practice. You open your business and all of a sudden you're like, wait, P. Ls, balance sheets, cash flow. All of this business acumen that you didn't know that you needed is now on your plate. And you've been taught that working more equals earning more. But in reality, if you don't change the way you think about money, you'll just keep producing your way to burnout. I want to say that again. If you don't change the way you think about money, you'll just keep producing your way burnout. And the previous generations, you know, they give blood, sweat and tears to their profession. And I think a lot of emerging newer generations are realizing like, hey, I'm not here to live to work. I'm here to work to live. And there's a new emergence of this work, life, balance that wasn't there before. It's no longer blood, sweat and tears. It's a little bit of, well, maybe not a little bit a lot of sweat, a lot of tears, but less blood. You know, there's more things out there to life than just having a successful business. But you can have it all. It doesn't have to be an either or world one. One of my favorite quotes from our founder, Gary Katie is this. Have you ever noticed that your expenses always rise to meet your new level of income? That's to say, all of a sudden you're finding, oh, I'm making more money, but wait a second, I'm also spending more money. And the truth is, you can't shrink your way to growth. So there's no way to just trim your expenses and expect to continue to grow as a practice owner. So let's dive deeper into Dr. Susan's story, who I was speaking with this morning because she really didn't have a revenue issue. I mean 2.1 million annually in collections. That's great. She was doing really, really well. She have a money mindset issue for 150 to be her take home at the end of the year. That's really unacceptable in our book. She was writing off too much. She wasn't enforcing payment policies, she was underutilizing her hygiene and she truly wasn't charging what her services were worth. But worst of all, she would feel guilty about making money. There was shame in her to make money. Here's what we did to help her. Number one, getting out of feelings and getting into facts. You don't have to feel guilty for providing a service and receiving money for it. So start tracking real numbers, not just revenue and understanding where the revenue is actually good going. How much are you spending on labs? What are you spending on supplies? But most importantly, your team. Your team can either be your biggest expense or your biggest asset. And really taking a look to see if you're getting a return on investment for the time and money that you're spending with your team is a big one. All of this is going to impact what's left over at the end of the day and what's left over at the end of your p. L. Stop playing small. That's step number two. She raised her fees appropriately. You know, 2019 people was six years ago. So make sure you're appropriately monitoring what your fees are. Even working with an outside company to help you with some of those negotiations. She stopped over discounting. Okay, I know that's a big one. We want to be able to give back to our patients and make sure that they're taken care of. But it can't come at our expense. And she also created a really clear financial option system to remove money as a barrier for her patients. Lastly, align the team. Her front desk and hygienist learned how to talk confidently about money, value and care. So her patients saw the value and paid accordingly. This does not need to be a doctor only system. This should be a team driven approach to patient education and case acceptance. Within six months, Dr. Susan's take home pay actually doubled. And without seeing more patients or adding more hours, in fact, she took more time off. So if this sounds like you, I want to give you three actionable steps that you can start doing immediately and start seeing results immediately. Number one, calculate your hourly worth. This is a really great exercise for practice owners. Okay, so take your annual take home income if you want you can add in any profit that you have, any draws that you take. You know, that should all be considered your take home income. W2, wages included. Divide that by the number of hours you worked. So what you'll want to do is, you know, take 52 weeks out of the year, subtract how many weeks you take from vacation and multiply that by the number of days that you work by the number of hours you work each day. Divide your take home pay by the number of hours worked. That's your hourly rate. You're going to be shocked. If it's appropriate, great, congratulations. If it's lower than what you thought, it's time to start making some changes and adjust that appropriately. Number two, create a profit first mindset before you focus on producing more, more, more, more. Ask how can I collect more of what I'm already doing? That's called running a more efficient business, right? How can I actually monitor or adjust or change or get rid of something that you're spending money on to actually have a more efficient and profitable business? Install clear financial policies, eliminate write offs, and make sure money isn't slipping through the cracks. Step number three is really understanding your mindset and your beliefs around money. A lot of this is like things that are deeply ingrained from childhood. And a lot of times our money beliefs come from our parents experience with money or the things that they taught us. I know our founder, Gary Katie talks about a story about when he was younger and he shoveled neighbor's driveway and the neighbor gave him 20 bucks for it. He came home, he was so excited, he provided a service, he got paid for that service. And his mom was like, gary, what are you doing? You have to go give that back. What are you doing taking money from her? And so that was like where his money journey started with like I don't deserve to receive money for a service that I provided for this person. So really understanding and uncovering your hidden beliefs about money. Do you believe that making a lot of money means that you're greedy? That you have to sacrifice family time to be successful? Challenge that inner noise in your head. If you don't rewrite those beliefs, you'll sabotage yourself even when you do win. So let's recap the key points from today's episode. Production does not equal profitability and being busy doesn't equal being productive. Stop chasing volume and start chasing value. You can earn more without working more hours. You just need to have the right systems in place and the right mindset. Your relationship with money drives every decision in your practice. If you can fix that, the rest starts falling into place. A great exercise for you to do today is to benchmark your practice against practices within the top 10% of the US. We have our Practice Expense Benchmark worksheet that's available for you to download today. Click the link in the Show Notes if you want it, and understand where you should be spending your money. You know what percentage of your income should be going to, lab supplies, team accounting even. It'll help you get in the right money mindset. So if today's episode gave you a new perspective, send it to a friend. And don't forget to subscribe. I'm Kelly Dahmer and this is the Next Level Practice Podcast. See you next time.