In his recently published book, Practice Turnaround: Succeeding in the New Dental Economy, Dr. Levin uses actual case studies to illustrate how Levin Group has helped struggling dental practices regain control and accelerate growth. The following is an excerpt from one of these success stories.
The practice is your best investment
Roger P. Levin, DDS, founder and CEO of practice management consulting firm Levin Group.Dr. Brad was a 47-year-old dentist who was married with two children. His brother-in-law decided to launch a mortgage company after being laid off from a large construction firm when it merged with another company. This seemingly unrelated act was to play a crucial role in Dr. Brad's future.
The economy was excellent, as was the housing market.
Dr. Brad had a good practice producing $925,000 per year. His new patient numbers were strong, and overhead was at 59% (precisely what Levin Group recommends as an overhead target).
By maintaining a relatively modest lifestyle, Dr. Brad had accrued $1.7 million in savings. Although he had never had a formal financial plan, he was in excellent position to handle his children's college expenses and was well along the way to achieving his retirement savings goals.
When Dr. Brad's brother-in-law decided to open a mortgage company, he needed funding. Banks and other individuals had turned him down for any type of loan or line of credit. At that point, he approached Dr. Brad to invest in the new mortgage company. He had an ambitious business plan developed for the banks and knowledge of the construction and housing industry. Every chart and graph showed housing market growth during the previous five years.
Investment
Dr. Brad invested $1.2 million of his money in his brother-in-law's new company. In the first year, they did extremely well but, other than a moderate income for his brother-in-law, they reinvested all profits to help the company grow faster. Personnel was hired, advertising, and marketing campaigns were expanded, and Dr. Brad believed he was on his way to making millions of dollars while still maintaining his dental practice.
In the second year, the housing market began to decline quickly. A recession had hit, and, despite Dr. Brad's brother-in-law being an honest, hard-working individual, the company began losing revenue. As the slide continued, they poured more money into advertising and marketing. Dr. Brad even began working some hours in the mortgage company to provide free labor when layoffs became necessary.
Practice declines
Dr. Brad was caught in a serious bind.
"At the three-year point, things were a mess," he said. "My practice had declined by more than 29%, my personal practice income was down 70%, and the mortgage company was failing quickly."
Dr. Brad and his brother-in-law had a major fight. Each hired an attorney and tensions increased. The lack of communication between Dr. Brad and his brother-in-law caused the mortgage company to file for bankruptcy. Since Dr. Brad's brother-in-law had no savings, the only asset Dr. Brad could go after was the brother-in-law's house, but Dr. Brad's wife refused to let him do that to her brother and his wife.
Outside of dentistry
At the point, when Dr. Brad enrolled in Levin Group management and marketing programs, he was desperate. He had worked hard to accumulate his savings, only to see it disappear. He was angry, believing he had been talked into investing in the mortgage company.
Practice Turnaround: Succeeding in the New Dental Economy by Dr. Roger P. Levin.Fortunately, Dr. Brad's practice was not difficult to build up again. The economy was recovering, especially in his region, which -- though it would not have saved the mortgage company -- did allow Dr. Brad to enroll in two key insurance programs and maintain his staff. Levin Group also created reliable targets for quarterly improvements in the practice.
At the end of 16 months, the practice was ahead of its peak production performance and continuing to grow. This resulted from Dr. Brad refocusing on the practice and the implementation of new management systems and a strong internal marketing program. This consisted of a minimum of 15 custom-selected strategies working simultaneously to achieve the Levin Group target of having 40% to 60% of patients referring at least one other patient each year.
By now, Dr. Brad's income exceeded what he had been earning before -- a very positive situation. Through financial planning with outside professionals, he was able to create a new financial pathway. He would be able to pay his children's tuition, but would have to work five extra years to accumulate the necessary savings to retire comfortably. In the end, he will be OK, but his experience was unnecessarily difficult.
"I made things harder for myself than necessary," he admitted. "Had I sought the guidance of advisors from the very beginning, I would have avoided a lot of grief."
Roger P. Levin, DDS, is the chairman and CEO of practice management consulting firm Levin Group.
The digital version of Practice Turnaround: Succeeding in the New Dental Economy is now available online for just $59. You can also hear more case studies like this at one of Dr. Levin's upcoming Ignite Your Production seminar in Atlanta on February 18. Use code BIC50 during sign-up and save $50 on doctor tuition.
The comments and observations expressed herein do not necessarily reflect the opinions of DrBicuspid.com, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.
Copyright © 2016, Levin Group. Reprinted with permission.
