In one of his recently published books, 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. Here is an excerpt from one of these success stories.
The following case study is about a specialist, but it is also instructive for general dentists. While there are very few general dentists who are the only general practitioners (GPs) in their area, many have had little competition and believe it will continue.
Don't get too comfortable
Dr. Theodore was a specialist and the only one in his area within 75 miles. He opened his practice and it immediately grew. Not only was there no competition, there was also pent-up demand. His first few years in practice were excellent, and he enjoyed practicing in the area where he had grown up.
Roger P. Levin, DDS, founder and CEO of practice management consulting firm Levin Group.At its peak, Dr. Theodore's practice was producing $1.9 million per year. It took less than five years for him to reach this level. Cash flow was excellent, he was working 4.5 days a week, and his overhead was 57%. Married with three children, Dr. Theodore was making a significant income, but had student loan, practice debt, and now house debt to pay off.
Everything looked excellent for Dr. Theodore and his future. He did not have to worry about financial planning, because there was plenty of money to pay bills, pay down debt, and have money left over for savings. He led a moderate lifestyle, and the future looked excellent financially, personally, and professionally.
However, between years six and nine after Dr. Theodore opened his practice, five similar specialty practices opened full- or part-time offices in or near his town. As is often the case, there was no rhyme or reason as to why these offices opened all around the same time.
Dr. Theodore might not have known why they opened near him, but he did know one thing -- he was losing referring doctors and money.
When Dr. Theodore enrolled in the Levin Group management and referral marketing programs, his practice had declined by slightly more than $1 million. Feeling the sting of these production losses, he was extremely upset that referring doctors had not been loyal to him as the original specialist in the area. He couldn't understand why GPs had been so willing to support other specialists who had moved in.
Dr. Theodore made a number of fundamental mistakes:
- He believed that he had no competition.
- General dentists do not automatically refer to certain specialists.
- Dr. Theodore had lost more than $1 million of production in three to four years.
What happened to his practice?
When Dr. Theodore joined Levin Group as a client, he was considering options such as approaching competitors to see if they wanted to share space or opening his own satellite in an area 100 miles away from his current practice. Merging with a competitor is always an option, but having a practice 100 miles away leads to wasted time driving back and forth.
We advised Dr. Theodore to follow neither option immediately and re-evaluate in two years. Our first goal was to implement a strong referral marketing program to regain some of the lost referrals. By analyzing his reports on a doctor-by-doctor basis over a three-year period, we determined the exact number of referrals from each referral source and percentages of change, and then customized a plan for each doctor.
His success far exceeded his expectations. At the end of one year, Dr. Theodore had increased his practice by $490,000, and at the end of two years he was at $1.75 million of revenue. This was still shy of his $1.9 million target, but we expect him to reach or exceed that in his third year.
While the referral marketing program is based on using 15 strategies at all times, in Dr. Theodore's practice, we concentrated heavily on one-to-one relationship building with doctors.
"I was fortunate," he said. "The doctors who were referring to competitors were not so loyal that they couldn't be easily swayed to refer to me again."
Building and maintaining relationships became a permanent part of his professional life. We launched numerous strategies for Dr. Theodore, such as the following:
Practice Turnaround: Succeeding in the New Dental Economy by Dr. Roger P. Levin.- A niche-specific study club
- Speakers to educate the referring doctors
- Hygiene study clubs for hygienists of referring doctors and potential referrers
- Staff-related activities
- Fun activities
- Hobby-based groups such as golf and an annual fishing trip attended by 21 of the doctors from the community
Dr. Theodore fully intends to maintain a strong, consistent marketing program for the rest of his career. The strategies will change as needed, and he will have to look for new innovative marketing approaches over time. He also understands that falling back into old habits of not marketing would be a serious mistake leading to a second wave of failure.
"After witnessing the devastating effects of practice decline," said Dr. Theodore, "I'm extremely committed to maintaining my practice and its ongoing growth."
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 seminars in Boston, Chicago, or Philadelphia. For more information, please click here.
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Copyright © 2016, Levin Group. Reprinted with permission.
