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9.5.08 Issue #339 Forward This Newsletter To A Colleague


Nancy Caudill
Senior Consultant
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When Is It Time to Retire?

Dr. Richard Mandale—Case Study #242

Dr. Mandale’s Concerns:
After being in practice for 30 years, Dr. Mandale’s practice was in decline with fewer new patients, and his staff was disenchanted with his lack of concern. But Dr. Mandale’s primary issue was that he really didn’t care about going to work anymore!

Practice Facts:

  • PPO and fee-for-service practice
  • 12 new patients a month average
  • 30 years in practice at same location
  • 4 days of hygiene
  • $57,000 a month in production average

Observations:

  • The interior carpet, paint and décor were worn and out-dated.
  • The landscaping outside the stand-alone building was not maintained.
  • No internal or external marketing systems were in place.
  • The dental team was not motivated or inspired to promote the practice.
  • The doctor arrived late every morning for his first patient.
  • No morning meetings were held.

Dr. Mandale was not a happy dentist because he had already retired emotionally and it was reflecting in his practice statistics.

Let’s review some historical figures for Dr. Mandale’s practice:

Year                Net Collections                     # of New Patients
1995               $51,000                                  21
2000               $54,060                                  18
2005               $55,415                                  12
2007               $56,000                                  10

Don’t let the slight increase in the collection column fool you. Even with a small 2–5% increase a year in his fees, his practice is not growing enough to offset the ever-increasing overhead. The number of new patients is declining each year, and not keeping within industry standards of 25 new patients a month per dentist. Dr. Mandale’s practice is not in a good financial situation at this point in his career.

On a positive note, he has been very diligent over the years to make the most of his 401K and he owns the building. He is in an excellent position to retire… but what about his practice?

Options:

  • Work another 3 years to increase practice profits in order to increase the value of the practice
  • Semi-retire by bringing in an associate
  • Start looking for a buyer now

What needs to happen in each of these scenarios?

Work another 3 years…
In order to turn his practice around in 3 years, changes need to be made:

  • Effective business systems need to be in place.
  • Internal and external marketing efforts should be implemented.
  • The office interior must be updated.
  • Operatories need to be brought up to date.
  • Dr. Mandale needs to develop a new attitude.

Semi-retire…
All the above will still need to be done, but it could be more difficult to find an associate interested in buying the practice as it is now.

Start looking for a buyer today…
Without making any changes to the practice, the value will be based on the past several years of collections, the value of the equipment, etc. How long will it be before a buyer is found? It could be weeks, months or years! It is a buyers’ market now with so many dentists retiring, so it is not the best time to be selling a tired, non-performing practice.

What was his decision?
After giving the options much thought, Dr. Mandale elected to change his attitude with the understanding that his goal was to work 3 years to increase the practice profitability, make the necessary changes to draw new patients to his practice, start marketing to his existing patient base for referrals of their family and friends and, most important, rediscover his love for dentistry by taking some hands-on training for new procedures that he can add to his treatment options.

His decision was shared with his team. They were very excited to know that the practice had a direction now and they were secure in knowing that the practice wasn’t closing its doors.

Conclusions:
Dr. Mandale participated in the McKenzie Management Practice Enrichment Program and implemented all the changes that were addressed. He has added Invisalign and implants to his list of services and his net collections are up 35%!

He has a vision now, and realizes the positives about his dentistry and his practice. He again enjoys going to work and arrives early enough to handwrite his “thank you” cards and attend the morning meetings.

If you find that you need to start making some changes in order to prepare for the rest of your life, contact McKenzie Management for a consulting program that meets your needs.

If you would like more information on how McKenzie's Practice Enrichment Programs can help you IMPLEMENT proven strategies, email info@mckenziemgmt.com.

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