Is Now the Time to Downsize your Practice?
Dr. Melvin Black – Case Study #689
Dr. Black has been considering downsizing his practice for the past few years and is wondering, is now the time?
He is presently seeing 20-25 new comprehensive patients a month. In 2008, the practice was averaging $67,000 a month in net production. The first quarter of 2009, he averaged $72,000 a month.
Dr. Black’s practice overhead in 2008 was almost 80%. His employee overhead expenses were at an all-time high of 34%.
Bottom line – What Dr. Black was experiencing was an example of working too hard and making too little after all the expenses for the practice were paid. Did it make sense to reduce the number of employees, perhaps see fewer patients and/or work more efficiently but perform 100% of the dentistry himself in order to net more income?
Hygiene is now assessing and selling more interceptive perio treatment and has increased up to $950/day on the average. By downsizing one employee, working more efficiently with his assistant, and training for hygiene, his new salary overhead for the practice is now 18% and his total practice overhead is 67%. These numbers mean an additional $112,320/year in Dr. Black’s pocket, with less stress and happier patients because he is providing all of their care.
Now, is 67% all that great? No. But upon further evaluation of his expenses, there is an additional 7% above the standard in the industry of 5% for his facility cost. The good news here is that he is purchasing the building! If his practice mortgage was not included, his overhead is 54%.
Do you think that Dr. Black made the right decision? He sure does! Are you interested in investigating the possibility of downsizing your practice now?
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