Is There More Month Than There Is Money?
Dr. Jim Caviness – Case Study #131
Dr. Caviness’s concerns: “It is a struggle for me every month to make enough money to pay my personal bills. Some months I can write myself a payroll check and some months I can’t!”
Many dentists, like Dr. Caviness, share this lament. The problem is that Dr. Caviness has failed to include himself as part of the big picture and making emotional decisions instead of informed decisions.
Dr. Caviness’s practice facts:
The team members enjoy working with Dr. Caviness; however, it was noted that he was anxious and vocal about not making enough money. This left the team confused when they knew they were reaching their daily goals 75% of the time. However their goal was $96,000/month leaving them short $16,000/month.
To make matters worse, Dr. Caviness recently purchased a new home in an affluent neighborhood. His mistake was emotionally assuming that the practice was going to make more money to offset this larger mortgage payment! Unless there is a definitive business plan to improve practice systems, the practice overhead stays the same, the collections stay at 83% of goal and he cannot afford to pay himself more to meet his new mortgage payment.
In addition, the doctor put in a 150 gallon fish tank in the reception room area and he just hired an additional clinical assistant. It was evident that Dr. Caviness did not know the answers to these questions:
What He Needed to Know:
The practice was NOT producing/collecting enough money to support the practice expenses and Dr. Caviness added more fuel to the burning fire by purchasing a home that he could not afford at the moment without a business plan to reduce overhead and increase revenues..
In Dr. Caviness’s situation, the additional expenses have been incurred and he can’t do it over. The practice is going to have to “step up” to increase production and collections in order to allow the practice to increase his salary.
Dr. Caviness determined the amount of money per month to satisfy his personal obligations and determined at 35% of monthly collections what that monthly amount would need to be.
The practice systems were reviewed, obstacles were revealed with solutions, and Dr. Caviness realized that it was important for him to diagnose necessary treatment and leave it up to his competent staff to “sell” the dentistry. Reaching his goals as well as knowing “the numbers”, will help him to make informed decisions in the future.
There are limitations on what a practice can produce so don’t make the mistake of thinking that you will work harder and therefore make more money. Know your numbers so you can make good buying decisions that will affect the rest of your life!
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