The Dentist's Network #96

Dr. Lorne Lavine
Dental Technology Consultants
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Face The Music - Part II

You’re the owner of a dental practice and you are trying to figure out the best steps to get on to Facebook to drive new patients. It can be a daunting task and with little extra time in the day, how can you be expected to spend time promoting your business on Facebook? I completely understand the challenges of running a busy practice and after speaking with dentists as well as other small businesses, I’ve compiled the following list of strategies that should help ease the process. This is part II of a two-part series.

5. Limit Your Advertising Budget
As I mentioned in the previous article, more dollars on advertising does not always mean more revenue. Start off with a few dollars a day to test out Facebook’s advertising system. You can create an ad to test out all of Facebook’s targeting capabilities. Make sure that if you are spending money you’re investing in some long-term goal, otherwise you’ll end up spending a lot of money aimlessly. Trust me, I know from experience! As your performance improves and you figure out which ads work most effectively you can begin to steadily increase your ad spend.

You would most likely spend a few hundred dollars on a Yellow Pages advertisement, so be willing to test out a similar budget on Facebook. If all goes well and your business starts to increase, you can always invest in more advertising as necessary. As I mentioned before, this is an educational process and with so many resources on the internet, learning has never been cheaper. Don’t spend all your money when you don’t have to! To most effectively manage your budget, start off with one Facebook advertising campaign which has a limited budget. For all of the initial ads, use that same campaign rather than creating separate campaigns for each advertisement.

6. Create A Facebook Page, Not New Profiles
A quick way to get banned from Facebook is to set up multiple accounts and multiple profiles. I have multiple friend requests in my inbox currently from people who’ve set up separate accounts to promote their business. Don’t do this! You can set up your own Facebook Page while keeping your existing profile. Under no circumstance should you be creating separate accounts. Not only is it against Facebook’s terms, but it provides no additional value. I could spend more time explaining why this is flat out a bad idea but I won’t. It’s much better to spend the time focusing on the activities you should be doing.

7. Emphasize Mobile Subscriptions
One of the best components of a Facebook Page is the ability to receive updates via your mobile device. Once updates come to your phone you can also reply to the updates, making it possible for instant two-way communication. It’s a model that’s similar to Twitter except that on Pages you get more features for engaging users. The mobile component adds an additional layer of interaction which can be used to build relationships with your new and existing customers. Facebook is a relationship marketing platform, not a direct sales channel. That’s why it’s important to build your relationship with others through Facebook. Configure your Facebook Page to function with your current mobile device and communicate with users while on the go. This can make for some great, instantaneous dialogue. Ultimately most internet based promotions are going the way of mobile, and it is in every business’s best interest to take advantage of that trend including on Facebook.

8. Post Occasional Entertaining Statuses
When was the last time your patients saw an update from their dentist in their news feed? They probably never have and they may consider it strange, unless of course it was a funny joke. For example if a dentist posted occasional updates about eating candy and junk food in general, you may get a quick smile and possibly even post a status comment. Whatever the response, at least you are getting one, which is one additional level of interaction that you never previously had with your patients.

Keeping your fans engaged is an important component of any good Facebook strategy. How much time does it really take to come up with a clever status update? If you’re like me then catchy ideas occasionally pop into your head (or at least ones that you think are clever) when you are on the go. If you’ve properly configured your Facebook Page to work with your mobile device, you can instantly update your Page’s status while on the go. It takes very little extra effort to bring a smile to your fans and it’s something that they’ll remember.

Conclusion
Every small business can take advantage of the promotional opportunities that Facebook presents. By using some of the tips listed in these articles, dentists can get a great start on promoting their practice on the site. While there are many other strategies to increasing the number of fans you have on the site as well as driving new business, much of that can be learned through experimentation. The best thing to do is to get started and figure it out from there!

Lorne Lavine, DMD is the Founder and President of Dental Technology Consultants. Dr. Lavine holds two prestigious certifications, the A+ Certified Technician designation and the Network+ Certified Professional. These designations demonstrate proficiency in computer repair, operating systems, network design and installation. Dental Technology Consultants provides dentists a full range of services relating to the implementation of technology.

Interested in having Dr. Lavine speak to your dental society or study club? Click here. Dr. Lavine can be reached at drlavine@thedentistsnetwork.net.

Hear Dr. Lavine’s FREE podcasts at The Dentist’s Network - HERE

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Thomas L. Snyder, DMD, MBA
Managing Partner
The Snyder Group, LLC
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When Should You Value Your Practice?

We have seen an increasing number of deferred transitions over the last several years. Whether you are recruiting an associate to become a partner or want to find a candidate to purchase your practice in one to two years, the question always asked by the associate or owner is “When does the practice get valued?” For many associates who intend to make a financial commitment, they need to know what their potential investment may be. Therefore, determining a value at the outset or within the first year of employment is not unreasonable.

We’ve often heard complaints from associates who have worked at a practice for several years to be offered a partnership opportunity, but at what price? If no valuation had been prepared at the outset, does the associate want his/her contributed production to be included in the valuation calculations? The answer is a resounding NO! If you want to value your practice prior to a partnership formation or deferred sale and the price is too high in the associate’s mind, they may walk away. Therefore, in order to avoid this problem and avoid potentially delaying your transition plans, we recommend establishing a baseline early in the relationship, usually within the first year of employment.

Since many owners offer guaranteed salaries for the first three to six months of employment, it is fair to wait for the completion of the first year to conduct this baseline valuation. If you do the math, most valuations include a three to four year historical average, so the inclusion of the associate’s first year collections should not skew the numbers too much for them. By establishing a baseline valuation when it is time for the partnership or sale to commence, you must update the numbers to reflect current economic conditions as well as any additional assets that may have been purchased during the associate’s employment phase. Using this approach minimizes any disincentive for your associate to work hard and help your practice grow without their being penalized for their efforts.

In our experience, if done properly, associate profit margins should be around 30-35%. If not, there is something wrong with your economic equation. Perhaps overhead is too high or there aren’t enough patients to share. Good economics assure the owner receives a good profit margin during this employment phase. We recommend a baseline valuation for solo practitioners who plan to offer their associate a partnership opportunity within a two to three year period after the associate joins the practice.

There is one major exception to this rule. In situations where the owner feels that hiring a Management Consultant at the outset will not only enhance the success of the associate’s integration into the practice, but also increase the potential for the practice to grow, the valuation for buy-in or sale should precede the event. The rationale here is simple. If the owner invests $25,000 to $40,000 for a reputable consultant to improve the practice’s gross revenue, increase new patient flow, fix patient retention and increase profitability, the new partner or owner will benefit from these changes and be buying into or purchasing a stronger asset. In fact, we have seen instances where the associate’s ability to earn income is enhanced during the employment phase. So everyone wins!

At the time of partnership formation, the valuation is updated in the following way: As we have discussed in prior columns, all practice valuation consist of two classes of assets - Tangible Assets and Intangible Assets. Intangible Assets include goodwill, restrictive covenant, telephone number, namely all things you can’t see, feel and touch. Tangible Assets include dental equipment, supplies, instruments, sometimes leasehold improvements and technology. Once the baseline valuation is determined, you can segregate the value into these two asset categories.

From our database, we have found that Intangible Asset values on average are about 76% of a practice’s value and 24% represent Tangible Assets. When it’s time to update your valuation, you’ll adjust the Intangible Assets by the CPI over the period of time from the baseline valuation to the current period. For example, if the buy-in occurred in 2009 and the baseline valuation was prepared in 2007, adjust the former value of the Intangible Asset Value by referring to the Bureau of Labor Statistics “Inflation Calculator” to update that number. Tangible Assets are then reappraised to take into account the additional “wear and tear” that has occurred. We assumed some new equipment or technology was purchased during this period, so you add these assets to the mix. Here are examples of how the calculations may work:

Updating Your Valuation
Practice Value 2007 - $600,000
Intangible Assets Value (IAV) - $456,000
Tangible Assets Value (TA) - $ 144,000

Re-Value in 2009
IAV BLS Inflation Calculator - $471,800
Reappraise TA - $150,000
Updated Value - $621,800

So in this case, with the various adjustments made to both asset classes, the revised value would be $621,800. This way, by setting a baseline value, you demonstrate that you are trying to create a “win/win” situation for your partner. Establishing a baseline valuation lets your potential partner or purchaser know you want things to be fair. In my many years of transition consulting, the root cause of most partnership failures has been over money. Start your relationship out the right way by putting your economic cards on the table and create a win-win relationship.

If you would like additional help, email Dr. Snyder at drsnyder@thedentistsnetwork.net.

Interested in having Dr. Snyder speak to your dental society or study club? Click here.

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Sally McKenzie, CEO
McKenzie Management
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Uncover the Mystery Behind Patient Loss

There you are day-after-day, providing the best care you can for patients. From all outward appearances things seem to be just fine. Patients are in the chair, you provide care for them, you like them – well most of them, anyway. They like you. They come back. Okay, maybe not all of them return but a lot of them do. Actually, if you look closely, chances are very good you’ll find that not as many come back as you would like to think. In fact, your existing patient base is shrinking. But not to worry, right? Because you have a steady supply of new patients coming in, or so you believe, until you take a closer look. New patient numbers are dwindling as well. But why? What is happening? Where’s the disconnect?

Oftentimes patients are lost at precisely the point where the patient experience begins - the telephone. If you were a prospective new patient calling your practice, would you schedule an appointment? Would you feel the staff are welcoming and accommodating? Would you find your telephone experience pleasant, or something you just had to endure on your way to getting in to see the doctor or hygienist? Would everyone who answers the phone be able to answer basic inquiries about treatment, procedures, insurance? Knowing the answer to those questions is critical to sustaining and building your practice, however, few dentists are concerned enough to even ask the questions.

For the dental employee, the phone is often viewed as a constant interruption to more important job duties. Few realize the powerful impact of this “annoyance” on the total success of the practice. The people who call always take forever to get to the point. They are never happy with the appointment times available. They have a gazillion insurance questions, millions of treatment questions, and umpteen other issues and problems that staff really don’t always know how to address intelligently. As far as many business staff are concerned, the job would be perfect if it weren’t for that ringing, whining telephone. However, ask them how they think they come across to patients and they will probably assert that their customer/patient service skills are just fine.

I see this issue time and time again in dental practices. The dentists looks at the open appointment times, dwindling new patient numbers and sinking production figures and blame the price of gas, the neighborhood, the weather, the politicians, the economy… any outside circumstance they can come up with. It never occurs to them that the hardworking business employee, who’s managing check-in and check-out, answering the phones, running reports etc. has erected the Great Wall of China between the practice and prospective patients.

Yet dentists commonly view the phone simply as a perfunctory duty. It rings, someone answers it, schedules an appointment, and that’s it. In fact, only 12% of dentists believe the telephone has a major impact on their practice even though it is usually the only point of entry for new patients. And only 5% of practice staff are trained to properly handle patient phone calls. The vast majority simply wing it.

It’s not that these business employees are incapable or unwilling to manage phone calls effectively, they simply have never learned how to maximize the telephone lines to boost new patients and production. If poor telephone protocol causes you to lose just 20 new patients a month and each would spend an average of $1,000 on dental care a year, that’s 240 patients and nearly a quarter of a million dollars. Maybe it’s time you found out how your team manages this most important point of entry for current and prospective patients? As we’ve discovered, you have no idea until you hear both sides of the conversation.

In the medical community, “mystery shoppers” have been around for several years. Dentistry is embracing the concept more and more as practices have come to realize that they are profoundly dependent upon a satisfied patient base, especially in this economy. And mystery shopper services, such as those offered through McKenzie Management, enable you to be the fly on the wall to hear exactly what transpires between the caller and your employee. But most importantly, the assessment enables you to identify exactly where you and your team can make immediate improvements and see immediate positive results.

In many of these cases, simply educating staff on effective telephone communication can significantly improve their approach. Moreover, it can prevent the loss of hundreds of patients and tens of thousands of dollars every year.

Sally McKenzie is CEO of McKenzie Management, a nationwide dental management, practice development and educational consulting firm. Working on-site with dentists since 1980, McKenzie Management provides knowledge, guidance and personalized solutions that have propelled thousands of general and specialty practices to realize their potential.

Interested in speaking to Sally about your practice concerns? Email her at sally@thedentistsnetwork.net or call 1.877.777.6151.

Interested in having Sally speak to your dental society or study club? Click here.

Hear Sally’s FREE podcasts at The Dentist’s Network - HERE

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