Different than 30 years ago, there are now two different types of practices: Practices that are growing and practices that are shrinking.
We get to work with a lot of dentists. Much like you get the true honour of being trusted with your patient’s oral health, we get the honour of being trusted with our colleagues’ succession planning. And I never take that lightly.
If you read these emails, you know that our mandate is increasing the transparency and legitimacy in the business of practice valuations and transitions. On that theme, we’ve noticed three key observations in the dental practice marketplace over the past year that seem to be differentiators between growing practices and shrinking practices that we’d like to share. Despite the increasing saturation of dentists and the decreasing population to dentist ratio, there remain practices that continue to grow. But the number of practices that are experiencing attrition is likely to increase.
Practices that are growing have been noted to have the following one, two or three differentiators.
- They have a critical mass of patients that organically grows at a rate that more than offsets attrition. That number seems to most commonly be above 2,200 active patients. At this number the internal referrals from existing patients often exceeds the number of patients that leave due to death, moving away, or because they’ve fallen out of love with your practice.
- They have effective marketing investments that yield a return. In today’s era of search engine optimization and Google Ads, costs of marketing to bring a new patient into the waiting room can be upwards of $1,000. At that number it can take more than three visits to profit from a new patient. And with new patients usually spending about $1,100 per year in a practice, it’s often not until year two that we see that fourth and profitable visit finally happen. Practices that are growing in patients and profit get their acquisition cost under control. With the right help, getting that client acquisition cost to $300 or less is usually where we recommend your marketing budget be set at “infinity”.
- Thirdly, they have curated and aligned their team communication. Teams that spend more time with their patients and talk about their patients’ lives build loyalty. Loyalty reflects likability. And people do business with people they like. Modern dentistry is important but it only matters if you’ve nailed retention. That requires communication to be consistent from the front desk experience into the hygiene room and during the recall exam.
In the next three blog articles, we’ll dive into each one of these with a little more depth. They matter immensely today in patient care, profitability, and practice value.
If your practice is growing and you don’t know why, it’s temporary.
If you practice is shrinking and you don’t know why, it’s permanent.
