The Profitable Dentist Earns an Honorary MBA

Written by on January 6, 2012 in Practice tips - No comments
Successful professional

By Edward M. Logan, DDS

Practice management is an area of dentistry that is in great need of expertise; dentists need to learn strategies to improve the profitability and gratification of their businesses. Less than 2 percent of our graduate school education covered themes related to business, it seemed essential to make this limited exposure count. However, most of the course time in these business related classes was spent learning how to work with a dental assistant performing four-handed dentistry. Business start-up, growth and management were given cursory attention, yielding yet again to the dental school’s central imperative, training graduates for clinical excellence.

Dental schools are charged with the unique responsibility of adequately preparing all of us to deliver standard of care dentistry to millions of people. Their goal is to ensure that, clinically, we can all pass muster. Our well-meaning instructors hold hopes that all of us who choose to, will be successful in running a private practice; it is just not incumbent on them to assure that we will.

The profession of dentistry is vastly different from other occupations requiring the skills of business management. Those acquiring upper-level positions in corporate America receive training specifically in the acquisition of business knowledge and acumen. Business is what these people do, it does not matter much what specifically the business does that makes the job pertinent. Most well-trained business managers move from one position to another with the freedom and speed of an Indy car driver. They are neither tied to one company, nor committed to any particular product or service. They are merely committed to the business of doing business.

Medical doctors are similar to dentists in terms of their long-term occupational commitment. This is easily understood given their extensive training, heavy debt load and even greater requirement of deferred gratification than that of dental professionals. Medical doctors are, however, much less likely to become encumbered with practice loans, as they assume the role of business owner with much less regularity.

A friend and family physician early in his practice related to me the various ways in which MDs elect to practice. He explained that the most practiced form of medicine, which is within a small group, limits the upfront cost and serves as more of a blend between private practice and group practice. The next most popular form of practice is within a large organization, such as hospital, government or university employment. In this case, the individual doctor is shielded from the requirement to borrow money in order to start working.

The approach of starting a private practice alone is taken by less than one in six medical practitioners. Not only are a large percentage of medical doctors free from the burden of additional debt, they are also excused from the responsibility of running a business. The following data from the U.S. Department of Labor bear out these trends:

  • Physicians and surgeons held about 633,000 jobs in 2006.
  • Approximately 15 percent were self-employed.
  • About half of wage and salary physicians worked in offices of physicians.
  • 18 percent were employed by hospitals.
  • Others practiced in federal, state, and local governments, including colleges, universities, and professional schools; and outpatient care centers.

In contrast to the practice style numbers for MDs, the statistics for dental professionals are markedly different. According to the Bureau of Labor Statistics Occupational Outlook Handbook, 2006-07, there were 150,000 licensed dentists in the United States at the time of publication. The following is from an excerpt emphasizes the overwhelming propensity for dentists to work as solo practitioners:

  • About one third of dentists were self-employed and not incorporated.
  • Almost all dentists work in private practice.
  • According to the American Dental Association (ADA), 78 percent of dentists in private practice are sole proprietors.
  • 14 percent of dentists belong to a partnership.
  • A few salaried dentists work in hospitals and offices of physicians.

While there is a growing trend of dentists who start out working for conglomerate practice management companies with multiple locations nationwide, the primary goal for most dentists is to eventually break out on their own. This typically means pocketing more of what you produce, but also imposes the responsibility to learn and put into practice the intricacies of running a business. Learning right the first time eliminates wasting time and money through trial and error in your own business.

As trained dentists, we tend to have only one shot at a career. Though some move on from this profession to others, most are committed to being dentists and doing dentistry.  Accordingly, most dentists have accepted the commitment to running their own businesses. Investing sufficient time educating ourselves in the fundamentals of business administration is essential. We are owners, managers and administrators. If we do not know how to effectively manage those job descriptions, our businesses stand little chance of achieving maximum profitability. When we do invest the time and energy to acquire this business acumen, we position our practices for success, far beyond that of many or our peers. We have chosen a great profession, one that can reward us handsomely for our hard work. The dentist earning an honorary MBA is the one in charge of the profitable practice of the future.

Edward Logan, DDS
is a general and cosmetic dentist practicing in O’Fallon, Mo. Dr. Logan graduated from the University of Washington School of Dentistry. After years of learning the business side of dentistry, Dr. Logan decided to write a book. “Dentistry’s Business Secrets”. You can read more articles by Dr. Logan at his website DentistrysBusinessSecrets.com.

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