The Scariest Number in Your Practice

 

Announcer:
Hello, everyone. Welcome to The Millionaire Dentist podcast, brought to you by Four Quadrants Advisory. On this podcast, we break down the world of dentistry finances and business practices to help you become the millionaire dentist you deserve to be. Please be advised, we do speak with an honest tongue and may not be safe for work.

Casey Hiers:
Hello, and welcome. This is Casey Hiers back at The Millionaire Dentist podcast in studio with co-host Jarrod Bridgeman.

Jarrod Bridgeman:
Casey, how are you doing today? Looking sharp in your seafoam blue kind of an outfit.

Casey Hiers:
Compliment accepted. Thank you. I like it. Got a nice blazer on.

Jarrod Bridgeman: Hey, yeah, kind of both doing a blue situation here.

Casey Hiers: I can dig it.

Jarrod Bridgeman:
Casey, you know we've got Halloween coming up. We both have kids, and Halloween's always a super fun time. I'm a big scary movie guy. I love autumn and fall seasons. You guys have any fun plans for Halloween?

Casey Hiers:
I like comedies, and I like the summer.

Jarrod Bridgeman:
Okay. Do you appreciate the "dad tax" on the trick-or-treating? Getting some?

Casey Hiers:
Yeah, they know all about that. They actually have fun. They hide the candy with my wife so that Daddy doesn't find it two weeks prior to giving it out, because the bags will be opened. Whoops! My sugar addiction—I'm in a much better place right now with that. But yeah, I love it. Now, Halloween's not a big deal at our house. I mean, sure, get dressed up, have fun in the neighborhood, get some candy. Not a big evil spirits guy.

Jarrod Bridgeman:

Yeah, just a vodka spirits guy.

Casey Hiers:
Better than...

Jarrod Bridgeman:
Casey, with Halloween coming up, as we mentioned, sometimes things can scare practice owners, scare myself, or even scare you when you're out on the road and speaking to practice owners across the country. What's something that they tell you that can scare the hell out of you?

Casey Hiers:
It's actually something they don't really tell me until we get into it. The biggest thing that scares them daily is Monday morning: "What staff member is going to fill in the blank?" Right? That's the daily fear.

I'll tell you what should scare them. It's always been a factor, but it's coming up more and more. It's not just the word "insurance" or insurance adjustments—insurance can be frustrating, right? It's how many business owners—dentists and specialists who own successful practices, big practices collecting 1.5, 2, 2.5, 3 million dollars—have no clue or visibility into what their top-line production is versus their collection. What that means is, as a business owner, you are blind to some very serious parts of your practice and your money.

Jarrod Bridgeman:
Isn't collections kind of like the basics?

Casey Hiers: Well, we'll get into it, because again, this scares me when I'm talking to folks collecting $1.5M to $3M, and their insurance adjustments are 35% to 50%. They're writing off multiple millions of dollars, and they're not really that sure about it.

Jarrod Bridgeman:
Do you think sometimes their initial reaction is, "Well, let's just try to find a way to bring more patients in"?

Casey Hiers:
Yeah, those are the two gateway drugs for insurance. Growth is an important word, and in dentistry, growth is important. But most screw up the definition because there's growth, and then there's profitable growth. To grow, sometimes the gateway is, "Hey, let me have an insurance strategy," or "Let me increase marketing spend to get patients." With the right strategy, timing, and an endpoint, there's an argument that there's something to that when starting out.

Jarrod Bridgeman:
Right, especially when you're just starting out.

Casey Hiers:
Sure. Mind you, during this whole podcast, you can run an insurance shop and be incredibly profitable. The problem is a lot of people are running an insurance shop and are not being profitable because nobody's talking to them about business model and strategy, repercussions, or money back into their pocket. Or they don't even know they're running an insurance-heavy shop. There's no clue.

This is not an indictment of practice owners, but my God, it's an epidemic in dentistry. 99% of practice owners collecting $1.5 million and above have little to no visibility or knowledge about what their production actually is. Once they've achieved that growth, what they ask is, "Where's all the money?" They don't have the cash flow or income in their hands that they expected.

Jarrod Bridgeman:
And growth plateaus at some point. You only have so much time and space in your day, so it's not like you can keep a 48-hour shop going.

Casey Hiers:
I was talking to somebody recently with a couple of associates. They might not be in love with them—maybe one isn't the best, or the other is just mailing it in. Yet, with no visibility into insurance, the reaction is, "Well, I might have to get another associate."

Ultimately, it's: Where is all the money? Heavy insurance practices eventually hit capacity, burnout, and hygiene gets booked out. There's no room or space, just growth, growth, growth, but the money isn't where they wanted it to be. So now they're thinking about a second location because they think, "I can't be less busy, or I'll have less money."

Jarrod Bridgeman:
A lot of the psychology behind this is the thought that more production means more money—that production is the most important part.

Casey Hiers:
Everybody wants to be busy. I joke about junior high—you want a lot of people to like you, you want your dance card full, you want to feel important.

Jarrod Bridgeman:
And you're more of a quality guy than quantity.

Casey Hiers: Well, there you go!

Jarrod Bridgeman:
I'm the opposite. Yes, I understand!

Casey Hiers:
So many practice owners feel like if they're busy and producing dentistry, it's all going to work out. A couple of generations ago, that was the case. It is not the case anymore. That's where frustration and shame come in—they're busy, but it's not yielding what it should.

There's not just one lens to look through your practice from. Growth is an important ingredient, but too much blind, unprofitable growth leaves people burnt out. They complain about "adult babysitting" and staff, yet their business model forces them to hire more people just to collect 60 cents on the dollar.

Jarrod Bridgeman:
They're getting 60 cents on the dollar, but then that money goes to staff, facility overhead, supplies, and everything else. It just multiplies the problem.

Casey Hiers:
The amount of people giving away $800,000 to $2 million a year in free dentistry because of insurance reimbursements without being keenly aware of it is unacceptable. That blind spot costs so much money, stress, and forces you to practice for many extra years.

One big reason this happens is practice management software almost encourages booking "expect-to-collect." Jarrod, do you remember what that means?

Jarrod Bridgeman:
Yeah! Instead of writing down the true full procedure cost on the books, you enter what you expect to get reimbursed after insurance adjustments, right?

Casey Hiers:
That's good—that's about the level of response I get from practice owners. If your fee schedule says $1,000 for a procedure and insurance reimburses $600, the right way is to book $1,000 so you can track that $400 write-off haircut and make strategic decisions. Booking "expect-to-collect" means entering $600 from the start. You collect $600, think you're 100% efficient, and stay completely blind.

Jarrod Bridgeman: Why would software or practice owners do it that way?

Casey Hiers: Three reasons I hear:

1. "The software kind of makes me do it."
2. "I don't like to see what the haircut is; I feel better when it matches."
3. "My staff doesn't like to do it that way."

If you're the business owner, two out of three of those excuses are complete horseshit.

Jarrod Bridgeman:
If your staff doesn't like to do it that way, too damn bad!

Casey Hiers: It's not the staff giving away a million dollars of free dentistry a year! Think of the supplies, chair time, and team labor being wasted. You can't fly blind and run a business.

On the flip side, fee-for-service practices have their own unique challenges preventing them from making another $150,000 a year and retiring early. But in insurance scenarios, it's baffling how little it's talked about. Practice owners are busy, but tolerating it year after year without a strategy is the baffling part. Making decisions using incomplete data hurts overhead, tax strategy, and cash flow.

Jarrod Bridgeman:
Wouldn't writing off $1.5 million hurt way more than the uncomfortable feeling of digging into the real numbers?

Casey Hiers:
Some say, "That's just how dentistry is today," or "I want to help people in my community." Doing charity is great—do charity on your own time. Don't run a business blindly and call it charity as an excuse not to fix it.

Fee renegotiation is a fine start, but it's a band-aid on a gashed wound. You need an overarching strategy for timing, pace, and metrics. You can be profitable with insurance, fee-for-service, or a hybrid model, but the wrong answer is not knowing your numbers and having no plan.

Jarrod Bridgeman:
Casey, what's a blind spot you have in your own life?

Casey Hiers:
I tell myself I can eat whatever I want and stay skinny, even though Father Time has other plans. I love nacho dogs, pizza, and double cheeseburgers. I'm half-blind to it because I tell myself it'll be fine. What about you?

Jarrod Bridgeman:
Mine would be what I spend on my hobbies—ignoring what's in my bank account because of how I grew up. Looking at it makes you feel bad, so you avoid it.

Casey Hiers:
Looking at insurance haircuts makes practice owners feel terrible, so they avoid it. Most make "enough" money that they accept mediocrity. Since when do dentists accept mediocrity?

When we help practice owners correct this, they make hundreds of thousands more per year and retire 4 to 5 years earlier with double or triple their wealth. Stop accepting it. Wrap your arms around your numbers—what are your insurance adjustments, hygiene metrics, cash flow, and production per day?

Jarrod Bridgeman:
Casey, if folks want to come see you, where is the team heading soon?

Casey Hiers:
On November 5th, we'll be in Athens and Savannah, Georgia. On November 12th, we'll be in Charlotte and Winston-Salem, North Carolina. On December 10th, we're in Austin and Houston, Texas. Then in mid-January, we'll be in Tampa and Naples, Florida!

Jarrod Bridgeman:
Head over to fourquadrantsadvisory.com, click on upcoming events, and register today!

Outro Announcer:
That's all the time we have today. Thank you to our guests for their insight and for sharing some really great information. And thank you to you, the listener, for tuning in. The Millionaire Dentist podcast is brought to you by Four Quadrants Advisory. To see if they might be a good fit for you and your practice, go on over to fourquadrantsadvisory.com and see why, year after year, they retain over 95% of their clients. Thank you again for joining us, and we'll see you next time.