Is outstanding debt killing your dental practice? If you find yourself struggling to make payments each month, overdrawing your account, or struggling to pay for staff and operational expenses, know this: you are not alone. Debt in dentistry is thriving and no one is talking about it — until now.
In the beginning of my book Million Dollar Dentistry, I outline a common scenario I see with many of the clients we coach at NextLevel. A dentist with massive debt, chaotic practice management, and a fear that there is no end in sight to the stress. Dental school may prepare you for a variety of clinical experiences in your career, but money management and business management instruction are sorely lacking.
The Negative Impact of Debt in Dentistry
Debt can feel like a fact of life for most Americans. From car loans to student loans to mortgage payments, there are many necessities in our lives that may require loans—especially in the early years of adulthood. However, practice debt and education debt act like weights that can sink your practice fast. Here are three ways that the influence of debt can be damaging to your dental practice.
1. Revenue Obsession
There’s no question that revenue obsession can take over all other goals for your practice even when you’re not buried in debt. Every dentist wants their practice to be profitable and there’s nothing wrong with that. For dentists in debt, however, desperation can lead to an all-consuming focus that actually harms your bottom line. Revenue obsession can diminish quality patient care as your practice seeks to pack as many patients as possible into the roster to increase gains. The driving concept behind this action isn’t necessarily bad. After all, NextLevel has entire programs dedicated to helping dentists grow their patient numbers and increase profitability. In this case, however, the execution of that concept can be heavily skewed if the motivating factor is the chill of debt constantly breathing down your neck. Some common mistakes include:
- Taking on more patients than you can effectively serve
- Cutting staff or overworking existing staff
- Nickel and diming patients for every service
- Overcharging for services
- Failure to be selective in patient acquisition
- Canceling appointments
- Overbooking appointments
2. Poor Staff Compensation and Unappealing Benefit Offerings
Speaking of employees jumping ship … One of the key mistakes that many dentists make when trying to manage their debt is to offer the minimum salaries to their team. On the surface, cutting operational expenses is a practical decision. In reality, it is a bad idea. Very bad.
While offering low salaries/wages may save you money in the short-term, it is cost-prohibitive in the long run. You can’t attract top talent with a rock-bottom budget for compensation. You cannot run a successful, profitable practice without top talent. The struggle with staff retention is especially difficult in today’s job market. The Great Resignation has employers scrambling to fill empty staffing positions and dentists are not immune to the phenomenon. While dentists were once able to focus on courting patients, they must now also focus on courting staff.
In NextLevel’s recent webinar “Essential Strategies for Hiring and Retaining Employees,” we addressed the impact of this phenomenon on dental practices — and provided tips for how to solve it. Why is an all-star staff so critical to your success (and your goal to eliminate your debt)? One of the key reasons to attract top talent is to improve practice outcomes. Low salaries and sparse compensation will not motivate the best of the best to join your practice. Even if you’ve somehow managed to hire stellar team members, you can be sure that they won’t stick around if a better offer comes along.
Your team is the face of your practice and each member has a role to play in patient satisfaction. From a welcoming and engaging front desk staff and a roster of friendly, professional technicians and hygienists, to a savvy, compassionate and insightful dentist (that’s you), the patient experience is paramount to retention. If staffing shortages and unprofessional team members are leaving your waiting room packed as the delays stack up each and every day, that low salary “savings” quickly disappears. In fact, it costs you money. That won’t solve the problem that made you make the decision in the first place.
3. Ever-Increasing Debt Totals
When the salary potential for a dentist is coupled with the revenue from running a practice, it may seem impossible that any dentist has debt at all. However, as we have reiterated time and again at NextLevel, a dental degree is not a business management degree. Public universities and private colleges do not include financial planning or business strategy as a part of their curriculum — at least not in a way that is substantial enough to reverse the dental debt trend.
The problem with substantial debt is that it can become more and more difficult to pay down the balance as time goes on. Once you’ve gotten to the point that you are paying the bare minimum, you end up with the old adage of robbing Peter to pay Paul. You use a credit card to cover payroll for one month, or finance a new piece of equipment the next month because you cannot pay existing debt and new bills without overdrawing your account or cutting into the wage you need to live. You open a new line of credit to pay off an existing line of credit and then promptly refill that old line with new expenses.This is not the dental career you planned out when you first started school.
Debt Destruction: Getting Started with Reducing Your Debt
You can reduce your debt and reduce the stress of running your practice.
Take a thorough look at every debt you owe and create a final total. Add up your monthly payments as well. The number may be shocking, but don’t let it sway you from your goals. Once you have an honest understanding of the challenge you face, you can begin to formulate a strategy.
You don’t have to go it alone when it comes to unburying your practice from the burden of debt. At Abundants University, our proven program for strong and profitable practices, we offer a free Debt-Destruction Masterclass that will help you seize control of the financial debts that are preventing your practice from becoming a next-level powerhouse. Our experienced team has proven strategies for tackling challenges inside and outside of your practice. It’s absolutely free, making it a perfect first step in your financial management goals.
The best time to get started with debt management and elimination was yesterday. The next best time is right now. We’re here to support you through your entire debt-reduction (and elimination!) journey.
Get started right now! You can sign up for our Debt-Destruction Masterclass right now and be on your way to creating the profitable practice you have worked so hard to create. You can also sign up for a free 30-minute consultation with a NextLevel coach, where you’ll get even more important insights into the true revenue potential of your practice, plus tips and support for achieving your goals. This no-pressure, free call could be the step that transforms your practice.