By Ross Martin, Accountancy Director at Hive Business
Does your company have a heart, and should it? If you are a dental practice owner your answer is going to be yes and yes. People with clinical backgrounds tend to emphasise the clinical motive — the heart — over the profit motive of their businesses — the head — for deeply embedded reasons.
But nevertheless, technically, a company exists to serve its shareholders. When that’s forgotten things get distorted, the same in dentistry as in any other industry. It’s not uncommon therefore, when clinicians run dental practices, to see them subsidising the rent and their own labour — putting clinical concerns above profit, heart before head.
The tension between clinical and profit motives is uncomfortable for dentists and it has intensified due to rising goodwill prices and the financial pressure they exert on buyers. However, social norms are also changing and it’s no longer clear where the balance is. For example, it’s becoming normal to expect to see ethical corporate tax strategies. So while the profit motive pulls harder, so do ethical concerns.
It’s good to understand the dynamics underneath this tension if you are going to be a business owner, because a lot of people get confused. Why are you running a business, after all? If it’s to create a nice environment where you can do what you want, remember that people purchasing dental practices right now don’t have that luxury. Which means somewhere along the line you are paying a premium for what you’re doing. Not necessarily a bad thing, just as long as you are aware of it.
I’m not saying you should discard all your ethical and clinical standards. But clinician-led businesses do have a problem around upselling and being openly commercial. Many do not even acknowledge that this is an element of their business. The owners don’t want to because they don’t like it. They’re not inherently commercial and it feels like they’ve been thrust into the business world, yet the business world is not the natural home of the technician.
The universities don’t help when they say things like “if you get your qualification with us that’s your meal ticket for life”. The world isn’t like that. When a corporate takes over a practice, for instance, there’s always criticism from university-trained people who resent the way it goes about things. The corporate isn’t particularly concerned about the clinical side and, whether you like it or not, it has a singular purpose which is to make a return for shareholders. It’s normal that sometimes it is therefore going to be at odds with the clinicians. It’s the same in any healthy business: marketing departments always want a bigger budget, ops always want more labour and equipment, accounts always want to trim costs, shareholders always want a return on their investment.
All of this is healthy, but it’s often missing in dentistry, and to its detriment. Perhaps if there were a better eye on the commercial imperative we would be seeing a larger, more commercially viable industry that was spreading dental services a little wider; there are many types of life-changing dentistry that can be provided regularly to wanting patients. Not that the sector is doing badly, with seven or eight per cent growth, but it’s seeing that growth despite, not because of, its emphasis on the heart over the head.
If you would like to discuss how you can make your dental business a success or if you have any questions about this article please get in touch on 01872 300232 or email us at hello@hivebusiness.co.uk.
