Achieving business success is gruelling, so it helps to get clear on the meaning and purpose of your mission. They keep you going beyond what you thought possible. I reflected on how here, here and here. I think this is a universal truth that applies to any personal or collective challenge.
As the plight of dental practice owners got harder this year, my usual message, “Run as hard as you can in a proactive direction,” might now be upgraded to a more severe, “Build a bike and cycle as hard as you can in a proactive direction.” Innovation in this case is not just about developing the business, it is about survival. However, if you radically reinvent the somewhat misshapen wheel that is the dental business model, the post-Covid landscape provides astonishing business opportunities, the likes of which we have never seen.
Let me explain. When we were supporting our clients through the reopening phase there were a couple of owners who felt they didn’t have the energy and thought they might bow out after tinkering with their businesses to get a good sale. We advised them that, as deals seemed to be happening, it might be worth taking a slightly lower price to nail completion before more shocks to the market. After all, to get the price they had in mind would have meant a three-year business development project. Less tinkering than swimming against the tide.
Accepting a markdown on your anticipated wealth is neither catastrophic nor tangibly difficult, but it does require a mindset shift which can be painful. I was told around that time that dentistry will bounce back because it always does, and that healthcare is always a safe bet. And it’s true, the 2008 crash was tough but we came back. And today I only know three practices in danger of dying. Although that’s more than pre-Covid, it’s a very small number.
But there are more dimensions to consider in 2020 than there were in 2008. The incoming crash could be bigger, but equally disturbing are the government regulations on how you practice dentistry post-Covid. As the economist Milton Friedman said, “Nothing is so permanent as a temporary government program”. Income tax, for example, was introduced in 1799 as an emergency measure to pay for the war against Napoleon (at a top rate of 10%). I’m not suggesting that regulations won’t ease at some point, but your mission as a practice owner has permanently changed as a result of government intervention. You are now competing in a new environment with unquestionably more difficult (man-made) conditions.
So to make the appropriate mindset shift means digesting the fact that market conditions and regulations may never be the same again. Our advice has been get back to work as quickly as possible, open as long as possible, capture as much of the marketplace as possible and go harder in growing your business than you’ve ever gone before. We’ve seen some great successes. One client has hit 130% of pre-existing revenue levels with 60% of operational capacity.
This is no accident; the practice was already performing well. On the other hand a large group of people kept their staff furloughed, didn’t push to get back to work, and hoped they could rely on the government to tell them what to do. The wisdom of this approach was hinted at in the closed wards in two Welsh hospitals recently. If you take the government’s lead your business won’t survive, and healthcare isn’t a priority.
In a nod to how serious the obstacles to delivery now are NHS dentists receive 80% of revenue for seeing 20% of their patients — perfect evidence of the inflexibility of the public sector, while many private practices, like the client I mentioned above, innovate and hoover up market share. It’s straightforward: principals must operate at around 50% capacity thanks to required fallow times, but they will be stuck at 50% of revenue if they don’t change their opening hours and business models.
On Friday 13 March, the day Covid panic began, I was running a business managers’ course. A principal was asked to draw his management style. He drew an ostrich with its head in the sand. I believe such an attitude, understandable as it is given the big and scary shifts in the dental sector, is the single biggest risk to business survival in dentistry today. It will be the deciding factor on whether those three struggling practices survive, and whether the three become 30. Or 300.