How to Grow Your Dental Practice

When to Grow or Go Slow dental clinic

Last updated on April 13th, 2023

Finding the right balance — having enough resources to satisfy patients and enough profit to make it all worthwhile, can make the decision to expand your dental practice excruciating.

In business culture, growth is almost assumed. Why wouldn’t you want to grow? More revenue means more resources, more satisfied patients, and presumably higher profits. However, there’s always that nagging voice urging caution: unless you have room to expand where you are, there’s a new lease to negotiate. That new space has to be equipped, and of course, you’ll need staff to man that equipment such as new associates, hygienists, office staff…it can be overwhelming. 

Here are some ways to tell if you are ready to grow your dental practice;

Competition Counts — Red flags to consider when location scouting

If you’re in (or looking at) an area that has few other dental offices, that’s most likely a red flag. Did a bunch of other dentists look at the area and decide it was not the right place to build and grow their dental practice? What do they know that you don’t? Unless the underserved area you’re considering is poised for significant growth, look carefully at why it’s underserved.

The opposite is also true: An area with a number of existing dental offices may not be a limiter on your growth. Perhaps there’s a strong demand because of geography or the demographics of the residents. 

Dental consultants often use practitioner: patient ratios as a kind of litmus test of an area’s potential: The number 1:2000 is frequently cited. Just because the area around your office has more than one dentist for every 2,000 residents doesn’t mean you can’t grow your dental practice;

Instead, look at the character of the existing dental practices and the population:

  • What’s the actual demand for dental services in the area?
  • Assess income, education, age and average household size. If demand is above average, and saturation is at or below average, there’s opportunity to provide additional services. 

Also consider the character of the competing practices:

  • How do they compare to your practice? 
  • Are they smaller offices with limited capacity? 
  • Are they run by older dentists who may be nearing retirement who aren’t investing in new procedures and aren’t growing?

The key is to measure the demand for the types of services that you provide and the supply of those services. If you’re a general practitioner, having several orthodontists nearby doesn’t affect your marketability. And if you’re an orthodontist, locating in an area with a number of GPs with strong pediatric practices could be a good thing.

New — and returning — patients for your Growing Dental Practice

Are new patients coming in at a good rate? Dental Economics magazine estimates that having 10 to 25 new patients per doctor per month is an upper limit before service to your current patients begins to decline.

What is your attrition rate? Dentistry Today estimates that the average rate of patients leaving a practice is 17% yet the top 10 percent of practices have an attrition rate of only 3 percent. 

The secret formula to understanding the impacts of your dental practice is not rocket science

Estimate how long your average patient will stay with you by using the formula 1/(attrition rate)= length of stay in years.

If the average rate is 17 percent, then the average length of time a patient stays with that practice is 1/0.17= 5.88 years. 

If those patients come in at least twice a year for cleanings, that means your expected revenue per patient is (5.88 years x 2 cleaning = 11.76 cleanings) and (11.76 cleanings x cost of one cleaning = expected revenue per patient). 

Attrition rate is also an indicator of how much your patients value your practice; lower attrition gives you a more stable base of patients and it can also mean more referrals to family and friends, increasing your patient count.

Demand and workload for Growing Your Dental Practice

What’s your current workload? Do you and your associates have large gaps in your schedules or are you struggling to keep up with appointments with little time off? That’s an obvious demand signal.

If you’re close to maxing out your facilities and your staff, you may already have the demand to justify adding two, three or four more chairs and the potential revenue to make them profitable. Here’s a benchmark for you: Can you currently accommodate dental emergencies without throwing your entire office schedule into turmoil?

If your answer is no, you’re over-capacity. 

It’s possible to expand without adding chairs immediately, to test the waters for an expansion and “bridge” your way to a larger patient base: Hire one or more associates to extend your office hours. Opening several hours earlier and staying open throughout the day into the evening can add appointments and revenue. Weekend hours offer additional opportunity. You may find that some of your current patients like coming during these “off” hours and, with some marketing, you can attract patients for whom the customary office hours just don’t work.

Now hiring!

Workload brings us to capacity: How many associates do you need, and how many would you ideally like to have? Hiring is a critical piece of the expansion puzzle, and working with a professional dental staffing company is one of the best ways to ensure you get it right. If you’re busy enough to be considering expansion, you’re probably too busy to devote the time and energy needed to find and vet an associate — much less two or three.

In addition to being able to tap into a large network of potential associates and staff, a professional staffing company has years of experience in filtering candidates. They recognize the signals that mark those with a huge upside and signs that someone might pose dilemmas down the road.

During an expansion, you especially need to find ways to limit fixed overhead to allow revenue to catch up to expenses. One way to do that is to use contract labor rather than full time hires. Dental staffing companies can help you find qualified, experienced staff who can help you handle a growing patient load until you’re in a position to hire full timers.

The Covid opportunity curve

The Covid pandemic was devastating to small businesses across all industries, including medical and dental. The demand for dental care will eventually normalize, but the time between now and a recovery represents an opportunity for expansion-minded practices. There are small practices that will never recover and have already closed permanently, and there are those run by solo practitioners who don’t have the financial resources to outlast the pandemic. Both of those things mean lower competition — even in prime areas  — in the future. 

There may be an opportunity to pick up the lease on an already built-out and equipped office, or maybe there’s an office with an older practitioner who would just as soon retire as restart. 

The ability to negotiate more favorable leases, acquire equipment and even ingest an entire practice — all at favorable prices — could make your expansion far less risky. In the end, only you know if you’re ready to expand. And if you are, go for it!

Consider these key questions whether to Grow your Dental Practice or not

Being diligent, asking the right questions and getting professional help will lead you to the right decision. Remember:

  •   Consider your current workload and the rate of productivity you want to set for yourself and your associates
  •   Count the competition, but don’t overestimate its impact
  •   Investigate your patient base thoroughly and understand your attrition rate, length of time they stay with you and their lifetime value (dollars billed per year x years of affiliation)
  •   Know where you will find additional associates and staff and consider professional staffing solutions

•   Consider ways to expand while keeping fixed overhead flexible, including picking up assets from practices that have closed

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