Last month, I got a call from a BDS batch-mate out of the blue. He said he wanted to leave his 10 years old running clinic, and was considering pursuing an MBA. And the reason for the call was to find out some good institutes and the admission processes there. I was curious to know the reason of this drastic measure, why would someone want to leave a 10 years old clinic and completely change his field NOW (after 10 years!!).
Well, I confess to have received a few more calls on these lines and they all wanted to leave their running clinic and move-on to do something else.
I did not want to be judgmental of their decision, but since, it was also my job to give them full clarity of their decision and the long term impact of it on their career. Doing an MBA, 10 years after their practice, would need a lot of courage and steps that may affect in long term on how they have been working, and how they will be working in future.
The main reason, I learnt, was that their clinic wasn’t doing well. “I am not earning as much as the other dentists in the area” was a common answer by all of them.
What is the yearly revenue you are making, I asked. He said “very less”.
I asked if he knew the number, he said he wasn’t sure, he has a rough figure. I asked him if he knew his expenses, he wasn’t sure.
See, we as dentists or medicos aren’t taught these very-very
fundamental stuff. How to keep a record of our clinic’s finances, customer’s
database, or a record of sources of our income. And what should be done with
that data. None of it is taught or even spoken-of in the 5 long years of our curriculum.
That’s where the problem is. And the second problem is that only 10% practicing dentists are interested to learn or engage with a consultant who knows these things.
A clinic has various parameters to measure it’s health and help you devise future plans for growth.
The first and foremost is, Revenue Vs Expenses or Income Vs Expenses. Your revenue is not the measure of your clinic’s success, it is your profit. Which is derived after deducting all your expenses from your total revenue. You must keep a track of how your profits are doing month on month, whether it is increasing, decreasing or is stagnant. This record must be maintained monthly. And at the end of a financial year, you must create a balance sheet, which is our second parameter.
Balance sheet is your clinic’s report card. You must record the value of your assets (such as your cash reserve, machineries etc) on one side and your liabilities (loans, payments to be made to labs etc) on the other. You would know where you stand at present and how healthy are your clinic’s finances. You may get one created from a CA and just maintain the value of it year on year.
Third parameter is your customer ratio- new vs old. A healthy clinic would have 60 to 75% of total revenue coming from old customers in form of repeat business or references. This may sound too business(y), but it is one of the most important measures to be able to predict the growth and survival 3, 5 and 10 years down the line. You see, there are only these many new customers in your catchment area or the area that you are catering to. Only getting new patients will not help. It may help you in the short term, but in long run, you may see a decline in your business.
Fourth parameter is the service wise revenue break-up. You may break down your revenue under various services you are providing, and see which particular service or services is getting you more revenue than the others. If you are a general practitioner, this may give you a focus for creating your marketing strategies in future, you would know what your target audience or customers need/ want the most. For example, in an area where your major revenue is coming from extractions, then you advertising for cosmetic therapies may not help (I hope I am making sense here!)
The fifth parameter would be your customer feedback. What your patients are saying outside of your clinic or on social media is also included in the feedback. Not many clinics take a feedback though, I suggest having a simple feedback form created and sent to all patients for the day by your assistant or someone. It can be a link of a Google form or Google business review link sent via Whatsapp. Whatever is feasible and easy to manage must be done to acquire patient feedback. A weekly review on the feedbacks received to take care of unhappy patients must be planned and conducted regularly with your entire team. At times, this may turn out to be an eye-opener towards your understanding of patient expectations and their expectations in reality.
It is my advice to all my dentist friends, seniors, and freshers, please review your clinic parameters regularly. This would give you a clear picture of how your clinic is doing. Instead of getting demotivated seeing a patient go away to another clinic in the vicinity, you can take data driven informed decisions.
I hope these points help!