Revenue is one of the four factors in a business turnaround and, perhaps, the single most critical factor
By Roger P. Levin, DDS
At the time I am writing this article, we do not know what new regulations will emerge from the COVID-19 crisis. Following our mission to help orthodontic practices improve, Levin Group has been building models and explaining them in numerous webinars to help practices gain a better understanding of what strategies will be essential for success in the post-COVID-19 world. We share that orthodontic practices will be facing a business turnaround and the speed and depth of their success will be highly dependent on four key factors.
Four Factors for Success Following COVID-19
The four factors in a business turnaround are revenue, cash, expenses, and advisers. It’s essential to make the right investments and have the resources to maximize all four of these categories. Cutting expenses to the bone, which is a common knee-jerk reaction in a crisis, can often leave an orthodontic practice without sufficient resources to bounce back or at least recover as quickly and deeply as it would like.
Today we will focus on the first of the four factors—revenue. Businesses with revenue that exceeds expenses have survived and moved into profit. Businesses with revenue that does not exceed expenses are not surviving and will be living on fumes if the situation is not reversed.
Single Most Critical Factor
Revenue may be the single most critical factor in any business turnaround. Fortunately, even during the COVID-19 crisis, many orthodontic practices were collecting monthly payments from patients. And while there will certainly be a drop-off of both patients and payments for orthodontic practices, they have benefitted from this steady revenue stream.
Unfortunately, this could fool orthodontists into thinking that they will be fine, and their practice is okay. And this false sense of security could deepen in the first few months after re-opening, when pent-up demand for orthodontic checks and treatment will be at an all-time high. Unfortunately, as time goes on in the post-COVID-19 era, orthodontic practices will experience decreasing production. This exact scenario played out after the 2008/2009 recession. However, as everyone knows, this current economic downturn was brought on by a health crisis. So orthodontic practices will have to deal with patients who are both financially challenged and afraid.
As the production declines, it will become evident that the number of patients completing treatment or payments is no longer offset by the number of new patients coming in. Fortunately, in months 6 through 12 after reopening, orthodontic practices can start to build back the number of new patients. Keep in mind that this will be gradual and require 1 to 2 years for most practices.
Therefore, Levin Group is recommending that practices focus on doing the most productive things, such as getting current patients scheduled, starting new patients as soon as possible, and designing a new collections system that is highly effective and compassionate at the same time. Practices will also need expanded financial options and new payment plans to encourage patients to come back for checks and treatment.
Hear practice consultant Roger P. Levin, DDS, talk about the 20 strategies for orthodontic practice recovery
Not Business as Usual
The one thing you can be sure of is that it’s not business as usual and probably never will be again. This doesn’t mean it will be bad, just different. Practices will have to gain the ability to both manage the higher patient volume that will come as they reopen and address the sudden drop off in production after they’ve satisfied pent-up demand. We recommend that you go to our COVID-19 Resource Center at levingroup.com. You’ll find a collection of free, high-value strategies that will help contribute to your successful recovery. OP
Roger P. Levin, DDS, is the CEO and founder of Levin Group, a leading practice management consulting firm that has worked with over 30,000 practices to increase production. A recognized expert on dental practice management and marketing, he has written 67 books and over 4,000 articles and regularly presents seminars in the United States and around the world. To contact Levin or to join the 40,000 dental professionals who receive his Practice Production Tip of the Day, visit levingroup.com or email email@example.com.