662: Work Less, Earn More: The Dentist’s Blueprint to a Dream Practice & Life – Dr. Barrett Straub

Do you find yourself working harder and harder, but earning less and less? If you're feeling overworked and overwhelmed, don't miss this episode! Kirk Behrendt brings back Dr. Barrett Straub, ACT’s CEO, to share their blueprint for working less and earning more. Don't become a statistic — create your dream practice! Listen to Episode 662 of The Best Practices Show to start writing off less and enjoy dentistry more!

Episode Resources:

• Send Dr. Straub an email: barrett@actdental.com 
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Links Mentioned in This Episode:

Get your Golden Ticket to ACT’s To The Top Study Club: https://info.actdental.com/golden-ticket 

Get your free copy of ACT’s PPO Roadmap: https://www.actdental.com/free-resources/ppo-roadmap/

Get ACT’s Say This, Not That resource: https://form.jotform.com/221665137804153

Main Takeaways:

Working more hours does not equal more revenue.

Understand the different gaps in your practice.

Be proactive with your dental accountants.

Invest in differentiating your practice.

Create a plan for dropping PPOs.

Quotes:

“Some dentists that we're finding right now are writing off as much as 42% — and write-offs are climbing. Typically, we wouldn't find dentists that are writing off 42%. It might be normal to find a dentist that was writing off 20% or 22%. But the thing that's important right now is that write-offs are skyrocketing, and dentists aren't even aware of that. So, that's something very important to pay attention to.” (11:30—11:58) -Kirk

“It's not unusual for us to coach a practice and a dentist will say, ‘Well, I only participate with one insurance.’ I'll pull [the data], and I'm like, ‘Not really. There are a lot of other insurances you're not even aware of that are slowly filtering into your practice.’ So, we have to take a look at that.” (12:08—12:28) -Kirk

“I'm sure you're watching this going, ‘I'm busier than ever.’ We don't find one dental practice in the world that says, ‘I'm not busy.’ Everybody is too busy, too busy, too crazy, too many patients. The data reflects that. Here's what the data shows. The data shows that patient appointment wait times are up significantly in 2022. Now, the ADA points to this is likely a result of staffing shortages — I don't like the word staff. It's “team” — in dental offices. I kind of agree with that, but not wholeheartedly agree with that. I mean, more and more patients are going to the dental offices through PPO measures that everybody is incredibly busy. The data shows that.” (12:36—13:23) -Kirk

“Dentists across the United States are feeling overworked. This shows the percent indicating too busy to treat all people requesting appointments, or provided care to all who requested appointments but was overworked. The thing that [the ADA points] out is that it's at an all-time high. We're way too busy and we're way overworked. That's what the data shows. The bottom line is dentists are busier than ever.” (13:29—14:01) -Kirk

“Dentists are working more hours than ever. On average, right now, GP dentists worked 4.5% more hours in 2022 than the average from 2000 to 2019. The increase in 2022 is roughly equivalent to an extra 1.5 hours per week. Now, what this doesn't show you, we like to think of it in terms of days. There are people out there that work 12-hour days. Knock yourself out. That's crazy. But in real simple terms, 1,758 hours a year is the equivalent to 225 days a year — assuming you work eight hours in one day. That's a lot of days. That's way higher than the previous research that we had. The bottom line is dentists are working more hours, making less money. They perceive busyness is way up. The crunch is biting in terms of capacity, which is a whole other thing that we'll talk about. Wait times are up significantly for patients, and team member shortages are severe.” (14:19—15:31) -Kirk

“Usually, when we work more, our assumption is, ‘I will work more, and therefore my revenue will go up a corresponding amount.’ But the graphs and the numbers show that we are working more, working harder, expending more energy, and making less. So, no longer is working more actually benefiting you financially. There are other reasons you may feel the need to do it. The math isn't working anymore. We've got to understand the math and then apply the learning to our own practices because, ultimately, why do we practice dentistry? We're going to encourage you that the answer should be so you can live the life you want. When you're too busy and making less than you should, it affects your life. That's why we've got to reverse this equation here, do some math, and figure out some different strategies going forward based on this new knowledge that we have.” (15:43—16:38) -Dr. Straub

“If you come to anything that we do, you're going to hear us talk about gaps. Gaps will work like this. You've got a couple of gaps in your financial statements. The first gap is the effort gap. You’ve got what you produce, your gross production, your percentage of write-offs, your net production as a result of those write-offs, how many days that you actually gave to produce that much, and then gross production per day. We call that the effort gap, and that's an important gap that you have to pay attention to because you can't keep working more, and more, and more, and more, and more. There's a limit to that. We see some dentists giving blood, and they can't give anymore. And so, the effort gap is really important. As you tighten up each one of these gaps, you're going to see one more dollar falls to the bottom line.” (16:54—17:51) -Kirk

“The second gap is the collections gap. You've got your net collections number, and it comes as a result. It's your collectible production. Well, what percentage of those dollars did you actually collect? If your net collections is 94%, you're leaving six percent on the table. So, that's an important gap. You might be thinking, ‘Well, I've got Sally. Sally works at the front. She's so nice. She's been here for 20 years. We collect 92%.’ You have to collect 100% of your collectible production. That is money left on the table.” (17:53—18:30) -Kirk

“The third gap is your overhead gap. Costs are increasing. Costs are rising just to do business, and you have to know what percentage your overhead is. We see practices that have 75% overheads — some even higher than that. We're going to show you how you can get your arms around it. It's not about cutting costs. It's about, first of all, knowing what the percentage is. It's amazing how many dentists go, ‘My overhead is this number.’ I'm like, ‘It's not even close.’ That's a gap that you can trim up.” (18:33—19:03) -Kirk

“The last gap is your cash flow gap. Now, let me explain this . . . You're a dentist. You go to your accountant every year, and your accountant goes, ‘Man, look at your profit and loss statement.’ At the bottom of your profit and loss statement, it says, ‘Wow, I made $300,000!’ Your accountant goes, ‘You're doing so good compared to all my other clients!’ And then, you go, ‘Yeah . . . I don't have any money.’ Well, your P&L statement doesn't show what you paid in taxes. It doesn't show your loan payments. It doesn't show any of that stuff. And so, you go home to your spouse or significant other, and you're like, ‘We have no money. Yet, I keep working harder, and harder, and harder.’” (19:05—19:43) -Kirk

“To totally simplify it, every gap is where a portion of your production leaves your practice. So, if you do $1 of production, a portion of that leaves in the case of write-offs. On the screen, you're going to see a 14% write-off — 14%, gone. Of that remaining money, if you're not collecting 100% — so, let's say you collect 92%, per your example. You have an eight percent collections gap. So, eight percent of that dollar now has left again. Now, we have overhead expense. So, another big chunk of that dollar leaves. And then, we have this cash flow expense. So, really, what we're talking about is margin. The true profit margin on every dollar of production of that dollar produced, what I want to know as a small business owner and a dentist is, how much of that dollar do I actually get to put in my wallet? What we're seeing is the P&L statement is only a small part of this whole equation. When you put it all together and you work to shrink these gaps, your margin increases and, therefore, you get to put more money in your pocket.” (19:47—20:57) -Dr. Straub

“There's never been a business owner in the history of the United States that ran a business on a P&L. It’s just never happened. Anyone who's ever had a successful business will go, ‘A P&L is important, yeah. It shows me where cash went out.’ But that's half the story about what's going on in a business. You need cash. You need to pay taxes. You need to know the implications of all of this and how it's reflected in a P&L. So, don't let the P&L be your driving decision-maker. It's part of the story, but it's half of the story.” (22:28—23:03) -Kirk

“Every successful change process, no matter what it is in the world, starts with the first same step. You have to tell the truth. If you're in AA, Alcoholics Anonymous, the first step is you have to admit you're an alcoholic. If you go to a weight loss program, you have to first weigh in and find out what your weight is. Anything that you're doing, you have to start with, ‘Where are we right now?’ so that I can start to improve where we are — and it starts with data.” (23:14—23:44) -Kirk

“Here's the other thing you have to pay attention to. You probably have to educate your dental accountant. Now, I love dental accountants — don't get me wrong. But you can't be passive with a dental accountant. You have to be proactive with a dental accountant.” (32:42—33:54) -Kirk

“If you want to be happy as a dentist, you only need two things. You need progress — I call them the two P’s. And this is what we're showing. Year over year, you don't have to have the most amazing, brilliant everything. But if you're making progress every year, your soul is good. The second thing is you need predictability. By using this method we're showing you, you can predictably determine where your income is going to be and how hard you're going to work within very few dollars. It's really quite predictable when you can embrace progress and predictability.” (35:33—36:09) -Kirk

“Here is an important point to the math that you can't see. Nothing is more disheartening than when you feel PPOs run your practice. This is the critical point where you say, ‘I make the rules.’ And it's true — you make the rules. This is more powerful than the money.” (37:25—37:42) -Kirk

“There is nothing better than paying all of your bills and having money in the bank.” (39:08—39:11) -Kirk

“As you grow, growth sucks cash. Your business needs cash on hand in order to do anything in the future.” (39:13—39:23) -Kirk

“Every dentist watching knows this scenario. You're at CE. You're eating lunch with dentists, and they're like, ‘I produced $1.2 million. I produced $1.2 million.’ Now, I think we're starting to see that producing dentistry means very little. There's a big difference between the dentist at year one that says, ‘I produced $1.2 million,’ and the year three, ‘I produced $1.2 million.’ Those are very different practices. One has got $30,000 sitting in the bank with 20 more days, or five weeks more of vacation. They have $30,000 to take their family to Disney and spend some of that. The other one is stressed, scraping, and borrowing money from family members to pay the tax bill — but they both produced $1.2 million. And so, our point is, we as dentists have to stop focusing on production and know that production is just one small KPI in a much bigger, more complex story.” (40:35—41:27) -Dr. Straub

“Time is the new rich. I don't care what people produce. Gross production means absolutely nothing anymore in dentistry. I care about like, what kind of days do you work? I can't waste a day for anything. Yet, we see dentists wasting days. I mean, if you're writing off 42%, that means more than one out of every three days you're working, you're working for free. And that's not fun either.” (41:35—41:57) -Kirk

“This is not a joke. Anyone can do this. All you have to do is know the numbers. If you're not looking at the numbers and you're letting PPOs flood your practice, you have no idea what's going on, and you're a victim of circumstance. You now don't control your practice anymore. We want you to control your practice and enjoy your life.” (46:45—47:04) -Kirk

“There are three scenarios where we coach dentists, and they benefit from this gaps method. The first is, year one, ‘I don't know where my money is. I'm in financial hardship,’ and the gaps can help them strategize how to get out of financial hardship. That's scenario one. Scenario two is the doctors that are like, ‘Okay, I'm going to be practicing in my practice for many more years. I want to maximize my profitability for my effort, and I'm going to use the gaps, and I'm going to use these levers, and I'm going to use the production per day and how many days, and I'm going to find the right better life, better practice mix that works for me and my life and my family.’ That's phase two, and that's a bulk of the career. And then, we also coach dentists who are like, ‘Okay, I'm really good. I'm on the back nine of my career. I still love dentistry. I'm going to use this calculator to see how few days I can actually work and still make what I'm making. That will allow me to practice maybe longer than if I were just pounding it out.’ So, this isn't a young doctor, middle-aged doctor, or old doctor tool. It's for every phase of the professional career, and we can use this to make each phase as successful as we possibly can.” (48:40—50:01) -Dr. Straub

“Many people think they're going to lose all their patients [when they drop PPOs]. You might lose a few. But don't listen to the pundits who are like, ‘Oh, you're going to lose 20% across the board.’ That is absolutely not true. There are so many people that are like, ‘I dropped X, Y, Z insurance. No one is going away.’ I can't tell you the number of people that have dropped insurance, and they're like, ‘I am still way too busy.’ Here's the real issue. There isn't a dentist in the world that we get that isn't busy. Most practices we get, we'll get a single GP doc, and I'm like, ‘You have 3,500 patients.’ They go, ‘I know.’ I'm like, ‘You don't need 3,500 patients.’ The great restorative practices, if we're talking about GPs, they know exactly how many they need. They need 1,200 patients, probably about 750 per full-time hygienist in a practice. They know what to charge. They know how many days they work. So, I would be so quick to not say, ‘Oh, we're going to lose a bunch of patients.’ Now, if you don't have people paying your full fee and you're 100% PPO, that is true. If you get off PPOs, you're going to lose patients because you haven't created enough value. Here's the bottom line. I want people to come to you because of you — not because you're cheap, and not because you're easy. The real mark of a true professional is that people come to you, and they trust you, and they pay you because you're my person and my team is so well-trained.” (51:59—53:25) -Kirk

“Our practices that have gone fee-for-service, they'll be the first to tell you, ‘We get the insurance question all day long.’ Once you go fee-for-service, it's not like people come in and go, ‘I've got all this cash. Can you just prep all these?’ No, you still have the question every day from almost every other patient, ‘Do you take my insurance? Why aren't you on my plan? How come you cost so much?’ That's the game you have to play as an entrepreneur. You have to train your team. Verbal skills matter. Your team has to be so good that when somebody says, ‘Why aren't you on my plan?’ they go, ‘I love that question. Bring it.’” (53:28—53:59) -Kirk

“We never coach someone to just drop a PPO. There's a method and a right way to do it. We have a whole PPO Roadmap that we walk our coaching clients through, and it starts with data. It starts with identifying the low-hanging fruit insurance plans that make sense to get out of. It identifies the one that we should stay on for a little while. It doesn't mean you drop all your PPOs. So, there's a method and a strategy to doing it the right way. When done correctly, after making the right decisions, knowing the right data, and training the team for the right verbal skills, it's very successful. You will lose some, but much less than you can. Once you know the numbers, we can even do a calculation where you know how many of those patients you can lose and still break even. It's often like, ‘Oh my gosh, I can lose a ton and still break even financially.’ So, when it's done right, when we see dentists do it right — meaning, follow the roadmap, take our time, do it the right way — very successful. When dentists say, ‘Hey, guess what? I just dropped all my PPOs yesterday,’ and they didn't do the steps, it's not good. And so, there are some things that we need to ask ourselves. There are some strategies we need to employ before we [drop PPOs so we] can become successful. Part of it is this thing called differentiation. We coach all our dentists that the patient has to have a reason to go to you before you dump all your PPOs.” (54:08—55:46) -Dr. Straub

“We see people chase volume in the search for profit without really knowing the equation. ‘If I add more capacity, if I add a hygienist, if I add a chair, if I add a building, if I add three doctors, I should be making more.’ Not necessarily, because this margin goes with it. Sometimes, we actually make less. And so, the gaps also help people say, ‘I think I should hire an associate.’ Great. Maybe. Let's run the numbers and say, how much does that associate need to produce and collect on that for you, senior doctor, to make a dollar? Sometimes, the math works. Sometimes, ‘Oh, gosh. That's not going to work. I'm not going to hire an associate. I'm going to drop a couple of PPOs, and it will all work out.’” (56:56—57:43) -Dr. Straub

“There are a lot of dental accountants. There are a lot of accountants. Just because someone says, ‘I'm a dental accountant,’ doesn't mean they're a good accountant. And just because someone isn't a dental accountant doesn't mean they're not great for dentistry. In the end, you give them the gaps. You say, ‘I need you to show me where my cash is going.’ [That] was the question that I, over my career, proposed to my accountant. P&L, great. That's just the starting point. I want to know where all the money is going after the P&L, with all the distributions, the loans, the depreciation, amortization, all that stuff that is complex because of our IRS. And an accountant, if you train them, you tell them — you have to advocate for yourself — ‘I need to know where every cent of this monthly revenue went,’ an accountant should be able to customize his or her reporting mechanisms for that to happen.” (1:00:12—1:01:05) -Dr. Straub

“You have to drive the agenda for every accountant. Even the best accountant in the world, you have to say, ‘This is what I want.’ So, what I would encourage you to do is, you now have the gaps calculator. You can say to an accountant, dental or not, ‘This is where I want to go. I need you to help me get that way, and I'm going to be paying taxes in advance, and here is my thought on this.’ That is step number one. Step number two, there are some huge downsides to working with a dental accountant, and you saw them in this webinar. They are comparing you with every dentist across the board. You're not watching this webinar because you're average — because the average dentist, the number of days worked is going way up, and income is going down. So, if you're watching this webinar, your dental accountant, who's watching all of that with all of their clients, go, ‘You're doing great.’ And you're like, ‘I'm not doing great.’ So, I'm a little biased. There are amazing dental accountants out there, but you have to drive the agenda. And please do not have them compare you with other dental practices. That is the least helpful thing that could ever be done with your financials.” (1:01:10—1:02:12) -Kirk

“If we, as dentists, are trying to compete as a commodity, if we're trying to compete as the same as every other dentist in my town — I do crowns, I do fillings, I do implants — it will be a struggle with the dentist to population ratio. I want everyone to go to our website and look for our differentiation guideline because differentiating yourself — meaning, setting yourself up as a different option, a competitive option, a unique selling proposition — is different than the other ten dentists within the two-mile radius. That's when you can lower PPOs and you can attract patients to come to you. Is that easy to do, to differentiate yourself? No. Is it easier than we think? Yes. And so, if we're competing as the same, then we are definitely in a demographic challenge and it's always going to be hard. But if we skill up and use some strategy to market ourselves and set ourselves apart, that's when we really can go and do any type of business strategy we want, including the high margin, low volume; see a few patients, do a lot of dentistry; get paid our full fee, and really be very profitable and be able to have as much fun in dentistry as we can.” (1:02:24—1:03:45) -Dr. Straub

Snippets:

0:00 Introduction.

8:37 The current state of dentistry.

16:39 The gaps, explained.

23:03 The 14 important numbers to know: Year one.

29:43 The 14 important numbers to know: Year two.

33:38 Q&A: The difference between gross collections percent and net collections percent?

36:09 The 14 important numbers to know: Year three.

41:57 The 14 important numbers to know: Year four.

44:14 The 14 important numbers to know: Year five.

48:34 This tool is for every phase of your career.

50:56 Q&A: How do you make up for lost patients when you drop PPOs?

55:47 Q&A: What constitutes “days worked”?

56:27 Q&A: Does the number of providers you have matter?

58:28 Q&A: How do you answer the “Do you take my insurance?” question?

1:00:06 Q&A: Where do you find a dental accountant?

1:02:13 Q&A: Is the profitability struggle a result of your environment?

Dr. Barrett Straub Bio:

Dr. Barrett Straub practices general and sedation dentistry in Port Washington, Wisconsin. He has worked hard to develop his practice into a top-performing, fee-for-service practice that focuses on improving the lives of patients through dentistry.

A graduate of Marquette Dental School, Dr. Straub’s advanced training and CE includes work at the Spear Institute, LVI, DOCS, and as a member of the Milwaukee Study Club. He is a past member of the Wisconsin Dental Association Board of Trustees and was awarded the Marquette Dental School 2017 Young Alumnus of the Year. As a former ACT coaching client that experienced first-hand the transformation that coaching can provide, he is passionate about helping other dentists create the practice they’ve always wanted.

Dr. Straub loves to hunt, golf, and spend winter on the ice, curling. He is married to Katie, with two daughters, Abby and Elizabeth.