The Problem of Overproduction—Or, Why You Don’t Want Great Days

Chris Moriarity
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More than likely you’ve had monster production days in the past. The “Yes!” train finally pulled into the station, and patients seemed actually eager to get their work done. You crammed as much same-day dentistry in as possible and you went home exhausted, but feeling better than ever.

How could a day like this possibly be a bad thing?

Imagine your production is water and most days it feels like you lived in a desert. However, two or three times a month, you find an oasis and drink all you can handle. Now, you don’t know where the oases are. You might find an oasis three days in a row and then find none for a month. How do you manage this resource, knowing that if you’re wrong about the distance to the next oasis, you might go bankrupt? 

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People naturally seek stability in uncertain environments. In a desert, you would ration (or budget) your resources to better prepare for those dry stretches. 

The problem is, we’re all terrible at this! Running a business can feel unrelenting. The mental weight you carry never goes away. You can take a vacation, but then you just feel the same anxiety with a better view. Most of your employees can’t understand the permanence of these stressors. 

It’s this element of constant pressure that derails long-term success when we face a short-term reprieve. When we get our “great” days, we act poorly. We overspend and hyper-produce out of a dual need to feel finally rewarded and to grab as much as we can while we can. We need to find some balance.

There are two basic techniques that successful practices use to smooth out production and avoid drought situations. 

Technique #1: Production Goals 

It’s not going to shock anyone that we should have production goals. The hard part is that the office needs to avoid the impulse to produce beyond that amount in a given period. If you’re scheduled to hit your monthly goal by Wednesday, there’s no reason to be scheduling on Thursday or Friday. Start scheduling into the next week that you’re not on goal. This will level your cashflow and lessen the peaks and valleys. 

The primary benefit of this method of scheduling is being able to see further into the future. The earlier in the month that you can predict your production for the month, the better you can make long-term plans.

Want to add a new technology or learn a new procedure? Sticking to your production goals means you know when you can fund it. Plan to expand? Knowing your baseline for the coming months will help you see where to add chairs or when to bring in an associate.

Technique #2: Use Payments to Produce Cash Flow

In a perfect world, everyone would pay you 100% of your fees upfront and never finance anything. However, it doesn’t take a degree in economics to know that when prices go up, people buy less, and when prices go down, people buy more.

In economics this is referred to as price-elasticity. If Ferraris were $50, there’d be no reason not to run out and buy a few. Alas, they are not $50, so very few people can justify the expense of a new Spider or three. 

To conserve resources, seek methods to increase case acceptance while preserving the total case fee.

Let’s assume you have a case value of $1,000 and require full fee. Each month, on average, seven patients say “yes,” so after six months you’d have a total of $42,000 in production. Now look at what happens when you allow for terms.

The patient can pay 90% up front and the remaining balance net 30. If we gained one more “yes” per month, our total goes to $48,000. Similarly, if we shifted to 80% down and net 60, we could expect a total of $50,100 per month. 

Many practices avoid offering terms because they worry about what will happen if patients don’t pay the balance. While it’s easy to shy away from taking on additional risks, at a down payment of $800 (80%), your initial payments are still $43,200, which is a 3% increase over the 100% down model. So, any patients making any payments creates a positive net present value or NPV, which is an indicator we use to determine if a financial plan is a good one.

By combining both of these techniques, you can irrigate the desert. Instead of struggling from production oasis to production oasis, always unsure about the future, you can create the kind of predictable cash flow that provides your practice with a basis for good growth and a rich harvest.

Mr. Moriarity, MA, FA, MBA, spent years working with attorneys and physicians before coming into dentistry in 2008 (just in time for all the fun). As a national speaker and as the vice president of client development for the Productive Dentist Academy, he has been able to share tactics and ideas from coast to coast, helping hundreds of dental offices grow their businesses and better serve the communities they love. He also is the author of the award-winning book, Catchy Title Here: 30 Micro-Courses on Marketing, Business, Leadership, and Motivation Based on the Principles of Behavioral Economics. He can be reached at chris@productivedentist.com.

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