05 Jul Increasing the Value of Your Dental Practice
For quite some time, EBITDA has served as a key measure of dental practice valuation. It is, after all, one valid definition of profit. In essence, EBITDA represents the adjusted measure of what remains after all financial obligations have been fulfilled. It is a time-honoured formula for increasing revenue by earning more and minimising expenditures. However, as we all know, achieving this is not as straightforward as it may seem!
In recent years, our social and business landscape has experienced a somewhat tumultuous period – one that some may remember, some may question, and others may find eyebrow-raising. Unfortunately, many highly regulated professions, despite their extensive expertise, became so consumed with focusing on EBITDA, KPIs, and shareholder value that they lost sight of an essential aspect of any business: people. When individuals who dedicate their time were reduced to mere “human resources” and those who contributed financially were labelled as mere “targets and leads,” EBITDA may have been achieved, but it came at the expense of everyone and everything else. To avoid repeating the same mistakes made by other professions, it is crucial that we reverse this detrimental trend within the field of dentistry. Fortunately, the solution is within our reach.
To reverse this trend, we must shift the conversation. By recognising that your digital results – you know, those delivered to you through reports from your practice software, accounting system, and accountant – improve sustainably over time as a result of investing in the development of the individuals who dedicate their time and finances to your practice, you can achieve remarkable outcomes. In other words, by doing the right thing and prioritising the growth and well-being of your team, positive results will naturally follow.
While this truth resonates instinctively with us, particularly in the healthcare field, it’s worth noting that if you were to ask most dental teams about additional metrics beyond the obvious KPIs, their responses would typically revolve around obtaining more Google reviews and little else. However, history has shown that if EBITDA is achieved at the expense of everyone and everything else, it will eventually crumble away.
So, how can you avoid crumbling your EBITDA?
Well, surprisingly, it’s not about convincing people that EBITDA, KPIs, and related acronyms are directly about them because, simply put, that’s not the case. While providing a vested interest, financial gain, or target may temporarily encourage specific behaviours, we know that such approaches don’t always yield favourable outcomes. Paying people to develop an interest in something they previously didn’t care about hardly represents a meaningful change in direction.
Remember, it all begins with reversing the conversation. By placing emphasis on the well-being and emotional measures of success for your team members, combined with your digital results, you can achieve significant progress. EBITDA, FTA’s, occupancy rates, conversion rates, and all other digital metrics derived from keyboard inputs stem from the autonomy, motivation, well-being, and self-awareness of your team. As they develop a deep understanding of your patients and cultivate their health and value, positive results will naturally follow.
At Rose & Co, our Club Connect clients have been consciously fostering their teams’ growth and diligently documenting the outcomes for quite some time. They have gone beyond mere requests for Google reviews to truly understand their patients. We have witnessed their successful results first-hand, and we are more than willing to share our approach with you.
If you aspire to increase the value of your dental practice and are ready to explore alternatives beyond EBITDA, let’s talk.