OUR RESPONSE

Five Considerations in Down Markets

By Richard A. Green, DDS, MBA

1. Communicate - Be Transparent - Stop the Denial

It is critical that leadership be transparent about the challenges facing any organization,

the actions being taken, and why. The present situation highlights the importance to

openly and honestly communicate with all levels of management and employee population

in general. It is easy for an organization, at all levels, to deny that adverse business conditions

impacting the rest of the world are doing the same to our business. These challenges

need to be brought "up front and made personal." Don't panic your office/management team,

but don't sugarcoat the message either.

Be very transparent with your banks and bankers. Each member of your team has the

responsibility to review the 2010-12 outlook, projections, budget, and possible shortfalls

as part of evaluating your need to go to the bank and have face-to-face meetings considering

cash flow needs and expense confinement. It is possible to assume that you may need

their help in 2010-12; therefore, it is better to be very proactive with your bankers.

Attempt to work with a set of objectives by holding monthly meetings of the team and budget

committee in an attempt to “live within your means” and by setting clear goals, timetables

and deliverables. Does your management team and your employees know in detail what

needs to be accomplished as an organization: the Why, How, What and When. Especially

in difficult times like these, it’s important to use these measures as a benchmark to develop

“Strategic Thinking” with flexibility, when shaping future plans/actions. While course correction

is often needed, leadership's consistency in direction, strategy and purpose is important to a

management team and to employees.

2. Take Control - Put Tools in Place to Change the Outcome - Be Open to the Ideas of Others

It is best not to generalize; rather, get into the detail and be specific about expected objectives,

clear goals, timetables and deliverables. With a focus on cash preservation/cash generation,

work your way down through the individual elements of the Services Rendered (Gross and Net),

Profit and Loss, Cash Flow and Balance Sheet statements - several times. Focusing only on

Revenue causes you to evaluate all elements that make an impact on the Services

Rendered (Gross and Net), for instance, the impact of Adjustments on available Revenue to pay

for Operating and Financing (Non-Operating) Costs. Constantly monitoring cash flow on a rolling

basis and, where you have the levers to pull, make adjustment where required. You can't just

skim the surface, but have to dig deep into the details of the practice — and do it often!

Develop, orient, and use your whole team and “Board of Directors;” these folks have a wealth of

talent, experience, skills, and maybe most importantly, often have a different and fresh perspective.

There should always be a "welcome mat" out for good ideas. Remember the management principle

– “People tend to support what they help to create!”

3. Take Advantage of the Downturn to Position the Practice for Improved Future Performance

Difficult economic times are the best time to take the hard actions required to position the

practice for improved future performance. People expect/accept change; take advantage of

the opportunity. There are lots of things to do even during times when the schedule seems

light. One example would be to focus on permanently changing the cost of infrastructure in

the practice and retaining the best talent while removing the “conditional” folks. When the

business turns, and it will, the practice must be positioned and ready to take full advantage

of the upturn. Do not fear appropriate action!

4. Find the Opportunity in Adversity

At a time when most of you are experiencing a “lighter” schedule, refocus your efforts with your

present patient base. Re-engage them with conversations (some “Difficult Conversation About

The Obvious”) around their long-term health and the possible longevity of their present oral

health – waste a little time listening! These are the folks that you probably have the strongest

relationship with, and therefore, you have earned their loyalty. Listen for the persons that need

different financial arrangements or need their treatment plan lengthened. Do some need to be

put a “holding plan” for a while? Realize, in these financial times, it may not be easy for them to

talk about their concerns either; express your desire to support them in their decisions, and

walk with them in order to help them get what they want and need. Make “Time the Variable

and Quality the Constant.”

Look for those in your patient base of long-standing that are coming up on retirement, within the

next three to five years, and invite a conversation about longevity, theirs and the dental work in

their mouth. It may be a time for a “change out” that they can do while they have the benefits of

a job, cash flow, and fewer concerns now, before they retire. You are able to do their work in a

way that will protect their teeth for the next thirty to forty years – I know you have learned to do

that kind of dentistry!

Take initiative to find new business opportunities.

• Some dentists have found an older practice that has patients of record that need a home;
  often these times create opportunities.
  
  
• Dr. Pankey would often encourage a dentist to use extra time for investing in self. “The
  best investment you can make,” he would say. Increase your knowledge and skills, become
  a better clinician, diagnostician, communicator, take stock of your management and financial
  skills. After your assessment, if you find yourself lacking, his encouragement would be for
  you to take aggressive steps to remedy the situation. (Here’s a question from his Philosophy
  Manual: “Have you taken aggressive steps to make it so?”) Review your spending on
  advanced continuing education for you and your team; your cash flow may require some
  tough choices for the time being.
  
  
• Stay active with your focus groups of patients as a way of taking the pulse of opportunities
  that may develop in today's super tough marketplace.
  
  
• I would encourage you to also keep moving forward on future plans and projects, knowing
  the idea is right while, at this time, the timing may be wrong. “There's a pony in this mess
  somewhere; we just have to find it!”

5. Live to Enjoy Another Day

As a management team, stay focused on survival in an incredibly difficult situation. Invest your

best efforts and do your best work for each of the patients you serve. You may find yourself doing

a different mix of services than you were doing three to five years ago, but this, too, can change

in time. Be true to your deeply held values and respectful of the patients’ values, as well. The

past is history. Learn to “be present” with and for the patient. That continues to be your bond

and promise! There is nothing sacred in an old system. Be vigilant, constantly scoping out the

challenges and available opportunities. As options become more limited, the decisions may

well be getting more difficult and may result in some organizational change.

Work with your team Strategic Thinking, creating a response with your over-arching goals in mind,

as you seek to cope with a disastrous economic situation. Do what you have to do to survive an

extremely bad global situation and, in doing so, try to stay out of your “equity pockets” unless your

"ask" is associated with making the practice fundamentally better, seizing a serious new business

opportunity. Otherwise, "self help" is the order of the day! Plan to be here to enjoy another day. Live

positively, while at the same time knowing that we are responsible for our Response!