Dr. John Meis: Welcome to the Dr. John Meis Show. Today’s episode, the Tale of the Missing Profit. I wanted to let you know about a book that I recently read that has really, really good information in it. The book is called Exactly What to Say by Phil Jones. And I’ve heard many, many consultants and mentors and teachers say, “Well, if you just said the exact right words, that case acceptance would happen.” And I’ve always felt like that was maybe not entirely true. But I also read this book, which has great ways of saying things that you can use to help your patients understand their care, may affect case acceptance. But you’ll be able to use it in other parts of your life as well, so I think you’ll really, really enjoy it. It’s worth a read. It’s a very, very short, simple read.
Dr. John Meis: All right. Also wanted to let you know that we have a free gift for you, and that gift is my book, the number one Amazon bestselling book, The Ultimate Guide on How to Double or Triple Your Practice Production. If you just go to the website down below, you will be able to order your book for free. All we ask is that you pay for the postage. We’re going to talk today about a principle that is called the next dollar phenomena. Now I have been with so many practices that have had this mindset of, if I want to earn more, I have to spend more. Now we talked about in a previous episode, where there wasn’t enough capacity, that we were capacity blocked. And yeah, sometimes you have to spend more to earn more.
Dr. John Meis: But most practices are missing an opportunity under their very noses that can dramatically improve profitability. Let me tell you the story of a practice that solved this problem. This practice was in the middle of nowhere in Georgia. They had one of our coaches come in and work with their hygiene team. And that was on a Friday. On Monday, that same hygiene team produced twice as much as they had the previous week, the average day of the previous week. All right. So they doubled their production from Friday to Monday. Now what happened there? The simple thing is they learned how to do same day dental procedures in hygiene. Right? They learned how to do preventative care at a higher level and they learned how to do it now.
Dr. John Meis: You can imagine what happened to the profits there. In this case, I’ve got to look at the numbers here, their hygienists were doing combined about … There were two hygienists, and combined they were doing about $20,000 a month, so they weren’t particularly hyper productive, but reasonable. They went from $20,000 a month combined to running at the rate of $40,000 a month. Now what happens to that extra 20? Well, there’s some expense there. Isn’t there? And there was an incentive for the hygienists to produce more. But what happened is about 80% of that fell to the bottom line, so this was a million dollar type practice. And their profitability went up by $16,000 a month. That is the power of the next dollar phenomena.
Dr. John Meis: Let me explain it to you. I’m going to use a lemonade stand in order to explain this to you. This lemonade stand … Actually, I’m going to go to a lemonade store. The lemonade store sells a glass of lemonade for a dollar. It sells the cup and all the ingredients. The cup and ingredients cost 10 cents. Right? So they’re selling a glass for a dollar. The cup and the ingredients cost 10 cents. And then the fixed overhead, the rent, the labor, the supplies, all that, let’s say it’s $89. Now we know these numbers are fictitious. Right? So it doesn’t all make sense, but you follow the principle. If you sold 100 glasses, how much profit is created?
Dr. John Meis: Well, it’s pretty simple. You do the math, so you’ve got $89 in fixed cost and $10 in variable cost. Well, the profit is $1. Let’s mix it up a little bit. Let’s change it, just change the story just a little bit. Now we’re going to sell the glass for a dollar. The cup and the ingredients still cost 10 cents. The fixed overhead is still $89. But on this day, we’re going to sell 120 glasses instead of 100. All right? So how much profit is created now? Still, it’s 120 times one, so that’s 120 of income. 120 times .1, which is the variable cost of the cup and the ingredients, minus the $89. We come up with this and we come up with this. $19 is the profit.
Dr. John Meis: Now wait a minute. That doesn’t even sound right. Does it? Well, let’s look at it. You sell 20% more and you get 19 times more profit. Let’s look at a dental office. It’s the same principle. Isn’t it? With everything that you’re doing right now, the average overhead of dental offices in the United States is somewhere north of 70%. It’s costing you 70 cents to produce every dollar up to this point. What about the next dollar? What’s the cost of the next dollar that you would produce? The cost … Well, let’s see. Let’s look at it.
Dr. John Meis: There’s going to be some supplies, so maybe that’s 6%, or 7%, something like that. Some of those dollars are going to be lab, and so that’s going to be another maybe 6% or 7% on average. Maybe some team bonus, maybe that’s 10, so we’ve got what? Six, seven, 10, 23%. So the next dollar, 70 some cents drops to the bottom line. And that is the power. If you have capacity, fill it. If you can fill it with same day dentistry, those dollars are so profitable that it’s absolutely magic. It is simple for practices to, if you can double hygiene, you can double doctor. But you don’t have to double your production to double your profitability because of the intense leverage of the next dollar phenomena.
Dr. John Meis: Now economists call that marginal profit. And dentists don’t really come to that naturally. I certainly didn’t. And when it was explained to me, I was able to implement it in my office, and my profitability soared, and so will yours if you follow this principle. It has to do now, relating it back to culture. What’s the culture in your office? Is the culture in your office one that, eh, we can do it next week, or we can do it next time? Or is your culture, we can do it, and we will do it, and we’ll do it now. That do it now attitude and being able to do it every time you can, you’re not going to be able to do it all the time, but every time you can, being able to do that next same day procedure will dramatically increase your profitability.
Dr. John Meis: I want to remind everybody, if you have any comments or question about this, go ahead and put them online. And we will respond to those either directly, or we’ll respond to those in another episode. As always, I’m going to leave you with a quote. And today’s quote is, “It always seems impossible until it’s done.” That quote is from Nelson Mandela, one of my heroes. Well, that’s it. I’ll see you on the next Dr. John Meis Show.