Dr Chris Hart stumbled on an alternative to selling your practice to a corporate group - and he's hoping it's something he can build internationally. By Rob Johnson
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Hart's Buy Pass
8/05/2012 9:11:25 AM
Bite Magazine

Some problems can’t be solved – only managed. They’re the worst problems to have, because they can’t help but affect everything else in your life. Dr Michel Zabik had one of those problems. He and his wife, Dr Jacinta Clayden, had worked in a high-end practice in Brisbane for 17 years, sharing management duties between them. Then one of their kids developed a chronic illness.

At one fell swoop, Michel gets the stress of a sick child and the loss of a practice partner, as his wife has to take up a role as the kid’s full-time carer. Sourcing a replacement sucked away time he didn’t have. Doing the job himself was too demanding. Selling out to a corporate group, which can take all that back office stuff off our hands, wasn’t an option: “It wasn’t the money I needed. They expect you to manage yourself, plus they sometimes put minimum goals you have to attain. It’s not a bad model, and if I was going to retire soon I may be tempted. But that wasn’t my problem.”

Around the same time, Dr Chris Hart had a problem that couldn’t be managed – only solved. Dr Hart is the Director of Life Time Smiles, which was, at that point, a chain of 12 practices across regional and metropolitan sites in Queensland, New South Wales and Victoria. And as those practices hit competition with large corporate groups, and squeezes on fees dictated by health funds, he saw some of his own practices becoming inefficient in the quest to compete. The solution was to rationalise, consolidate and systemise.

“All over the place, you are surrounded by other dentists who are selling out to corporate or signing up with health funds,” says Dr Hart. “In our metro properties we found we had to compete. We had 14 practices and I admit my own practices were starting to develop the symptoms you see in other. I personally got tired of trying to manage individual dentists, too. So I decided to rationalise the business and consolidate.”

But in doing so, he had excess management capacity in his back office, which managed all the Life Time Smiles practices. So when a problem that can only be managed, not solved, meets a problem that can only be solved, not managed, you get ... a management solution. “At the moment we will call it Life Time Smiles management,” says Dr Hart. “It’s more or less a turnkey solution where the dentist turns up – everything else is taken care of. We’re only charging a small percentage of turnover, and less than what they’d be paying with a practice manager.”

Dr Hart saw the service as an alternative to the current options available to dentists, not only those at a turning point in their careers, but also those at the start.

“A lot of younger dentists are approaching us – this has only been happening in the last 12 months – and saying, ‘I know I’ve got to get a practice as soon as possible or there’ll be nothing available.’ And they’re right,” Hart says.

“So this service is great if you want to own your own practice, but don’t have the confidence or experience to run it. After a while using our service, they can go out on their own and run it. And we wouldn’t have any problem letting them go loose because we can scale the service up and down.” The benefit for a practice is significant, he says – enough so to see it is a viable alternative to other models of ownership.

“The potential savings are in the hundreds of thousands – up to 10-to-25 percent profit after allowing for commissions, so you can double that profit if the business is not being run efficiently,” Dr Hart explains.

Michel Zabik could see the value in the service Hart was offering, which included the ‘strength in numbers’ theory – that there were unexpected benefits of being managed by the same people who were managing a string of other practices. “Chris and his management team has been very hands-on,” Dr Zabik says. “They’ve been very supportive in ways that other groups can’t be. What his team needed to learn was what we needed to make it work. They offered a whole range of services, some of which we didn’t need, and some we hadn’t even thought of.”

The basics of the service involved Life Time Smiles’ call centre taking over incoming calls and confirmation calls, and of course for software to be matched across both sites.

“Their team has been extremely supportive and listened to what I needed and how we did things,” Dr Zabik adds. “Then they tailored what they can offer to suit my needs. They have not made me change anything – to the patients it’s still the same practice. They track staff hours and organise the pay for the staff each fortnight. I just check it over and pay them via electronic banking. They also provide an Excel spreadsheet of these records which makes my life easier, as I can see wages for the month/year to date. Takes all the stress out of dealing with this late at night after a big day at work.

“They have assisted me with hiring new staff. I find this very time consuming and draining. Because of their size they are interviewing regularly for new staff, so it was easy for them to assist me with this. Their team is also familiar with what the current going rates for different dental positions are, (I had no idea and believed what the candidate told me they were looking for...) so I have been confident and able to be more selective on who I hired, and didn’t over-pay.”

It hasn’t all been smooth sailing, but Dr Zabik found the solution to problems rested in the willingness of the Life Time Smiles team to be involved with his practice. “We’re refocussed on customer service, and sometimes the communication chain might break down,” he explains. “For example, we might have a long-standing patient who is part way through a treatment plan, and they might call us to find they were talking to someone who wasn’t familiar with their case. What we did is we set up multiple phone lines, so when a long term patient has a special number, they can call and the call will go straight through to the surgery, and a regular staff member will take up the inquiry.

“We sat down a couple of times with the team from Life Time Smiles and had coaching together from an overseas firm, who coached us in the most professional manner to deal with those sorts of calls. Also, we’re on their internal communications system, so their team can message us immediately. And their management team are part of our morning meetings.”

“Their reporting is very good. Monthly I get reports on how my practice is going, how much we made, by practitioner and also what our expenses were. This is presented against optimised figures they try to achieve over the group. This is extremely helpful, especially when an impartial third party does this, and provides feedback. For example it was brought to my attention that in January our wages expenditure was too high. I had noticed this, but didn’t think too much about it. They told me the reason was that production was down as we had a significant number of gaps and cancellations, and that someone in the practice should have been responsible to reorganise those days more productively, for instance moving patients to morning or afternoon and sending casual staff home in downtime. Now that we’ve had that discussion my team are more prepared for when this happens again.”

Chris Hart almost seems surprised he’s stumbled on the business model, and is hopeful for its potential. “This is something we can build internationally if we wanted to,” he says. “We can’t really take our dental practices out of Queensland, but it’s different with this service. And the problem with the corporate model is they go in and say, ‘we’ll buy you out but re-employ the vendors to manage’. You don’t just keep buying practices. With this model, we run it but they maintain ownership, so we had people as motivated as we were. We almost doubled productivity, but you need a motivated dentist to do it.”

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