Complexity Plateau: Why Most Practices Struggle after Exceeding $1M
After discovering the Dental CEO Paradox, I knew I had the clarity to solve another observation of mine. In interacting with hundreds of dentists and countless industry experts, I noticed how very few practices exceed the $2M level. I just lazily assumed that those practice owners didn’t know how to successfully grow a practice that large or they lost motivation to continue to grow once they were satisfied with their current salary. Good can be the enemy of Great. In reality the growth plateau is due to the owning doctor serving too many roles and following the traditional dental model that does not easily build a supporting team for the dentist.
As I discussed in the dental CEO paradox article, the practicing dentist is in a conflicting role with the practice’s CEO when both happen to be the same person. The dentist opening a practice typically designs the employee structure in a flawed way. In order to keep operating costs down to generate more short term profit, a dentist opening a new practice hires the minimum number of staff needed to keep the practice running. This usually only includes employees tied to patient production. You hire dental assistants to assist in clinical needs, new patient team members to sign contracts with new patients and front desk employees to answer phones plus handle patients’ administrative needs. Most of these employees are hired at a lower pay rate who are capable of handling the production role but tend to lack the business skill set to develop into a future C suite executive.
It is extremely rare for a dentist to hire a business partner at the founding of the practice to handle running the company and allow the dentist to be the most efficient producer possible. Instead the dentist, who on average has extremely limited business experience, assigns himself the role of a full-time producing dentist and full-time CEO. When you first open and only have enough patients to be open two days a week then you have equal time to split with each role. However, as you grow your time in the clinic increases and you have less time to spend running the practice. At the same time, your CEO responsibilities are increasing and becoming more complex. To make things more challenging, you have not built a team who is capable of handling your more complex issues. As you grow, your office manager is not typically promoted because of all of her past management experience. Instead she is promoted because she is the most capable at her position and is pleasant to work with. Most doctors do not look to hire a business partner at this point to run the practice because they do not want to take the pay cut. This is especially true because the cash flow from growth tends to lag behind the production, which creates a temporary window where the increased workload is present before the new profit to cover the cost of the extra help. The task of finding this type of niche partner can be a challenge as well. In reality, the doctor tends to get too bogged down by the increased patient volume to create solutions to implement that can allow the doctor to build a higher capacity to break through the $2M plateau.
Since I was able to discover this realization before I began designing our Rising Tide Operating System, I was able to create solutions for how to maximize the capabilities of your current team to help handle specific but impactful delegations. I also built in a way to identify which roles in your organizational chart should be filled by someone else or be outsourced to a third party to free up your limited capacity and focus on production or running your company. But to truly break through the complexity plateau you will have to choose which role you prefer to determine if you need to find support through an associate, a business partner or both. You have to give up control in some area.
