The corporate path

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Given how unique health sciences are, the greatest appeal of the corporate model is the business and management knowledge it brings to the table.
Given how unique health sciences are, the greatest appeal of the corporate model is the business and management knowledge it brings to the table.

What can we learn from the growth of corporatisation over the past decade in the dental profession? By Chris Sheedy

There are benefits and drawbacks to everything in life, says dental business mentor Julie Parker. In saying this, she is borrowing a teaching from her motivational speaker husband and Julie Parker Dental Management co-founder Charles Kovess, but she is using the quote to highlight the pros and cons of corporatisation in the Australian dental profession.

Corporates provide an alternative method of succession from practice ownership for the owner/dentist who wishes to retire, she says. But a large business can also take away from a small practice’s ability to regularly and efficiently manipulate its structure in order to accommodate different and changing needs of staff, patients and the local community.

Another benefit of corporates is that they often manage much of the back-office work, freeing up dental staff to do what they are good at and focus on caring for patients. But the larger body can also take away from a team’s unity and shared core values when it forces its own ideals upon the smaller entity.

And while corporates often enhance a surgery’s brand visibility and bring on board slick marketing practices, resulting in stronger market presence, a clinic’s authentic nature and its image as a business that contributes to the local community can be damaged if ownership mindset changes from Сhealth’ to Сprofitability’, Parker says.

“Health services require a great deal of trust between the health practitioner and the patient,” she explains. “In retail, for instance, there is no real need for strong trust between the shopper and the person working in the shop. If there is something wrong with a product then the purchaser can bring it back at a later date for a refund or exchange. But in health sciences the level of trust required is quite unique. It is more of a relationship between two individuals than a service that can be replicated across a number of practices.”

What is of great value in the corporate offer is the business knowledge and management nous that it brings to the table. The business expertise being introduced into the industry by corporates is making dentists more aware of the enormous benefits of great people management, Parker says. Team engagement is just as important in a four-person practice as it is in a large corporate, she believes. And while many independent practice owners understand this, some do not.

Geoff Parkes of Dental Advantage Consulting Group says better business management has become a requirement for practice owners across Australia, but that corporatisation is only one of the catalysts promoting this change.

“I wouldn’t draw a direct correlation there,” he says. “I think a lot of independent practices have existed for some time in their own world, irrespective of what’s going on around them. As they have done so, the industry has become more competitive. Corporate is a part of that, but so is the over-supply of dental services and the density of practices relative to population. It’s more difficult for dental practices to be as profitable as they were in the past. So, several factors are forcing practices to look at what they’re doing and to provide higher levels of service with greater efficiency.”

The average dental practitioner a decade ago, Parkes says, would perhaps not have considered themself to be a businessperson. They were simply Сdentists’ or Сclinicians’ who happened to own a practice. They did not need an understanding of how to operate in a competitive environment because they were not in such an environment. But now they are.

“For those people who are uncomfortable about the pressures of doing business in a competitive environment but who recognize that their business needs to evolve and stay relevant in today’s environment, the corporate offering could be a perfect solution,” he says. “Business management can be taken care of in the background while the dentist operates their practice in pretty much the same way they always have, with minimal interference from a corporate partner or corporate owner. They are able to sell to a corporate with their eyes open and be comfortable with the fact that they don’t own the business anymore. They’re still being well remunerated for their dentistry, and the legacy of the practice continues on.”

Lessons for independent practices from corporates include the potential value of outsourcing specific tasks such as marketing, human resources, bookkeeping and payroll so the owner/dentist can continue to concentrate on patient care. Getting outside help will be vital in being able to make sure that the dentists can focus on what is most important; their patients. So whether this means getting in touch with professional or asking a friend who is qualified in dealing with finances, there is no harm in asking for a helping hand when it comes to running a business.

When small businesses start out, they may also prefer to receive help from accounting and tax specialists so that everything will be completed to its highest potential. This will be the same for every business, big or small. Implementing strict and strong processes within the business, which are detailed and documented and regularly updated, is also of enormous value in terms of clarity and communication. But the most powerful lesson of good management, Parker says, is to “use what is on your side”.

“Your greatest resource is your people,” she says. “Team engagement is a massive issue, no matter the size of your practice. It is a huge challenge and done badly, it can be a nail in the coffin of a business. If one person is underperforming in a four-person team then that team is only operating at 75 per cent of its true capability.

“Great practice management all comes back to the human being. In a corporate environment, staff can feel that they have less autonomy and recognition than when they were working in a solo practice. There are unique challenges when managing staff in a larger entity with a number of locations. The individual desires and needs of each person become more difficult to address … but in any business, if you want to hold on to your good people then this needs to be an area of concentration.”

Parkes agrees, saying that one of the main reasons for the corporates’ current slow-down in acquisitions is the difficulty in finding experienced and qualified people to help manage their practices effectively.

Talent attraction and retention has become not just a matter of importance, but a matter of survival. And for the independent operator, the right staff member could create the difference between their business’s success or its failure.

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