Heather Driscoll: Well hello everybody, and welcome to this week’s session of The Strategic Thinker. I am here with my awesome colleague, Melissa Thomas. How are you doing, Melissa?
Melissa Thomas: Hey Heather, I’m good!
Heather Driscoll: Alright, I’m excited because we get to talk today about a topic that comes up regularly, and that’s really the idea of starting to share financial information with teams. So, while I pull up our slides Melissa, share with everybody some of your experience in your career regarding financial performance and the education of teams.
Melissa Thomas: Sure, so I think that, to your point, some people have a lot of questions when they first start considering sharing their financial information with their team. It’s like from this end of the spectrum to the other, right? Some people think that, “My teams aren’t going to understand it, I don’t want to burden them.” And then, there’s another side of the spectrum that are fearful of… whether it’s sharing private information, or people are going to know how people are compensated if you share that. And so, I think that there’s so many of these fears that aren’t necessarily founded if you do it the right way. And, I think that, more than anything, it can be done well and it can be done not-so-well. And so, really trying to make sure that you’re doing it in a way that makes sense for everybody, that doesn’t feel like they’re burdened with the… especially if the financial results aren’t spectacular… and coming off of this COVID pandemic, you can imagine how some of that would feel a little bit heavy on some of your team members. And so, really being sure that you’re thoughtful about what you’re sharing and how you’re sharing it.
Heather Driscoll: Absolutely. But, what we’ve found is that the sharing of information like that really has been a driver in getting people on board to understand the importance of financial performance in dental group practices specifically. And, that’s really what Spark is about, we focus on things that really can help improve the value of dental groups. We do that through the utilization of the Dental Enterprise Value Matrix. And so, today we’re actually going to be focusing on that financial quadrant. Everybody can learn a little bit more about the Enterprise Value Matrix at sparkdentalnetwork.com. But, let’s dive in. So, I love the fact that you said that it’s kind of scary for people. And, for those people who are typically responsible for financial reporting and the overall money side of the organization, this is like your first language. So you, Melissa, I always thing are a little bit of a unicorn because you know the finance and the operations side. But, trying to bridge that gap between the two, specifically for those whose primary role really was patient care, and we didn’t have a whole lot of exposure to financial performance. I think it’s so important that you give yourself the freedom to recognize that, “Rome was not built in a day”. And so, just planting little seeds of financial performance and financial information with your team, and really starting to watch them grow. That’s really what we’re talking about, right? We’re not going to dump a whole bunch of stuff on them from the get-go. Alright, so how do we get started? So, Melissa, I know that this is something you’ve spent a good amount of time doing throughout your years in dentistry. And since you started on the financial side of things, your learning curve really was trying to figure out how to bridge that gap from the finance side to the dentistry side of things. So, one of the things I know you do is just kind of start with a conversation. So, would you mind sharing just a little bit more about how you get that started?
Melissa Thomas: Sure. I think that to the point of asking what they know, you really have to help establish your baseline, right? Understand what your team knows, what they don’t know, and where their level of… we always say “financial acumen”, but I even have a bias against that term, because I have a passion for not using terms that are too financial-minded. We always talk to the practitioners about not using terms they learned in dental school with the patient. And, I think the same is true with financial professionals, don’t use too financial of terms that either make people intimidated, or they don’t understand what you’re saying. So, helping to assess what’s their base level of knowledge. Do they know what a P&L is? Do they know that it’s “P and L” not “PNL”, right? Because, I’ve seen that before, and that actually helped me realize, “Oh wow, people don’t know what P&L stands for.” And, that’s just something that you’re so in tune with. So, starting with, “It’s Profit & Loss.” But, if your population is sort of offended like, “We know what a P&L is, don’t talk to us here when we’re here,“ you’ve really got to assess where they are so you know where to start with your level of education. And, it never hurts to sort of go a level below, as long as you’re not offensive in that, making sure everybody really does know what they think they know.
Heather Driscoll: Yep, you’re so right. And, I think sometimes people are just afraid to ask those questions. And so, getting your leadership team together, or even your entire teams together, and really asking those questions. What do they know about the business side of dentistry? Because, to your point, some of them have maybe come from different industries and they have a lot more exposure. Some of them have always been on the clinical side of care, and so this wasn’t a big point of focus for them. But, you do have to start somewhere. And, to your point, starting simple without making it feel like you’re talking down to anybody, is a really great place to be. So, I’ve heard you share the strategy on making comparisons with things that people already know about. So, maybe it’s not something specific to finance and accounting from a business standpoint, but maybe it’s something that is a little bit more personal to all of us like balancing our own family’s budget, or for those of us who a little bit older, checkbook, right? So, talk a little bit about that.
Melissa Thomas: So, it’s funny that you said “checkbook”. And so, I didn’t grow up with much of a checkbook, it was… my mom and I actually fight about this quite often because she’s like, “How do you know how much money you have?” And, I’m like, “Mom, it’s electronic, I just check it immediately.” And so, really understanding if the checkbook analogy works with someone, right? Do they understand how they balance their checkbook for what comes in and what goes out? Or is it that they have an advanced budgeting process at home? Maybe the team member sits down with their spouse and they go through what a budget looks like. So, can you use that as a reference point? You might be surprised to note that a lot of your supply orders, maybe a dental assistant that does supplies, is sort of familiar with their dental supply budget and what they can spend. And, if you can use that, on that scale, to really grow it to the income in the practice and all the expenses, you’ve got a good starting point of something they already understand. And, I think that if you go back to the most simple thing… I always like to say a lemonade stand, right? It seems a little bit childish in nature, but you can use the customers of your lemonade stand for patients. You can talk about the supplies you need: the cups, the lemons, the ice, make sure the ice doesn’t melt, and what the income vs. the expenses are. If you start with something really simple, and then start equating it to something different, it’s much easier to grasp. The simplicity really helps.
Heather Driscoll: Yep, and I do think that it’s easy to make a really fast jump from “Do you know much about the business of dentistry?”… to, “Let’s start performing to a budget.” We expect people to just run before they walk, and if you can take it in little bite-sized pieces, to your point, I think it’s much more impactful. And, you’re more likely to get more of an interested audience because people will have a chance to kind of grow their own confidence before being introduced to more complex scenarios. And also, taking into consideration everybody’s role in the organization and the things that they have influence over or the things that they’ve had responsibility for and really just keeping that in mind. And so, with that, we talk about kind of speaking in bigger concepts first, so like your lemonade stand, right? And so, what this might look like in dentistry is helping people to understand that $0.50 of every dollar we collect actually goes to pay for all of our great people, dentists and hygienists and dental assistants and business assistants. And, maybe 3% of every dollar we collect goes to our marketing efforts to cover the cost there. And, maybe 5% goes to our dental supplies. And, really speaking in those broader terms as opposed to immediately getting down into, “Well, what percentage of revenue did you…?” Again, using the terms that don’t feel as natural and helping people grasp the concepts first, and then continuing to kind of whittle away from there. Any additional thoughts on that, Melissa?
Melissa Thomas: I think that another thing, when you were talking about the percentage of revenue, I just kept visualizing an Excel spreadsheet, and I think something even powerful about that is maybe an Excel spreadsheet’s not the way to show people what an income statement looks like, right? Maybe you’re starting with different visuals like graphs or things like that, something that can speak to them in a different way. Because, sometimes you see all these lines on an income statement on an Excel sheet and your eyes don’t know where to start, you don’t know what they mean, you don’t know why something’s in red vs. black, or what it really looks like to be in parentheses. And so, making sure that you’re even spending time on the presentation of it to help their knowledge and understanding of it I think goes a long way, too.
Heather Driscoll: That is such an important part, because for those of us who have been accused of using Excel as a word document (laughs), right?
Melissa Thomas: (Laughs) I didn’t say that!
Heather Driscoll: (Laughs) Not you, not you. We just have a different comfort zone with different platforms. So, even something as simple as a flip chart and marker, that might be where you start. But, to your point, things that are maybe a little bit more visual in nature - graphs, pictures - don’t be afraid to transfer that financial information into a setting or a platform that’s just a little bit more digestible for your audience. Awesome. So, I always think that one of the fears people have when they start sharing some of this information is that their teams will grasp it, but then perhaps go maybe a little too far in one direction. And, it may or may not be a positive direction as far as financial performance goes. So, one of the things that we were always sensitive to, and continue to be sensitive to, is that when you start to talk about budgets and expense management, that our teams will get so passionate about saving a few cents here or there, they might miss the big picture. And, I’ll never forget being in a dental practice once where the clinical team was actually cutting up 4x4 squares of gauze because they were cheaper than ordering 2x2’s. And, I was like, “Oh my goodness, please don’t do that.” And so, you have to be really careful to help them kind of bridge that gap. And, remind them to focus on the items over which they have the most influence and the things that are going to give them the greatest return on their effort. And certainly, we know that is patient care, being just a bit more consistent and comprehensive with every patient, every time for our patient experience, so that productivity has a level of consistency and collections. But, I know that you’ve had a lot of great examples of maybe where good intentions of education have gone awry. So, anything else you would add for examples of ways we’ve maybe missed the boat on focus?
Melissa Thomas: “Pennywise and pound-foolish,” is that the saying? I butcher sayings all the time, so it’s probably not right. But, I think it’s a good sign because people are trying to grasp it, they’re trying to take action, they’re trying to do something that matters, they just need a little help from you to understand what matters the most. And, I think that even when you look at an income statement, you have one line for revenue, and you have 25 lines for expenses. And so, I think people immediately go to, “Okay, there’s all these things I can do. Let’s make sure we turn the light off in the lab when we’re not using it. Let’s do this. And, let’s do this.” And yes, but in the grand scheme of things, that’s not going to add up to a whole lot. Or, to your point of cutting 4x4’s into 2x2’s, I feel like I’ve even seen you draw this out on a whiteboard or a Post-it before, basically helping them understand… I like to use the example of chasing after insurance claims when there’s really not a lot of money there. So, if you look at it and say, “Okay, let’s talk to the front desk, the business assistant,” how long is it taking you to track down this claim? They’re putting you on hold, doing this, and you make how much per hour? Let’s say you make $15 per hour. So, you’ve just spent $30 tracking down this claim. And, how much is that actually worth to you, $10? So, you’ve just lost money for this. And granted, helping them understand, you don’t want them to throw away those big-ticket claims. It’s not to say that insurance claims should go out the window, but helping them understand… we use the term “return on investment”, right? How much return are you really going to get on the money and the time that you invest? I think people forget that their time is money, and if they can understand that piece, it really helps them think further into that. Sometimes even going through the mathematical example of how one additional crown per day can do much more for the income of your business than saving $2.00 a box on 2x2’s, right? It’s really kind of helping them see it for themselves what makes the biggest influence.
Heather Driscoll: You’re exactly right. And so, because everything ultimately does come back to patient care, helping them to understand their activities of re-appointing patients and being consistent with the way we use technology. To your point about a crown, seeing is believing, and so use of an intraoral camera, all of those things we sometimes forget are ultimately linked to overall performance. And so, you do have to be just a little bit careful. But, I think it’s always important not to minimize the passion and commitment our team members have for our business in general. I think sometimes people think, “Well, they’re just going to think that we make all this money, and I think it’s dangerous to show them.” And, I honestly have really never found that to be the case. Once they really start to grasp the concepts, they’re good stewards of our business. And so, the more they know, the more impactful they can be. And, that’s a really great thing, especially in group practice where you have maybe a little bit smaller margin, and one tweak or idea can have a pretty big impact across an entire organization. So, awesome. Well, thanks Melissa for joining me today! That is this week’s session of The Strategic Thinker and we will be back next week with another concept from The Enterprise Value Matrix, and in the meantime if you want to learn more about Spark, we’re at sparkdentalnetwork.com. Thanks, Melissa!
Melissa Thomas: Thank you, Heather!
