Financial growth isn't always most important
As the dentist removed my painfully infected tooth the other day, he told me about his latest experience in skiing downhill through the financiers’ maze.
“I used to believe this idea that ‘If we’re not growing, then we’re dying,’’ he said. “So I was anxious to make my practice grow as quickly as I could. Our partners and staff agreed with that, and, sure enough, we grew rapidly.
“But I’ve learned how that’s really a very bad management concept.”
As he paused to grasp a new tool, I said. “O-ay, ar-cho,” which was all I could muster with my mouth wide open.
“I know now,” the dentist said, returning to my ailing tooth, “that if we’re not growing, that’s all right. Because it means our customers are getting better service through the years.”
At the next break for a swallow of water, I asked, “How’s that affect your bottom line?”
“Well, frankly, we’re not rich, but we’re economically comfortable. And we focus on the customers much more than on growth,” he said.
“What changed your mind?” I asked.
“Two years ago we had a top-notch financial officer. She knew her finances, she knew the patients, and she understood the insurance maze. She helped many patients through complicated procedures by working out payment schedules that maximized the use of insurance. And the patients loved her. We got more implant business than we could handle for a while.
“Then the partners got anxious about growth, thought we should grow faster. They said her “old-fashioned,” customer-oriented ways were outmoded. We should replace her with someone younger to develop new techniques, and pay a third of the other gal’s salary.
“So we fired her, and hired someone recommended by our accountant. The new-hire was cheap, trained in insurance basics, with a decent financial management background. But he was scared to death by the whims and wants of the patients. He took the line of least resistance--gave customers the company line and stuck to it.”
“Did that help the practice grow?” I queried at the next break.
“Oddly enough we experienced an increase in the number of dissatisfied customers. They weren’t getting the flexibility and individual approach with their insurance. We tracked it over time, and slowly we were losing business.
“When the partners got wind of that we had a very serious discussion. And we made a new decision. We convinced all but two dentists that slow growth or no growth was better than losing patients. We decided to concentrate on serving our customers with increased knowledge, expertise and flexibility. Those who disagreed were replaced.”
“So what did your banker say? I asked. By this time, my tooth was out and the job was nearly done.
“Good point,” he said. “The bankers didn’t like it. It’s tougher now to get a loan for a big piece of equipment when we need it. They say we’re not growing fast enough. But, frankly, all that means is that they’re not going to get their money back, along with their high interest, as fast as they’d like to. Too bad. We don’t have to play that game. Our practice is strong enough we save for new purchases and pay cash. We get a discount, too!”
“That must make you feel pretty good,” I mumbled through the cotton wadding as I put on my coat.
“Well. our base of satisfied customers is growing steadily. We no longer follow the look-alike, banker-dictated mania for fast growth. We’re content with slow or no growth, so long as our customers are happy and recommending us.
“The bankers burned us. They don’t care about our customers, but we do. We now develop our own values instead of adopting theirs. And we’re doing just fine.”