Just to help everyone out here with the DMD/MBA question, I elected to pursue an MBA before dental school?figured I?d be burnt out after dental to do anymore. Anyways, it is true that most programs are directed towards running large corporations, but all of these principals still apply to small business (small business meaning from one dental office to around $300 million in revenue).
There are many physicians and dentist in my program and they all agree it is helping them a lot. I will make some recommendations: when you take elective classes make sure you choose them wisely. For instance my electives were Real Estate Investment Analysis (need an office), Health care marketing and planning, Health care law, and Employment law.
Now many of you may have this perception, as I did, that business school will be easy. Granted it is not as hard as dental school, it is very demanding. For example, my information systems management class required 25 3000-word case study analyses in a 10-week period. There is a tremendous amount of research and writing to be done granted your program takes a ?Harvard? approach, which is case study based. I recommend you go to a school that takes the case study approach since you have to apply your knowledge to real world situations unlike the perfect world of examples in books.
To save for dental school, I do some work for local physicians and they are amazed with how much I can improve their processes and bottom line.
Here is a dental example I did for one of my classes: (this data is from 1996 bec I couldn?t find anything newer) Assume an average solo dentist works 1,800 hours in the office per annum and has three operatories so his capacity is 5,400 chair hours (1800x3). The average dentist will work 4,500 of the 5,400 hours leaving 900 unused hours. Since we only get paid for our work we better pick that up some how. Assume $300,000 is gross income (GI), Variable expenses(VE) are $150,000 and fixed expenses are $50,000
Break even point in chair hours will be?
First some calculations
($300,000/4,500hr)= $66.67 GI per chair
($150,000/4,500hr)=$33.33 VE per chair
$66.67-$33.33= $33.34 break even per chair
so break even in chair hours is ($50,000/$33.34)= 1,500 chair hours to break even per annum
Now to address the 900 excess capacity:
Ok some of this data is old again but it?s the concept I?m trying to get across
Assume that a dental HMO (DMO) has a capitation rate of $5 per month per patient with co-payments averaging about 50% of capitation payments. 71.4% of DMO patients visit their dentist each year around 4 times with each visit around .75 hours, so each patient needs around 3 chair hours a year.
So the max number of new DMO patients a dentist can acquire is:
(900 unused capacity/ 3 hours per DMO patient per annum)= 300 extra patients
But only 71.4% show up so the dentist could acquire (300/.714)= 420 patients
Now the DMO will pay you per patient if they show or not ($5 x 12)=$60 per patient per annum
Now $60 x 420= $25,200 extra from adding the 420 patients
Now 300 patients will need service (remember only 71.4% use their DMO) so with copay 50% of capitation is $30
So $30 x 300= $9,000 from copays per annum
Add the two ($25,200 + $9,000)= $34,200
But you have to subtract the variable expense per chair hour which is (900 x $33.33)= $30,000
So the dentist will have a gain of ($34,200 - $30,000)= $4,200
Now this doesn?t add the built in profit from the procedure, this is what you get from acquiring the additional DMO patients should you want to deal with them
Any questions just ask and I?ll be glad to help.
