Session 14 – The 7 Things You Want In a New Practice Site – Podcast
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Session 14: The 7 Things You Want In a New Practice Site:
No Matter What!
By Scott McDonald
The “Right Site” for a practice can mean many different things to different doctors. But as we have considered thousands of practice locations both for purchase and for start-up, we have found that there are seven you have “No Matter What!”
There are elements like outstanding visibility of the office and a total lack of competing practices that are nice to have but not always necessary. A site with great visibility may be extremely expensive and there may be a good reason why there are no other doctors nearby. A reasonable competition ratio to population is the goal; not a total absence of other practices.
These variables are not listed in any particular order of priority. But in the end, we want to have you consider these when looking for a great place to practice:
No Matter What #1: Sufficient Population
There is a bit of math that seems to have escaped some folks: if you don’t have enough teeth to treat, you will not be busy. And the teeth you are treating tend to be attached to patients. In this first bit of calculation, we strongly recommend caution whenever a doctor is considering opening a practice in a community that has less than 5,000 within its “market.” That can be a little deceptive because we are NOT saying that the town in which the practice is located needs to have 5,000 residents or that there should only be one doctor per 5,000 residents.
Many communities serve surrounding smaller “burghs” that have few or no dental practices (or many other professional services). These communities often contribute patients to practices located in their larger neighboring cities. So, for the purposes of calculation, these smaller communities should be included in the population figures.
The note of caution is intended to remind doctors that no matter how “upscale” a population might be (read: rich), it is still more important to have a sufficiently large population to draw upon for a practice to survive. We mention this because there are many doctors considering practice in “promising” locations that have not matured or grown sufficiently large to support a practice NOW. This is as true of practices in Texas as well as in Massachusetts. In short: the great demographic character of a population will not trump the bottom line of sufficient patients to treat.
While the reasonable competition-to-population will vary with the demographic character of the population, if we assume that a practice needs 2,500 potential active patients for a full-time schedule in most middle-class parts of the U.S., it makes sense that the population that the practice is going to serve will be larger than this because, not surprisingly, the practice is unlikely to attract 100% of the available population as paying patients.
No Matter What #2: Compatible Neighbors and Acceptable Surroundings
It should not have been quite this funny but we couldn’t help but laugh when we visited a practice near Pasadena, CA. At about 10 AM the office was suffused with the most tantalizing aroma of fresh baked bread-dough. About an hour later, the pungent smell of deep-dish pizza wafted into the reception area. Big Tony’s Classic Chicago Style Pizza had fired up its ovens down-stairs and the dental office was the “beneficiary” of the smell. No, it was not a bad smell. But it certainly was a STRONG smell, thanks to a neighbor downstairs (who also happened to own the building). Our practice location consultation was postponed in favor of a large “Italian Sausage and Garlic Special” at table number 3. Unfortunately, we heard that some people don’t like the smell of pizza.
We are sometimes sobered to consider dental practice sites that have everything going for them in terms of the “numbers” but are actually located in neighborhoods that repel potential patients. In one practice site we considered in Maricopa County, Arizona. While it is true that the site was located near two Interstate Freeways and there was little competition nearby, the local crime-rate was legendary. EVERYONE in town seemed to know that this is the best place to score drugs on a Saturday night and to find casual social company of an exotic flavor.
In this case, the doctor seemed to want to purchase a practice “sight-unseen” because the rent was low, the traffic was high, and the competition was favorable. That being said, any patients that this practice was able to acquire would tend NOT to be of a variety that would attract long-term patients.
We are a little reluctant to say that there is an ideal “compatible” neighbor for a dental practice although it isn’t hard to imagine that some situations will “tend” to be better than others. For example, in a small community, a new shopping center with a Wal-Mart will not be a bad way to go. When we see a new shopping center of ANY kind that is close to major transportation arteries with a strong “anchor” store or stores it is worth checking out.
There are some who believe that because McDonald’s Restaurants do so much market research on their sites that this is a “golden ticket” to success, we want to remind them that this may not be a bad indictor but it is no panacea either. Their research is of their own purposes and not for healthcare. On the other hand, proximity to schools, shopping, major transportation arteries and government offices that get many visits (like regional Post Offices) are not bad.
No Matter What #3: Reasonable Accessibility
It is good to be seen. But it is vital to be “found.”
Offices that are squirreled away behind large hedges or have poor signage can be frustrating to find but those that cannot be accessed are another level of problem all together. A classic example was found in Sacramento, CA. The office was located along a major one-way street. As long as traffic was flowing in the right direction, the office certainly was accessible. Unfortunately, during most of the day, the traffic flow was NOT going in front of the office. Rather, if one wanted to park anywhere near this building, it required three turns and a long stretch along an alley to get there. Even the employees complained that they would sometimes be delayed not only because of this long and circuitous route to work but additionally due to the long trains that traveled twice per day near the office. These trains would delay traffic as much as 15 minutes.
Ironically, the property manager drove the doctor to the site knowing all the tricks of local traffic. There was simply no way to tell if this site would work simply by standing in front of the impressive office front or walking in its beautiful (and low priced) interior.
Certainly, a practice does not need to be located at the intersection of major streets to be desirable but it doesn’t hurt. We encourage Clients to try driving to the locations they are considering from different directions at various times during the day to get a feel for what the potential patients will see and experience.
It is a classic truism that some older drivers will simply refuse to turn left on a busy street in an uncontrolled turn-lane. It will make your life (and theirs) much easier by thinking ahead.
No Matter What #4: Identifiable Market Niche
We knew an apartment that had ten remarkably beautiful blond young women living in the building. They were attractive, charming, and intelligent. Does it seem odd that the only brunette in the building got more dates?
The application for healthcare is to have a Market Niche (or a “Unique Selling Proposition” to borrow a term from the 1970s). Yes, we understand that doing high-end cosmetic practices may be professionally challenging and potentially profitable. It does not help, however, if every practice in the neighborhood is offering exactly the same service. The same can be said for “family practice.” There is a demand for a variety of services. This is not to say that you cannot offer services that are similar to those around the office. We ARE saying, however, that being the one who can offer something a little different from the competitors has a distinct advantage.
It is appealing to a specific “want” or “perceived need” that will really make the difference in the effectiveness of any practice promotion technique including word-of-mouth. Please understand that the service or “niche” does not have to be entirely unique. There are a lot of practices that use dental lasers, for example. But if one doctor and practice are known for their extensive education and techniques in using them, the public can more easily judge that this is the “laser guy.” Obviously, there is an advantage to being known as the least expensive (or most affordable) practice in an area. But there is also an advantage to being known as the most expensive (or top end) practice in town.
The idea is to have something that will set this doctor and this practice apart. The challenge is worst for doctors who look precisely like everyone else.
No Matter What #5: Natural Constituency
Ideally, there is some group of people in every practice area with whom you will have more affinity for than in any other. This is your “Natural Constituency.” In the old days, we counted the members of your extended family, friends from high school, and neighbors where you grew up. But it does not happen so often any more that a person will return to their hometown to practice. That does not mean that you won’t have a Natural Constituency to use as foundation of your patient base.
Let us assume that that the area of the practice is about 10% Chinese immigrants (first generation Americans). It is even possible to be known as the doctor who speaks Mandarin (assuming no one else does). While the practice will certainly accept non-Mandarin speaking patients, being able to speak in the dialect of a certain percentage of the patient base is a big advantage.
Let’s say that you are an LDS doctor in Texas. Texas is not known for large LDS congregations but they make up about 1% of the Texas population (about 260,078 members). Almost all of them are found in the major city centers in the State. They represent a well-defined minority upon which an LDS doctor can focus his internal marketing efforts. This “Natural Constituency” is lost, however, in Utah where a very large percentage of residents are LDS and no perceived advantage (or disadvantage) can be found. On the other hand, Catholics and Evangelicals in Utah may have an advantage.
This sometimes requires a little introspection on exactly who YOU are and what population you will most readily appeal to for your practice.
No Matter What #6: Healthy Employment/Economic Base
Why would ANYONE want to practice in Austin, Texas? Obviously, the metropolitan area is growing in terms of its population. But there is something even more important that is causing all this growth: jobs.
During the recent (and current) economic downturn, we have found some communities that simply refuse to play along. They are ADDING jobs and, in turn, they are adding population. We would rather recommend a location that has a growing population for a start-up practice than one that has a population with a perfect demographic character. The likelihood of success if far better in the former rather than the latter.
There are lots of ways to measure Employment and Economic Health. Until fairly recently, how much housing prices increased was one method but has since been rejected by demographers and social scientists for obvious reasons. But the “new math” of 2011 has one figure that trumps all others: jobs. We think the unemployment rate is a nice number to track, especially when it is contrasted with the national averages. Still, our favorite figure is “jobs added.” This is a fairly simple figure that is tracked on a County basis and by Congressional District level. Regardless of how many people are out of work in a particular location, for a practice, we want to know just how many MORE jobs are opening within the geographic boundaries of a practice area.
As a little hint: Right-to-Work-States are severely trumping Non-Right-to Work States in almost every part of the U.S.
No Matter What #7: A Place You Like in Which to Live
This is so simple that it is often ignored or denigrated. You have to like where you live (and practice).
This last year we have seen general doctors and specialists stress-out their practices by running off to locations, sometimes nearby and sometimes far away, because they don’t like their communities. This is a problem no matter what it is that they don’t like.
Instead, consider the doctor who knows the teachers at his children’s school, or the doctor who knows all the women at the beauty salon she frequents. Think about the doctors who play the local golf courses and go to the local restaurants. There are lots of doctors who go to church near their offices. The advantage to LIKING your practice area means that you are going to spend time there.
No practice will ever be as successful with an “absentee professional” who swoops in for as little time as humanly possible and then runs away. But is there an exception for the doctor who practices in an more business-oriented or urban area? NO! We strongly recommend that the doctors who are in these location s get to know the businesses including the owners, CEOs, Human Resources Professionals, and even the mom-and-pop bodegas down the block. There is no success like personal contact within the neighborhood of the practice.
Does that mean that no one can survive unless all seven “No Matter What’s” are met? Nope. But if you want to tilt the playing field in your favor, you ignore these at your peril!
Scott McDonald is president and owner of Scott McDonald & Associates, Inc. The company is the largest and oldest provider of demographic data and analysis in the U.S. for healthcare. His products and services can be found at www.DoctorDemographics.com. You can reach him by calling (800) 424-6222.