Being an owner and manager of a private dental practice requires both clinical ... practice ownership, small business management skills ... accounting, managing liabilities, cash flow, accounts receivable .... Inventory and supplies. 52. Leasing ...
Australian Dental Journal
The official journal of the Australian Dental Association
Australian Dental Journal 2010; 55: 423–429
SCIENTIFIC ARTICLE
doi: 10.1111/j.1834-7819.2010.01264.x
Owners’ insights into private practice dentistry in New South Wales and the Australian Capital Territory JE Fischer,* T Marchant* *Graduate College of Management, Southern Cross University, Coolangatta, Queensland.
ABSTRACT Background: The aim of this study was to investigate aspects of practice ownership including debt on graduation, the time period between graduation and acquiring practice ownership and small business skills. Methods: A mail survey of 400 dentists with practice ownership, in New South Wales (NSW) and the Australian Capital Territory (ACT), addressed demographics, setting up practice, technology and business management. Most respondents were male and nearly half had 20 years of practice ownership. Results: Dentists agreed with the need to be taught small business management skills. Average debt on graduation was AUD$18 000 and the figure was higher for post 1995 graduates. On average, it took five years to acquire some form of practice ownership, but nearly half acquired ownership within three years. Few favoured opening a new practice. Staff were the most frequently nominated contributors to a successful practice, with fees, profit and parking noted least frequently. Conclusions: There was no question that these experienced dentists thought small business skills should be taught to the dental fraternity. Given the significance of staff to a successful practice, dentists may need to learn more about advanced human resource management including professional development and performance management. Keywords: Debt, human resources management, private practice, small business. Abbreviation: HRM = human resources management. (Accepted for publication 28 January 2010.)
INTRODUCTION Being an owner and manager of a private dental practice requires both clinical and business skills. In the absence of small business training while studying dentistry at university, graduates must somehow learn vital business skills to enable them to successfully provide clinical services. With stringent workplace laws and regulations, a changing workforce that may require more sophisticated human resources management (HRM), high set-up costs, competition from third party providers and numerous administrative issues, there are many factors of private practice dentistry confronting the practice owner manager. The purpose of this study was to gain insight into current practice among owners of private dental practices, with a special focus on their perception of selected business topics. Private practice dentistry is composed of clinical and non-clinical responsibilities1 and each requires different skills and training. The majority of dental school graduates will eventually find themselves filling the simultaneous roles of producer and manager of their own small business,2 yet dental students are not taught ª 2010 Australian Dental Association
small business skills. This paper focuses on the results from a survey about dentists in private practice, including debt on graduation, the length of time between graduation and acquiring some form of practice ownership, small business management skills and knowledge required in private practice ownership and key features of a successful practice. Debt on graduation and influence on assuming private practice ownership The issue of debt for Australian dental graduates, especially in NSW and the ACT, has not been examined previously, but some insights can be gleaned from overseas research. The mean educational debt for US dental students was just over USD$100 000 in 20003 and by 2006 it was nearly USD$150 000.4 Estimates for dental tuition fees at one Australian university ranged from AUD$54 000 (partially government funded) to AUD$174 000 (full fee paying).5 Debt is a major factor influencing US dental students’ plans to enter private practice in an employee arrangement.6 Existing levels of postgraduate debt, the decision to assume more debt, 423
JE Fischer and T Marchant taxation issues, location selection and other management concerns contribute a clear message that working with a senior practitioner would help the neophyte practitioner realize higher income in their early practice years.7 The majority of Australian dentists (82%) work in the private sector.7 Private practice provides valuable clinical experience, access to dental equipment, suppliers and staff, patient exposure and a virtually assured income.8 In the US, an increasing number of graduates elect to associate with established practitioners in the traditional setting of salary or commission prior to starting their own practice.9 A large percentage of Australian dentists operate as sole practitioners.10,11 It may be increasingly difficult for new dentists to establish a solo practice and recent graduates may be unable to build or buy a new facility due to their relatively weak financial position if they have accumulated a large debt on graduation. For example, this debt has been identified as a deterrent to solo practice for GPs,12 and female dentists may see this debt as one of several obstacles to private practice ownership.13 On the other hand, in the last decade, obtaining credit has been easy and high demand for dental services means there may be a ready market for new dental practices. With potential high levels of debt on graduation,14 there may be little incentive for graduates to enter the public sector, despite the starting salaries of graduate dentists surpassing all other professions.15 Debt also needs to be considered in the Australian context of reduced government funding for universities,16 an ageing dental workforce with the imminent retirement of a large cohort,17,18 a shortage of graduates working in the public sector19 and long treatment waiting lists.20 On the other hand, the number of practising dentists is projected to increase by nearly half to the year 2020,21 but the question remains how this increase will address Australia’s failure to achieve social justice in dental care or the lack of services in regional and rural areas.22 Another theme of interest in this paper is a workforce that may require more sophisticated HRM. The health workforce is threatened by serious skills shortages,23 attributed to various causes but with one of the main ones being the ageing population. This in itself creates HRM challenges to manage older workers.24 Other challenges stem from generational issues such as how ageing Baby Boomers should manage incoming Generation Y25 and subsequent generations. Also, responses to the skills shortage, such as increasing the number of skilled immigrants (overseas trained dentists),21 who add to the ethnic diversity of the workforce and encouraging more women (back) into the workforce, introduce pressure for family-friendly and flexible HRM practices.26 If dentists are facing any of these issues, then how they approach HRM may be significant. 424
Small business skills for private dental practice The timbre of small business literature is clear and enduring. In the early eighteenth century, Daniel Defoe, author of Robinson Crusoe and an entrepreneurial small businessman,27,28 published The Complete English Tradesman. This work is mentioned to show that small business has long been of interest and to demonstrate that Defoe’s ideas of 1727 are still relevant today. Some of the skills Defoe felt important were accounting, managing liabilities, cash flow, accounts receivable, start-up capital, inventory management, legal forms of business and location management.29 In more modern times, there have been concerns about literature emphasizing the business aspects of dentistry over the vocational.30 That is, dentistry has broader aims, such as serving the community and patient welfare over and above the income of the dentist. One research study, albeit only for orthodontists in the US, found that successful practices seek high quality results and respect from the community over personal or practice income.31 The NSW and ACT survey The questions of practice ownership, debt upon graduation and small business skills outlined above represent the context for a survey on managing dental practice undertaken in 2006 as part of a systematic study on the nature and extent of business management skills and attitudes to the business component of dentistry. MATERIALS AND METHODS The materials and methods consisted of a mail survey of the population of Australian Dental Association (ADA) members in NSW and the ACT. Following pre-testing, the final six-page questionnaire consisted of open and closed questions, with five-point Likert scales. Questions about small business skills were derived from 18 small business management textbooks. Ten common skill or knowledge areas were identified, as shown in Table 1. The three areas mentioned in all the textbooks were finance, marketing and HRM. The survey was directed to 3600 current members of the ADA (NSW Branch) via the Association’s monthly magazine. Members comprised approximately 90% of all practising dental professionals in NSW and 75% in the ACT. Only those who had some practice ownership experience were invited to participate. The project was approved by the Southern Cross University Human Research Ethics Committee, responses were anonymous and all participants gave consent. With 400 replies, the response rate was 11%. This figure underestimates the actual response rate since an unknown ª 2010 Australian Dental Association
Owners’ insights into private practice Table 1. Common skill areas addressed in 18 small business management textbooks in descending order showing frequency of coverage Skill or knowledge area
Percentage of textbooks addressing this area
Financial reports HRM Marketing Ownership types Insurance Location of premises Inventory and supplies Leasing (equipment) Computers Customer (patient) payments
100 100 100 89 83 56 52 39 33 22
Meana
Gender
Experience
Male Female
