6.22.07 - Issue # 276 Forward This Newsletter To A Colleague

Nancy Caudill
Senior Consultant
McKenzie Management
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Sherlock Holmes vs Blissful Ingnorance

A McKenzie Management Case Study

Dr. Dan Goforth – Case Study #57

I know this Case Study sounds like a broken record (for those of you who know what “records” are!) but doctors tend to call us about similar concerns; such as, production and collections, not busy enough, need more new patients, too many cancelled and broken appointments, staffing issues, etc.  Dr. Goforth was no exception – not enough money to pay my bills”.

Practice facts:

  • Steady practice growth over the past 5 years
  • Overhead almost 80% (not including his salary)
  • Staff gross salaries at 30%
  • Paying staff bonuses based on production and collection goals without considering salary and overall overhead expenses
  • Too many hygiene days for the number of active patients
  • Too much overtime for employees
  • New employees added to existing staff over the past six months

McKenzie Consultant’s job is similar to that of Sherlock Holmes, i.e., get out the magnifying glass and determine why “things” are the way they are.  Here is a list of reports that needed to be generated in order to uncover the cash flow crunch.

  • Adjustment Report – look for adjustments that “don’t make sense” such as high PPO adjustments when posted adjusted fees have already been done.
  • Credit Balance Report – This can reflect courtesy and other adjustments posted without being offset by charges, hindering the proper billing of the account.
  • Profit and Loss Statement – Identify the 7 major expense categories and compare them to collections for the same time period.  These are “within normal limits” ranges in the dental industry for these categories. These ranges can reveal concerns such as not enough lab procedures being produced, too much money spent on staff salaries AND BONUSES or benefits paid are too high.
  • Past Due Recall Report –The practice may be seeing 50 new patients a month but if you are losing 60 “out the back door” through your recall program, your practice is declining!
  • Outstanding Insurance Claims Report – Looking for lost revenue?  It might be here!  There should be no claims outstanding over 60 days.  What does your report look like?
  • Daily day-sheets can identify what type of charges and payments are being posted.  If there is more than one provider in the practice, are the procedures being posted to the correct provider?  Are the patients paying at the time of service….which means – is your business coordinator asking for money?

Doctors, it is important to be knowledgeable on the reports from your computer that will help you to oversee the performance of your business staff.  I am not saying that you need to “micro-manage”.  I am saying that you need to be informed of what is taking place in your practice from a business standpoint.

New employees need training.  I don’t care how many years of dental experience they have.  Every office is different and follows different protocols.  It is YOUR job as their employer to make sure that they get proper training and their work is reviewed for accuracy.  Don’t assume that the previous employee trained them!  Trust me, you don’t want a disgruntled employee who is working her two-week notice to train your new employee.

Conclusion:

  • Dr. Goforth learned how to generate and analyze reports
  • He provided training for his business coordinators and learned how to hold them accountable
  • He reviews his P&L and makes “informed” business decisions accordingly
  • Once a week he scans his day-sheet for anything that “doesn’t make sense” and questions his business staff for explanations
  • Monthly staff meetings are conducted to keep the team involved in the practice

Don’t stick your head in the autoclave and assume that “what you don’t know won’t hurt you”.  Ignorance is NOT bliss in your dental practice.  Learn how to use your magnifying glass and become Dr. Sherlock Holmes for a profitable and happy practice.

If you would like more information on how McKenzie's Practice Enrichment Programs can help you IMPLEMENT proven strategies….. email info@mckenziemgmt.com.

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