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10.31.08 Issue #347 Forward This Newsletter To A Colleague


Nancy Caudill
Senior Consultant
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Running Your Practice As A “Lean, Mean, Dental Machine”

Dr. Jill Sartin—Case Study #424

Dr. Sartin was experiencing high levels of anxiety during the past few weeks. Production in the practice had leveled off, old money that was being collected had now run dry and the practice did not appear to be busy. "We need to be working!” she exclaimed.

Dr. Sartin’s Current Practice Statistics:

  • 2 doctors and 4 assistants
  • 2 hygienists
  • 4 business assistants
  • Net production had been averaging $95,414/month during the past 6 months.
  • Net production had been averaging $71,652/month during the past 2 months—a decline of 25% in net production.
  • 19% decline in new patients during the past 6 months
  • Net collections had been averaging $83,671/month during the past 6 months, but had been averaging $100,608/month during the 6 months previous to that—a 17% reduction in practice income.

Observations:

  • Collections had remained high because of the active pursuit by the Financial Coordinator to collect outstanding debt in overdue A/R. The A/R was reduced by 0.48 x the net production and accounts over 90 days were reduced to 6%.
  • Initially, this practice had "accelerated" hygiene, with one hygienist working between two rooms with an assistant. Therefore, the doctors were not conducting their exams with the hygienist in the room, causing a breakdown in communication between the hygienist and the doctor, and the patients always felt rushed through their appointments.
  • On average, 10 patients a day were being seen by each doctor for operative treatment.
  • Employees were seen trying to either look busy or busied themselves with unproductive and unnecessary tasks.
  • Gross staff wages were 28% of collections, not including the associate dentists. Standard in the industry is 19 to 22% (not including benefits).

The two dentists were associate dentists. The doctor owner, Dr. Sartin, was on site most of the day performing non-dental related work. She would see a patient from time to time. The associates were paid 30% of their production collections. It was determined that the associates were unaware of how low production affected total overhead. The practice overhead was never discussed with the associates. As far as they knew, the only people that were being affected by their poor production were themselves, because they were making less money than before.

It was pointed out to Dr. Sartin that not only were the low-producing associates affecting the production, but the staff overhead was not being supported by the production figures. This practice was providing employment for too many employees!

After analyzing the Profit and Loss Statement for the past nine months, the scheduling and the potential of the existing employees, the following recommendations were made and implemented:

Recommendations:
1. Reducing staff overhead kept the practice viable and profitable. Otherwise, no one would have had a job. After much consideration, Dr. Sartin decided to dismiss 1 business assistant and reduce the salary dramatically for another. 2 chairside assistants were dismissed; the two that had been with the practice the longest and were the most skilled were maintained.

2. In order to run "lean and mean," the Schedule Coordinator was taught how to schedule in order to allow two dentists to work with 1 assistant each. Previously, these doctors were not fully scheduled more than one day in advance and the patients were scheduled incorrectly, causing staffing inefficiencies and poor patient service.

3. Specific job descriptions were clearly defined and given to the Financial/Hygiene Coordinator and the Schedule Coordinator so that there would be no question regarding who would perform what tasks daily, weekly and monthly. A check and balance system for accountability was put in place to monitor results.

4. The schedule included times when the doctors would work alone in the operatory.

5. The Financial/Hygiene Coordinator learned the importance of keeping the hygienists scheduled to their goal, because the hygiene department was very productive and was actually keeping the practice alive.

Conclusions:
It was difficult for Dr. Sartin to dismiss three of her employees but it was a necessary business decision based on the practice production and collection numbers.

The practice most likely will bounce back after these economic issues are resolved, but from now on Dr. Sartin will always run a lean dental machine. If you are “running on empty,” take a hard look at your team, scheduling systems and your performance indicators to determine what decisions you may need to make. Need help? Give us a call.

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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