4.10.15 Issue #683 info@mckenziemgmt.com 1-877-777-6151 Forward This Newsletter
 


Nancy Caudill
Senior Consultant
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How About a PAID Vacation This Year?
By Nancy Caudill, Senior Consultant

This article is directed towards those solo practitioners who struggle to financially recover from a well-deserved vacation. Do you mark your calendar off six months in advance and start planning for that week in Hawaii you and your family have been dreaming about since dental school? Do you feel you need a break from the tedious and strenuous day-to-day activities in your office? Do you mark days off in the appointment book for seminars that “might” be interesting because even if they aren’t, you need a few days away from the practice? My guess is that at some point in your career you have done all of the above, and it’s okay as long as you can afford it! But wouldn’t it be nice if you could be away from the office AND get paid? First, let’s talk about what happens when your office is closed for holidays and/or vacation.

Daily Production
Your practice produces a certain dollar amount every day based on the hours, the procedures performed and the number of providers. Do you have a daily goal for each provider either based on enjoying a 55-62% overhead or staying within the guidelines of gross wages (not including yours) compared to net collections? If you don’t have one, you must. Create a goal for you and a goal for your hygienist(s).

Daily Collections
Your patients should be compensating you and your team for the services you deliver. This compensation is in the form of insurance payments and direct payments from your patients. After adjustments, your office should be collecting 100% of adjusted production. If you are not collecting 100% after adjustments, you must!

UNPAID Vacations Work Like This…
If you work without goals and without knowing in advance how many days you plan to work in a year, your vacation and holidays will be paid for from your own pocket. Let’s say you need to collect $800,000 to meet your financial obligations in the office and pay yourself a fair salary. You have no daily goals and you have no idea how many days you are going to work in a year.

It is now time for vacation. If you are not on schedule to collect the amount that you should have planned for, the dollars lost due to your office being closed for your vacation is coming directly from your pocket. What does this mean to you financially?

In order to collect $800,000 for the year with a 5% production adjustment percentage, your practice needs to produce $842,105. This is assuming you are collecting 100% of adjusted production. Unfortunately you don’t have a goal, so in June when you are planning to take the family to Hawaii, the practice has only collected $295,000 instead of $333,333 during the first five months of the year. You are short $38,333 in revenue, you are closing the office for a week which will cost you an additional $14,936 in production for those four days, plus the cost of the vacation itself.

PAID Vacations Work Like This…
Your goal is $800,000 in collections. You have a production adjustment percentage of 5%. You know that you need to gross produce $842,105 for the year. This is $70,175 a month and $4,386 a day. Your hygienist must produce at least $1,100 per day and you must produce $3,286 per day, based on working 190 days a year or 80 days between January and May before your vacation is scheduled in June. The other 70 days you are not working, so those are holidays or weekends.

Your monthly practice statistics indicate that you are on track to reach your goals through the end of May. You and your hygienist have collectively gross produced $358,877 and your wonderful business team has collected $340,933. This is an overage of $7,600 YTD. As a result, your vacation time away from the office has been paid for by your previous hard work! And because you and your team produced an extra $100/day, you have an additional $7,600 to pay for your hotel and airfare.

Plan for your vacations and holidays by determining your daily goals. Leave your worries behind when you close the office, knowing that your expenses are covered (which also includes your team’s vacation pay) and you have a little extra in your pocket.

Now go have some fun this summer!

If you would like more information on how McKenzie's Consulting Coaching Programs can help you implement proven strategies, email info@mckenziemgmt.com

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