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1.4.08 Issue #304 Forward This Newsletter To A Colleague

Don’t Expand Until You Do This!
by Sally McKenzie CEO
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That’s it! You’ve had enough. You have been running from dawn until dark for more days, weeks, and months than you care to think about. It’s time to take action. The insanity is too much. You need help whether it’s more staff, a bigger office, possibly an associate; the time to expand is now. You can’t keep doing what you’ve been doing, and what could be more convincing proof that you need a plan for expansion than the insane schedule, the fact that patients cannot get an appointment, and the sheer stress of it all.

Ah yes, another emotional reaction to the rigors of running a dental practice. Now don’t get me wrong, I’m not minimizing your struggle. Believe me, I understand. I’ve been working with dentists in your predicament for years. But here’s the point: The stress, the packed schedule, and craziness of it all are not proof that you need more help or that you need to expand your space.

I hear from doctors all the time who say they can’t keep up with demand, patients are booked out weeks, and hygiene doesn’t have an opening for at least another season and probably two. So what are you supposed to do? You’re bursting at the seams. If you had more space, you could hire more help and this would all be so much more manageable, right? Wrong.

The obvious solution is not always the right solution. In this case, dentists routinely convince themselves that they can afford to move into a larger space with just a smidge more production. They give zero consideration to the fact that they are going to shoot their facility costs well beyond the 5% budget target. Look at what happens to this doctor’s expenses:

Dr Elizabeth produces $25,000 per month. She collects $21,000 per month and she wants to move into a new facility with a total rent of $2,500 per month, which would be a $1,450 increase over what she is paying now. She justifies the increase by telling herself that a couple more crowns per month will take care of it – nada problem. If it could only be that simple we'd be in great shape. With a $2,500 per month rent bill, Dr. Elizabeth will have to collect a mere $50,000 – yes that would be Fifty G’s each month to stay within the 5% guideline. Therefore, she will have to increase collections by a whopping 29 grand to cover that itty-bitty, little $1,450 per month rent hike. That’s a pretty big smidge in production, wouldn’t you say?

Dr. Elizabeth’s stress has just gone through the roof. She now has a huge mortgage, wasted space, and she’s still running from dawn till dark. Worse yet, she’s hired more staff and her overhead is so high NASA is considering classifying it as a separate constellation.

The problem: Well, there are several. First of all, the bigger space didn’t attract more patients. In fact, in the move Dr. Elizabeth lost patients, but she now has more people to pay and significantly greater facility costs. Before she ever signed her profits away for the next 30 years, she needed to consider a number of factors, chief among them, the illusion of the overcrowded schedule, starting with hygiene.

The hygiene department tends to be where the greatest disconnect occurs between illusion and reality.  Although the days look completely booked, too often not a soul is paying any real attention to the multitude of cancellations and no shows.

Worse yet, just because it’s jam-packed doesn’t mean it’s profitable or could support another hygienist. Instead of more hygiene hours, what the department does need are production targets and a designated Patient Coordinator to help it achieve specific goals.

And Goal #1 for every hygiene department is that the hygienist must be booked to produce three times her/his salary. For example, a hygienist paid $350 per day must be scheduled to produce $1050 in practice income. Goal #2: The hygiene department should be producing 33% of total practice production. But the hygienist can’t achieve those goals without the Patient Coordinator. This person is responsible for scheduling the hygienist to achieve financial goals and fill unscheduled time units daily. It’s her/his responsibility to ensure that there is no more than half an opening a day in hygiene.

Next week, you may not need more space, just a better understanding of supply and demand.

Interested in speaking to Sally about your practice concerns? Email her at sallymck@mckenziemgmt.com.
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