Tackle the Number One Cause of High Overhead
by Sally McKenzie CEO
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Without a doubt, the single biggest contributor to high overhead is personnel. Certainly, you must have quality staff to deliver quality dentistry and excellent customer service. But too many dentists line their payrolls with problem employees. Consider each person on your payroll and ask yourself if they contribute to your practice. Do they consistently deliver a quality product, or are they a source of frustration and discontent for you and your team? Be honest.
Next, take a good close look at payroll. This has the potential to steamroll right through your profits. If payroll is more than 20% of collections, not including doctor’s salary or taxes and benefits, here’s what may be happening:
- You have too many employees
- Raises are based on longevity rather than productivity/performance
- Hygiene production is low
When evaluating business staff levels, look at patient check-in and check-out. Typically, these administrative tasks take approximately 10 minutes per patient. If your practice is seeing 15-20 patients per day, one person should be able to effectively manage the front desk duties. If that person is spending more than 240 minutes handling patients, or half the day, the practice should consider hiring an additional employee.
As for assistants, if the procedures are streamlined then one assistant can efficiently maintain two treatment rooms for a general dentist using two operatories and seeing 13 or fewer patients a day. This would include setting-up the room, seating the patient, assisting the dentist, dismissing the patient, and cleaning-up.
Next, look at your compensation culture. Do employees feel “entitled” to an annual pay increase, or do they understand that it’s performance that drives the dollars? Establish performance standards. Use performance measurements to determine raises. While there are any number of models out there, systems that are based on individual jobs and focus on specific job-related goals and how those relate to improving the total practice are the most effective. Set guidelines for raises when you hire an employee and explain to current staff when raises can be discussed and under what conditions they are given. Make certain your employees know what is expected of them. Job descriptions are a must for everyone.
Another major contributing factor to high overhead is low hygiene production. Typically, this is the result of a malfunctioning recall system. The hygienist’s salary should be no more than 33% of her/his production (excluding doctor’s fees). If the hygienist receives a guaranteed salary, the expectation must be that she/he produces three times her/his wages. The key to achieving this is through the hygiene schedule. If patients aren’t in the chair, the hygienist can’t meet production goal. The practice should designate a Patient Coordinator. This is the point person who is responsible for keeping a steady flow of patients streaming into the hygiene treatment rooms through a solid recall system.
In addition, incorporate an interceptive periodontal program into the practice. I recommend you start at the front. The Business Assistant greets the patient upon arrival and mentions the program. She hands the patient a questionnaire and a brochure educating the patient on the importance of addressing the signs and symptoms of gum disease. The patient checks any symptoms they have experienced, which opens the door for discussion in the treatment room.
Monitor supplies and demand. Supplies should run 5-7% of monthly collections. If yours are higher, first make sure you are budgeting these expenses and giving clear direction to the person – not persons – ordering supplies about how much should be allocated for this. Work with your dental supply company and dealer representatives. They are very willing to help you get your supply costs to 7% or lower. Keep close track of supply inventory.
The “miscellaneous” budget category can nickel and dime your budget well into the red. This category often includes many little items that add up to big bucks – malpractice insurance being one of those. The annual premium is often paid with little thought and no effort to shop around for a more affordable plan. The same holds true with medical coverage, business, and overhead insurance. Check out your accountant’s fees as well. Are you paying a $300-$500 retainer each month for services you’re not actually receiving? Certainly, many of the items in this category are necessary, but pay attention to what all those little percentage points are adding up to and ask questions.
Regardless of economic conditions, controlling overhead requires constant vigilance. During challenging financial times, it can make the difference between surviving and thriving.
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