8.26.11 Issue #494 info@mckenziemgmt.com 1-877-777-6151 Forward This Newsletter
 

The Dentist/CEO's #1 Concern
by Sally McKenzie CEO

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Years ago, large company CEOs were seemingly insulated when things went south. Poor decisions were made, company profits would plunge, but there were always the underlings to blame. The CEOs had the Teflon shield around them. Remember “new Coke?” A blunder here a disaster there, yet the CEOs would remain. While that is no longer the case in corporate America, it’s never been the luxury for dentists. As leaders of their practices, when things went wrong, the proverbial buck stopped with them. True, they weren’t likely to get fired - but they’ve always had to take responsibility.

What has changed, however, is that dentists today must acquire far more CEO-type skills than ever before. As CEOs of the practice, they need to clearly understand profit and loss, marketing, human resources, hiring and firing. Long gone are the days where Betty the office manager takes care of the books and the staffing issues.

Running a dental practice requires careful attention to 22 business systems - none of which are thoroughly taught in dental school. When doctors inquire about the McKenzie Management training program for the dentist/CEO, invariably it’s because the doctor has one primary concern: The practice is losing money. Yet no one is paying attention to those systems that directly impact revenues - starting with production. Few dental teams understand how to establish production goals or even how to determine the number of hygiene days necessary. I recommend this approach:

Start by identifying a realistic financial goal for your practice. For example, let’s say your goal is $700,000 in clinical production. This calculates to $14,583 per week (minus four weeks’ vacation). Working 40 hours per week requires you to produce about $364 per hour. If you want to work fewer hours, per hour production will need to increase.

Use the formula below to determine the rate of hourly production.

  1. The assistant logs the amount of time it takes to perform specific procedures. If a procedure takes the doctor three appointments, s/he should record the time needed for all three appointments.
  2. Record the total fee for the procedure.
  3. Determine the procedure value per hourly goal. Take the cost of the procedure, for example $900 for a crown; divide it by the total time to perform the procedure, 120 minutes. That will give you your production per minute value - $7.50. Multiply that by 60 minutes - $450.
  4. Compare that amount to the doctor’s hourly production goal. It must equal or exceed the identified goal.
  5. Start scheduling to meet that goal every hour of every day.

If you choose to block the schedule for specific procedures, do so based on actual procedures performed over the past six months - and not on what you would like your ideal day to be.

The other area that is critical to production, obviously, is hygiene. You want to ensure that you have an adequate supply of hygiene days so that new and existing patients do not have to wait weeks, or worse yet months, for hygiene appointments. Additionally, patient demand should be such that the hygiene department accounts for 33% of your total practice production and your hygienist is producing 3x her/his daily wage. Follow this formula to guarantee that your supply meets demand:

  1. Count the number of active patients seen in the past year for oral health evaluations.
  2. Multiply that figure by two, since most patients come in twice a year for oral hygiene appointments.
  3. Add the number of new patients receiving a comprehensive diagnosis per year. For example: your practice has 1,000 active patients + 300 new patients = 1,300 x 2 = 2,600 possible hygiene appointments.
  4. Take that number and compare it to the hygienist’s potential patient load.
  5. If the hygienist works four days a week, sees 10 patients per day, and works 48 weeks a year there are 1,920 hygiene appointments available.
  6. Subtract that total from 2,600. You are losing 680 appointments per year or 14 patients per week. In this scenario, the hygiene department should be increased 1.5 days per week.

If your practice schedules patients when they are due, examine how far ahead patients are booked for appointments. If there are no openings in the hygiene schedule for a three-week period and some patients are being bumped into the fourth week, begin increasing the hygiene department’s availability in half-day increments. If there are several open appointments, develop a patient retention strategy.

Want more of me? Click here to visit my blog, The Lighter Side, for more Dental Practice Management info.

Interested in speaking to Sally about your practice concerns? Email her at sallymck@mckenziemgmt.com. Interested in having Sally speak to your dental society or study club? Click here.

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