Budget Busters Choking Profits?
A recent news story reported that the long-lost cousin of a loner living in Nevada would be the heir to millions in gold coins. Overnight the woman went from substitute teacher to multimillionaire - not a bad deal. Most of us don’t win the lottery or find ourselves on the receiving end of a long-lost relative’s riches. Rather, it’s hard work and perseverance that must pave the road to financial success.
In the dental practice, that long road also involves 22 systems and dozens of variables that directly affect the financial wellbeing of the business and your subsequent path to riches. If your wealth seems to be the stuff of distant dreams, perhaps it’s time to take a close look at a few financial realities, starting with practice overhead. Examine the areas listed below and compare your practice overhead numbers to the target percentages listed next to each item.
You know what your overhead targets are, so how do you actually hit them? First, consider the areas that are most likely to be well above the benchmarks. Payroll is usually number one. If your payroll costs are pummeling profits, here’s what may be happening:
Consider your employee rolls. When determining the need for more business staff, keep in mind that administrative tasks, specifically patient check-in and check-out, take approximately 10 minutes per patient. If your practice is seeing 15-22 patients per day, which would total 150-220 minutes of patient contact, one person is 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’s systems need to be evaluated and the time and motion efficiency put towards working the systems.
As for assistants, if the procedures are streamlined, 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, assess your procedures for giving staff raises. Tie raises to performance, and raise, or perhaps establish, performance standards. 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. Job descriptions are a must for everyone. Use performance measurements to determine raises. And if the practice is losing money, you don’t give raises.
The third major contributing factor to inflated 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 s/he be scheduled to produce three times her/his wages.
Incorporate an interceptive periodontal program into the practice. This can be initiated seamlessly with the patient check-in process. The business assistant greets patients and hands them a questionnaire and brochure with a checklist educating them on the importance of addressing the signs and symptoms of gum disease. The patients check any symptoms they have experienced, which opens the door for discussion in the treatment room.
Pay attention to other areas of overhead as well. Dental supplies should run about 5% of monthly collections. If yours are higher, make sure you are budgeting these expenses and working with your dental supply company and dealer representatives to help you control costs.
The miscellaneous category often includes several smaller items that add up to big bucks. Certainly, many items in this category are necessary. Nonetheless, pay attention to what’s labeled as miscellaneous and ask questions.To learn more about your office’s overhead numbers and what you can do to improve them, visit www.mckenziemgmt.com for a FREE Overhead Assessment and report.
For more information on this topic, visit my blog: The Lighter Side
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