Educate Your Team about Practice Economics and Pay Raises
The way your team members see it, you’re making plenty of money. They know what their salaries are and some even know how much the practice actually brings in each month. Yet, even though they think you’re rolling in money, they fully expect you to say the practice can’t afford it the next time they ask for a pay raise.
Of course, they’re forgetting to factor in a little detail known as overhead, but to them, that doesn’t matter. They begin to resent you because they don’t feel like they’re being fairly compensated. Many of them have been with you for years, after all, and think they should be rewarded for their service. Some employees might even see their contributions as more valuable than others, and simply can’t understand why you haven’t given them a well-deserved bump in pay.
The problem is, these employees’ perception of the practice is nowhere near reality. They don’t understand practice economics or what it takes to actually build a profitable practice. How can you change that? Start by being more forthcoming with practice information. Provide leadership and guidance so team members don’t fill in the gaps with what they believe is reality. Trust me, if you let them come to their own conclusions about the financial health of the practice, it will only lead to mistrust, resentment and discontent – all of which are common indicators of salary system shortfalls.
Sit down with employees and explain practice economics. Don’t wait to talk with them about falling revenues during their annual salary review, as you break the news that you simply can’t afford to give out raises right now. Instead, take the time to talk with them about the status of overhead and practice expenses during monthly meetings.
These monthly meetings are key to getting everyone on the same page about where the practice is headed. If revenues are down, use these meetings as an opportunity to figure out why and come up with a plan to get the practice back on track. Talk about all the areas that impact the practice’s profitability, such as number of new patients, collections, recall patients, production, treatment acceptance, accounts receivables, unscheduled time units, and uncollected insurance revenues more than 60 days old.
Remember, while you’re the practice CEO and are there to provide team members with guidance, giving updates on practice financials isn’t your responsibility alone. During these meetings, every team member should be prepared to report on the heath of the system they’re accountable for.
For instance, ask your Scheduling Coordinator to report on the practice’s actual monthly production as compared to the practice’s monthly production goals, the number of unscheduled time units and the number of broken appointments. This will help get everyone thinking about how to address any issues that are keeping the practice from meeting true success and profitability.
It’s also important to use these meetings to address any areas of concern you and your team members have. If the schedule has too many holes, for example, you can take this opportunity to talk about how you can fill those holes and increase revenues, whether that means reaching out to patients with unscheduled treatment, identifying patients with unused insurance benefits, evaluating the practice’s treatment financing options, examining case presentation techniques or encouraging hygiene patients with unscheduled treatment to move forward with care.
This will all go a long way in helping your team members understand the big picture of practice revenues and expenses, and why you might not be able to afford to give out raises right now. It also helps them see how important their contributions are to the practice’s success.
Remember, to build a profitable practice, you need to create a strong team focused on meeting practice goals. If your team members don’t trust you, they’ll be more focused on complaining about the lack of raises than doing their part to build a successful practice. They won’t believe you when you tell them you can’t afford to increase salaries, and that will only lead to resentment and possibly even staff turnover.
Educate team members about practice economics and involve them in finding solutions that will help the practice grow. This will not only give them a better understanding of the financials and what they can do to earn raises, it will also help them feel more connected to the practice – all leading to improved productivity and the increase in revenues you need to give out raises to employees who earn them.
Next week, Can you afford to give out raises?
For additional information on this topic and more, visit my blog: The Lighter Side
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