Mistakes Clouding Your Financial Picture?
“It just doesn’t
add up.” Is that a familiar lament in your practice these
days? You’re scratching your head, staring at the financial
reports, and that sinking feeling is beginning to take over. Overhead
is still out of control. What is going on? You and your
team have been working for months to get the numbers in line and
maybe even come within striking distance of that 55% overhead goal.
You established the following budget targets according to the industry
Dental supplies - 5%
Office supplies - 2%
Rent - 5%
Laboratory - 10%
Payroll - 20%
Payroll taxes and benefits - 3%
are convinced that your supply inventorying process is better than
anybody’s. Rent hasn’t increased, payroll … there
it is. The big fat black hole. Payroll is orbiting so far above
the benchmark it should be a separate planet. So what is going on?
Is it low production, we’re not collecting what we produce,
overpaid staff? The short answer is, yes, it could be all of those,
but it also may be none. Read on.
the saying goes, “The devil is in the details.”
In this case, the devil may well be in the details of your disbursements.
Here’s the common problem: Many practices do not have
the correct categories for disbursements. Consequently,
when it comes to really measuring overhead in comparison with the
industry standards it’s next to impossible – the ol’
garbage in garbage out rule still applies – particularly when
it comes to practice
say your practice is incorporated, and the doctor has been designated
as an employee and his or her salary is pooled in with the rest
of the staff. Therein lies a major budget problem. Lumping the doctor’s
salary into payroll causes that line item to be off the charts when
compared to the industry standard of 19%-22%. And it’s a classic
example of how a disbursement detail in practice
accounting has a dramatic impact on the office’s overhead
picture. The doctor’s salary should be removed from the payroll
line item. Instead, the doctor should be designated as an officer
of the corporation, therefore his or her salary, payroll
taxes, and benefits are separate from the employee salaries, taxes
and benefits and the practice has a much more realistic interpretation
of its employee salary and benefit expenses.
the fundamentals of practice accounting are never clearly spelled
out to the staff or even understood by the doctor. Let’s face
it, the individual responsible for overseeing hundreds of thousands
in practice revenues is commonly expected to train themselves on
the management and accounting software. Consequently, it is not
uncommon for practices to find themselves mired in accounting
In fact, a few of the most common mistakes not only will cause your
payroll expenses to appear to be off the charts, they will cause
your accounts payable to appear inflated, payroll taxes to appear
as outstanding unpaid liabilities, and they even
could cost you more in income taxes. Consider this important little
accounting detail. If your reimbursement checks are being written
from the wrong account – a common practice – you just
might be paying more to Uncle Sam than you need to. Next week, 2%
here, 1.5% there, .48% for that, .25% for this, eventually it adds
up to a real overhead nightmare.
you have any questions or comments, please email Sally McKenzie
in having Sally speak to your dental society or study club?
YOU FIND YOURSELF WAIST DEEP IN
HERE TO ANSWER THESE
10 EASY QUESTIONS
to improve management techniques through your technology platform
VP Professional Relations
Last week, [see
article], I discussed how to generate professional letters to
your patients and referral sources. Many times as a practice matures,
we tend to stop doing the “little things” that helped
build the practice in the first place.
This week, let’s stay on the topic of doing the “little
things” with your software to enhance your customer service
experience. These are primarily operational customer service
techniques done when you utilize some of your software’s
otherwise “hidden” features.
Most, if not all practice management systems have a pharmacy database.
If you don’t already, I want you to start asking your patients
for their preferred local pharmacy. It would be
easier with new patients if you simply added the question to your
welcome to the office form. For established patients (especially
those that require pre-medication before treatment), I recommend
adding this step at the patient’s next visit. If your pharmacy
database is reasonably complete, asking the patient which pharmacy
they prefer will take seconds. Updating their patient record will
be even faster.
Speed and efficiency are usually first to come to mind. Is it easier
to print a prescription and have record of the prescription in your
computer system rather than placing it in a chart? Of course it
is. Is it easier to refill a prescription for a patient if the original
was generated by your computer system? Sure it is! Speed and efficiency
are just one side of the benefit equation.
Imagine you are a patient of record who is loyal and compliant to
the prescribed re-care regimen. Now let’s say for the sake
of argument that before your re-care appointment – you must
pre-medicate. Do YOU have to remember each time? Do YOU have to
tell the dental office which pharmacy you prefer every six months
or is your dental practice “on the ball” and have it
on record. Does your dental practice know it when they call to confirm
things like remembering a patient’s preferred pharmacy go
a long way toward adding that personal touch to
every patient visit.
This benefit is a combination of efficiency AND better customer
service but you have to use another feature of your practice management
software to get it. You have to synchronize your patient
data with the doctors Palm (PDA) each evening before he/she
Patient of record calls in complaining of pain and swelling. The
dentist is at dinner with family when the call arrives. Our hero
(in this case the dentist) swiftly opens their PDA, finds the patient
of record, reviews any previous medications, reviews any med-alerts
on record, finds the patients preferred pharmacy, and immediately
calls the pharmacy (the pharmacy phone number is there too!) to
have them fill the prescription.
To the patient, this dentist is a magician! How in the WORLD did
he/she know all this stuff about the patient at 7:30pm on a Saturday
at a restaurant? Unbelievable!
No, it’s not unbelievable. It’s in your practice management
software. If you don’t use it – this is a great opportunity
to try it for the first time. Setting up the pharmacy database and
your PDA will literally take minutes.
I welcome any and all readers to email
me with specific questions, problems, requests and challenges.
Who knows? Maybe your inquiry will lead to a new Tips For Today
article! Don’t worry, your inquiry will remain anonymous unless
you want credit for the question.
in having Mark speak to your dental society or study club?
you DON’T do anything to improve your
history is bound
to repeat itself.
Find out how you can make the
most of your practice...GO
POLICY: what they give you on page one and then take away from you
on page two.
Belle M. DuCharme, RDA,
Director/ The Center for
Dental Career Development
we like it or not, dental insurance is still here to give us frustration
and headaches. If you accept assignment of benefits as partial payment
of your accounts receivables, then you must “play the game”
to the best of your advantage. Most calendar year maximums have
not gone up in the last twenty years so it doesn’t take much
dentistry to “max out” the benefit dollars.
The patient expects you to get every dollar due them in dental care.
Dental offices run from being providers to the DMO and or the PPO
networks to not accepting assignment of benefits at all. In the
latter practice, the patient
pays and is given a “super bill” or
type of “walkout statement” from the dental practice
that they can bill the insurance themselves. This is the best of
all possible worlds, but not the best choice for some practices.
Demographics, economy, potential for growth in your area can affect
the choices you make in regard to accepting and processing insurance.
For instance, if you were in the vicinity of a major industry that
employs several hundred to thousands of employees, it might be advantageous
to be a provider in their network ... if you want to experience
growth. To maximize the prompt receipt of reimbursement
and to monitor the claims from processing to payment involves overhead
expenses. If you are strictly fee for service and offer no insurance
billing, you may be able to eliminate a full time employee.
Gathering insurance information, entering it in the computer, filing
claims, follow-up on claims, documentation of claims, calling insurance
companies, paying for outside insurance information services, postage,
delay in payment, and anxiety from patient calls can create the
need for a fulltime “Insurance Secretary” or adding
these insurance duties to the job description of the Financial Coordinator
or the Treatment Coordinator.
Most patients know little to nothing about their
dental insurance plans. Telling them that they need to know the
per calendar year maximum, policy limitations, deductibles and percentages
of payment for each category of dentistry is met with a look of
either glassy eyed indifference or sheer terror.
week…Getting patients and Insurance companies to pay promptly!
Center for Dental Career Development in La Jolla, California,
the McKenzie Management team has developed an advanced business
program to train Business Administrators, Financial Coordinators
and Treatment Coordinators. An important part of this training involves
understanding dental insurance reimbursement and how it affects
the success of the practice. For more information, call 1-877-900-5775
M. DuCharme, RDA, CDPMA
Director/ The Center for Dental Career Development, La Jolla
YOU LIKE TO BECOME A SUCCESSFUL TREATMENT COORDINATOR?
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2004 In Your Practice
you invest time, money, and energy taking a QuickBooks class from
your community college, check out the QuickBooks In Your Practice
workbook. Written by Susan Gunn, this workbook is the result of
frustrated clinicians wanting a workbook designed specifically for
their professional practices. A mandatory reference for any practice,
this workbook allows practices to care for patients, not figure
out their accounting software.
US TRAIN YOUR
Center for Dental Career Development
Business Education for Dental Professionals
737 Pearl Street,
La Jolla, CA 92037
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