Money Mistakes Clouding Your Financial Picture?

Sally Mckenzie, CMC
President
McKenzie Management
sallymck@
mckenziemgmt.com

      “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 standards:

Dental supplies - 5%
Office supplies - 2%
Rent - 5%
Laboratory - 10%
Payroll - 20%
Payroll taxes and benefits - 3%
Miscellaneous 10%

You 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.

As 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 accounting.

Let’s 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.

Oftentimes 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 mistakes.

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.

If you have any questions or comments, please email Sally McKenzie at sallymck@mckenziemgmt.com.

Interested in having Sally speak to your dental society or study club?
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Tech Tips For Today!

Designed to improve management techniques through your technology platform

Mark Dilatush
VP Professional Relations
McKenzie Management
mark@
mckenziemgmt.com

      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.

Pharmacy Database

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.

Benefit #1
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.

Benefit #2
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 your appointment?

Little things like remembering a patient’s preferred pharmacy go a long way toward adding that personal touch to every patient visit.

Benefit #3
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 goes home.

Here’s the situation......
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.

Interested in having Mark speak to your dental society or study club?
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DENTAL INSURANCE PROCESSING

INSURANCE POLICY: what they give you on page one and then take away from you on page two.

Belle M. DuCharme, RDA, CDPMA
Director/ The Center for
Dental Career Development
877-900-5775
belle@
dentalcareerdevelop.com

      Whether 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.

Next week…Getting patients and Insurance companies to pay promptly!

At The 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

Belle M. DuCharme, RDA, CDPMA
Director/ The Center for Dental Career Development, La Jolla
877-900-5775
belle@dentalcareerdevelop.com

For more information, email info@mckenziemgmt.com
or call 1-877-777-6151