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  12.16.04 Issue #145

 

Hand Over Compensation to Staff without Giving a Handout


Sally Mckenzie, CEO
McKenzie Management
sallymck@mckenziemgmt.com

Question: What's a five-letter word synonymous with dread?
Answer: R-A-I-S-E.

At least that would be how most employers feel about the issue. By and large, they absolutely despise having to discuss the matter of compensation with their employees. Given the choice, most would prefer to balance themselves on the wing of a prop plane as it flies over the Grand Canyon than square off with an employee over the paycheck. Next to firing a team member, it is the single biggest anxiety producer in running a business.

What's the problem? For starters, countless numbers of dental practices do not have a standardized compensation policy. Consequently, about the same time every year, staff member Jeanne starts dropping hints about how the paycheck just isn't stretching the way it was a few months ago, and it will sure be nice when those annual pay raises take effect. Or perhaps Sue notes the fact that she has really been putting in the time and doesn't know how much longer she can do so at this pay rate. Meanwhile, doctor is squirming, the head is pounding, and the acid reflux is boiling over.

Too often dentists give raises based on two factors, and they are not efficiency and effectiveness. Fear and emotion typically drive the doctor to increase the dollars. Worse yet, many dentists find they have reached a plateau in practice revenues yet feel pressured to continue giving employees raises and even bonuses in some cases. Meanwhile, employees, unaware of the practice's financial situation, will continue to expect those raises and bonuses.

Consequently, another year rolls by. Nothing has been changed in the compensation system, the profit margin shrinks ever further, and wages are creeping well beyond the industry benchmark of 22% of gross production (not including taxes/benefits or the doctor's salary). But, in the interest of democracy and equality for all, doctor doles out another token 2%.

Resentment grows, doctor is stressed, and tension is thick. This ineffective compensation structure is clobbering your profitability and rippling overall practice success. Take action! First. Raise your right hand and repeat after me: I hereby promise that I will not give a raise to any employee because I feel sorry for them or because I am afraid they won't like me, or because they threaten to quit. Further, I will not give a raise under any circumstances unless the practice has the revenues to support it.

Next, forget democracy, it's time to establish a meritocracy - raises are earned based on individual ability or achievement. Without exception, this is most effective compensation system because it is contingent upon demonstrated results for the dental practice. What's more, it enables every team member to understand that individual job success equates to practice success, which equates to increased compensation.

Next week, establish a compensation policy that makes employees an asset not an expense.

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?
Click here




Hiring Right the First Time


Dr. Nancy Haller
Executive Coach
McKenzie Management
coach@ mckenziemgmt.com

You know how important it is to hire the right people. But do you know what it costs you if hire the wrong person?

The estimates are shocking regardless of which source you read...an average of nearly $40,000 if the turnover occurs six months after hire. You might think that is a fabrication, but consider what a "bad apple" can do to slow productivity. Not to mention the lost revenue from dissatisfied patients and income lost from new patient referrals!

Recruiting employees is likely to be the most frustrating and time-consuming challenge in your practice. Losing a valuable employee also is expensive. And the labor shortage is not going away.

Employees are no longer commodities that can be replaced easily. The age of the "organization man" (or woman) has passed. Beginning in the 1970s, the business world changed. Our economy was impacted by the globalization of competition. There were increasing demands for services. And the way we worked was accelerated by information technology.

In a recent issue, a Harvard Business Review article noted that in 1900, 17% of all jobs required "knowledge workers..." employees whose responsibilities are predominantly concerned with generating or interpreting information, rather than just manual labor. By 2001, that figure rose to well over 60%.

Even more striking is the shift in how the "bottom line" is influenced. The percent of a company's market value related to tangible assets in 1982 was 62%, with 38% for intangible assets. By 2000, only 15% of market value was related to tangibles while a huge 85% was based on intangibles. In other words, your practice worth is greatly impacted by your employees!

With such enormous evidence of the importance of good hiring, it is essential to devote time to your hiring processes. Certainly there are no sure-bet methods to guarantee an applicant will be a peak performer in your practice, but there are ways you can hire with the greatest probability of success.

1. Review job descriptions.

Good hires need to have a clear understanding of the job you want them to do. Not only what to do but how you want them to do it. Write out the specific duties and responsibilities of the position. Be concrete. For example, your business office manager needs to "pick up and sort mail." Contrast that description with the following: "Mail carrier arrives between 12 noon and 2pm. Check for mail by 1pm each day, and each hour thereafter until it is delivered." The more you spell out the exact details of how you want something to be done, the more likely the employee will meet your needs and expectations.

2. Standardize your interview.

Studies have shown that the interview is one of the most flawed parts of the hiring process. However, most employers place enormous weight on what happens in the interview. Applicants with good social skills frequently fare better than reserved or shy people. Furthermore, there is tremendous personal bias in the interview - we gravitate to the people we like rather than evaluating the person-job goodness of fit. Eliminate subjectivity as much as possible by structuring questions that are focused on the real needs of the job and your office environment.

3. Look beyond the resume.

Technical skills and experience are important but you also need to pay attention to "soft skills." Listen to how they answer your questions to determine if they are an effective communicator. Give them a conflict scenario and ask them what they would do. Inquire about the last "new thing" they did to ascertain if they enjoy learning. Test their reasoning by presenting a couple of logic questions. You have the greatest potential for superior performance when you hire someone with good thinking abilities as well as effective people skills.

4. Expand your selection tools.

With the increasing importance on interpersonal effectiveness for job success, employers who add pre-employment testing will have a strategic advantage. Recognizing the importance of such a tool, McKenzie Management will be offering the Talent Management Guide in early 2005. This ready to use system will help you to identify successful applicants for various dental positions. We are now in the process of determining the specific traits and characteristics associated with success for hygienist, business office personnel, chair assistant and dentist/associate dentist.

Through the years, I've learned that many personnel problems are the result of a poor job fit due to poor hiring practices. Good hires will insure a more successful and productive office, better patient service, and new referrals. Confronting your own hiring processes is time consuming upfront but the investment will yield large dividends. The pay-off is higher caliber employees who work harder and stay longer...and this ultimately helps your bottom-line!

To learn more about how your thoughts, feelings and attitudes contribute to or interfere with your financial success, contact Dr. Haller at coach@mckenziemgmt.com.

Dr. Haller is available to speak to your dental society or study club on subjects such as interpersonal communication, conflict management, and team building. If you would like information about any of her practice-building seminars, contact her at coach@mckenziemgmt.com or 1-877-777-6151 Ext. 33



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Tune Up Your Insurance Claims Submission System


Belle M. DuCharme
RDA, CDPMA. Director
The Center for
Dental Career Development
877-777-6151
belle@ dentalcareerdevelop.com

"Most ignorance is vincible ignorance: We don't know because we don't want to know."
Aldous Huxley

At The Center for Dental Career Development, we focus on creating efficient business systems to run your practice so that you and your staff can spend more time treating patients instead of chasing paper.

In the thirty plus years I have spent with "hands on" management of dental office systems, insurance processing and follow-up seems to be the most time consuming and is often put off causing a backlog of paperwork and uncollected money.

According to Delta Dental of California, one of the largest insurance companies, lack of sufficient information is the most common reason for a delayed or denied dental claim. You have to pretend that you are a dental consultant and ask yourself what would you look for on a claim that would warrant payment of that claim.

Electronic submissions have made the sending of claims easier and the ability to attach radiographs and other documents to the claim have changed the speed in which claims are processed and paid. If you are not doing electronic claims you are waiting too long to be paid, paying too much postage and tying up your front office staff with attaching radiographs and other documents to claims.

It makes sense to send the claim correctly the first time especially if you are using the old fashioned "snail mail." Often important information is left off of claim submittals causing the insurance company to ask for "more information." The dreaded letter arrives and your stomach clenches as you realize the money can be delayed for weeks. Providing a narrative and documentation that you yourself would need to understand why a patient would need the treatment performed is important to the payment process.

Particular attention should be given to things not visible in the radiograph. Remember, there is no such thing as "too much information." For instance, if you prep a tooth for a crown and just send along an x-ray without a narrative, this could hold up the claim or cause it to be denied because the fracture was not evident in the x-ray. Recurrent decay around an old amalgam filling is often a reason why a crown is necessary but not evident in the x-ray. It is important to anticipate what the consultant would be looking for and not assume he or she will "fill in the blanks" for you.

All documentation must be relevant to the claim by explanation. Anticipating necessary information will help prevent the "more information" letter. If there is an existing crown on the tooth, the consultant needs to know how old the existing crown is and if it is "no longer serviceable" and why a new crown is necessary. Intra-oral photos are my favorite tools to get claims paid. Often a good photo is better than a narrative. I use an indelible pen to point out cracks, decay, chips, open margins, tissue reactions to metal, washed out restorations, exposed dentin, craze and fracture lines, gingival irritation, pus, etc. Sometimes, no matter how great the information provided, the claim is denied. Some necessary procedures just aren't payable no matter how impressive the documentation because they are not a benefit under the terms of the employer's contract.

Patients need to understand the benefits and limitations of their insurance plans. Dental insurance is not comprehensive in coverage and is only meant to "help" the patient pay for dental care. In case of a denied claim, always refer your patient back to the insurance company if your explanation for non-payment is not satisfactory. Remember, it is their plan, not yours.

If you are interested in expanding your knowledge with further training on insurance processing, call The Center for Dental Career Development at 1-877-777-6151.


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Sally's Mail Bag

Dear Sally,
Are there any industry standards on what percentage of your practice you should produce for certain type of treatments?

Dr. Illinois

Dear Doctor,

Yes, there are dental industry guidelines for general dentistry and they are as follows:

% Of Treatment Mix
Periodontal/Preventative 30%
Basic Restorative 20%
Major Restorative 40%
Miscellaneous 10%

This will certainly vary depending on the posture that the practice has positioned itself in the marketplace. However, this will give you an idea. This information can be obtained from a report in your computer that lists all producers for a selected time frame and procedures produced. You should find a % by the individual procedure, of the total production for that time frame. You will probably have to add up the procedures for the categories listed above.

Hope this helps,
Sally


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Advanced Business Education for Dental Professionals
737 Pearl Street, Suite 201
La Jolla, CA 92037
877-777-6151

Want to Know More About McKenzie Management?


This issue is sponsored
in part by:

McKenzie Management Upcoming Events
Date Location Sponsor Speaker
Feb. 24-27, 2005 Chicago, IL Chicago Mid-Winter Meeting Sally McKenzie & Exhibit
Mar. 3, 2005 Rochester, NY Monroe County Dental Society Sally McKenzie
Mar. 14, 2005 Santa Rosa, CA Redwood Empire Dental Society Sally McKenzie

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