'Help' Yourself to High Overhead
“Desperate Dentist needs warm body to take this job---PLEASE!!!!”
After weeks of searching by network, word of mouth, ads in all the major papers, employment agencies and the local Dental Society, one is tempted to dig thru those rejected resumes to take another look at the applicants.
Nationwide there is a shortage of qualified and experienced dental applicants to fill all positions, and some dentists I know have resorted to “tempting” their colleagues’ staff with an “offer she can’t refuse.”
Dentists are turning to hiring an applicant with a business degree and or a customer service background, teaching them the basics of dental terminology and then giving them the title of “Office Manager”. The clinical staff is delegated to “explaining” to the patient about treatment, length of appointments, post and pre-op care, insurance reimbursement and fees and financial arrangements. In many offices I hear the following from clinical staff “I have enough to do without having to tell the patient about insurance or fees”; “I don’t know why Dr. Smith hired her, she doesn’t know anything about dentistry”; “She is always coming back here asking the “dumbest” questions and interrupting the doctor.”
Large corporations hire professional recruiters to find the best people. After passing a battery of qualifications these new employees go into a “training program” that lasts anywhere from one to three weeks before they begin their job assignments, sometimes with the aid of a supervisor who mentors them along the way. How many CEO dentists have time for this?? From my experience, I say very few have the time and even fewer have the business knowledge or the computer software skills. There is no revenue unless the high speed is going full speed in the treatment room. Many dentists have a “sink or swim” attitude about their staff. “I hire someone with experience, I throw her into the mix and if she survives and the practice doesn’t suffer she gets to keep her job.” This is a quote from a dentist I know who has a “revolving door” reputation.
I recently instructed a very sharp woman, Jane, who had taken a position as “Office Manager” in a dental office because she “wanted to try something different.” Jane had worked in a bank and had a BA in Business Management. She felt she was learning very fast and was enjoying her new career. Jane said, “The only thing that is hard to grasp is why people balk at paying for their dental care and understanding dental insurance is confusing. These are big issues but the biggest is getting the respect from the other team members who already know about dentistry, they aren’t very patient.” I discovered that she did not have a structured training period, nor did she have any written materials as a resource. She shadowed other team members and was allowed to participate as time allowed which gave her a chaotic view of her day.
After creating a formal JOB DESCRIPTION we were able to concentrate on the areas where she needed the most help. We did mock treatment presentations and financial arrangements with much coaching on how to answer the most common questions patients have about insurance, fees and financing options.
“Coming here for training and receiving so much important and useful information is the best thing that has happened. I feel hopeful now and I understand how the pieces fit together”, says Jane. After completing McKenzie’s Advanced Training for Office Managers, she felt that she was headed toward a real career and not just a job.
If you don’t hire smart and train well, you have to face the “revolving door” as people leave almost as soon as they arrive. A worst-case scenario is letting someone go because you hired in haste and now regret it.
“Burned out” over training people? Let us train your business staff. Ongoing training and education is necessary for the success of any practice. The patients who visit dental offices on a regular basis expect everyone to know what they are doing and to be able to answer questions about fees, insurance, treatment and comfort. With the addition of new technology, products and materials, training is an ongoing expense that has many benefits to the practice and to the patients. The rewards are a team of professionals who take pride in their work and are enthusiastic about communicating dental services to patients.Forward this article to a friend.
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Dr. Scott’s, Farris, Johnson’s, etc Stories:
The telephone rings at our home office in La Jolla, California. We hear the same cries for help from young dentists just starting out. “Help! I don’t have enough money to pay my bills. I need more patients and more production.”
Similar Office Facts:
As I work with these wonderful young dentists, my heart goes out to them. I remember when I was young and ignorant and thought I knew everything and what I didn’t know I didn’t need to know. “Ignorance is Bliss” someone told me one time.
When I arrive at airports and am “claimed” by the dentist in baggage claim, the dentists direct me to their vehicle…sometimes it is a brand new BMW SUV and sometimes it’s an old dirty Explorer. This tells me something! As we ride along, we talk about what is happening in the office and what the dentist perceives as the issues at hand. Obviously, cash flow is at the top of the list for these dentists in this article. Granted, there are also those young dentists that I work with that were fortunate enough to “get lucky” and fell into a practice that is serving them well and they are looking for help with their uncontrollable growth. I must say, however, that these dentists are the exception in my experiences.
As I preview the practice on the first day of my 4-day visit, I observe the following:
Now don’t misunderstand me. I am not saying that all these items aren’t important in a progressive practice. What I am saying is that there is a time for everything during the course of the life of a practice.
Recommendations to these young dentists and others that may be reading this article:
How do you even know if a Cad Cam is applicable for you unless you already know that you are going to be doing at least 20 units of crowns/onlays/inlays a month and knowing how it is going to make you money?
Let’s do some math…get your calculator and let me teach you about determining exactly how much money you should allocate to the overhead categories listed above relative to your collections.
Your monthly collections are $25,000 a month so far.
Your facility cost (lease, utilities, repairs, etc. Does not include telephone) is $2,750 a month. $2,750/$25,000 = 11%! Too high!
OK….so what should you have done before signing the lease now that you realize that you are almost 2x above customary facility overhead? When you are considering leasing a space…here is your formula: Lease ($2,750) / 5% = $55,000 Easy enough to do…this means that you need to collect $55,000 a month to keep your facility overhead at 5%.
If you want your overhead to be around 60% for the year, “guesstimate” what your expenses are going to be for the month ($15,000 not including your salary) and divide my 60%. $15,000 / 60% = $25,000. This means that you need to collect $25,000 to cover $15,000 in overhead expenses.
Keep in mind that a 60% overhead is NOT covering all your high-ticket items. These are all items that are depreciated so these expenses are covered above and beyond the 60% overhead that you pay out within the 7 categories.
It is not my intention to confuse you and I am not an accountant, nor am I giving tax advice. What I am trying to reveal to all dentists is the importance of understanding your business and where you are spending your practice dollars. It is not enough to say, “My checks aren’t bouncing so I must be making money.” This is not a way to run your business.
Before you get so deep in debt that it is too late to dig out of your hole, contact McKenzie Management and inquire about how we can help you avoid the need for a “shovel”. If you are already in the hole – don’t despair. You might just need a ditch digger instead!Forward this article to a friend.
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La Jolla, CA 92037