Revenue Opportunity Assessment
by Sally McKenzie CEO
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First allow me to thank you for your LOYAL readership. I have been sharing practice management tips and information through this newsletter for 5 years. It is an honor and a pleasure to be able to do so.
As I write this, I’m on a plane heading back home to LaJolla after having spent the last week in a dental practice along with one of my consultants in what I’ll call Anytown USA. As I was waiting to board the plane, I decided to read the Wall Street Journal, Weekend edition, June 7-8, 2008. The headlines: Markets Slammed by Oil; Oil surge is Fresh Hit to Economy; Recession Fears Ignited. The first paragraph of one of the articles read: The likelihood that the U.S. is in a recession increased Friday following weeks of hopes that the country might be skirting one. If this is indeed a recession, it is the second I’ve seen in the 28 years that McKenzie Management has been helping dentists improve their practices.
What I’ve learned from the various economic highs and lows that we’ve seen over the past three decades is that doing nothing is disastrous. You may not be able to impact what happens at the gas pump, nor can you lower the cost of groceries, but you do have the ability to make sure you’re not among the financial casualties of 2008 … IF you’re proactive. If you’re not, well, make sure you have your water wings ready and waiting, because the sea of red ink may just carry you away.
The dentist whose practice I visited last week is being proactive. This doctor is a general dentist who has been practicing for 19 years. Last year, his practice revenues were just over $1 million. Although he’d noticed a few more openings in the schedule, he hadn’t linked it to current economic conditions. He just thought that something wasn’t right.
When he called me, he said he “felt” that the recall system wasn’t the best. While I’d like every dentist to know if their recall system is effective, when in doubt trust your instincts. If you feel something isn’t right, follow up on that hunch, chances are very good that you are right. Yes, this doctor had a sense that there were problems, but he had no idea their extent. Read on.
Over the past 12 years, nearly 8,000 patients had come to his practice. However, only 1,194 remained active. That’s an 85% patient loss! From January 2004 through May 2008, he had 2,267 patient charts in the file yet barely half were currently active. So in that shorter time frame he retained only 53%.
In the first 5 months of this year, he treated 20 new patients a month but 40 patients left the practice every 30 days. The loss of patients DOUBLED in the first 5 months of 2008 as compared to 2007. Unfortunately, the carnage didn’t stop there.
The unscheduled treatment plan report revealed an average of $86,000 a month in 2008 vs. $42,000 a month in 2007, another figure that DOUBLED in the first 5 months of 2008 over 2007.
However, this doctor didn’t sit back and ignore the situation. He may not have known exactly where the shortcomings were, but he made the effort to find out. The good news, and there is plenty. With proper training, we anticipate his practice will begin capturing a minimum of 75% of this unscheduled treatment within the next few months, providing an increased revenue potential of $65,000 per month.
In reviewing the hygiene department, we found that its potential for appointments thus far in 2008 was 1,565; however, hygiene actually treated 1,060 patients for a loss of 505 appointments or 3.1 openings per day for two hygienists. This is lost revenue potential of $215,036 per year. We found 219 patients were past due for recall appointments. Based on two appointments per year this translates to a $77,964/year in potential revenue opportunities. We project that with some system corrections, the likelihood for major income gain in this area is significant. But the work doesn’t stop there.
Hygiene produced a dismal 6.4% of their production in perio. Assessment, time needed to do so, education, scripting and communication are all lacking. Putting this in place should provide an additional $40,000/ month in revenue potential.
The practice collected 98% of production last year and this year so far, BUT accounts receivable over 90 days were at 35%! With training and system improvements the practice is looking at retrieving another $20,000.
Clearly the practice needs to tighten key systems. Improvements also are necessary in employee training, organization, and communication. This doctor is very fortunate in that his team has a sincere desire to improve and is genuinely motivated.
As this example illustrates, you cannot control the economy at large but you do have powerful influence over your own financial situation. December is a mere six months away, and the decisions you make today will determine whether look at the year that was and count it as one of your worst or one that tested you and your practice to become your best.
Give me a call and learn more about our Revenue Opportunity Assessment, two days, $4,895. Don’t tell me you can’t afford it. You can’t afford not to, just look at the thousands that little investment brought in for the doctor we just visited. Rather than waiting for the government’s next economic stimulus package, create your own! It’s just a phone call away.
Interested in speaking to Sally about your practice concerns? Email her at email@example.com.
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“Presto Change-o” - The Perfect Practice
It would be wonderful if we could wave a magic wand and create the “perfect practice.” What would such a place look like? There are key elements that start (but do not stop) with the following:
- The telephone is answered with a “smiling,” happy voice. Thank you for calling Brighton Dental. This is Sandy. How may I direct your call?
- There are a minimum of 25 new comprehensive exams per month per doctor.
- A “new patient experience” is provided to all new patients so that when they leave after the appointment, they tell their friends about the great dental experience they had. This requires sufficient (uninterrupted) time with the doctor in order to establish rapport, discuss treatment options and answer all clinical questions.
- Outstanding accounts receivables are no more than the monthly net production (not including credit balances).
- Unpaid patient account balances are 12% or less of the total accounts receivables.
- There are no insurance claims more than 31 days old.
- “Time of Service” collections are 45% of net production.
- Patient hygiene retention ensures no more than 50% of the # of new patients are going out the back door.
- A minimum of 10 hygiene patients are reactivated per month per hygienist.
- Treatment acceptance of recommended treatment is at least 75% because of patient education and efficient treatment presentations.
- Dental supply overhead is no more than 5–6% of net collections.
- Practice overhead is no more than 55-60% of net collections.
The key to success is to transform the average into the extraordinary by taking the following steps:
- Develop a team that works together to achieve established goals.
- Establish production, collection, scheduling and retention goals to improve practice growth.
- Modernize, organize and design the office to be an attractive and comfortable place for your patients and your team.
- Develop a marketing plan based on the psychographics of your patient base.
- Start and maintain morning meetings to create a positive direction for your scheduled day.
- Strategically plan monthly team meetings to discuss practice concerns and achievements, and to receive important feedback from the team.
- Develop and work to improve practice business systems that achieve the goals set by the dentist and his/her practice “vision.”
Most important: Be a doctor who is a leader and sets positive examples for the team.
How is this accomplished?
- The doctor always arrives on time for the morning meetings with a smile on his/her face, and leaves personal baggage on the doorstep.
- The doctor always returns from lunch on time.
- The doctor does not take unnecessary phone calls that interrupt patient treatment time.
- The doctor does not criticize the team members in front of others, especially patients.
- The doctor is open to recommendations from team members regarding practice improvement.
- The doctor is respectful of the team members’ need for breaks, lunch and leaving on time at the end of the day.
A team that appreciates and respects the doctor as their employer and practice leader. Everyone working together becomes the “magic wand” that transforms the average into the extraordinary.
If you would like more information on how McKenzie's Practice Enrichment Programs can help you IMPLEMENT proven strategies, email firstname.lastname@example.org.
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Scheduling: It Makes or Breaks Your Day
“That was a terrific day we had today. I want to thank all of you for your efforts in making this day not only profitable but pleasant. It is the first time in a long time that I have actually enjoyed being a dentist.” —Dr. Gerry Smithfield (not his real name)
Days go by, the moment is gone and the usual grind sets in. Looking over practice production reports will reveal whether you made goal on any given day but it does not reveal any sense of accomplishment, team synergy or just plain happiness felt. Having really great scheduled days can leave some team members with a sense of euphoric accomplishment that can last for days or even weeks. It can fuel the fire of personal significance that might manifest as taking extra time to educate a patient about the benefits of implants, as saying, “Let me help you,” to a team member struggling to learn to schedule on the computer or as offering to stay late with an emergency patient after everyone else has left for the day.
Examining a week’s worth of patient schedules during McKenzie Management’s Advanced Business Training can demonstrate to Office Managers and other members of the front office team the technical problems that are causing practice difficulties. The schedule is the wheel that turns the practice and the Scheduling Coordinator is the driver. Because a week’s worth of practice schedules represents a snapshot of what is happening, it proves to be a very valuable learning tool. Scheduling Coordinators who want to schedule to meet goal and to reduce daily stress need to know some key points when planning each day. These points include the following:
- doctor clinical time units for each procedure performed by the doctor (should be in 10-minute increments)
- assistant time units for every procedure scheduled (should be in 10-minute increments)
- what appointments are “open-ended” and can be extended if necessary
- accurate doctor and assistant times (Is the doctor spending too much time in his/her office or running behind continually?)
- patient issues affecting the scheduled time (likes to talk, uses a wheelchair, etc.)
- hygiene examinations during scheduled treatment time
- the doctor’s need to receive or make phone calls during patient time
- whether a scheduled procedure meets practice goal for time allotted
- where emergencies will be seen that day
- scheduling lunches so that everyone will get a break
- effectively utilizing dental assistants (Are registered dental assistants doing expanded functions per state laws?)
- which patients need “evidence-based” x-rays and whether an assistant or hygienist will take them
- whether dental assistants enter treatment plans and clinical notes on the computer as the doctor is diagnosing
- how long each patient waits to see the doctor (time waiting after being seated)
- noting lab cases scheduled for delivery, and receiving and checking them for accuracy
- making sure the scheduled day represents the service mix that the doctor(s) have requested (not an entire day of deliveries or back-to-back endo)
- scheduling New Patients and identifying who will conduct the new patient interview if the Treatment Coordinator is not available
- determining if the schedule can accommodate, within a week or two, any new patient that calls
- determining if patients for whom hygienists are assessing periodontal conditions and motivating them to get scaling and root planning with anti-microbial treatment can be scheduled within a week or two
The Business Coordinator or Scheduling Coordinator responsible for scheduling the doctor(s) and hygienist(s) should be informed of the dollar amount the practice has to produce each day. This total amount would also include each hygienist production goal. When the Scheduling Coordinator is told to “keep the schedule full,” she/he may end up with a busy and possibly frantic schedule, but not necessarily a profitable one.
Knowing what makes or breaks the schedule is vital to creating a “perfect” day versus just “filling lines” without thought to how it will affect the team.
If you would like for McKenzie Management to train your Front Office Scheduling Coordinator please contact us at 877-777-6151 or email@example.com or visit our web-site at www.mckenziemgmt.com.
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