Is The ‘Silo Effect” Putting You And Your Practice Out To Pasture
Cosmetic dentistry is often viewed as a luxury by patients because most dental insurance companies view cosmetic treatment as elective services. As a result, patients more readily accept services that are covered by the insurance because these services are viewed as “necessary.” I would venture to guess that each of us has a different view of what is necessary to live the best life. With today’s negative news on the economy, I realize that I should cut back on some expenses and put more dollars into a “safety net” savings account. I even took an inventory of my expenses to see what I could cut out to be able to save, but the one thing I will not give up is my regular 4-month visit to my dentist. Having a beautiful smile with straight, white, healthy teeth and bone gives me confidence that I am doing the best thing to prolong the quality and quantity of my life. I have instilled that same value in my children, who both have beautiful, healthy, smiles. Many years of involvement in the practice of dentistry just further helps me see the results of not having regular care and maintenance.
Consequently, I was delighted to see an article in the Cosmetic Tribune newspaper (December 2008 edition) that confirms what I have suspected to be true for decades. We all know that a beautiful smile will make you more attractive to others, but according to research studies conducted by Beall Research and Training of Chicago, a renewed smile clearly brings other benefits. This study was carried out by Dr. Anne Beall, a social psychologist and market research professional of behalf of the American Academy of Cosmetic Dentistry. Briefly, pictures of eight different people were shown to 528 Americans that represented a valid cross section of the population. According to the press release:
The participants were asked to judge the eight people as to how attractive, intelligent, happy, successful in their career, friendly, interesting, kind, wealthy, popular with the opposite sex and sensitive to other people they were. None of the people had rotten teeth, missing teeth or obviously serious dental problems. Two sets of photos were created showing four individuals before cosmetic procedures and four after cosmetic procedures. Half of the participants viewed set A and the other set B. Then they were evenly divided by gender. Two had mild improvements through cosmetic services, two had moderate improvements and four had major improvements to give a wide range to view. Respondents were not told that they were looking at dentistry but were asked to make snap judgments rating each person for the ten characteristics on a scale of one to ten with one being “not at all” and ten being “extremely.”
The study revealed surprisingly that a pretty smile does have a broad range of benefits. Most people consider improving your smile to have the benefit of being more attractive and popular with the opposite sex, but it was surprising that people thought a beautiful smile was an indication of being successful, intelligent and wealthy, too. The complete survey results are available at the American Academy of Cosmetic Dentistry website.
|Characteristic Average||“Before” Rating||“After” Rating||Increase|
|Successful in Their Career||5.8||6.7||0.9|
|Popular with the Opposite Sex||5.0||6.2||1.2|
|Sensitive to Other People||5.6||6.1||0.5|
For all of you that present treatment plans to patients, whether you are Dentists, Dental Assistants, Business Coordinators or Treatment Coordinators, you can rejoice knowing that it is true, in measureable ways, that dentistry is a great investment. The most dramatic demonstration of this information would be to create your own before and after studies of patients. Not only would it be a great idea to take a good photo of the patient prior to treatment but also prudent ask them about their anticipated results of the treatment. After treatment, take a new photo and ask the patient how they now feel about themselves and compare. To learn more about presenting treatment to patients, ask us about our course, Treatment Acceptance Training, and raise your awareness of what patients really want.
Interested in having Belle speak to your dental society or study club? Click here.
Dr. George Grant—Case Study #112
Is your dream to own your own building, have 6 fully equipped operatories, 2 hygienists, 2 business staff and 2 assistants? It was Dr. Grant's dream and it came true. However, along with his dream practice came some not-so-dreamy overhead headaches!
Sounds okay, right? Well, it was all good when he was averaging these production figures at his previous location because he only worked with 1 assistant and 1 business employee. This allowed his staff gross wage overhead to be 18% of his net collections per month and a total overhead of 55%!
So what is happening to cause Dr. Grant to dip into his emergency funds to meet payroll? Let's take a look…
What should have happened first? Without even considering the investment of new equipment, dental supplies, a mortgage, etc., simply understanding standards in the industry would have helped Dr. Grant to make some decisions initially in order to pre-plan his move. The graph below illustrates industry overhead standards.
How much does he need to collect every month to stay within normal ranges for facility and gross wages for his employees?
Facility overhead should be around 5% of collections. In Dr. Grant's case, his facility cost is $5,000 a month.
$5,000 / 5% = $100,000 a month in collections. Prior to his move, he was collecting around $77,000. This would be an increase of 30%! Possible? Yes, with the right tools in place and a good marketing plan.
Staff overhead budget would then be $100,000 x 20% = $20,000 monthly.
2 hygienists at $350/day x 16 days = $12,200
2 assistants at $144/day x 16 days = $5,760
2 front desk coordinators at $144/day x 16 days = $5,760
TOTAL: $23,720 or 23.7%—3.7% over budget
Working more days does not equate to higher production if there aren’t patients to put in the chairs on the additional days. He is booked out 1.5 weeks and seeing the same number of new patients.
Increasing fees in this economy may not be a viable option and doesn't have that much impact when accepting PPOs.
Leasing out 1 or 2 of his operatories is a consideration, but that also brings along its own set of concerns with legal agreements and other logistics.
Recommendations: Since the commitment was already made, the building was purchased and equipped and the doors were open, he couldn't go back now and rethink his situation. The first step was to determine how to increase production. Systems were implemented to “dial for dollars” to his existing patient base. This included calling past-due hygiene patients as well as patients with outstanding treatment plans. Nothing was going to change except his overhead unless he promoted his practice by stepping up his internal marketing and seeking assistance implementing an external marketing plan to attract new patients.
Additionally, until he becomes busier, he can easily produce chairside the same amount that he was producing in his previous practice with only one assistant and proper scheduling.
It was not recommended that he reduce the number of business staff because he needed both employees for practice promotion and management of anticipated growth.
Is bigger better? It certainly can be but smart pre-planning must be considered first.
If you are considering enlarging your existing space or relocating, be sure to put your pencil to paper and work the numbers so you know what you need to produce to avoid spending the next ten years worrying about meeting payroll.