Tax “Cash” For Your Practice Clunkers
|Cost of Equipment||Section 179 Allowance||New Equipment Costs (after 179)||Total Savings (after 179)||Normal Depreciation|
*Some restrictions on purchase amounts may apply. The above are possible tax scenarios
Next week, get existing patients into the practice before year’s end.
To date there are approximately 140 different dental software programs available on the market, all competing for their share of the dental business. There are a few software programs that seem to have the lion’s share of the business, and it has been lucrative for the people selling these products to also become “dental consultants” based on their knowledge of the software.
So why not kill two birds with one stone and consult in the practices that purchase the software program? When you already have a foot in the door as a software trainer, the transition to consultant may seem easy, thus blurring the distinction of software trainer and professional dental consultant. It is undeniable that there is a critical need for training of the software programs to properly manage both the business and clinical data. A software trainer is necessary to make sure you are not making errors and to show you better ways to navigate the program. With the goal in mind of going chartless and eventually paperless, it is imperative that all paper forms being used are converted to a computer form for the same purpose. For instance, the health information form in the computer should be used instead of the paper health history form, and the patient should sign the digital signature pad instead of the paper. Insurance claims that have to go out with attachments and narratives should not be printed out, written on and sent with documents attached. You cannot go paperless until you have achieved a standard uniformity with all documents.
Once the dental practice understands how to use the program to their best advantage, the software trainer is seldom called back again unless there is a new team member added or the upgrades contain complex information requiring the services of the trainer. If the trainer is going to be a professional consultant to the practice, then he/she needs to be available to oversee and implement the suggested changes to the practice for a specified period of time and with a performance agreement as to the outcome.
Recently, during software training in a new practice, the trainer announced that he was a dental consultant and began giving advice contrary to advice that was given by a professional dental consultant earlier that week. The dentist, shaking his head, agreed to abide by the advice of the software trainer concerning tasks at the front desk. He was unaware that the front office person was already in over her head with an inbox full of unprocessed insurance claims that needed narratives, x-ray and perio charting attached, billings with unanswered questions and unscheduled patients needing appointments.
The software trainer gave standard advice, not customized advice based on the analysis of the business systems, staffing and overhead demands of the dentist. By saying that he was a consultant, the software trainer started priority confusion for the business coordinator as to what was most important to do. “I have a hard time working because I am not sure what I am supposed to do next,” she stated.
Professional dental consultants have a system to carefully analyze all operating systems, staffing issues such as job descriptions, temperaments and training, office policies, overhead percentages, profit and loss, hygiene department, recall systems, billing, insurance, leasing arrangements and more, before giving any advice to the dentist about what systems to add, remove or implement. The consultant is there for a contracted period of time to implement changes with support of the entire team who have agreed to take responsibility for their share of the outcome. It is a professional dental consultant’s job to find hidden untapped revenue and teach the dentist and the team how to capture that revenue. It takes time to observe, analyze and write a plan of action. Software training takes a lot of time as well, and requires the availability of the entire team to succeed. Will software trainers be available to take consulting questions from their clients when they are in the middle of software training in another office? That won’t work. Just as dentists cannot do dentistry and answer their own phone, I say leave the software training to the trainers and dental consulting to the professionals. You will get a better result from both.
If you would like more information on McKenzie Management’s Advanced Training Programs to improve the performance of your team, email email@example.com.
Case Study #211
Dr. Robert Mahoney
Dr. Mahoney’s practice is a very “typical” dental practice. He has two Business Employees, two Clinical Assistants and two Hygienists. What sets practices apart from one another is the ability to be profitable, productive and sustain continued growth. Dr. Mahoney’s practice was suffering in all three departments.
His practice overhead was averaging 69% over the past 12 months. The industry standard is 55-60% for a healthy practice. His employee gross wage percentage was 26% of net collections for the past 12 months. Healthy would be 22% or less.
It is safe to say, based on our experience, that many dental practices do not have daily production goals established for the practice - but production goals are essential in order to know where you are going and when you arrive! Dr. Mahoney’s monthly team gross wages were averaging $11,000 a month. His net collections were averaging $42,308. Wages / collections = 26%. In order for the wages to be within normal limits, he needs to be collecting at least $50,000. He is adjusting about 5% of his gross production for senior, professional, cash, staff and other courtesies. His fees are already adjusted for his PPO plans. Therefore, in order to collect $50,000 at a 98% collection rate, he needs to be producing $53,763. ($50,000 / 100% - 5% for adjustments – 2% for non-collected fees OR 93% = $53,763.)
Therefore, based on working 16 days a month on average, the daily objective to obtain this production for the doctor and hygienist should be $3,360. The hygienist should be producing about $900 per day and his production should be $2,460. Daily production goals should always be established individually for each producer, instead of a total practice goal.
Dr. Mahoney’s practice is almost 10 years old in the same location. He is averaging 22 new patients a month. Theoretically, 10 years x 22 patients per month = 2,640 active patients if his retention rate was 100%, however it is impossible to retain 100% of your hygiene patients. A practice that is managing their recall system should be able to retain 85-90% of their patients, depending on the demographics of the area.
One hygienist working 16 days a month and seeing 9 patients a day is capable of seeing about 144 patients a month. If all the patients were on a 6-month recall interval, she is only capable of maintaining 864 active patients (144 x 6). He has seen over 2,640 patients over the past 10 years. Where are the other 1,776 patients?
The good news is that once the recall system is repaired and the bleeding is stopped, the need for additional hygiene days will happen automatically. 22 new comprehensive exams per month and a retention rate of 90% is enough to grow a practice. The need for additional hygiene days will become evident when the reports are reviewed.
As the hygiene department grows, the practice production and collections will automatically increase. However, keep in mind that there are 2 distinct departments – the doctor and the hygienist. The hygienist’s production has increased due to improved recall systems and the ability to schedule a daily goal. Now Dr. Mahoney must step up his production to carry his portion of the necessary production.
Increasing the doctor’s daily production
For three months, a survey was taken to determine the percentage of patients that were and were not scheduling treatment with the doctor, as well as what type of treatment was recommended. The survey listed:
|Patient Name||Susie Smith|
|If not, why?||Wants to think about it|
What was discovered was that 90% of patients scheduled restorative and extraction appointments, but only 50% of patients were scheduling for C&B and removable prosthetics. Why was this the case? Based on the reasons that were given, the primary reasons were financial and “wants to think about it.” I have always thought that “thinking about it” is interesting. I just can’t imagine patients going home, sitting in their easy chair, and contemplating whether or not they are going to have a crown placed on Tooth #31!
Help Patients Say Yes to Recommended Treatment
When you shop at your favorite clothing store, can you imagine what it would be like if you couldn’t touch anything? We make decisions based on touch, smell and sight. Patients are no different. Dr. Maloney had no presentation models or other educational tools in his office to assist his patients in “buying” their dental needs.
As the hygienist is expressing to Mrs. Jones about the need for a crown to replace an old silver filling that has a cavity in it, Mrs. Jones has no idea what a crown is, what it looks like, what it is made of, or how much it is going to cost. When she is presented to Judy at the front desk and Judy explains that her “investment” is going to be $550, Mrs. Jones is shocked! There was no value placed on the necessary crown by the hygienist. The hygienist only gave her words with no pictures. Mrs. Jones wasn’t able to touch, see or smell what a crown is or how it will help her to chew all the foods that she enjoys, improve her appearance, and last for years and years.
By using something as simple as another patient’s model with a crown already prepared by the lab, added value is placed on the word “crown.” Mrs. Jones can hold it in her hand, she can see how her tooth will be prepared, she is told how the crown is custom-made just to fit her tooth, and if it is made from porcelain, it could last as long as her grandmother’s china!
Don’t allow your patients to “think about it”. This means that they don’t have enough information to make an informed decision. Get them excited about their recommended treatment by knowing what to say to activate their senses, so they can say yes!