McKenzie Newsletter 421

Practice Management for Dummies
by Sally McKenzie CEO
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It seems as though there is a “For Dummies” book on virtually every topic from Facebook for Dummies to Wine for Dummies to Health Care for Dummies (I wonder if that book covers dentistry). There is even an Australia’s Dangerous Creatures for Dummies – better to be prepared should that adventure trip into the Outback suddenly go horribly wrong. Certainly, the market for those bent on self-help is huge. In fact, earlier this month, the parent company reported a 10% increase in profits for the third quarter in the Dummies line.

I am reasonably convinced that if there were a Practice Management for Dummies book, dentists would buy it - certain that they had the template to the perfect practice. And the best part, they could pick and choose those things they would be willing to implement, or, should I say, that they believe would actually fly with their staff. I can see the doctor scanning the table of contents now - “Let’s see, here’s a chapter on hiring and firing. I’ll only read the part about hiring because I don’t ever want to fire someone. And here’s another chapter on retention and what I need to change to keep my patients. Hmmm, I really just want to find the chapter about how I can get a gazillion new patients in the door without ever having to change a thing.”

The self-help approach is a great concept and obviously it is a huge money making industry. The problem is that while dentists may recognize that they need help with something, too often they may be afraid of the commitment that real change requires. They are afraid of the investment of time and money, so they look for those cheap and easy “fixes” that they believe will require the least amount of pain, suffering, and expense. And lo and behold, a few months later no real change has happened and they are still dealing with the same frustrations, financial loss and problems that have been weighing them down for years.

Although dentists come away from articles, books, and seminars with kernels of very good information that, if implemented correctly, would be tremendously beneficial to the practice, the doctor cannot do it alone. He/she simply does not have the time or the expertise to examine the systems, determine the shortfalls, run reports, analyze results, and address the current and potential problems associated with system changes. Moreover, if the doctor isn’t diagnosing and delivering dentistry, the practice isn’t making money.

Bottom-line: major shifts in protocols such as scheduling, collections, treatment presentation, financial arrangements, marketing, etc., require research, careful planning and implementation, and ongoing monitoring and adjustment. The reality is neither dentists nor dental teams know how to conduct the research within their own practices to determine how effective a blocked schedule would be, or how well a new collections procedure would go over, or how to generate a flock of new patients. They do not have the demographic information at their fingertips to determine if a significant change in the practice will be accepted or rejected.

Moreover, it is incredibly difficult for doctors alone to create true change in their practices. Employees, naturally, are resistant to change. They must be educated, trained, and coached to understand how the change benefits them, the doctor, and the practice as a whole.

As much as you may want to, you simply do not have the time to be the CEO, the VP of Production, the Director of Human Resources, the Accountant, the Visionary, and the Practice Management Consultant – no matter how many self-help books you read. But you do have a choice. You can continue to limp along and try to figure out over the lifetime of your career how to make the most of this unwieldy thing that is your practice and do the dentistry as time allows. Or you can invest a little time and money and within weeks enjoy the practice you’ve always dreamed of. Think about it. Then call me. 877-777-6151

Interested in speaking to Sally about your practice concerns? Email her at sallymck@mckenziemgmt.com. Interested in having Sally speak to your dental society or study club? Click here.

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Nancy Caudill
Senior Consultant
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New Employee, Old Mess!

Dr. Sharon Butler– Case Study #233

Every now and then our office receives a call from a team member requesting information. Judy from Dr. Butler’s office had the opportunity to hear Sally speak at a state convention and was impressed with her knowledge and expertise after 30 years of consulting, so McKenzie Management was where she placed her cry for help.

“Yesterday was my first day of employment here at Dr. Butler’s office. The previous front office manager left without notice and I was hired to take her place. The office is a mess and I don’t know where to start!”

Dr. Butler’s practice mess:

Aging Report = $156,000 (2x as high as it should be) with 50% over 90 days
Outstanding insurance claims over 60 days = $37,250
Credit balances = $24,000

Poor Judy has no idea where to start the attack on this mess. No wonder the previous employee left – she should have been fired! However, Dr. Butler was not monitoring practice statistics so she was not even aware of the situation.

Aging Report
As Judy reviewed the accounts receivable report, it was obvious that many of the account balances were over 2 years old with no payments made since the treatment was completed and no contacts made to the patient. It was suggested that these accounts be written off. The accounts that were inactive prior to 1-2 years ago and had no payments made should receive a “bookkeeping adjustment” letter. This letter would indicate that an accounting audit was completed and this account was discovered unpaid. Extend an apology for the oversight and offer the patient a 50% bookkeeping adjustment to pay their account. Attach a statement that will show the date of the charges along with a return envelope, and keep your fingers crossed that they will pay. If not, write it off.

It is reasonable to attempt to collect the recent unpaid accounts from 12 months to current. First, Judy was instructed to place a call to the patient and express her apology for the delinquent notice of their account and inform them that they would be receiving a statement in the mail in a few days. Did they have any questions? Since many of these patients were active patients, it was important to maintain the relationship. A statement was then placed in the mail to the patient and follow-up was applied. To aid in the distribution of these statements, Judy utilized computer-generated electronic statements through the practice software to avoid the need to print, stuff and mail the statements manually.

The credit balances needed to be addressed immediately. In many states, credit balances are to be refunded to the patient within 30 days of the receipt of the overpayment. Many of these credit balances were also several years old and the patients were no longer being seen. The first task was to attempt to contact the patient, inform them of the credit balance and ask if they would like to apply it to treatment planned dentistry. If the patient cannot be contacted by phone, a check should be mailed to the most current address with an “address service requested” written or stamped on the envelope. It is possible that the forwarding address has expired and the refund check will be returned. Judy should make a note in the computer that the check was returned and give it to Dr. Butler for an adjustment in QuickBooks.

Delinquent Insurance Claims
It is unusual to find an insurance company that will honor a dental claim over 12 months, but not impossible. Judy called the insurance companies associated with the claims 12-16 months past due, explained the situation and requested consideration of the claim. The claims had to be resubmitted to those carriers that were willing to “review” the claim for payment. Claims over 16 months and unpaid were deleted and a review of the patients’ ledgers to determine what the next step should be was conducted, following the guidelines above. Fortunately, the claims that were less than a year old were resubmitted for payment or additional information was submitted as requested.

Moving Forward
New systems were put in place for Judy to avoid any future “messes” in Dr. Butler’s practice. All patients were informed at the time of scheduling their appointments how much they were responsible for, and this amount was written on the back of their appointment card. When applicable, a Financial Options Form was completed.

When necessary, statements are electronically submitted on a weekly basis to reduce the time needed to review each one individually. Statements are also sent immediately when the insurance payment is received. A telephone call is placed to the patient when the account balance is 45 days delinquent, confirming the address of the patient and informing the patient of the balance. If no contact can be made to the patient, a message is left requesting that the patient contact the office. Unpaid insurance claims are followed up after 15 days if submitted electronically, and 30 days if submitted by paper due to attachments (the office does not have digital radiographs to allow Judy to use Fast Attach).

A system of keeping “score” was instituted in the practice to monitor the monthly practice statistics. Dr. Butler was updated in a timely manner on the health of the practice. She would not find herself in this position again – no more messes to clean up.

If you would like more information on how McKenzie's Practice Enrichment Programs can help you IMPLEMENT proven strategies, email info@mckenziemgmt.com.

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Belle DuCharme CDPMA
Instructor/Consultant
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The Much Neglected Business Plan

One of the main reasons for business failure is the lack of a realistic and adequate business plan. It is like going out to sea without a navigational chart and praying that the wind currents will take you where you want to go. In order to get a loan from a lender or investor, the dentist must prove that there is limited risk and give good reason to think that the dental practice will be a profitable venture long term. Statistically dental practices are good investments, but if not managed correctly they can struggle to be in the black and may never achieve their full potential simply because the business operators are under-informed and ill-prepared. Often dentists rely on key staff members to keep the business on track for success and are trusting that this is being done correctly.

Most dental office managers or business coordinators have never seen a business plan. It is not uncommon to be considered experienced in dentistry, great at scheduling and collecting the money and billing insurance, but a novice when it comes to business planning. In the beginning when you needed financing for start-up, a business plan was necessary, but why do you need a business plan after that?

A good business plan serves as a guide that you will follow throughout the lifetime of the business. A business plan is a blueprint that serves as a starting point to future analysis of the business systems to monitor growth and determine where to implement changes in the practice. Knowing the past performance will provide history of the practice and help give projections to the future of the practice.

Briefly the core principles of a business plan are:

The Organizational Plan
The Marketing Plan
The Financial Documents
U.S. Tax Information

The Organizational Plan addresses the description of the particular dental business, administrative set-up and descriptions of services and products offered. The creation of your Mission Statement and your short and long term business goals are part of this segment. Establishing the Employee Policy Manual and other procedure protocols to standardize office systems will be clarified in this principle. The type of management style is defined and job descriptions are created to assure accountability. Create an organizational chart to visually show areas of responsibility and the personnel in charge of each section along with the number of employees they will manage. If your management style is that of autonomy then who will the clinical staff answer to if there is a question about buying more instruments or taking a vacation? Without these organizational principles in place the practice is doomed to constant chaos and miscommunications.

The Marketing Plan integrates the activities involved in advertising, selling treatment acceptance, customer service, internal and external marketing strategies and networking. It is vital to know how to measure your patient base and monitor patient retention to insure practice growth. Determine how many new patients do you get each month and where are they coming from. Decide if and how you want to niche your practice in the current demographic and define your target market and how to reach them. An ongoing marketing plan is more necessary in today’s market than ever before as people choose more carefully where to spend their money.

Financial Documents are those records used to show past, current and projected finances. Using good financial software like QuickBooks will help keep you organized in this important area. Keeping overhead under control by managing current costs and projected costs is fundamental to a healthy practice. Understanding the principles of cash flow and how it relates to the practice accounts receivables is a required skill of a trained business coordinator.

U. S. Tax Information is the responsibility of the dentist CEO. A basic understanding of the U.S. tax system is an absolute necessity if you are going to write a business plan for a business that will operate within the U.S. Keep a calendar of federal taxes depending on how your business is defined. Whether a Sole Proprietor, Partnership, S Corporation or other, this must be set up correctly and using a professional in this area is recommended because of the ever changing tax laws.

If your original business plan is collecting dust somewhere, get it out and look it over. Get your staff onboard to spur the business in a new direction by giving them an opportunity to own their success. Visualize and strategize. Need help - call McKenzie Management and we will get you on the right course for future success.

If you would like more information on McKenzie Management’s Advanced Training Programs to improve the performance of your dental business skills, email training@mckenziemgmt.com and inquire about our Dentist CEO Training or Office Manager Training.

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