12.17.10 Issue #458 info@mckenziemgmt.com 1-877-777-6151 Forward This Newsletter
 

Fee Increases - How Much is Enough?
by Sally McKenzie CEO
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The Christmas holiday shopping season appears to be off to a strong start. Many retailers saw longer lines on Black Friday this year, as shoppers were happily opening their wallets to purchase laptops, clothing, electronics, and the like. Consumer confidence is growing, and along with it, so is consumer spending. While retailers certainly made bargains available, they weren’t exactly giving away the goods. What’s more, they are expected to pace those discounts over the holiday buying season. The sentiment that prices have to be slashed ridiculously low simply to get bodies in the door has gone the way of Christmas past.

What does this mean for dentists? During the last couple of years, many dentists have been locked in financial maintenance mode. Fee increases stopped, and for many, professional and personal aspirations were shelved as they hunkered down to wait out the Great Recession. Today, we are watching the strongest holiday season in three years unfold, a clear indication that as we approach 2011, the economy is poised to make significant strides. The question is, are you? It’s time to take a close look at adjusting fees in the coming year and dust off that list of dreams and goals while you’re at it.

Start with the very basics that shape your quality of life. What is your definition of success - money, time, family, technology, early retirement, three-day work weeks? How much vacation time do you want to take? How much does the practice need to produce to meet your financial needs and wants - i.e. goals?  How much do you need/want to pay your staff and yourself? What are the mortgage and the utility bills? How do you pay for all these? By renewing those production-per-hour goals and adjusting fees to achieve those goals. Let me explain.

For purposes of example, we’ll say your goal is to break $900k for practice production, including hygiene. Your hygiene department is on track and producing 33% of total practice production. Therefore, your production goal for the year is $603,000, which calculates to just over $12,563 per week (taking four weeks out for vacation). Working forty hours per week, this means you’ll need to produce about $314 per hour. If you want to work fewer hours, per hour production will need to be higher.

A crown charged out at $950, which takes two appointments for a total of two hours, exceeds the per hour production goal by $161. The excess can be applied to any shortfall caused by other procedures. Use the formula below to determine the rate of hourly production and see if the practice is meeting production objectives.

  1. The assistant logs the amount of time it takes to perform specific procedures. If the procedure takes the doctor three appointments, she should record the time needed for all three appointments.
  2. Record the total fee for the procedure.
  3. Take the cost of the procedure, $950, divide it by the total time to perform the procedure, 120 minutes. The production per minute value is $7.91. Multiply that by 60 minutes - $475/hr.
  4. Compare that amount to the doctor’s hourly production goal. It must equal or exceed the identified goal.

If you’re not meeting your production per hour goal, you have two choices: reduce the time you take to perform procedures, or increase fees. Ideally, you should adjust your fees twice a year: 2% then 3% for an annual increase of 5%. Even if you increase fees only slightly, say $4-$5 per procedure, that will make a huge difference in your bottom line. 

However, it doesn’t stop there; consider practice expenses as well. Examine where current expenses are as compared to where they should be. Overhead costs should line up according to the following benchmarks:

  • Laboratory expenses: 10%
  • Dental Supplies: 5%
  • Rent: 5%
  • Employee Salaries: 19-22% (excluding the doctor)
  • Payroll taxes and benefits: 3-5%

Knowing your expenses will help you identify specific production goals based on the number of days per week you will see patients, and the number of hours you will spend on treatment. Establish a solid fee for each service, and when your second cousin Sue asks if you’re giving “family discounts,” tell her that she’ll have to take that up with your Collections Coordinator. I recommend you leave the price breaks to the Black Friday jockeys and the big box retailers. You’ve got a practice to run.

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 Haller, P.h. D.
Leadership Coach
McKenzie Management
coach@ mckenziemgmt.com
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Listening for Practice Success
By Nancy Haller, Ph.D., Leadership Coach McKenzie Management

If you aren’t familiar with Hallmark’s Maxine, she is a brazen older woman with a stooped back, a mop of curly gray hair and an abrasive personality. One of her infamous pieces of sage advice is “If you have something to say, raise your hand and place it over your mouth.”

Let's face it… the deck is woefully stacked against us when it comes to true listening. We are all hard-wired to evaluate and plagued by an endless internal monologue. To top that off we have to contend with external distractions in our environment. Time, to-do lists, noisy equipment or crowded rooms can all get in the way of listening.

The art of listening is truly a challenge. Hearing what is needed from your patients and your employees isn’t easy. You must seek this knowledge by deliberately asking questions and listening. Only then can you plan and decide what actions must be taken. Whether it is treatment compliance or job performance, influencing others can’t happen until you listen.

Hearing is not the same as listening. That’s why it’s called “active listening.” It is not a passive activity because it demands your attention and focus. And if you want to be a “black belt” in listening, listen for what isn’t being said in words. Non-verbal gestures, facial expressions, volume and tonality of speech give insight into the speaker’s true message.  

Even as a psychologist with years of practice, I know that listening is one of the most difficult things a human can do. Yet the ability to listen effectively is an essential component of leadership. Unfortunately few leaders know just what it takes to become a better listener. You can improve your ability to lead effectively by learning the skills for active listening.

  1. Listen with Purpose
    In your work, look at how much of your job depends on getting cooperation from other people. Intentional listening builds relationships. Invest the energy to set a comfortable tone. Allow time and opportunity for the other person to think and speak. Pay attention to your frame of mind as well as your body language. Be focused on the moment and operate from a place of respect.
  1. Listen for Understanding Rather than Judging
    As a listener and a leader, you need to be open to new ideas, new perspectives and new possibilities. Even when good listeners have strong views, they suspend judgment, hold their criticism and avoid arguing or selling their point right away. Listening does not convey agreement. You can share your views later in the conversation.
  1. Reflect
    Active listening requires that you imagine what the other person’s view must be. Your job is not to change it, fight it, or argue them out of it. Learn to mirror the other person's information and emotions by paraphrasing key points. Don't assume that you understand correctly or that the other person knows you've heard him/her. Reflecting is a way to indicate that you and your counterpart are on the same page.
  1. Clarify
    Don't be too shy to ask questions about any issue that is ambiguous or unclear. Open-ended, clarifying and probing questions are important tools. They draw people out and encourage them to expand their ideas, while inviting reflection and thoughtful response.
  1. Summarize
    Restating key themes as the conversation proceeds confirms and solidifies your grasp of the other person's point of view. It also helps both parties to be clear on mutual responsibilities and follow-up. Briefly summarize what you have understood as you listened, and ask the other person to do the same.
  1. Share
    Active listening is first about understanding the other person, then about being understood. As you gain a clearer understanding of the other person's perspective, you can then introduce your ideas, feelings and suggestions. You might talk about a similar experience you had or share an idea that was triggered by a comment made previously in the conversation.

If you apply the six skills required for active listening, you will not only be known as a good listener. You will become a better leader as well. And remember that we have two ears and one mouth because we are supposed to listen twice as much as we speak.

Dr. Haller provides training for leadership effectiveness, interpersonal communication, conflict management, and team building. If you would like to learn more contact her at coach@mckenziemgmt.com

Interested in having Dr. Haller speak to your dental society or study club? Click here.

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David Clow
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The First Line
By David Clow

Tell me if you think this is a stretch: dentists are part of national security infrastructure.

Am I going too far? Consider some troubling news from the Pentagon just brought to light by conservative columnist David Frum on CNN: In 2008, over 4,500 recruits were discharged for failing to meet military weight standards. When we say “military weight standards,” we aren’t talking Army Rangers or Special Forces. Male United States military recruits have to have a body fat percentage below 26%. That’s just under the body fat percentage, 30%, that defines clinical obesity. It’s far above what a soldier in good physical condition typically carries. And it means that over 4,500 people literally ate their way out of the service. Worse, it means that millions of young Americans are physically ineligible to wear a uniform. A Patient Speaks to Dentists. A Few Words from the Chair.

If the future looked safer than the past for any of us, maybe all this would be acceptable. Sadly, no one reading this thinks that’s the case. This puts dentists in a position they might not know they occupy: you’re the first line of defense.

The Battle Lines
Dentists man the post where obesity begins. You’re the experts on the mouth, and by extension, you’re the expert on what goes into it, what happens when it’s there, and the effects it has afterwards. No, you aren’t nutritionists or weight counselors, and no, you can’t make your patients walk three miles a day and lay off the Doritos. However, you do see the whole picture of diet from a unique perspective, and you can talk about good nutrition as it relates - and it always does - to good dental health. In so doing, you hit two targets: you can put a good word in for your patient’s total well-being, and you can remind them that you’re not just a drill-fill-bill expert, but that you have a lot more to offer for their whole health and happiness. The dentist who makes a living out of fixing problems needs problems to happen. The one who helps patients prevent problems might get to practice a higher level of dentistry, and might get better trust, better word of mouth recommendations, and a more satisfying practice.

If all this sounds like an exaggeration, well, I’ll concede a little. It is. But, only a little. Any reader here with military experience knows the importance of every soldier’s good health to the overall fitness of the unit. Compromises can’t be tolerated for long. The same level of attentive fitness pays off in everyone’s life, whether civilian or military. We’re all fighting a daily battle against aging, sickness and chronic illnesses - for ourselves, our families, and the whole country. We’re still in the middle of a national debate over the bloated healthcare costs we face as a nation. The future on that front doesn’t look any safer than the one on actual battlefields. Health, fitness, and the investments we all make in them are front-and-center in our budgets and our behaviors every day. Am I exaggerating when I say we need to reverse the trend towards obesity, poor dietary choices and their outcomes? Am I exaggerating when I say that if we don’t, we’ll be weaker, sicker, and less prosperous?

Business and Battles
It’s an irony for all of us that our healthcare infrastructure is one of the world’s finest, that our technologies for wellness are more advanced than ever, and with those advantages and opportunities, we’re plagued not just with natural problems, but with problems we acquired on our own. But scolding helps no one. Maybe a little inspiration is called for.

The greatest generals were the ones who could get their soldiers to march fearlessly and proudly with full hearts and firm purpose. I’d humbly suggest that for every healthcare professional, and particularly for dentists, there’s no better cause to march for than your patients’ overall good health. For them, there’s no better purpose. The dentist who can connect the big healthcare picture with the small one, the big effect with the small act like flossing or basic preventive care, can help a patient rediscover motivation he or she might have lost. That dentist is more than a drill-and-fill practitioner. That dentist can make a difference in a patient’s whole life.

Wellington said that “The battle of Waterloo was won on the playing fields of Eton." A dentist’s equivalent might be that “Victory over bad diet choices starts with a motivated, informed consumer.” As a patient, I keep hoping that the dental profession will take a more prominent role in collaboration with physicians, dietitians, and the media in linking together all the facts that lead to better overall health and wellness. The need is obvious: in the big picture, America needs better healthcare habits, and we need them now. The dental profession has an important role to play in this fight.

I’d also welcome advice from you when I’m in your chair. One-to-one, our collaboration might help me see my role in this more clearly. The big picture seems overwhelming to me sometimes, as I suspect it does to many patients. But once I’m motivated, I march. And the general, even the one in the white smock, who gives me a full heart and a firm purpose, wins my ongoing loyalty. That’s the dentist I come back to again and again.

One more thing: you’re in a battle to be the best dentist in your market area. I’m ready to help you if you help me. Tell me if you think that’s a stretch.

On behalf of McKenzie Management, David Clow consults with dental professionals on practice culture, case acceptance, and patient expectations.

David Clow is a writer/consultant for Fortune 100 companies. His book, A Few Words from the Chair, is the first book written by a patient for dental professionals and students and is available here.

Listen to David’s FREE podcast. Click Here

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