Money Can't Buy Motivation - But "Rewards" Can
It’s summer-time, and I would be willing to bet that you and your team are thinking more about vacations than practice goals and objectives. Seven months into 2011 and the luster of the “New Year” with all its promises to do this and pledges to do that has likely given way to “status quo” mode. It’s time to shake things up for the better.
Summer is an excellent time to regroup and reward your team. You want to keep them as motivated and excited about the last half of the year as they were in the first half. After all, a motivated team is essential in retaining quality patients. And increased productivity is dependent upon staff who understand that excellence translates into profits. Performance rewards are an ideal way to recognize an employee that has gone beyond doing their job well. What’s more, rewards are personal expressions of your gratitude, which can reap enormous dividends over time.
But what do I mean by “rewards”? Most importantly, rewards are not raises. Too many dentists consider annual raises to be “rewards.” Consequently, they are continually adding to practice overhead. While raises are temporarily appreciated, there is nothing “special” about them. They don’t motivate employees. They are not an incentive to go above and beyond. In fact, an outstanding team member begins to question why s/he should put forth extra effort or work to come up with new ideas or improvements in systems if they are seldom or never recognized. If there is no feedback and no reward from the dentist and the star performer gets the same raise as everyone else, why should they bother?
Conversely, establishing a reward-for-performance philosophy has several advantages for the dental practice. Employees who participate in reward programs that are integrated into well-defined performance measurement systems tend to develop more of an ownership attitude in the success of the practice. They are more likely to exhibit innovative behavior, actively seeking ways to improve performance within their job description. And they perform more effectively as a team.
Consider a few points when developing a program, to ensure that it is best suited for your practice. First, ask yourself, what do you want to reinforce? In other words, what actions or results do you want to reward? For example, if you want to reward excellent job performance, excellence means going beyond merely doing the job; it’s doing the job extremely well. It may be expertly handling a difficult patient, ensuring that the schedule is booked to meet specific production goals on a regular - not occasional - basis. It means consistently exhibiting very positive and helpful attitudes. It is demonstrating superior patient service during every patient/practice interaction. It’s taking ownership of system improvements, not just criticizing what isn’t working. Having a clear idea of what actions or behaviors you want to reinforce is essential.
Next, consider whom you want to reward. Do you want to reward individuals and the entire team? Certainly, you have standout employees who deserve to be recognized; star performers need a little star treatment now and then to keep them motivated. But don’t forget, true success requires that everyone on the team be engaged and working toward excellence. For example, you can establish team goals for specific accomplishments, such as reducing patient attrition, which requires everyone’s effort. When the goal is met, take the entire team out to dinner and celebrate. It doesn’t have to be extravagant, it can be to the local favorite pizza parlor. It’s about putting fun and excitement into meeting the challenges you need to meet to be successful.
What kind of a program will be well-received by the team? One of the best ways to find out what types of rewards will be most appreciated by your team is to ask them and involve them in designing the reward program. Be sure to establish a budget and let employees know that resources are limited, so creativity is important. It can be very effective for the doctor to start “on the spot” rewards with small gift cards of $5 or $10. This will not only be greatly appreciated, but it is an excellent way to encourage staff input and ideas into the program.
A well-constructed rewards program has specific criteria and objectives. Ultimately, the program should be designed to work for the good of the practice and to help move the practice and the team toward established goals.
Next week, boost practice profits and productivity.
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The Competition and Practice Success
One of the components of practicing dentistry discussed during the Dentist Start-Up Program and the Practice Acquisition Program is marketing strategies, building a niche and understanding the competitions’ strengths and weaknesses. “What if I buy out the competition, won’t that eliminate the patient’s choice and they will have to see me?” Sound rational? Perhaps, if all other systems are operating successfully, such as excellent customer service, fair fees, ethical practices, updated services and systems, and if the demographics and psychographics indicate that a dental practice would be successful in each of the practice locations. Even with a monopoly, the patient still has a choice to drive to another area or not go to the dentist at all.
Take for example, Dr. Able and Dr. Ridealong - cousins who share the same dream of a dental empire. They take pride in saying that they own 5 specialty dental practices in the fifty-mile radius of two small towns. When they purchased the first practice it took off quickly and there was plenty of money to pay the bills and enjoy a “nice” lifestyle. “Let’s do it again” they said over a bottle of champagne, and they did. The second practice was not as profitable as the first, but it broke even most of the time and sometimes they were in the black enough to pay back what they were borrowing from the first practice. Then a “great deal” came along in the form of a dentist who had to sell quickly, and so they bought her two practices as “satellites” to the first two. And lastly, another “I can’t pass this up” opportunity of a large, partially rehabbed practice on a major commuting highway, which grabbed their attention and their wallets.
Their onsite business manager of several years was struggling with the management of the new empire and asked the doctors how they determined whether they were successful or not. Their reply was “if we can pay our bills, which we have been able to do, we are happy.” “What are our production goals?” she asked. Their reply was, “we don’t have any, and our accountant will let us know if we are in the red.”
A consulting analysis revealed that the doctors rarely looked at their profit and loss statements and the business manager had never seen one at all. They did not know if they were operating within industry overhead percentages, which would ensure funds were available to cover operating costs. Consequently, their accountant was not familiar with industry standards for a dental practice. The practice of borrowing from one practice to pay the bills of the other practices caused a lot of confusion and ended in the accounts payable person (a relative) being late in getting bills paid. This practice was affecting the doctors’ credit, and they were not aware of what was going on.
Further analysis revealed that the systems of financial and billing practices were different in each practice, resulting in an overall negative cash flow. The practice of keeping poor performing employees because of loyalty was affecting the practices ability to survive. With the satellite offices available on off days, the main practices suffered open schedule time and an overstaffed situation resulting in 41% of overhead paid to salaries. Industry standards indicate salaries and benefits should be between 20-27% of overhead.
Lack of an Employee Policy Manual, Job Descriptions and accountability for daily performance made it a challenge to get everyone on the “same page”- as the business manager struggled to juggle employee demands and other human resources issues.
“I used to be able to control the two practices, now I am spread too thin and need to hire another manager,” lamented the business manager. With the realization that there wasn’t any money to hire more people, it was recommended to delegate some of her tasks to another member of the team and train them to do these tasks. This will free her up to manage the important human resources and profitability issues of the practices.
Before embarking on the purchase of a practice, it is imperative to consult with professionals who can direct you positively and save you many thousands of dollars in mistakes. Business training for your key business personnel should be a requirement before purchasing another dental practice.
Clean Up Your Accounts Receivables
In the dental business office, there are many systems and protocols that we as consultants review to determine the “health” of that system. This article is to address the area of Accounts Receivables.
What is Accounts Receivable?
It is often confused as to whether the portion that the insurance owes is considered part of the Accounts Receivable…it absolutely is! In lieu of your practice asking the patient for payment, you have elected to ask for the payment from their insurance carrier. However, it should be indicated in writing that the patient is ultimately responsible for the entire amount of the fee for the services provided. Somewhere along the way, unfortunately, patients do seem to forget this part.
What about the account balances that you see on your report that has a (-) in front of it, such as -$100.00? This indicates that the account has a “credit balance.” This was discussed on my last article. If these accounts are not excluded from your Accounts Receivable Report, your report will be incorrectly reduced by the total amount of the credit balances.
The Accounts Receivable Report
What is important is that when you generate your Accounts Receivable Report, it does not include the credit balances.
Also, some software keeps all of the Outstanding Insurance Claims in Current, for some reason. Fortunately, there is also a breakdown available of the amount that is considered insurance so you can determine how much is actually current. Remember, even though it is outstanding from the insurance company, it is still considered part of your A/R.
Another possibility is that all the credit balances remain Current if you include them in your report.
A follow-up call should also be placed at 45 days past due, attempting to make firm financial arrangements for payment of the balance on the account.
Should you elect to ignore it but feel that it is a waste of postage and paper to continue to send statements, at least flag the account so it is not included in your “active” Accounts Receivable dollars at some point in the near future.
Your Financial Coordinator works hard to maintain a healthy A/R of 1x your net production. It is discouraging for her when she is working with accounts that are over a year old, the patient hasn’t been seen and no payment has been made. For her sake, write this account off so you see what your “true” A/R is.
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