Overhead: Your Deal With the Devil
"The art is not in making money, but in keeping it." - Proverb
For dental practices, those words could not be truer - and the #1 threat to keeping your money is overhead. It can be the disease that plagues the high-potential practice, the venom that sucks the life out of great ideas, grand plans, and even mere necessities. In some cases, overhead has made cash flow so tight that simply meeting payroll and the monthly mortgage is enough to have the doctor shaking his/her head in disbelief and struggling to understand why the practice is barely clinging to the side of the financial pool to stay afloat. After all, the doctor is certainly working hard enough.
For too many practice owners, it seems that no matter how hard you work, more and more of the practice revenues are siphoned off to cover just the day-to-day costs of doing business. And getting a grip on overhead is no small challenge. It is evasive, and its growth is often gradual. Few doctors recognize that seemingly insignificant decisions and daily occurrences have a profound and powerful impact on the bottom line, and many never consider what is happening right in front of them.
Sure, there are those “occasional” holes in the schedule, but you’re certain that’s not the problem. Okay, so you agreed to hire a part-time “floater” in the office to “fill in” here and there when things get a little hectic. But that position can’t possibly be what’s creating the financial stress, after all it’s only a few hours a week. And yes, you do give “modest” pay raises for the team annually, but they are so miniscule, that couldn’t possibly be the reason why you can’t fund your retirement or why you occasionally have to forego your own paycheck, or why you still can’t swing that much needed upgrade to the computer system. I can assure you that you are absolutely right, it’s not any one of those items listed above. No. It’s all of them, and so much more.
Doctor, I’d like you to take a moment to introduce yourself to Overhead, he is now in charge of your practice. It’s not quite like a deal with the Devil, but it’s close. He will dictate how you run your business. No longer are you making decisions based on what’s best for the practice. Rather, choices are made based on how much does “it" cost? How much longer can you do without “it”? And is “it” absolutely necessary. I don’t need to tell you that this is no way to run a practice.
Now if you are ready to reclaim control of your practice and your profitability, read on. It will take courage, commitment, and clear communication to get overhead under control. But the payoff is huge, not just in terms of your finances and your practice’s profitability, but in your overall quality of life and work.
First, I want you to write down this number: 55. No it’s not the age at which you can retire - at least not yet. Rather, this is the percentage of collections that should cover your overhead expenses. In the dental industry, this is the gold standard that every practice should aim for. If your overhead is currently 60-65% of collections, pat yourself on the back. You can remain calm and carry on for the most part, but be keep a watchful eye on those systems that are major overhead drivers as well as the seemingly insignificant expenses.
Unfortunately, most of you are well above the standard. While there are several factors that influence overhead, and dentists may be well aware of the bigger drains on resources, the little things add up quickly as well, in particular, those “little” raises that you feel obliged to give annually to your staff. Repeat after me: If production is going down, payroll cannot go up. To put it another way, if the practice is losing money, employees are not entitled to make more merely because they have logged another year on your staff.
Now, I will be the first to acknowledge this can be a difficult situation, particularly when it comes to long-term employees. I understand that many of you feel an obligation to pay them more, or you feel you want to reward those who have been loyal to the practice. It’s not that I recommend withholding raises – rather, change the context under which they are awarded. Move away from longevity increases to productivity increases.
Next week, when and how to award raises.
For more information on this topic, visit my blog: The Lighter Side
Interested in speaking to me about your practice concerns? Email email@example.com
Unscheduled Treatment - Dialing for Dollars
Quick story about you: It is time for your annual physical with your primary care physician. You schedule a 10:00 am appointment on your day off. At 9:55 you arrive and are greeted by a friendly face that acknowledges you by name and informs you that the doctor will be with you soon. At 10:55 you are dismissed by the assistant to the front desk to schedule an appointment for some blood work that is needed in conjunction with your annual exam. You know that you need to schedule it but you don’t have your calendar and you are already late for your workout at the gym. Your say to the schedule coordinator, “Gosh Sue, I don’t have my calendar and I am running late. I will call you when I get back to the office.” She says okay and you are on your way.
A week or two later, scheduling this important appointment has slipped your mind. It is not that you don’t want to schedule. You know that you need to. It just isn’t a priority right now. Fortunately for you, Sue calls you 2 weeks later to remind you of the importance of this appointment. You schedule, grateful that she followed up with you. Did you feel annoyed, harassed or berated because you failed to make your appointment and Sue had to call you? Of course not! You were happy that she took the initiative to follow up for something that you just hadn’t made time to do.
How many times do you think this scenario happens in your office? If you are tracking the percentage of patients that schedule, you should know. And you should be monitoring how many patients schedule vs. how many do not, and for what procedures. Is your Schedule Coordinator taking the steps that Sue did in this story? The biggest reason that these calls don’t happen is because the Schedule Coordinator does not feel empowered, does not see the significance, or feels that she/he is annoying the patient.
Let’s start the process and see how this SHOULD be handled in your office:
Step 1. The patient is presented to your Schedule Coordinator, Chris, who is informed by your hygienist that the patient needs a porcelain tooth colored crown on Tooth #3 on the upper right side for about 90 minutes.
Step 2. Chris reviews today's treatment, asks for any payment that is applicable, and schedules the next recall visit IF the patient can make a commitment to the appointment today.
Step 3. Chris says to your patient, “Mrs. Jones, I understand that the doctor has recommended a crown for you on the upper right side due to a large cavity underneath your old crown. He would like for you to take care of this as soon as possible to avoid additional costs relative to additional work that might be needed. I have an appointment on Tuesday morning at 9:50 or Wednesday at 3:00. Which time works best for you?”
Step 4. The patient understands but does not have her calendar with her. She indicates to Chris that she will call when she returns to the office.
Step 5. Chris acknowledges her statement and responds with, “Mrs. Jones, I know this appointment is very important. Should I not hear from you in a week or so, I am sure that the doctor will ask that I call you. Will that be okay with you?” The patient responds affirmatively.
Here is where the ball gets dropped so many times:
Step 6. Since the patient did not schedule, Chris must create a treatment plan for Mrs. Jones so there will be a way to track this recommended treatment. Dependent upon the practice management software, there are also ways to set reminders to call Mrs. Jones in a week should the patient not call back to schedule.
Step 7. A week or so later, Chris runs the outstanding treatment report for the past 2 weeks and notices that Mrs. Jones’s crown is still unscheduled. She places a call to Mrs. Jones. “Hello, this is Chris at Dr. Smith’s office. I know how busy you are and as promised, I am calling to assist you in scheduling your appointment for the crown on the upper right side that you and Dr. Smith discussed. This is the tooth that has the old crown with a large cavity underneath it. Do you have your calendar handy?”
Okay. So Chris is not successful in scheduling this appointment. She has a 50/50 chance, right? The patient indicated that she would call the office when she is ready to schedule.
Step 8. Chris runs the Unscheduled Treatment Plan Report for 3 months prior (only that month, not all months from now through 3 months). She is only going to follow up with those patients who have not scheduled 3 months ago. She must be careful to double check the patient’s upcoming appointments and history to see if the patient is still in treatment with other procedures.
Step 9. A friendly letter should be sent to Mrs. Jones, along with an intraoral image of Tooth #3, again recommending the treatment and why it is necessary, along with the potential consequence of no treatment. This letter should be signed by the doctor, giving the letter significance. A copy of the letter should be placed in the patient’s paper record or scanned into the digital record, as well as a clinical note added to indicate that the letter was sent and a copy is available.
As great as a Schedule Coordinator is, not all patients will schedule at the time of dismissal. But at least have a follow-up plan so you feel that you have done all you can for your patients. Sometimes, they just need to be reminded!
Are You a Digital Dropout Dentist?
Are you waiting for some government official to show up at your door demanding you drop the chart and pick up the mouse? I am not certain it will play out this way, but why wait for the “ax to fall” before making the change to technology? There have been amazing changes since the 1990s in dental software. You don’t have to be a “high-tech” person to learn and become comfortable with technology that is available now. If your vision for practice success includes highly efficient, smooth running and low stress days, then you are ready for a paper chartless practice.
The sooner you and your dental team become proficient at using the practice’s dental software program, the sooner you will feel comfortable incorporating EMRs (Electronic Medical Records) to your practice before the looming 2015 deadline. Using practice management software has allowed practices to work with smaller, more proficient teams. Many of the administrative chores of days gone by, such as printing and stuffing statements, sending recall cards, posting the charges manually into the computer and verifying the scribbled handwritten notes on paper are now automatically done within the software charting system.
Creating treatment plans and presentations for patients can be done quickly with just a few keystrokes by the clinical team, and are ready to view at patient dismissal. Submitting and tracking insurance used to be a full time position in many practices, and now takes about an hour to file claims electronically including attachments. Patients love being contacted via text or email because that is how they live their lives now. Stopping to make a phone call to the office just seems outdated and annoying. Technology frees up time to develop a more trusting and confident relationship with our patients.
In addition, most patients are educated enough to know that digital x-rays are far more beneficial to them and to the environment. Having outdated systems in your practice can spell disaster to attracting and keeping new patients.
Here are some guidelines to help you begin to go chartless:
1. Get the practice management software with computers and monitors in each operatory. Soon we may be able to access from one computer.
2. Get a digital x-ray system. Get an intra-oral camera too.
3. Pick a date to go chartless.
4. Each new patient is chartless as they come in for the first time. Fill in all fields and make sure health history is complete. Signify patients with e-charts with the letters EC in alerts. Existing patients, enter all information in the digital chart, not paper, as they come in for recall. Pull the paper chart for past history or old x-ray comparison only.
5. Use the health history form in the computer and have the patient sign on signature pads. If you’re not ready for this, you will have to scan health history forms into the document center in the patient digital chart. This is not difficult, but it can be time consuming. It is much cleaner and easier to read on the digital health history form.
6. Incorporate a digital patient education system that integrates with the software to create amazing treatment plans and informed consent. CAESY in Eaglesoft and GURU in Dentrix are amazing products that give a polished and vivid treatment video education in addition to a printable treatment plan.
7. Have regular software training either by the software supplier or a well trained staff member. Everyone is to be crossed-trained. Clinical assistants and hygienists need to enter treatment plans and clinical notes; front office needs to know how to do treatment estimates from standard fees and PPO fees, if in network.
8. Sign up for a patient reminder contact system like the service from Sesame Communications.
9. Electronic claims processing must be set up to attach and send x-rays, narratives and documents seamlessly to all companies that accept electronic claims. This is completed daily.
10. Your dental software company is the best source for updates to the digital system and should have the current information on government mandated electronic compliance issues.
11. Don’t look back. Don’t let the paper charts define how many patients you have. Your software will give you a far more accurate number based on when the patient was last seen and whether they are active in the recall system.
12. Verify that you have the best back-up system available and that it is offsite. Back-up must be transmitted daily to a reliable and verifiable source.
Need help getting your team on board for upcoming changes? Call McKenzie Management today for professional business training.
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