3 Ways to Improve Practice Profits
Owning a dental practice isn’t easy. Not only do you need to focus on providing excellent patient care, you also must manage a team and handle the business side of running a practice. There’s certainly a lot to think about, and that includes practice profits.
This is something many dentists struggle with, and it’s understandable. After all, chances are you didn’t become a dentist because you wanted to own a small business. You would much rather focus on the dentistry as the money just rolls in, enabling you to do what you love and live a comfortable life. Unfortunately that isn’t reality. If you want a profitable practice, you have to embrace your role as CEO, and that means understanding what influences revenue losses and gains.
I know this can seem overwhelming, but don’t worry. I’m here to help. Here are three tips designed to help you grow practice profits.
1. Conduct a simple 10-point financial assessment. Before you can make improvements, you need to know where your practice is today. Ask yourself these 10 questions to get a better handle on how your practice is performing financially:
1. Are you bringing in as much money as you believe you should/could be?
The answers to these questions should tell you if your practice’s financial health is keeping you from achieving both personal and professional goals. If finances are holding you back, it’s time to make changes in your practice that will help you grow your bottom line.
2. Create a financial policy. This is the cornerstone of your revenue system and key to ensuring you get paid on time. Develop a policy that makes practice payment procedures clear. The policy shouldn’t be condescending, but it should leave no question about when and how payment is expected from patients.
Your goal should be to collect most, if not all, of what a patient owes before he or she leaves. That said, I know some practices allow patients to carry balances. If that’s the case in your office, it’s important to establish parameters and stick to them. Don’t extend credit to patients indefinitely. While you think you’re helping them, you’re just creating a liability for your practice. Determine how long you’re willing to wait for payment and communicate that to your patients.
On the other hand, don’t make your policy too strict. If you decide you’re not going to accept insurance or only offer a few payment options, many patients won’t be able to go forward with treatment because they won’t be able to afford it. And that means practice productivity and revenues will go down.
Once you develop a written policy for your practice, hand it out to all new patients as part of the new patient packet. Remind existing patients of the policy before they start restorative or elective services so they know exactly what to expect. It’s also a good idea to post the policy on your website.
3. Communicate the value of dentistry. Don’t just collect money from patients once their appointment is over. Train your team to communicate the value of the services you’ve provided. Here’s an example of what team members should say:
“Mrs. Smith, the doctor performed fillings on three teeth today. This involved seven surfaces including medication in each tooth and anesthetic.”
This level of detail tells patients exactly what the doctor did, helping them understand that they received much more than just a simple filling. This helps them see the value of the care you provide, making them more likely to accept treatment in the future.
When telling patients the fee, it’s important to be clear, direct and polite. Here’s an example:
“The charge for today’s restorative treatment is $402. Will you be paying with cash, check or charge? As a special service to our patients, we’re happy to submit your insurance claim. The payment will come directly to you.”
Remember, patients with insurance should pay all of their portion when services are rendered, unless it’s more than $200. I suggest you provide convenient payment options for more expensive procedures, such as CareCredit. Another idea? Offer a 5% adjustment in fees when patients pay for expensive procedures in full. This gives patients a slight price break while you receive payment up front.
As the CEO of your practice, you have to find ways to increase profits. These tips will help you get there.
Next week: How to handle collections and grow profits
For additional information on this topic and more, visit my blog: The Lighter Side
Interested in speaking to me about your practice concerns? Email firstname.lastname@example.org
How to Measure Success
Every dental practice needs to set goals. Why? Without clear goals, you have no way to measure success. Setting daily, monthly and yearly goals will help guide you and your team members, and is critical to growing a thriving, profitable dental practice.
As a practice management consultant, I love helping dental teams meet their goals. There’s really nothing better. I want to help you reach your goals, but first you must determine what those goals are. Not sure how? Don’t worry, you don’t have to do it on your own. Here’s what I recommend:
Start by determining your monetary goal. This is the most important standard to set for your practice. To set your monetary goals, review your employee gross wages for the past 12 months and your net collections. Gross Wages/Net Collections = Gross Wage Overhead. Salary standard in the industry is 19-22% of net collections for a general practice.
In most cases, from here you can establish what your collection goal needs to be for the next 12 months, assuming you don’t have any drastic changes planned. Just remember practice management overhead is not the same as what your accountant calculates.
Now let’s say the Gross Wage Overhead for your team is 24%, but you want to get it down to 20%. Start by determining what your production adjustments, or adjustments that reduced your patient fees, were last year. These include employee discounts, insurance adjustments and senior citizen discounts. Let’s say your adjustments were 20%. That means you need to divide your collection goal by the inversion of 20%, or 80%.
- Monthly wages / 20% = Monthly Collection Goal
Because your Scheduling and Hygiene Coordinator schedule to a production goal and not a collection goal, this step must be performed to correctly calculate your daily goal.
From there, determine what your hygiene goal should be based on one of two factors:
Monthly Gross Production Goal – Monthly Hygiene Goal (daily ?? x number of days worked) = Doctor Monthly Goal. Divide the Doctor Monthly Goal by the number of days worked = Doctor Daily Goal.
You can perform this calculation yearly or monthly. To save time and avoid changing the goal each month, I recommend doing this once a year.
• Marketing internally to your existing patients to increase the number of new patients who come to your practice.
• Properly evaluating your staff for efficiency by incorporating job descriptions and making sure all team members are in a role suited for their temperament.
• Conducting new patient exams to begin building connections with patients who visit your practice for the first time.
• Diagnosing necessary treatment and educating patients about their condition at their level. Talking over their heads won’t help patients understand treatment, and it certainly won’t convince them to say yes.
• Educating patients about their periodontal condition to improve case acceptance.
• Spending quality chair time with new patients to start building trust and a rapport, leading to increased case acceptance and patient loyalty.
• Making sure that when patients are presented to the Scheduling Coordinator, all their clinical questions have been answered. The Scheduling Coordinator’s primary task is to schedule the doctor to meet the daily production goal, not to answer clinical questions that should have been addressed during the case presentation.
• Improving patient retention in hygiene and increasing the number of active patients to ultimately grow the practice. Remember your Hygiene Department is a profit center, not a liability.
• Celebrating every time goals are met. Team members want to be recognized for their accomplishments and feel like their contributions are important to the practice’s success. Recognizing their hard work will raise team morale and motivate them to continually meet daily, weekly and yearly goals.
You’re the CEO of your dental practice, which means you must provide direction for your team. Establishing goals helps provide that direction, making it clear how your practice will measure success. Take the time to determine practice goals as well as to develop strategies to meet those goals, and you’ll be well on your way to practice success. Need help to get there? Don’t hesitate to contact McKenzie Management.
Credibility and Treatment Presentations
Although based on real experiences, names and other details have been changed for this article.
“Do you have any questions regarding to your treatment, Carol? If you do I am sure that Christie, my Treatment Coordinator, can answer them for you. I am going to turn you over to her now and she will explain what appointments you will need and your costs. It was a pleasure meeting you today and I look forward to helping you achieve better aesthetics for your smile and overall health. See you soon.”
Dr. Brown is a well-respected dentist in town and has been in practice for several decades. He is confident that Christie will represent him in the treatment presentation and successfully appoint Carol and arrange for the payment or finances.
Christie has not worked for Dr. Brown for decades; she is new in town and has worked for him for 6 months. Her only credibility is that which Dr. Brown has kindly bestowed on her on behalf of the patient.
Christie had been busy with another patient and didn’t take time to prepare for Carol. When Dr. Brown left the room, she sat in his chair and stared at the computer screen and the clinical notes in regards to Carol’s treatment and then brought up the treatment plan to discuss with Carol. During this time there was just silence.
Christie’s style was always on the run and to prepare at the last minute, but Carol was one of those patients who had little patience for being treated substandard. Christie’s appearance was disheveled because she didn’t have an ironed blouse to wear today, so she wore one that was clean but wrinkled. Her hair was pinned back in a sticky looking bun with the tendrils hanging and catching in her dangling earrings.
Christie began her presentation with a big apology for not being prepared and having to read the treatment plan. “I usually am prepared but I need to look at this first”, she said. The fact that she apologized but never introduced herself got Carol wondering if she knew what she was talking about.
“That’s because I don’t have dental insurance and I will need financing. If you could let me know what the cost of option one would be and how we can arrange that treatment.”
Christie continued with, “Option one is $3,000 and we will need 50% at the start of treatment and when the crowns are delivered we will need the remaining 50%. If you would like financing, please fill out this form and I will call it in to our financing company. It will just take a few minutes to get a reply and you are welcome to sit in the reception room until they call or email back. Is that okay with you?”
Carol gave Christie the information and took a seat in the reception room. Thirty minutes went by and Christie never returned. Carol got up and left the office. No one noticed that she had left until Christie finally came looking for her, prepared with another apology. Christie dismissed the encounter and never called Carol.
Unfortunately, this is a true story.
How could Christie have turned this around and been a credible and valuable member of Dr. Brown’s team?
1. Employee Policies should always include a dress code. Treatment Coordinators and the rest of the staff should look sharp, clean and polished. The entire team represents the practice and the quality of care.
2. Professional attire. Dangling earrings are not considered professional for a health care setting.
3. Treatment Coordinators should be briefed on the treatment options presented and given an indicator of which plan the patient may want or should sit in on the diagnosis. Setting the stage for treatment presentations is usually discussed at the morning meeting.
4. Rapport. Christie did not establish rapport with the patient, instead gave an apology for not being prepared.
5. Timeliness. Christie should have processed the application immediately and then been proactive and scheduled the patient’s appointments. This would show confidence that the patient would be approved for financing.
6. Clear communication. Christie did not anticipate any questions or concerns the patient may have with the treatment and never asked her if she understood the procedures.
Doctors often ask why they aren’t busy when they know they have presented treatment all day long. If you don’t have a trained Treatment Coordinator with systems and goals for success, your practice will not prosper like it should. Call McKenzie Management today to sign up for the Treatment Acceptance Training Course and perfect your treatment presentations.
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