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  Sally McKenzie's
 Weekly Management e-Motivator
  8.08.03 Issue #76
   

Is Overhead Dragging You Under?


Sally Mckenzie, CMC
President
McKenzie Management
sallymck@
mckenziemgmt.com

     The numbers are staring at you from the page. There’s no plugging these leaks. Last month and the 30 days before that finances were riding a bit close to the edge, but you were not going to let it bother you – after all, there’s this economy issue and all. Now it is a different story altogether. At this rate, overhead is going to pull you under and fast.

Consider the impact of high overhead on both your personal and your professional goals.

Answer these 10 questions…honestly.

  1. Are you making as much as you believe you should/could be?
  2. Are you concerned that you are not saving adequately for your retirement?
  3. Are you putting off saving for retirement until you get expenses under control/production increases?
  4. Do you periodically skip payments to your retirement fund when things get tight?
  5. Do you have enough revenue for continuing education for yourself and your staff?
  6. Do you hesitate to make investments in equipment that could improve your practice and better serve patients?
  7. Do you put off improvements to the physical appearance of your practice?
  8. Are you effectively marketing your practice and your services?
  9. Are you concerned about staff raises/bonuses?
  10. Do you feel like you can’t possibly work any harder?

If overhead is keeping you from achieving personal and professional objectives, make a commitment to bring it under control. Your goal is to reduce overhead to 55% of production. If you are currently at 60-65%, congratulations, you are in the comfortable range for a general practice. However, to really protect your practice from the economy, stock market, and ever-changing reimbursement rules of third-party payers, you too will want to look closely at the overhead triggers – inconsistent production, low collections, and high expenses.

To achieve the 55% overhead goal, start by establishing the following budget targets:
Dental supplies - 5%
Office supplies - 2%
Rent - 5%
Laboratory - 10%
Payroll - 20%
Payroll taxes and benefits - 3%
Miscellaneous 10%

Next week, proven strategies to get overhead under control in your practice.

If you have any questions or comments, please email Sally McKenzie at sallymck@mckenziemgmt.com.

Interested in having Sally speak to your dental society or study club?
Click here

Building On The Theory

How An Ailing Business Foundation Can Cause
“Digital Chaos”


Mark Dilatush
VP Professional Relations
McKenzie Management
mark@
mckenziemgmt.com

Technology Tool Box

What Are You Doing For Your Summer Vacation?

Last week I discussed your technology budget [see article]. This week, let’s talk about something you can do right now that will help you start generating an immediate return on your technology investment.

Is August a slow month in your practice? If you listen to dental offices like we do, you begin to notice who’s busy and who’s not busy. Pedo and ortho practices are busy right now. Some general practices are busy while others blame patient summer vacation schedules for holes in their own schedule. Do you wonder why pediatric dentists and orthodontists are really busy right now? The children are home!

Yes, the parents of every patient under 23 years of age that come to your practice would like nothing more than to get all of these appointments out of the way BEFORE back to school season starts. By August, every parent of a school age child is just itching to get things like this done and out of the way before the annual trek to the mall for clothes, backpacks, pencils, pens, and oh yeah – those new sneakers that retail for $200!

Here’s what you might want to consider as a project for this week ...

  1. Go to the reporting area of your practice management software. Create a selection criteria to find all patients under 23 years of age who are overdue for their recall. Run another search for the same age range, only this time ask your practice management system for all patient’s who have an outstanding treatment plan
  2. Print both reports in alphabetical order
  3. With a highlighter, mark the patients who show up on both lists
  4. Formulate a telephone script for your scheduling coordinator. An example might be “Hello, this is Mary from Dr. Proactive’s dental office. Our records show that little Timmy was due for his professional cleaning in (date when Timmy was due). Dr. Proactive also wanted me to let you know that we haven’t completed Timmy’s (procedure delivered in a way that the parent can understand). Since “back to school” is quickly upon us, would you like me to reserve some time for Timmy before September?
  5. Always, always, always review the entire family recall and treatment history BEFORE dialing the phone. At a minimum, look at every family member’s recall date, account balance, and any outstanding treatment plans. You would be amazed at the opportunities you will uncover.
  6. Schedule smart! If you fill a general dentist’s schedule with eleven children under the age of 12 in one day – chances are you’ll be looking for a new job next week. At your next team meeting (huddle), agree on a maximum number of children per day and schedule toward that objective. Also, consider the following: as you make outbound calls and the parent’s make appointments – ask them if you can call them to move the appointment up in the event your practice has a last minute cancellation. If they say “yes”, put the appointment on your “short call” list in your practice management software scheduler. Any last minute cancellations during August can be filled with these patients.
  7. Stop giving children an hour for a professional cleaning with your hygienist(s)! Your practice management software should have a patient specific time unit for a prophy inside the patient record of the software. That way, you can tighten the schedule, stay on time, and dare I say – be more profitable?

The best person to make these calls to your patients is someone who has school age children at home. While some scheduling coordinators enjoy making calls and packing the schedule, others would rather do something else. With this project, you have a built in excuse to call which will be perceived by the parent as quality customer service. For those of you who are a bit uneasy calling, Back to School is a fantastic and understandable ice breaker.

If you have any questions or comments, please email Mark Dilatush at mark@mckenziemgmt.com.

Interested in having Mark speak to your dental society or study club?
Click here

See Mark's technology lecture Dec. 10th in La Jolla. For more information email info@dentalcareerdevelop.com or call 1-877-900-5775

Getting The Cold Shoulder


coach@
mckenziemgmt.com

Giving Dentists And Their Staff Different Perspectives On Day To Day Issues

Dear Coach,

I attended a couple of Sally's seminars a few years back. Very interesting but I would like a seminar or a workshop just for Drs. to learn how to handle different situations with our staff.

For example, I’ve had a front desk employee for about 6 years, and until now she was getting a raise every year at about the same time. (I was always reminded about the time for it.)

I know, I should not have done it that way, but here I am and I want to break this pattern…since I was reminded again.

I asked her for an analysis of the production of the past 5 years, and even though the gross income for the practice increased, production didn't.

How should I approach this since next week is the end of “another year”. I would really appreciate if you can give me some pointers.

Thanks, Dr. Forgot the Raise

From The Coach:

Thank you very much for your letter. As a matter of fact, I will be presenting a seminar entitled "Practice Politics: The Enemy Within" on October 8th and December 6th in San Diego. The seminar is designed to teach dentists and staff how to organize themselves so that situations like this one do not develop. To register email info@dentalcareerdevelop .com or call 1-877-900-5775.

While it is reasonable that an employee expects to receive a raise every year in order to keep up with inflation, that does not presume that they should. It is good business policy to give raises. The two most popular assessment tools are: 1) did they help to make money for the business; and 2) is the value of the tasks they perform important to the overall survival of the business.

First, you must take responsibility for establishing a compensation policy that applies to one individual and not the whole staff, at least according to your question. Second, you must take responsibility for doing as they ask and giving annual raises upon request.

They are well aware of their contribution to the business. If they work hard to make you money for the business, then they will rightfully expect improved compensation; however, if they do not work hard, then they will find another way to get what they want. This is only natural and to be expected, and it is your job to know the truth about their contribution.

Thus, it makes sense that since you have no universal policy, they will ask for raises, and of course they will ask for it at the same time every year, just as the economy is evaluated on a year-to-year basis.

However, the economy, just like your business, goes through cycles. There will be times when keeping pace with inflation is the ethical thing to do; however, there will be times when the business cannot keep up with inflation due to other factors.

Because you initiated a personal arrangement, you now find yourself in a position of feeling obligated. It is important that you understand that you created the obligation. You created the obligation by not establishing a company policy and applying it to everyone. Your decision or lack of decision only encourages the individuals on your staff to seek out their own arrangement with you which will only complicate your life.

Many doctors and dentists like to have these personal relationships because they feel closer to their staff; however, the trouble is that the doctor’s need to be a “nice understanding person” leads one to become the hostage to the employee who holds the power of approval in their hands.

While it makes sense to your brain to suddenly have the employee justify their request by asking for an analysis of the last 5 years of production, to their brain you are hedging on your agreement and they are losing respect for you and in all probability will become very angry with you.

The situation becomes even more complex when you suddenly tie their compensation to production and productivity. If gross revenues are up but overall productivity is down, can you reasonably and ethically attribute those results to this particular employee? I am sure the employee will say that is not reasonable nor is it part of our tacit agreement.

My suggestion is to create a company employee compensation policy. You should then announce it at the next team meeting. Since your front person will be in the meeting, they will understand that you are talking to them, as well as to everyone, and are halting your individual arrangement.

They will not like this and in all likelihood will express their disappointment, dismay, and let us not forget their anger. However, as long as you publicly state your policy and make it equitable for everyone and eliminate the private deals, they will have little recourse but to accept the new policy or decide to move on.

At this point, it would be very important that you remain vigilant as to their behavior and attitude. Their interpretation of your business decision will be different from yours. They will may see it as a personal insult and become passive-aggressive in behavior, whereas you will see it as a matter of staying in business and being the leader of your team.

It is your ability to communicate clearly and behave with consistency that will establish trust on the part of your staff. This trust will permit you to lead them through the various business cycles with an attitude of understanding, commitment, and loyalty. Your destiny remains in your hands.

The Coach

Want your issues answered? Ask the
coach@mckenziemgmt.com.

Could your practice be doing better if ....
you had clear-cut, explicit
job descriptions,
linked to staff accountability and reliability?

Do you want to know how you could be making far more, with a lot fewer headaches?

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Sally's Mail Bag

Dear Sally,
I am in the process of performing salary reviews for several staff members. My current payroll expense (net pay, payroll taxes and health insurance benefit) is 29% of production, for 2 assistants, 2 administrative staff and 2 hygienists. Is this a reasonable overhead cost or should I "hold the line" and consider increasing production/fees before any increase in compensation? This current level represents a 4% increase as compared to 4 years ago.
Thanks for any suggestions.
Dr. Timely Review

Dear Dr. Review,
Thanks for your email message. Total net payroll, taxes and benefits by the industry should be no more than 22% - 27%. Therefore your 29% is higher than is reasonable. An investigation needs to be done in order to ascertain what has caused this increase. It could be because you have too many employees or it could be because there is decreased production/revenues coming in by the hygiene department. This can be caused by poor patient retention causing less days of hygiene than what you had in the past. My experience in this business tells me that you should have the practice investigated to find out what is causing the problem. If it is not corrected, raising the fees could only be a temporary fix to a more underlying problem. Call me at 1-877-777-6151.
Best regards,
Sally


Are you wondering if your hygiene department is producing what it could be?

Dr. Allan Monack's hygienist produces $1231 a day seeing
1 patient an hour with a
prophy fee of $70.

What's your hygienist producing?

Dr. Monack is the Hygiene Clinical Consultant for McKenzie Management. He can help you produce the same results.
To find out more about the Hygiene Clinical Enrichment Program [go here], contact us at info@mckenziemgmt.com or call: 877-777-6151


Missed Past Issues of Our e-Motivator Newsletter?



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·Dentists
· Office Managers
· Financial Coordinators
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· Scheduling Coordinators
· Treatment Coordinators
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For a FREE Educational Video
email:
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The Center for Dental Career Development
Advanced Business Education for Dental Professionals
1-877-900-5775
737 Pearl St. Ste. 201
La Jolla, CA 92037



Want to know more about McKenzie Management?
email info@mckenziemgmt.com
For a Free Video by
Sally McKenzie, President

This issue is sponsored
in part by:
   
The Center for Dental Career Development
Presents
San Diego Seminar Series
Fall Schedule
   
   
Date Seminar Instructor(s)  
Oct. 3 How to Become an EXCEPTIONAL Front Office Dental Employee Sally McKenzie, CMC.
Belle DuCharme, RDA CDPMA
 
Oct. 8 Office Politics ... The Enemy Within    
Oct. 31 How to Recover the Lost $$ in Your Practice Sally McKenzie, CMC.
Belle DuCharme, RDA CDPMA
 
Nov. 7 How to Become an EXCEPTIONAL Front Office Dental Employee Sally McKenzie, CMC.
Belle DuCharme, RDA CDPMA
 
Nov. 8 Taking Your Practice Back - Leadership Development for Dentistry    
Nov. 14 Unleashing Your Team's Potential & Optimizing Clinical Efficiency Risa Simon, CMC.  
Nov. 19 How to Recover the Lost $$ in Your Practice Sally McKenzie, CMC.
Belle DuCharme, RDA CDPMA
 
Dec. 5 How to Become an EXCEPTIONAL Front Office Dental Employee Sally McKenzie, CMC.
Belle DuCharme, RDA CDPMA
 
Dec. 6 Office Politics ... The Enemy Within    
Dec. 10 Boosting Your Hygiene Department Allan Monack, DDS FAGD  
Dec. 10 Realistic Technology for Your Practice Mark Dilatush  
To Register 877-900-5775 or info@dentalcareerdevelop.com
 
 


For more information, email
info@mckenziemgmt.com
or call 1-877-777-6151


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