Breaking Down the Overhead Barrier

     If overhead is bringing you under look at a few key triggers. Facility Rent/Mortgage should be 5% - Many doctors convince themselves that a newer, bigger, better, more expensive location will improve practice productivity. However, they fail to consider the 5% parameter. A monthly rent/mortgage payment of $2500 per month requires $50,000 in collections and a solid plan to ensure both a steady stream of patients and consistent production.

If you’ve signed your profits away for the next 30 years and designated your beautiful home for collateral, consider renting a portion of the new space to another dentist. In addition, explore refinancing options. The dramatic reduction in interest rates can translate into significant savings on mortgage payments.

Staff Payroll should be between 20-22% of gross income. Tack on an additional 3-5% for payroll taxes and benefits. More staff does not guarantee an improvement in efficiency or production. It does, however, guarantee an increase in overhead – unless you are hiring a patient coordinator who is going to make sure the schedule is full and production goals can be met. Look at it this way, if the production/revenues do not increase to bring payroll back to 20% after a reasonable time in hiring this person, then you might consider that the job description was not a productive hire.

Raises - If production is going down, overhead is going up, payroll cannot be increased. Establish guidelines for raises when you hire an employee and inform current staff of the new policy. Explain when raises can be discussed and under what conditions they are given. Use performance measurements to determine raises.

Benefits - Offer a set amount for benefits that can be budgeted and controlled by the doctor. Consider a Section 125 Benefit Plan, also known as a Cafeteria Plan. The dollars used for this purpose are not subject to Social Security, Federal, or most State taxes.

Recall – Delegate responsibility for the recall system to the patient coordinator, and expect him or her to:

1. Make a specific number of patient phone calls each day in a specific amount of time.
2. Schedule a specific number of appointments.
3. Ensure that a specific number of patients complete treatment.
4. Schedule to ensure the hygienist achieves a specific daily or monthly financial goal – at 3x their daily wages.
5. Manage a specific number of unscheduled time units in the hygiene schedule per day.

Fees – Increase fees 3-5% each year. Overlap patients during just the first 10 minutes and last 10 minutes of each appointment or schedule utilizing doctor/assistant time. This will increase income even before fees are adjusted.

Collections – Establish a collections policy and follow it. Expect full payment at the time of service for all procedures under $200. Also consider:

1. In lieu of extending credit to patients, partner with a patient financing company, such as CareCredit.
2. Require insured patients to pay a portion of their payment responsibility when services are rendered.
3. Do not allow post-dated checks.

Several practice systems impact overhead. Establish a solid budget to control expenses, pay attention to the major triggers, and get out from under overhead.

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

Back to the Future

Last week I discussed a productive project for the week [see article]. This week, I want to discuss one of the results from our on-line survey. I want to thank those who have taken the minute or so to fill in our survey. If you haven’t done so yet, please do. [take survey now].

One of the questions on the survey is “What prompts the owner to “dig deeper” into the numbers of the practice?”

One of the answer choices on the survey is “When the practice grows at an accelerated pace.”

Only 1.5% of you said you take a closer look at the numbers when your practices are growing. This is rather alarming.

Imagine Bill Gates (founder of MicroSoft) at a board meeting saying “Things are looking good. We produced more revenue and generated more profit this quarter than last quarter. Thank you for coming!” As an investor, how would you feel about the future of MicroSoft? It would be reasonable if you felt “confidently unsure”.

In business, especially a small business like yours – knowing where you are and what’s coming down the road can have a profound impact on the “time” it takes to complete your journey. Not paying attention to the numbers during an accelerated growth phase is more expensive than not paying attention during a stagnation period or decline.

Over half of our new on-site business program clients are suffering from what we call “uncontrolled growth”. I will list some symptoms and then give you a measurement to run from your practice management software so you can see for yourself.

Symptoms of uncontrolled growth

1. Hygiene department booked solid more than three weeks
2. Missing lunches
3. Getting out late more days than not
4. Putting off team meetings
5. Doctor booked solid more than two weeks
6. No room to treat emergency patients
7. Squeezing in new patients
8. Large numbers of new patients
9. Large numbers of patients on overdue recall list

I routinely run an initial practice assessment for dentists who are considering having us in the practice. Part of that initial practice assessment is a patient flow ratio. I want to teach you how to determine your patient flow ratio. Then, I will tell you what the numbers might mean (depending upon the outcome).

Patient Flow Ratio

1. Run a production report for all providers. Have your practice management software tell you how many ADA code 00150’s (new comprehensive exams) you produced. Your date range should be the previous year (8/1/2002 through 8/1/2003).
2. Run an overdue recall list for the same date range. Different practice management software calls this list different things. For instance, Dentrix calls theirs, the Continuing Care Display List. Run your overdue recall list for the same exact date ranges as the above production report.

What do the results mean?

The number of 00150’s you did last year represents the true number of new patients into the practice. This represents the first number in a patient flow ratio. The second number is created by counting all of the patients that are on your overdue recall list.

Example, patient flow ratios and what they “might” mean. (Assume solo practitioner with three to four operatories)

Example #1
220 new patients : 105 overdue patients
This practice has a healthy patient flow ratio.

Example #2
220 new patients : 220 overdue patients
This practice has spent the past year entering a stagnation curve.

Example #3
220 new patients : 400 overdue patients
This practice is in decline. The owner has now seen the results trickle down to less profitability. The owner feels the need to take corrective action.

Example #4
520 new patients : 650 overdue patients
BINGO – Uncontrolled growth! The book is packed, the staff doesn’t need to follow up with patients, the practice is still growing financially. Well, the practice will grow financially for another 9 to 12 months anyway. What happens when more people leave than come in new? You got it – Example #3

Summary
If you carry stress around with you about not knowing the business future of your dental practice, the stress is avoidable. The information you need is right at your fingertips. The above exercise is not the “end all – be all” measurement, but, it sure is one of the more important and definitely one of the more telling ones. If you want me to run an initial practice assessment for you just click here. There is no fee involved. It’s part of the way we learn about our prospective new clients.

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 Workshop 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,

We try very hard as a team to keep up our spirits and we do our very best to get along with each other (no one’s perfect or has the perfect office).

The staff seems to always be positive and for the most part enjoy their job, but in the last few weeks, I have heard some remarks being made about the patient quality we have been seeing lately. The patients are bringing them down!

It seems that the patients being referred are not interested in treatment or if they are, they don’t have the funds.

Each staff member is excellent in their job area and has the patient’s best interest at heart. We make all attempts possible not to let financial difficulties interfere. I am at a loss.

I talk to the staff and try to keep them motivated and cheerful, but I wish I had something that could help them understand that it is not their fault or “don’t let them get you down” information.

I understand patients are all different and need to be handled individually, but do any other offices you work with experience this too?

I don’t want to loose staff members because of patients. Are there any tips you can share with me?

Sincerely,
Patients Getting Us Down

Coach Replies:

The behavior of complaining is a universal human response. Complaining is designed to redirect unexpressed feelings and energies outward instead of inward where the real dissatisfaction lies.

Usually, in cases of excessive complaining, we cannot express ourselves because of the perceived repercussions, and so we blame others. For example, a child cannot yell at their mother for moments of abuse or neglect and so they direct their anger outwardly and blame others.

Rather than taking responsibility for how someone feels and taking action, people who feel inadequate to change the status quo will either blame others or blame themselves and say nothing to anyone.

When you say that we try hard as a team to keep our spirits up and we try our best to get along, the feeling I get is that you are putting a lot of energy into something that should be quite natural. Is there a good reason why spirits should be down? After all, everyone is working and everyone is getting paid. Is there something going on in the office that is impacting everyone that you are not including in your question?

Blaming the patients who pay their salary doesn’t make sense. It makes no sense to complain about the patients, since their behaviors do not materially impact each staff member.

The Coach

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

See The Coach's Conflict Resolution Workshop in La Jolla Oct 8th and Dec. 6th. For more information email info@dentalcareerdevelop.com or call 1-877-900-5775

Dear Sally,

I hope you can help me with my question. I attended one of your seminars last year and you were talking about statistics for the office.

We are having a terrible time trying to come up with any kind of statistics for our dental assistants.

Do you have any suggestions for us?

Thank you,
Kim

Dear Kim,

Because the dental assistant is an assistant to a producer and not a producer herself (unless you're in a state like Ohio where placement of restorative material is legal) the only way you can measure her performance is through the use of "skill statements". I have developed a such a system and it is sold in my Performance Measurements for the Dental Team work book. You can order it off my web-site http://www.mckenziemgmt.com or by calling Sara at my office 1-877-777-6151 ext. 21.

A skill statement for example would be: You can see the distal of the cuspid on every bitewing x-ray I take. She answers: Always, Often, Sometimes or Never. Other possible statistics would be: 1. the assistant "selling" the comprehensive exam to emergency patients. Example, 20 emergency patients for the month and they converted what % to be “life long” patients. Their goal might be 75% >. 2. If an assistant orders dental supplies, what % of monthly revenues were spent on dental supplies using a 5% parameter.
Hope this helps. Let me know if I can be of any further help.

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

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