Practice Economics and Pay Raises: What Your Team Members Need to Know
When your team members don’t understand practice economics, it can lead to trouble. They often think the practice is doing better financially than it really is, and that means they’re not going to be happy when you tell them you can’t afford to give them a bump in pay.
How do team members get the wrong idea about the practice’s financial health? For starters, they know what their salaries are and likely have a pretty good idea of how much the practice brings in each month. To them, the numbers look good, even great, so getting that raise they asked for only seems fair. They forget to factor in overhead, however, which of course plays a huge role in what the practice can and can’t afford.
Even though their perception is nowhere near reality, team members begin to resent the dentist because they don’t feel like their compensation matches their contribution. Mistrust starts to set in, hurting team morale and prompting some employees to start looking for another, higher paying, job.
That’s why it’s so important for you to educate team members about what it takes to build a profitable practice, as well as how the practice’s performance impacts their earning potential. You can start by being more forthcoming with practice information. Don’t let them fill in the gaps or make assumptions about the practice’s financial health. This will only lead to unhappy employees who think you’re holding out on them.
I suggest you sit down with employees and explain economics and how it impacts their paycheck. Don’t wait to tell them about lackluster revenues during their next salary review, where you also give them the news they won’t be getting raises this year. Instead, talk with them about practice economics during monthly meetings.
What to discuss
These meetings also represent a great opportunity for team members to come up with ways to grow practice profits while also earning a bump in pay. If revenues are down, they can work together to figure out why and then develop a plan to get the practice back on track. I suggest you routinely talk about all the areas that impact practice profitability, such as recall, production, collections, new patient numbers, case acceptance, accounts receivable, uncollected insurance revenues more than 60 days old and unscheduled time units.
Make sure everyone is involved
Here’s an example. Your Scheduling Coordinator should put together a report on the practice’s actual monthly production compared to monthly production goals, the number of broken appointments and the number of unscheduled time units. The entire team should then discuss ways to move the actual numbers closer to the goals you have set. This gets everyone working together and thinking of ways to grow practice production and profits.
Tackle areas of concern
Openly talking about areas of concern will give team members a much better idea of the big picture in terms of practice revenues and expenses. They’ll understand why the practice can’t afford raises, and what they can do to help change that.
It takes a strong team
This can be avoided if you keep team members in the loop. Educate them about practice economics and involve them in finding solutions for any shortcomings. They’ll feel more connected to the practice and will see how important their contributions are to achieving success. This will make them more motivated to excel in their roles, and that means your bottom line will grow and you’ll be able to give out any raises your employees have earned.
Interested in speaking to Sally about your practice concerns? Email firstname.lastname@example.org