Is Your Overhead Over Your Head?
Dr. Sam Blackwell – Case Study #134
Have you looked at your overhead percentages lately? A healthy general practice should be running around 55-60% of collections. Consider this scenario and see if this might apply to you:
Dr. Blackwell’s practice statistics:
Dr. Blackwell enjoyed a steady pace and was not interested in seeing more patients or increasing his production.
Currently, his overhead is at 69%, 9-14% higher than industry standards. After scrutinizing his fixed expenses monthly, it was determined that the following areas would need to be reduced:
Staff benefits: No more benefits for "part-time" employees.
Employee reductions: Because the "assisted hygiene" was not profitable, the part-time hygiene assistant was dismissed with a nice letter of recommendation to assist her in finding new employment.
Accounting expenses: The accounting services were reduced from monthly to quarterly, with the office manager providing monthly P&L reports to monitor the practice overhead.
Continuing Education: The doctor determined that in the future, CE courses would be "hands-on" courses that would reflect an ROI, such as orthodontics or aesthetics.
Dental Supplies: An assistant was assigned to "manage" the ordering of disposable supplies in the clinical area. The new practice rule was that no new product was ordered until the existing product was used. She also worked closely with the supply rep to help keep her expenditures to 5% of the practice collections.
Work Smarter and not Harder....how will he do it?
The above figures indicate that Dr. Blackwell's practice should have a minimum of 4,800 appointments available per year to service his patient base.
If an average hygiene visit produces $125, then 4,800 appointments is equal to $600,000! Currently, Dr. Blackwell has 1,536 hygiene appointments that are equivalent to $192,000. That is a difference of $408,000….and this is income lost in one year!
By implementing recall systems to improve patient retention to 90% based on the # of new hygiene patients coming into the practice, Dr. Blackwell will enjoy the income produced by his hygiene department, as well as increase revenue from the exams and treatment that is recommended. How would an additional $400,000 a year affect your bottom line?
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