6.3.11 Issue #482 info@mckenziemgmt.com 1-877-777-6151 Forward This Newsletter

High Debt and Mega Overhead Clobbering Your Practice? Do This.
by Sally McKenzie CEO

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It is said that the longest journey begins with a single step. For dentists in debt, getting it under control is only the first step on the road to solvency. Next is the critical part of the journey: ensuring that once they achieve financial freedom, they keep it. That requires ongoing, painstaking system scrutiny.

As I discuss in the McKenzie Management Educational DVD Achieving Peak Performance, there are 22 systems and dozens of variables that affect your practice, all of which require ongoing assessment and monitoring. Effectively managing those systems goes hand-in-glove with controlling overhead. But it won’t happen overnight. You’ll need a strong commitment, a solid plan, and possibly outside assistance to achieve your practice profit objectives.

Take a good look at expenses and set goals. Establish the following budget targets:

  • Dental supplies - 5%
  • Office supplies - 2%
  • Rent - 5%           
  • Laboratory - 10%
  • Payroll - 20%
  • Payroll taxes and benefits - 3%
  • Miscellaneous - 10%

Now how do you achieve those targets? Read on.

If your payroll costs are crushing your profits, here’s what may be happening:

  • You have too many employees
  • Raises are based on longevity rather than productivity/performance
  • Hygiene production is low

When determining the need for more front desk staff, look at check-in and check-out. These administrative tasks take approximately 10 minutes per patient. If your practice is seeing 15-22 patients per day, which would total 150-220 minutes of patient contact, one person should be able to effectively manage the front desk duties. If that person is spending more than 240 minutes handling patients - or half the day - the practice should consider hiring an additional employee and have their business systems analyzed for time and motion efficiency.

As for assistants, if the procedures are streamlined, one assistant can efficiently maintain two treatment rooms for a general dentist using two operatories and seeing 13 or fewer patients a day. This would include setting-up the room, seating the patient, assisting the dentist, dismissing the patient, and cleaning-up.

Tie raises to performance, and raise - or perhaps establish - performance standards. Set guidelines for raises when you hire an employee and explain to current staff when raises can be discussed and under what conditions they are given. Job descriptions are a must for everyone. Use performance measurements to determine raises. And if the practice is losing money, employees do not get a raise, plain and simple.

Another major contributing factor to inflated overhead is low hygiene production. Typically, this is the result of a malfunctioning recall system and lack of accountability. The hygienist’s salary should be no more than 33% of her/his production (excluding doctor’s fees). If the hygienist receives a guaranteed salary, the expectation must be that s/he produce three times her/his wages. The key to achieving that is the hygiene schedule. Hygiene schedules frequently appear to be overbooked, but practices pay scant attention to those holes that creep into the workday. Bottom-line: If patients aren’t in the chair, the hygienist can’t meet production goals.

Incorporate an interceptive periodontal program into the practice. I recommend you start at the front. The business assistant greets the patient upon arrival and gives the patient a questionnaire and a brochure with a checklist educating them on the importance of addressing the signs and symptoms of gum disease. The patient checks any symptoms they have experienced, which opens the door for discussion in the treatment room.  Carol Tekavec RDH, Hygiene Director for McKenzie Management, has an excellent 1-Day in-office training program. Go Here for more information.

Supplies should run about 5-7% of monthly collections. If yours are higher, make sure you are budgeting these expenses and work with your dental supply company and dealer representatives. They are very willing to help you control costs. 

The standard for laboratory expense is 10% of gross production, assuming that 30-40% of your production involves crowns, bridges, partials, etc. If your laboratory expense is below that, it typically means that the amount of crown and bridgework you’re diagnosing, selling, and completing falls short of the standard. You may need to examine diagnostic approaches and treatment presentation skills. If your laboratory expenses are over the 10% benchmark, the business employees are probably not collecting from patients.

The miscellaneous category often includes many little items that add up to big bucks. No question, several of the items in this category are necessary. Nonetheless, pay attention to what all those little percentage points are adding up to, and ask questions. Be consistent. Monitor the systems. Avoid the temptation to get comfortable when you begin to experience the success of your efforts. And don’t be afraid to seek help.

Want more of me? Click here to visit my blog, The Lighter Side, for more Dental Practice Management info.

Interested in speaking to Sally about your practice concerns? Email her at sallymck@mckenziemgmt.com. Interested in having Sally speak to your dental society or study club? Click here.

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