Feeling Overwhelmed by Overhead?
When you first became a dentist, you dreamed of owning a thriving, successful practice full of patients who are happy to not only accept treatment, but to also refer you to their family and friends. Unfortunately, that dream is nowhere near your reality. You have not reached the level of success you know you’re capable of, and it’s fair to say your practice is struggling. Overhead costs dictate your every move, keeping you from investing in the upgrades your practice needs. You’re overworked and overwhelmed, and if something doesn’t change soon, you’re not sure if your practice will survive.
Your overhead costs should be no more than 55% of collections, which sadly isn’t the case in most practices. I know dealing with out-of-control overhead costs is frustrating, but the good news is I’m here to help. Here’s a look at some of the factors contributing to your skyrocketing overhead costs, and moves you can make to turn it around so you can finally meet your full potential.
1. You have too many employees. You might think hiring new employees will make your team more efficient and even increase your production numbers, but I’m here to tell you that usually isn’t the case. Hiring new team members can, however, increase your overhead costs.
Just because you know certain tasks aren’t getting done doesn’t mean hiring a new team member is the answer. It might mean your current team members aren’t properly trained and don’t know which tasks they’re responsible for completing. Creating detailed job descriptions that outline responsibilities as well as your expectations will help give your team members better direction, increasing production numbers and helping you reduce overhead costs.
How can you tell if you actually do need to hire a new employee? Look at how much time patients spend at the front desk. Check in and check out takes about 10 minutes per patient. There are 480 minutes in an eight hour work day. If your practice sees 15-22 patients a day, the front desk is spending 150-220 minutes with patients, which is a workload one front desk person can easily handle.
If the practice is working a normal 8-hour day and one front office person is spending more than 240 minutes with patients, then it’s time to analyze what is actually going on, not only with the employee but the possible inefficiencies of your business operational systems.
2. You give raises just because. If you give out raises to employees every year no matter what, you’re not giving them any incentive to improve their production or their efficiencies. In their minds, if you’re giving them a raise, they must be doing something right. All you’ve managed to do is increase your overhead costs and hurt your practice.
Payroll costs should be between 20-22% of your revenue, with an additional 3-5% to cover payroll taxes and benefits. If you’re giving out raises without any increase to your revenues, I can guarantee your payroll costs are well beyond that benchmark.
I know you want to keep your employees happy, but you have to stop justifying yearly pay increases because “Sarah” has been a loyal employee, or because you know “Dan” is struggling financially. Take the emotion out of it, and give out pay increases based on clearly established performance measurements.
3. You ignore recall. This is a big one. Recall is one of the most important practice systems, yet it’s also one of the most neglected. My advice? Stop ignoring your recall system and start tapping into the thousands of dollars in potential revenue it represents.
Empower your Patient Coordinator to activate the recall system. Instead of only turning to recall patients when there’s a last minute cancellation or no-show, have your Patient Coordinator call a specific number of overdue patients each day, and get them on the schedule. When you make the effort to get these patients back to your practice, you’ll find you’re scheduling more treatment as your patient retention numbers rise, helping to reduce those overhead costs.
If you’re ready to take back your practice, it’s time to make some changes. It takes commitment, but with the right attitude and a little guidance, you’ll finally be the proud owner of the practice you’ve always wanted.
Next week, 4 ways to get overhead under control.
For additional information on this topic and more, visit my blog: The Lighter Side
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