6.3.16 Issue #743 info@mckenziemgmt.com 1-877-777-6151 Forward This Newsletter

Is Your Overhead Out of Control? Here’s Why.
By Sally McKenzie, CEO

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Looking around your office, you can see all the updates that need to be made. The reception area could use a makeover, and there’s plenty of technology you’d like to invest in to improve practice efficiencies and patient care. The problem? Most of your money goes to overhead. In fact, no matter how hard you and your team members work, overhead costs seem to dictate your every move.

Unfortunately, this is a common scenario in today’s dental practice – and I know how frustrating and stressful it can be. Overhead costs should be no more than 55% of collections, but all too often they reach well beyond that industry benchmark. This leaves dentists feeling overwhelmed as they try to get their practice back on track.

If this describes you, the good news is you don’t have to do it alone. I can help you get your overhead costs under control so you can finally start meeting your full potential. To get there, you have to first understand why overhead has become such a problem. Here, I’ve put together three factors that could be contributing to your skyrocketing overhead costs, and what you can do to overcome them. 

1. Recall Isn’t a Priority
This vital practice system represents thousands of dollars in potential revenue, yet dentists often ignore it. If you want to get overhead costs under control, I suggest you invest in this system. Trust me, you’ll be happy you did.

Start by empowering your Patient Coordinator to take ownership of your recall system. Task this person with contacting a specific number of overdue patients every day and then getting those patients on the schedule. This will not only get more patients in the chair, it will help boost your patient retention numbers. And that, of course, will put a dent in those overhead costs.

2. You Have Too Many Team Members
When tasks aren’t getting done, many dentists think that means it’s time to hire another employee. This will help make your practice more efficient and increase your production numbers, right? Not necessarily.

If tasks aren’t getting done, it might be because your employees need more guidance from you, the practice CEO. I suggest providing employees with detailed job descriptions so they know exactly what systems they’re accountable for and what their role entails. This will ensure they understand your expectations and how their performance will be measured.

It’s also important to provide your team members with proper training to give them the confidence they need to excel in their role. This will translate into improved efficiencies and increased production – and a reduction in your overhead.

Still think you need to hire a new team member? Here’s how you can tell it’s time. Look at how long patients are 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 easy for one front desk person to handle.

If the practice works a normal 8-hour day and one front office person spends more than 240 minutes with patients, it might be time to bring on a new team member. But before you do, I suggest you analyze what is going on with the employee and look for possible inefficiencies in your business operational systems.

3. Team Members Get Raises No Matter What
You want to keep your employees happy. After all, they work hard for you and have stayed loyal to your practice. So you give them a bump in pay every year, no matter what.

While you might think a little extra money will motivate your employees to improve their performance, it won’t. Think about it. If you give out raises whether team members earn them or not, why would they try to improve? In their minds, they must be doing something right. The result? They don’t make any changes and practice production stays the same while your overhead costs continue to soar.

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.

It’s time to stop giving out raises just because. Make sure team members know exactly what they need to do to earn a raise. This will motivate them to improve their performance, helping you meet practice goals and reduce overhead.

If overhead costs are holding you back, it’s time to figure out why and start making changes. Addressing these problems will help get you back on track, transforming your struggling practice into a thriving practice.

Next week: Get overhead costs under control

For additional information on this topic and more, visit my blog: The Lighter Side

Interested in speaking to me about your practice concerns? Email sallymck@mckenziemgmt.com
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