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  01.13.05 Issue #149

Romancing the Cash-based Practice

Sally Mckenzie, CEO
McKenzie Management

It often begins as a harmless flirtation, a knowing smile, a few "What if..." scenarios that send you daydreaming about the possibilities. It's an innocuous, superficial "romance" of sorts. But perhaps over a glass of bubbly on New Year's Eve impulse swirled to the surface and you decided this was it. Time to make your move and you did. No more playing on the periphery. The waiting is over. This object of your affection is about to become yours.

All that fantasizing about building a relationship with the fee for service practice is finally going to be realized. At long last you are leaving that insurance ball and chain for good - ready to embrace the fiery and exhilarating cash-based practice. You are going to feel young and in control again. But like many romances, things often aren't as they initially seem, and, unfortunately, in the world of practice management, the heart is often easier to heal than the bank account. Before you give in to what you perceive to be a mid-practice insurance crisis and you chuck all those well as the patients who rely on them, take a cold shower and a good look at the numbers. Otherwise, come Valentine's Day, you may find you've been lookin' for love, not to mention money, in all the wrong places.

Deny the urge to toss the insurance plans out on the street come Monday morning. First, evaluate the criteria. In other words, sit down and compare all the managed plans in which the practice participates. List the plans in order of their total practice production. This will serve as your targeted removal inventory. Begin with those plans that account for a small portion of the total office production. If 65% of your production comes from patients relying on "No Bills No Burden Insurance Company" then that isn't where you start the process of elimination. Instead begin by winnowing out those plans that contribute less than 10% of the total office production. These are most likely to have a negligible effect on the practice.

Next calculate the gross collection percentage for each plan. To do this, divide the total collections for a particular plan by the charges for the same plan, based on the doctor's regular fee schedule. Those plans with the lowest gross collection percentage should be considered to drop first.

The third criteria to consider when evaluating the weight of your insurance ball and chain are payment histories. It's technically referred to as the "net collection percentage," but it's the bottom line in your insurance remuneration. Divide the actual collections for the plan by the net charges (gross charges minus the fee adjustment). A low net collection percentage, which would be below 90% indicates that payments are very slow in coming. This could be an indicator of a number of issues, such as the insurance contract is not being honored, claims are not being followed up on, the plan is not financially solvent enough to pay claims in a timely manner, or the company does not have the administrative infrastructure to process the claims within the time designated. Consequently, your little practice is carrying the big insurance conglomerate, and that's a pretty hefty load for a small business.

Last, but certainly not least, consider the administrative headaches that your practice endures because of each plan. Use each of the above factors to determine the order in which you will eliminate your reliance upon managed care plans. Those plans contributing the lowest percentage of practice production, those with the lowest gross and net production, and those with the highest level of administrative frustration would be dropped first.

STOP. Before you pick up the phone and fire the insurance companies, you need a transition strategy. Next week, don't dream of the cash-based practice only to drown in a sea of red ink.

If you have any questions or comments, please email Sally McKenzie at

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What Is A Team Retreat?

Dr. Nancy Haller
Executive Coach
McKenzie Management

Dear Coach,

I have been reading about the use of corporate retreats to improve team work and productivity. What is a retreat and would a dental practice benefit?

Phoenix, AZ

Suppose you were to come upon someone in the woods working feverishly to saw down a tree. "What are you doing?" you ask.
"Can't you see? I'm sawing down this tree," the woodsman says impatiently.
You respond, "You look exhausted! How long have you been at it?"
"Over five hours," he returns, "and I'm beat! This is hard work."
You inquire: "Well, why don't you take a break for a few minutes and sharpen that saw? I'm sure it would go a lot faster."
"I don't have time to sharpen the saw," the man says emphatically. "I'm too busy sawing!"

The story is from Steven Covey's book, Seven Habits of Highly Effective People. It illustrates the importance of stopping periodically for reflection. Unless you pause to evaluate your circumstances, it's difficult to improve. A retreat offers that opportunity.

A team retreat is a time out, a valuable period of reflection and development. A team retreat is an effective way to clarify strategy and goals; to gain commitment and loyalty; to build trust and openness; and to raise awareness and skill.

Hopefully you are not thinking like the woodsman...I don't have time. As the old saying goes, if you fail to plan, then you are planning to fail.

Over the past year, have you experienced unexpected or unwanted employee turnover? Have you been frustrated by the apparent 'laziness' of a staff member? Have you longed for more efficiency in your office? If so, then you would benefit from hosting a team retreat.

Regardless of whether you have a new or established team in your office, it is essential to step back from the day to day issues of work and look at issues in more depth than can be accomplished at staff meetings. By creating space and time, you and your staff can review, plan and agree on issues that are central to the team's success.

Turnover is one of the most disruptive factors to team effectiveness. As organizations look to remain competitive in today's economy, they make development and educational commitments to employees. The payback to the organization is immense. First, there is a strong and documentable link between a successful organization's commitment to educating its staff and high retention rates. Secondly, people stick with an organization where they are growing. Retreats are your investment in your human capital, your human resources.

When employees are not motivated beyond the basic responsibilities of their job, they aren't as productive as you need them to be. Retreats increase communication with employees and allow them to provide input on their work, and the direction of the organization. Consequently they develop ownership for the practice. Retreats engender more commitment, and more initiative. Team retreats are an excellent and effective way to communicate new ideas, plans for changes, and other information with employees.

Although team retreats offer both fun and educational experiences to employees, the team development that comes from a retreat moves beyond simple recreational bonding activities. In the process of a team retreat employees build collective capability in three inter-dependent areas: results (what do each of us need to do); processes to perform their duties (how do we communicate, make decisions, solve problems in the office), and behaviors to learn and practice (for the greatest effectiveness and collaboration). If you are considering a team retreat, here are some things to consider:

  • Identify what you want to accomplish and establish clear objectives and goals for the retreat.
  • Determine the time frame. Retreats vary from four hours up to two or more days.
  • Prepare. If you want a top quality retreat, it is important to start the planning process early.
  • Have at least one fun event built into the retreat to establish a tone that is relaxing, entertaining and keeps people interested.
  • If you are not familiar with retreats, it would be wise to have a facilitator.

Keep in mind that the retreat is only one step on a path to performance development. Therefore your design should include follow-up to ensure progress after the retreat. It is important to revisit the goals set and accomplishments achieved on a regular basis to ensure success.

Make time to 'sharpen your saw'. Call me - I can help.

Dr Haller can perform your Team Retreat in La Jolla, CA or special arrangements can be made to have your team retreat on-site. She can be reached at

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The New Year-Resolve to Master Your Practice Vision

Belle M. DuCharme
RDA, CDPMA. Director
The Center for
Dental Career Development

2005 is upon us and so is the time to "make some resolutions" to change one or more issues in your personal or business life. Terrified to come back to the same old problems, same old office, and same old routine? Most of us make a list of resolutions in good faith only to lose the list as life in the dental office gets underway again. Some items on the list may be about changing something in your personal life such as weight loss; improved physical fitness or spending quality time with loved ones. Other issues concern making more money, working more efficiently, improving or gaining new skills, updating the office equipment etc. How does one go about making resolutions happen?

Remember the saying "It takes a village?" As technically excellent as you may be in the art of dentistry coupled with the desire to be the best dentist in town, it is often not enough to keep you scheduled and working the way you envision. You are not a "village of one." Sit down and redefine how you want to practice dentistry. Do you want to do more "cosmetic" dentistry and less repair type dentistry? Do you want to treat fewer children or more children? Do you want to learn new endodontic techniques? Are implant restorations a goal? Do you want to purchase digital equipment? Communicate your practice vision to your staff and your colleagues. Vow to learn the skills to take your practice in the direction that you, as the CEO, desire. Investment in staff communication training can produce excellent returns in retention of patients and increased treatment acceptance.

Working with doctors and front office staff from all parts of the United States, I see a fundamental need for improved communication skills. My resolution is to provide the advanced business training and necessary communication skills to help you develop the practice that you envision for the New Year. Poor communication skills demonstrated by one or several members of your staff can quickly negate your best efforts at treatment presentations. The dental team-dental assistants, hygienists and business staff-should be trained in effective methods of communication to create a feeling of cohesive competence.

Competence communicated correctly helps to build the trust necessary for patients to accept treatment in your practice. Typically the patient spends more time conversing with staff members about treatment, insurance and financial issues than he or she does with the dentist. Because of this there is more time to create rapport and trust or, the opposite, doubt and mistrust.

Interactions with staff are the first and the last impressions that patients have as a measurement to the value of the services they receive in your practice. Team members with improved communication skills can make your job easier by obtaining important patient information that may help to direct the conversation during an exam with the patient. For instance, during a new patient interview, a patient told the clinical coordinator that she did not want to change the space between her front teeth, she was happy with the uniqueness. This information was passed on to the doctor. Imagine how the patient would have felt if the doctor had said "We can improve your smile by closing that space between your teeth."

Good communication skills can be taught and diligently applied to all areas of your practice to create a trusting environment for your patients. To learn more about the most effective types of communication for a dental practice and how to put it to work in your practice, contact us at The Center for Dental Career Development. Our resolution is to improve your bottom-line by improving your communication for 2005.

For more information on advanced dental business training for your front office employees, email us at



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Sally's Mail Bag

Dear Sally,

I'm an associate (soon to be partner hopefully) in a very nice practice. I've been producing around $48k per month and my schedule is rarely booked out three days. I have a Cerec and will average around 4 emergencies a week that are Cerec'ed that day. My question is, once I get booked out longer, should I leave emergency time in my schedule or schedule a certain way. I always hear doctors talking about scheduling for production and the like but what does that really mean? The way I do it is just put them in an opening and that's about it. What am I missing? Thanks.


Dear Townie,

To know if you NEED emergency time blocked for the future you have to look at what has happened historically. If you are averaging, for example 1 emergency per day and can PROVE THE FIGURES then reserve (at diversified times) 1 emergency time per day. This is established by simply going back through weeks of schedules. Scheduling to production means setting a daily production amount you want to achieve. If you as the sole producer want to produce $500K in 2005 and you are going to work 47 weeks and you are going to work 4 days a week your production objective will be $2,660/day. That daily amount is multiplied by how many days you will work in the month for your monthly objective. Your Scheduling Coordinator's responsibility is to schedule you "to the goal"...not to schedule (fill in lines) and hope it meets the goal.

Hope this helps.



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