06.12.09 Issue #379 Forward This Newsletter To A Colleague
Improving Practice Overhead
Emergency Practice Solutions
Communicating with Confidence

Overhead Clobbering Your Practice? Take Action!
by Sally McKenzie CEO
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Today’s paper is reporting that consumer confidence has soared. Good news, right? Well, that’s only part of the story. Yes, confidence is improving, but the unemployment rolls remain long, meaning that the undercurrent of uncertainty is keeping consumers frugal, focusing their resources on need-based purchases. Few are cracking their wallets for non-essentials these days.

Undoubtedly, you are well aware that consumers of your dentistry are more financially conservative these days, delaying treatment, seeking low-cost alternatives, etc. It’s also likely that you have experienced dips in treatment acceptance, as well as increases in cancellations and appointment failures. Your new patient numbers are probably down as well. Consequently, overhead is spiraling out of control in many practices, some offices report that it is upwards of 80 cents on the dollar. That’s enough to make even the most stalwart flip into panic mode.

Certainly, overhead is a concern for dental practices in both lean and robust economic times. But some practices are feeling pressure to make significant cuts, but from where? What do you give up and how?  Is it an across the board approach, slash 10% from every budget line item? Do you eliminate positions? Who goes, who stays? Should you stop marketing? Cut hours? Or should you just sit tight, do what you’ve always done and wait for the storm to pass? No doubt that virtually every business must run leaner during challenging economic times, but panic isn’t going to get you where you need to be and don’t assume that every so-called money saving measure is agood one.

Instead, I recommend that, if you don’t already have one, this is the perfect time to develop a very close relationship with your practice numbers. Get to know them very, very well.  First step, examine how your practice compares to the industry standard that total overhead should “ideally” not exceed 55% of collections. 

Once you know where you stand today, formulate a plan to reach the following budget targets in the coming months:

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

Now you know where you’re overhead numbers need to be, but how do you get there? By tackling one system at a time, starting with those areas that tend to be the biggest drain on revenues, such as facility (rent/utilities), staff salaries (employee taxes & benefits), dental supplies, laboratory, and miscellaneous. Everything that doesn’t fit anywhere else gets dumped in miscellaneous - association dues, subscriptions, legal bills, accountant fees, business taxes, telephone, marketing, fish food, etc.

Rent – I know, real estate bargains are everywhere. It’s tempting especially for those of you who are the particularly optimistic entrepreneurial dentists. You are convinced that the economic turnaround is just about to happen. So you may be eyeing that fabulous locale thinking you’ll happily do your part to boost the economy only to put further strain on your own cash flow. Put the pen down, doctor. Before you sign on the dotted line, consider one very basic question. If this is a rent increase how will you pay for it, particularly if you are experiencing your own revenue shortfalls?  As tempting as that gorgeous new location may be, don’t sign on the dotted line until you have either the collections to pay for it, or a solid plan for increasing both production and collections.

If you’re already up to your neck in facility debt, consider renting a portion of the space to another dentist and explore refinancing options. While you’re at it, curb the urge to go further into debt.  It can be very tempting to take advantage of short term notes, lease specials, and/or zero interest programs from various suppliers, vendors, etc.

Over time, the debt increases and eventually becomes too much to handle as the bills from multiple companies pile up. Ultimately, you become forced to start making minimum payments, which basically covers the interest and slows payment on principle. Don’t be afraid to explore debt consolidation options, particularly those offered through Bank of America’s Practice Solutions.  

They provide a variety of options to enable a dentist to roll several monthly payments into one smaller payment, secure a low fixed interest rate, and pay off the debt over a 10-15 year period.

Next week, tackle the #1 cause of high overhead.

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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Nancy Caudill
Senior Consultant
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Emergency Solutions for Practices

Dr. John Talbert – Case Study #521

Many practices in this recession are suffering from cancellations, broken appointments, patients not accepting recommended treatment, patients losing jobs, thus causing the loss of their insurance benefits and discretionary income…and the list goes on.

There is no doubt that the dental industry is taking a direct hit from these economic times.  Dr. Talbert noticed all of these trends in his office and it was directly affecting his production and collection figures.  He was also aware of his overhead expenses.  Didn’t seem to make a difference whether he had patients in his operatory or not, the bills continued to come in regularly, employees were asking for raises, and his anxiety was creeping up daily.

Newton’s First Law states “an object in motion stays in motion.” This concept also applies to a dental office.  Why?  Because if Dr. Talbert is expecting a different outcome than what he is getting right now under the circumstances that he is working within, he needs to do something different! 

Symptom #1 – Patients Not Keeping Their Appointments
Dr. Talbert was suffering with 2-3 patients a day not keeping their appointments with him, as well as 3-4 patients a day of openings in the hygiene schedule.  This was highly unusual for his practice, as his patients had always been loyal and compliant.  All the “normal” steps were being performed; confirming two days in advance and trying to speak with the patient instead of simply leaving a message.

The business staff was discovering that patients weren’t answering their phones or returning phone calls, making appointment confirmations impossible.  The result: a “no show.” Patients didn’t want to call and cancel because they didn’t want to disappoint the doctor, or they never received the message.

Emergency Solution:  Ask patients to call back to confirm their appointment, with the understanding that without a verbal confirmation the appointment will be considered “canceled.” Inform the doctor’s patients when their appointment is created that they will be contacted prior to their appointment and a verbal confirmation will be necessary in order to hold the appointment for them.

For hygiene patients whose appointments were created six months ago, if the appointment can’t be confirmed verbally, call and indicate that due to a non-response to the re-confirmation call, the office is assuming that the patient will not be keeping their appointment so it will be canceled and please call to reschedule.  Leave the patient on the appointment book, but schedule another patient at the same time (double-book).  If the initial patient comes, explain the situation and reschedule their appointment.

Symptom #2 – Patients Not Accepting Recommended Treatment
Dr. Talbert had never tracked his case acceptance, so he didn’t really know if it was 50% or 80%. His perception was that it was 80% or higher, judging by the patients reactions as they left his treatment room before they talked with the Financial Coordinator.

Now he is hearing complaints from the Financial and Schedule Coordinator that patients aren’t scheduling appointments for their crowns, fillings, implants, partials, etc.  It seems like the only patients that schedule are the emergencies that need extractions or root canals.

Emergency Solution:
Open the doors for more emergency patients!  Give the patients what they want and not what the doctor wants them to have.  If the patient can’t afford three 3-surface composites, then only do one and schedule the others at the next appointment.  If the patient has dental insurance that downgrades posterior composites to amalgams, the patient is looking at several hundred dollars for this appointment.  $100 is much easier to manage.

Also, offer “creative” financing.  Be willing to extend monthly payments after a down payment for those patients that have good credit but don’t want to participate in Care Credit.

Symptom #3 – Patients Not Scheduling Due to Their Work Schedules
Dr. Talbert was not the only practice that was hearing patients say, “I just can’t take the time off work right now.”  Sometimes we forget that patients not only have an expense with the practice but also lose time from work when they visit the dentist.  Many employers are cutting back on paid time off, sick leave or vacation days to reduce their employee overhead.

Emergency Solution:
Offer early morning appointments or evening appointments to accommodate these patients. Dr. Talbert’s practice overhead does not change, whether he is working 8:00 – 5:00 or 11:00 – 7:00.  Keep a small team of employees to work evening hours two days a week to help the patients that need and want their dental treatment but have difficulty leaving work.

These economic times call for a change in the way that practices conduct business.  We are all treading in new waters right now and are always seeking possible temporary solutions to solve the temporary issues that we are facing.

Take a chance and do something different to make your practice more accessible to your patients.  Conduct a patient survey to see what your patients would like to see you change in order to help them be loyal and compliant patients.  Remember that you can’t expect a different result if you don’t do something different.

If you would like more information on how McKenzie's Practice Enrichment Programs can help you IMPLEMENT proven strategies, email info@mckenziemgmt.com.

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Free Overhead Assessment

Belle DuCharme CDPMA
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Communicating With Confidence and Power

Dentistry is more than perfecting function and aesthetics; it is also about perfecting communication. When exploring  words that will say exactly what we mean to say, we are limited by our own vocabulary. The mind searches for the convincing phrase, the words with the right amount of panache and exactitude to deliver the message that motivates people to act.

“If only I had thought to say… it may have made a difference in the outcome of the communication.”

 Despite Barbara Walters’ quip “…many people think that polysyllables are a sign of intelligence,”  big words do not always impress people.

Big words and dental jargon can leave your patients wondering “what did she/he say?”  It is not just the dental jargon that can leave your patients somewhere between the chair and the door but it is the manner or tone in which the words are delivered.  The “hedge” in your voice, the vague and puny “as soon as possible” or “we will watch it” only gives the patient a message of unimportance.  A combination of not understanding what was said and a missing call for action equals a patient walking out the door without an appointment.  From scheduling the initial appointment to the treatment presentation, words are the keys to doing dentistry.

A core value of the Treatment Acceptance Course at McKenzie Management is verbal and non verbal communication when presenting treatment options to patients.  Vocal tone, grammar, pitch, body language, gestures, power words and phrases are only the beginning in building on powerful communication skills.  For example, a dentist who was starting a new practice called me about a patient that left his office in a “huff” over something he had said.  He went over every word that he remembered to find the culprit word or phrase, but came up clueless as to the answer. Later on in the day, he called me to say that he talked to the patient about what happened. While doing the diagnosis, he had made reference to the patients’ “difficult mouth access” to his dental assistant in a derogatory tone. The patient thought that he was telling the dental assistant that she was “a difficult patient.”  Dental jargon may be correct to those that are in the business of dentistry, but it takes on a different meaning to those that are outside the profession.

Let’s look at “hedge” words and how a patient is led to believe that the treatment is not a priority or doesn’t need to be done until something breaks or they feel pain.  Some hedge words are: let’s watch it, basically, I think, I feel, in my opinion, to be perfectly honest, etc. Certainly there are some situations where waiting for further symptoms would be benign and by postponing treatment the patient will be able to put money aside to pay for the treatment at a future date. In this situation, the patient is given a timeline and a date of repair of the tooth.  If real uncertainty forces you to hedge, then use stronger hedge words such as:  it should, I plan, apparently, research demonstrates, it appears, approximately etc.  In communicating the need for a crown, for instance, one might say, “I feel that a crown on the upper right tooth needs to be done as soon as possible.  In my opinion a gold crown is the best choice …when you are ready…..”  This demonstrates hedging because the importance of having the crown done is vague and causes uncertainty.  Instead one would say, “A crown on the upper right tooth is necessary at this time. I plan to use gold because it is the best material for this location in your mouth.” Wait for a response. Fewer words and call to action words will invite the patient to become involved with the diagnosis.

Technology continues to bring to our dental chairs amazing digital radiography, surgical microscopes, intra-oral photos, video morphing, etc. However, demonstrating the need for dentistry through marvelous technology has not replaced the spoken word and the power of verbal communication.  Want to be a better communicator?  Sign up today for one of our Advanced Training Programs including the Treatment Acceptance Course mentioned in my article.

Interested in having Belle speak to your dental society or study club? Click here.

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