06.19.09 Issue #380 Forward This Newsletter To A Colleague
Controlling Practice Overhead
Team Retreats and Rewards
Fee Schedule Review

Tackle the Number One Cause of High Overhead
by Sally McKenzie CEO
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Without a doubt, the single biggest contributor to high overhead is personnel. Certainly, you must have quality staff to deliver quality dentistry and excellent customer service. But too many dentists line their payrolls with problem employees. Consider each person on your payroll and ask yourself if they contribute to your practice. Do they consistently deliver a quality product, or are they a source of frustration and discontent for you and your team? Be honest.

Next, take a good close look at payroll. This has the potential to steamroll right through your profits. If payroll is more than 20% of collections, not including doctor’s salary or taxes and benefits, 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 evaluating business staff levels, look at patient check-in and check-out. Typically, these administrative tasks take approximately 10 minutes per patient. If your practice is seeing 15-20 patients per day, 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.

As for assistants, if the procedures are streamlined then 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.

Next, look at your compensation culture. Do employees feel “entitled” to an annual pay increase, or do they understand that it’s performance that drives the dollars? Establish performance standards. Use performance measurements to determine raises. While there are any number of models out there, systems that are based on individual jobs and focus on specific job-related goals and how those relate to improving the total practice are the most effective.  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. Make certain your employees know what is expected of them. Job descriptions are a must for everyone.

Another major contributing factor to high overhead is low hygiene production. Typically, this is the result of a malfunctioning recall system. 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 she/he produces three times her/his wages. The key to achieving this is through the hygiene schedule. If patients aren’t in the chair, the hygienist can’t meet production goal. The practice should designate a Patient Coordinator. This is the point person who is responsible for keeping a steady flow of patients streaming into the hygiene treatment rooms through a solid recall system.

In addition, incorporate an interceptive periodontal program into the practice. I recommend you start at the front. The Business Assistant greets the patient upon arrival and mentions the program. She hands the patient a questionnaire and a brochure educating the patient 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.

Monitor supplies and demand. Supplies should run 5-7% of monthly collections. If yours are higher, first make sure you are budgeting these expenses and giving clear direction to the person – not persons – ordering supplies about how much should be allocated for this. Work with your dental supply company and dealer representatives. They are very willing to help you get your supply costs to 7% or lower.  Keep close track of supply inventory.

The “miscellaneous” budget category can nickel and dime your budget well into the red. This category often includes many little items that add up to big bucks – malpractice insurance being one of those. The annual premium is often paid with little thought and no effort to shop around for a more affordable plan. The same holds true with medical coverage, business, and overhead insurance. Check out your accountant’s fees as well. Are you paying a $300-$500 retainer each month for services you’re not actually receiving? Certainly, many of the items in this category are necessary, but pay attention to what all those little percentage points are adding up to and ask questions.

Regardless of economic conditions, controlling overhead requires constant vigilance. During challenging financial times, it can make the difference between surviving and thriving.

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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Dr. Nancy Haller
Dentist Coach
McKenzie Management
coach@ mckenziemgmt.com
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Reward or Retreat? What Does Your Team Need?

Many dentists take their employees on retreats as a way of raising the happiness level in the practice. After all, research shows that happy employees are far more productive, get better results, and are more loyal to their organizations than their unhappy counterparts. I’ve heard about some impressive retreats – all expense paid trips to vacation destinations, limousine transportation to 5-star dining establishments, spa treatments, and large bonus checks just to name a few.

While these activities will put smiles on nearly anyone’s face, the larger question is….does your team need a reward or a retreat?

A reward is a way to show your employees that you appreciate their dedication to your patients and your practice success. Rewards are good if you can afford them and – more importantly – if your team deserves them. The trouble is, while tangible recognition is a great way to reward high performance, it does not help troubled teams. And if your employees are not all high performers, those who are stars will resent sharing rewards with less productive team members.

Repeatedly I hear complaints from dentists about how much money they spent to “motivate” their team only to have continuing gossip and a lack of initiative in the office. In an interesting book, Punished by Rewards, Alfie Kohn discusses why rewards fail to promote lasting behavior change or enhance performance. I agree with his premise that rewards are based on behavioral theories. Like Pavlov’s dogs, human nature is to “do more of the same” when given a “bone.” So unknowingly – and paradoxically – many dentists are actually rewarding the very behavior they hope to stop!

Unless you have a high functioning team in which everyone is working together at the same level of peak performance, think twice about giving rewards. You can call spa treatments a “retreat” but facials and massages have nothing to do with improving collaboration among employees. If you really want to increase initiation, enthusiasm and productivity, your financial investment may yield better returns through a facilitated retreat.

Although team retreats offer both fun and education to employees, effective team retreats go beyond simple recreational bonding activities. During a team retreat, employees build bridges for results (what do each of us need to do to help the team); processes (how do we communicate, make decisions, and solve problems in the office), and behaviors (learn to give constructive feedback). Team chemistry also comes from intense training and time together.

If you are considering a team reward (even if you are calling it a retreat) ask yourself the following questions:

  • Do team members openly and readily disclose their opinions?
  • Do team members confront one another about their shortcomings?
  • Is conflict resolved constructively?
  • Are team meetings compelling and productive?
  • Does the team come to decisions quickly and avoid getting bogged down by consensus?
  • Do team members sacrifice their own interests for the good of the team?
  • Do the front and back office work well together and help each other?

Although no team is perfect and even the best teams sometimes struggle with one or more of these issues, the best dental practices constantly work to ensure that their answers are "yes." If you answered "no" to any of these questions, your team may need some work. And by all means be very careful about rewarding undesirable team behavior.

It’s easy to lavish employees with gifts and incentives, but real leadership courage means acknowledging those things within your reach that you can change to make your practice function better. You may believe that your employees are a team, but perhaps they are just a workgroup. To find out, conduct a simple survey. Individually ask each employee to tell you: 1) the practice’s mission, 2) what they are trying to accomplish, 3) the priority of their specific tasks, and 4) the degree of collaboration between staff members. You may be surprised how differently they interpret the team’s goals, and how much they are functioning as individuals rather than a unified team. Team synergy occurs when a group achieves greater results together than they could accomplish individually. And it’s in your power to create that!

Send your questions to Dr. Haller at coach@mckenziemgmt.com. You’ll receive a complimentary executive summary of Maintaining Team Performance.

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

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Tom M. Limoli, Jr
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Balancing Your Practice's Fee Schedule

My company has tracked dental fees for the better part of the last quarter century. My father collected both international and domestic fees and fee schedules the same way some people accumulate postage stamps and coins. His detailed analysis of data was nothing less than a labor of love for his profession and how it functioned within the confines of differing world economies.

The tracking and reporting of dental fees is no different today. The sluggish economy complicated by rising unemployment and government intervention in the free market system is challenging capitalism as we know it. And guess what? All this shows up in the fees charged by doctors to their patients.

Not so long ago, it was common for dentists to raise their fees annually by 2% to 5%.  These fee raises were usually across the board, modifying each and every procedure code. But those days have gone by the wayside. The act of balancing fees is an art form pioneered by my father in his original 1984 textbook entitled The Dental Consultant Looks at Insurance with your Fee Schedule.  He and I perfected the process of fee balancing and relative value with our original 1995 text Fee for Service Dentistry with a Managed Care Component. In short, Limoli and Associates (www.LIMOLI.com) is the most accurate source for a comprehensive fee schedule analysis.

So what does the current fee data show?  In many parts of the country, dental fees are stagnant. We are not seeing dental fees statistically drop but we are seeing areas where the data has reached a plateau and is no longer in a growth posture. I see this also occurring as fewer and fewer dentists are routinely marking up their individual fees simply because the calendar says so.

In the few areas of the country where fee data is consistently rising, I see these increases as the effect of simple procedural reality. Artificially deflated fees simply and naturally rise as greater numbers of various procedures continually occur in that geographic area.

These two previous observations are complicated by the economic reality that many people simply have little or no confidence with the integrity and potential prosperity of Wall Street. People are holding on to their cash because they fear (real or perceived) yet another drastic economic shift. Too many analysts are still saying the financial situation is going to get much worse before it begins to get better.

Three things have to happen before the economy begins to grow on a foundation of rock rather than sand.

  • Banking and lending markets have to stabilize on their own without government intervention or other institutional manipulations
  • Service industries, including healthcare, need to fundamentally restructure how they do business in order to maintain a more competitive and cost effective posture in delivering their services
  • Corporate models must continue to trim out and whittle down the cost of goods sold while continuing to produce and develop newer market solutions to yesterday’s longstanding problems

In other words, business as usual is dead and gone. Old solutions are not going to fix the new economic problems that caused most of us to lose almost half the value in our Wall Street - based financial portfolios over the last year.

And what common denominator do all three phases share? The answer is fair market pricing. Fair market pricing is the amount of money that a willing buyer pays to acquire something from a willing seller, when a buyer and seller are independent and when such an exchange is motivated only by commercial consideration. What we are talking about is your unrestricted usual fee.

So where do your fees fit in? Is your data higher or lower than that of your neighbor? Is it that way by design and intent, or do you simply not know? Stop basing the future of your practice and fee schedule on randomly generated statistical percentile calculations. Now is the time to have your fees professionally analyzed. Your potential as well as active patient base is shopping for quality, price and value. Unfortunately, not always in that same order. But then again, aren’t you?

If you are interested in having a comparative Fee Schedule Review 7 page report detailing 216 of the most often performed dental procedures compared to your existing fee schedule compiled for your zip code, please email info@mckenziemgmt.com.

Tom Limoli, Jr. is the prevailing expert on proper coding and administration of dental insurance benefit claims. He serves as president of Limoli and Associates/Atlanta Dental Consultants, Inc., a company that over the past quarter century has assisted dental offices in streamlining the insurance reimbursement process.

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