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Sally McKenzie's

Weekly Management e-Motivator


Issue #42

Click here to print this
e-motivator Article.

December 13, 2002

Sally McKenzie,CMC
McKenzie Management

1-877-777-6151 Ext. 11

Lab Expense is Below Budget … and that’s a Problem?

So you are feeling pretty smug, eh? The practice budget is looking better all the time. In fact, there are some areas where you are coming in under the benchmark regularly. Only one small problem … the area that is consistently under budget is the line item for laboratory expenses. That is not a good thing.

If your lab expenses are less than 10-12% of your monthly collections, chances are production is not where it could or should be. The 10% figure is based on the industry standard that between 35-45% of production involves work on crowns, bridges, veneers, inlays, dentures, partials, and the like.

However, if lab expenses are over 10% of gross production, the problem likely rests in the area of collections or lack thereof. Although some particularly costly procedures may require more flexibility, generally patients receiving treatment over $200 should be expected to pay at least half at the time treatment is started and the balance at the time the "laboratory" treatment is delivered to the patient.

Sally’s Recommended Actions

  • Generate an aged accounts receivable report. Randomly look at patient's account ledgers that show a "high" dollar amount in the "current" column of the report. You are looking for patients who have had crowns, bridges, veneers, etc. performed and zero to minimal money was collected from the patient.
  • Bring this "evidence" to the Financial Coordinator and reiterate your payment expectations, i.e., all treatment must be paid for at the time it is delivered to the patient.
  • Educate the Financial Coordinator to understand that the practice has generated a laboratory bill and insufficient monies have been collected in order to pay the bill.
  • Accept credit cards and participate in patient financing programs, such as CareCredit. Payment options are essential in encouraging patients to pursue comprehensive dentistry.
  • Evaluate your fees in comparison to the laboratory charge. If the lab charge is $135 the treatment fee should be 6 to 7 times or $810.
  • Ensure that the Business Coordinator fully understands the financial policy and is professionally trained to execute it.

When it comes to lab work, your goal is to be a perfect 10.

Technology Tool Box

Mark Dilatush
VP of Professional Relations

for McKenzie Management


1-877-777-6151 Ext. 28

A series of short weekly chores designed to keep the return on investment in technology at its highest level.

If you missed any of the previous issues CLICK HERE.

Lab Tracking:
Since Sally wrote an article about lab costs, I thought it would be appropriate to further explain Lab Tracking using your computer system.
Enhance your patient service experience. Completely avoid the embarrassment of not having a lab case ready for an appointment. Stress free management of your lab/office relationship.

What to do:

  1. Set up your computer system properly. There should be a setting in the ADA code area that allows the system to open or close a lab case once you post the appropriate code (2750 for instance). Your computer system should have a lab database as well. Add your labs and their appropriate information.
  2. When you post the code to a patient’s ledger and the system opens up a lab case, tell the system which lab it’s going to. Your system should calculate the normal return date of the lab case.
  3. When the patient schedules to have their work inserted, attach the lab case to the appointment. It should be a simple drop down list on the appointment screen.
  4. Every morning, run a list of outstanding lab cases and tape them on the wall next to your case trays. Have the person who is responsible for receiving the lab cases, highlight the list of all received and “confirmed” cases. A confirmed case is one that is believed to be complete and correctly done. In other words, ready for the patient’s arrival.
  5. At the end of each day, someone is responsible for taking the “confirmed” cases and marking them as “returned” in your database. Throw away that day’s list.
  6. Your computer system should warn you when making and confirming appointments that there is a complete or incomplete lab case present and connected to each appointment.
  7. Some computer systems allow you to enter your invoice totals from the lab cases and run monthly lab reconciliation reports. For those of you who own a system that does this, I strongly recommend you do so. It makes reconciliation a breeze and catches lab invoice errors.
How long will this take you to implement properly:
Setup will probably take you an hour or so. Daily management is miniscule … maybe 5 minutes per day. The resulting benefits far outweigh the setup and maintenance.


You have 7 work days to reach your year end GOALS . . .

•Will your production exceed last year minus fee   increases?
•Will your patient retention   increase to add days of   hygiene?
•Will you take home more   money?

The TOP 4 concerns of 2002
•Staffing •Scheduling
•Hygiene •Cash Flow

Will you make it?
Take this test to find out!


What if ...
Your business staff had the training, efficiency, knowledge, expertise and organization of the
Nation's TOP Dental Management Consultants?

"I have GREAT employees and know they could be even better with the proper training, but that's not my area of expertise. HELP!"

How do I know if my staff needs Advanced Business Training?
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And … INCREASE revenues

Everything you need to know about cash flow is in this
information-packed book written by
Sally McKenzie

Cash Flow Management

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Sally McKenzie's Most Popular Lecture on DVD
Breakdown: The Hidden Signals of Practice Erosion

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