5.28.10 Issue #429 Forward This Newsletter To A Colleague

Will You Sink or Swim? Check Your Systems
by Sally McKenzie CEO
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I shudder when doctors say to me: “I don’t know what I would do without Betsy, she just makes this place run.” Dentists that allow this to happen are setting themselves up for economic, professional, and personal catastrophe. That may sound like high drama, and it is. I’ve seen it happen in too many practices too many times. The last thing you want is a situation in which your professional success or failure is contingent upon the actions of one employee. Every practice must have systems in place to ensure that the business is not dependent on any one person.

It is critical that doctor and staff understand how systems should be performing when measured against industry standards as well as the doctor’s practice vision and goals. For example, there is no industry standard for patient retention, but the doctor can and should set his/her own goal for this. The practice should begin by measuring how many patients it’s losing each month. From there, you can evaluate the various systems, such as recall, that directly impact patient retention and establish realistic goals to improve them.

Collections are another example: the goal should be a 98% collection rate; case acceptance should be at 85%; hygiene should produce 33% of practice production; 80% of emergency patients should be converted to comprehensive exam; and the schedule should have fewer than .5 hygiene openings per day.

Recall is commonly among the weakest systems in practices that are struggling, but unscheduled treatment typically doesn’t come anywhere near passing the “effectiveness test” either. Take advantage of practice management system reports that are readily available, including the Unscheduled Treatment reports. These allow you to see who has unscheduled treatment in the files. In actuality, the unscheduled treatment report is documentation of revenues waiting to be tapped.

With this information in hand, the objective is to get patients back in the practice. This may require a paradigm shift of sorts for your scheduling coordinator because instead of being reactive it requires that person to be proactive. But don’t send her or him out to line up production without a clear and specific plan of action and a well developed script to guide in talking to patients. And remember, this isn’t the sole responsibility of the business staff. As patients return for hygiene appointments, it is essential that both the hygienist and the doctor remind them of the importance of pursuing treatment that has been diagnosed but not delivered.

In addition, take a close look at the Production by Provider Report each month. This shows the number of each type of procedure performed over a specified period of time. Your business assistant should run this year-to-date report every month for each doctor and hygienist, so they can determine how their production compares with the same time periods last year, as well as with production goals that have been established for this year. According to the industry standard, 33% of hygiene production should be derived from periodontal therapy, specifically the 4000 insurance codes such as #4910 and #4341.

In addition, consider new treatment services. Practices that are struggling are likely doing what they’ve always done, i.e. crowns, fillings, and prophys year-after-year. Dentists who are doing interceptive perio, endodontics, veneers, bleaching, and implants not only expand their patient base and improve their production, but they also renew their professional enthusiasm for dentistry.

Additionally, take a close look at your clinical efficiency. We find that many dentists get up from their chair numerous times during patient procedures, or have their assistants leave the treatment room to retrieve items that should have been set up in the first place. Clinical time and motion studies reveal three more reasons for production shortfalls:

1) Slow Treatment Room Turnaround
2) Underutilization of Chair-Side Assistants
3) Poor Planning for Armentaria and Procedural Protocols.

Finally, give some thought to your fees. Calculate your production per hour (PPH) along with a PPH analysis of every procedure you offer. This is much easier to determine than many realize. Take the amount of your fee for a specific procedure and divide that by the amount of time it takes to do the procedure. That number is your production per minute. Now multiply the production per minute number by 60 minutes. That number is your production per hour (PPH). Once a year, consider implementing fee increases following an analysis of comparable fees in your area.

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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Bonus or Not to Bonus?

Dr. Sharon Strater – Case Study #216

Dr. Strater is a current client of McKenzie Management. Her practice analysis was performed a few months ago and she recently shared her eagerness to offer a “bonus plan” to her team.

Bonus plans historically are always a win/win for employees but a win/lose for the doctor. However, it was important to review the practice statistics, discuss what her objectives were for the bonus plan, what her team “expects” from a bonus plan and the most important element – Does Everyone Win?

Dr. Strater’s practice statistics:

  • Net collections are 98% of net production
  • Outstanding insurance claims are less than $1,000
  • Accounts Receivables (not including credit balances) is .96 times the monthly net production

All appears healthy so far. However, there are hidden dangers that she must be aware of before making a decision to implement a bonus plan of any type. Gross wages of the team compared to the monthly net collections AND the benefits that the practice pays for on behalf of the team. Before a bonus plan can be considered, these potential hidden dangers need to be reviewed.

Gross Wages as a Percentage of Net Collections
Statistics are an excellent guide to the performance of the practice, compared to observing Susie at the front desk carrying on a friendly conversation and thinking what a GREAT employee she is. This is not to imply she isn’t, but her friendliness shouldn’t be the only criteria, nor should she want that to be the only way the doctor determines her value. She also manages the schedule of the doctor to the daily goal 90% of the time!

So, numbers are the doctor’s best friend and should be to the team as well. In a family practice such as Dr. Strater’s, the gross wages for her team compared to the net collections for a period of time (we used the past six months because a team member relocated and was not replaced) was 22.8%. Standard in the industry for a practice this size, with 2 hygienists each working 4 days a week and 2 business and 2 clinical team members, a healthy guideline would be 19-22%.

Team Benefits:
In order to properly evaluate how Dr. Strater’s benefits-overhead compare to her net income, it was important to break down all the various forms of “benefits” that she offered her team. Unfortunately, most team members are not aware of how much their doctor invests in their benefits because it is never illustrated to them. I highly recommend that you break it down as follows for each of your team and present it to them in February of each year:

  • Vacation: Multiply the hourly pay x 8 hrs x # of vacation days = $ invested
  • Holidays: Multiply the hourly pay x 8 hours x # of holidays = $ invested
  • Sick Le
  • ave: Same as above x # of days offered = $ invested
  • Grievance Pay
  • CE
  • Uniforms other than what is required for OSHA
  • Dental Care
  • Retirement
  • Unemployment, Worker’s Compensation Premiums
  • Matching SS
  • Other benefits
  • Existing bonus pay, Christmas pay, etc

Again, standard guidelines in the industry are that no more than 3-5% of net collections should be allocated to team benefits.

Dr. Strater was happy to know that her benefit package was in order, but her salary overhead was high. Therefore, my recommendation to her was that if she was determined to offer a bonus plan to her team, the first goal must be to align her team wages to 19-22%.

Establishing Daily Production Goals
Since it is much easier to eat the elephant one bite at a time compared to one huge, choking bite, we determined how much the practice needed to collect over the next 12 months in order to see the wages at her goal of 20%. The collections goal was increased by the percentage of production adjustments that the practice has averaged over the past 12 months and this established the gross production goal. After breaking the practice goal down to daily goals for the hygienists and herself, the process began.

The entire team understood why and how the goals were established and that the doctor’s personal goal for the team was to implement a bonus program. However, until the practice statistics were healthy the practice could not afford to pay bonuses.

Her Bonus Plan
She also indicated to her team that once their salary overhead reached an average of 20% over a 12-month period, she would implement a bonus plan that would allow each team member to receive a portion of a “pool” of money determined by the gross wages of the team compared to the net income over a six-month period. For example:

Gross wages of the team after 6 months = $120,000
Net income for the same 6 months = $631,580
120,000/631,580 = 18.9%
Goal = 20% or less
Difference is 1.1% of net collections or $6,947.38 in the pool

Dr. Strater elected to disburse the entire pool amount to her team, based on their number of hours worked.  However, it was presented to her that an alternative would be to NOT disperse 100% of the pool but a portion and keep the other amount in a money market account.  This protects the practice should collections dip below goal because the doctor is required to pay the employee’s base salaries.

Results of Her Plan
By keeping everyone’s eye on production and collections, the entire team was able to realize that they can work efficiently and productively, with as few employees as possible, and still grow the practice. This truly is a win-win situation for everyone… it certainly proved to be effective for her!

In summary – if you are considering a bonus plan or maybe even have a bonus plan, please make sure that you have no “hidden dangers” reflecting that a bonus plan is not a good option for you at this time. Clean out your closet first and then re-evaluate.

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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Belle DuCharme CDPMA
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Workplace Violence and Bullying in the Dental Practice

Workplace violence has been in the headlines a lot lately, but it has always been part of the fabric of private business. It has been estimated that 90% of fatal work injuries occur within private businesses, and dental offices are not exempt from this violence.

I have witnessed various forms of workplace violence in dental practices. Some have come from patients, but most come from conflicts within the staff. Most of the situations could have been managed to a positive outcome if the skills to identify and then diffuse the situation were put into place. Most of this violent behavior is in the form of verbal abuse, direct or implied threats, frequent conflicts that upset office morale, inability to handle criticism causing outbursts, or chronic complaining about another co-worker to the point of creating a hostile working environment.

Much of this behavior may be termed as “bullying.” There is nothing about bullying that should be dismissed as benign, because according to recent headlines across the nation, bullying can lead to physical violence such as assault, suicide or forcing a good employee to terminate because of fear of reprisal. Bullying behavior or any other form of violence should never be tolerated in a dental practice. The person who is causing the problem often takes the position of being a victim to confuse the issue. The key is to not get sidestepped by this drama but keep focused on the responsibility of the dentist to protect those that work in the practice from anyone who would seek to harm.

Often the focus of developing business systems sidesteps this sensitive but potentially volatile issue of workplace violence because it is not the “business as usual” subject that is pleasant to discuss and it is rare to see a practice that has a formal written policy addressing this subject.  Many practices have a policy against both physical and sexual harassment that is included in the Employee Policy Manual. This policy addresses what will happen to the person who has committed the offense, whether it is a warning or an immediate termination. The policy should also address the actions that will be taken to protect the people that work in the practice from the actions of the perpetrator. 

In one practice the dentist, upon witnessing an escalating conflict between two employees, told them that they needed to solve the problem between themselves as adults. The bully was unrelenting, making it her mission to turn the team against her co-worker, thus creating a fearful environment and forcing the victimized employee to quit.  Afterward, a new employee was hired and trained. The dentist thought all was well until the bully began to cause conflict with the new person. After losing three excellent employees in the wake of this person, he finally terminated the bully. He admitted that he too had been intimidated by her and felt powerless to change the situation until he got help and advice from professionals.

Learn to recognize the signs of workplace violence in the early stages before it can escalate into violence or losing good staff members. Don’t empower the bully by looking the other way - have zero tolerance for this behavior. Most importantly, offer and require training for staff to:

  • Recognize when you are being threatened verbally or physically. For instance, if a person slams down an item near you or slams a door after speaking to you.
  • Recognize what verbal and nonverbal reactions may indicate anger or hostility.  Sometimes people make remarks in jest such as “I am going to kill him if he does that again.”  
  • Learn how to listen to employees who have angry or hostile reactions by paying attention to words, actions and body language. Have a policy of “safe” ground for employees to talk to you or to someone with experience in these matters.
  • Ask open ended questions that allow a person to vent and diffuse the situation.
  • Stay calm and non-threatening.  Staying neutral even though you have an opinion to the contrary is critical to controlling the situation.
  • Know how to correctly terminate an employee who has shown violent tendencies.  Depending on the severity of the situation you may not want this person terminated in the office but in a neutral location. 
  • Know how to hire correctly to help eliminate people with violent tendencies from working in your practice.

Want to know more, call us today at 877-777-6151, email training@mckenziemgmt.com or click HERE to find our more information on McKenzie Management’s Training Programs.

To learn more about developing or updating your employee policies click here: Employee Policy Manual, written by Mike Moore, Esq.

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