1.24.14 Issue #620 info@mckenziemgmt.com 1-877-777-6151 Forward This Newsletter

Can You Lead a Profitable Practice?
By Sally McKenzie, CEO

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Certainly, there have been plenty of excellent dentists who have managed to eke out a fairly comfortable living in spite of their less than stellar leadership skills. Truth is, years ago, few dentists (few employers for that matter) gave much thought to leadership. But as one of the most studied areas of management over the last four decades, we’ve learned a few things about the critical impact of leadership on business profitability, and most assuredly on small business.

Leaders of the past were the ones who had all the answers. They simply told employees what to do. As leadership models evolved, leaders were taught it was better to ask their employees rather than tell. And today, leaders are encouraged to engage, cultivate, and reward their teams. Below are three keys to leading a profitable practice.

#1 - Weed and Feed your Team
In other words, do not tolerate poor performers, bullies, and slackers. Just one toxic employee will drag down your entire practice. Instead, cultivate the high potential workers in your ranks. Recognize the strengths and weaknesses among your team members. All employees bring both to their positions. The fact is that some people are much better suited for certain jobs and not others. Don’t be afraid to restructure responsibilities to make the most of team strengths.

#2 - Pay Attention to the Numbers
It is critical that you understand completely the business side of your practice. One of the most critical numbers to know is your overhead percentage. It should breakdown according to the following benchmarks to ensure that it is within the industry standard of 55% of collections. 

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

Beyond knowing your overhead percentage, recognize that there are 20 practice systems affecting how much of your practice profits are consumed by overhead. You should be well versed in each of them, as the effectiveness of these systems will directly and profoundly impact your quality of life and work throughout your entire career. But here’s the rub - you alone cannot manage each of these systems.

In every dental practice, the management systems are ultimately shaped and molded by the quality and training of the staff. It is this trifecta of doctor/staff/systems that creates the framework for the seamless delivery of superior care to your patients. 

Moreover, the systems affect whether you have enough money to pay your bills. They impact your schedule, your production, your collections, and your reputation. The numbers and reports they yield will loudly and clearly tell you what you don’t want to hear when you don’t want to hear it. But no matter what, your success as a dentist is dependent upon your ability to understand and respond to these key performance indicators.

#3 - Clearly Define your Mission and your Vision
Your dream will remain a dream until you are able to share it with your team and empower them to take ownership. Start with the fundamentals: Take the time to define and clearly communicate your practice’s vision and mission to your staff. Next, prepare them to help you achieve your vision and mission; in other words train employees to carry out their responsibilities fully. If you expect employees to just figure it out, in many cases they will fail, thus so will you.

Create a working environment that empowers your employees to be accountable, offer ideas, and give input. If you cannot genuinely accept even the simplest of employee suggestions without finding some fault or issue with their recommendations, eventually you will silence them. Take a close look at your practice culture. Is it focused on “problem solving” in which concerns or challenges are viewed as indicators of system weaknesses that can be adjusted and improved as needed? Or is yours a blame-based business model, i.e. there’s a problem; find someone to blame.

Ultimately, you alone must be accountable for the type of leader you are. If you believe that your team cannot fulfill your vision, ask yourself why. Are you leading with a “victim mindset” - if only you had better equipment, better patients, better employees. Or is yours a leadership attitude in which you minimize the weaknesses, acknowledge the challenges, and build on the strengths. You decide.

For more information on this topic, visit my blog: The Lighter Side

Interested in speaking to me about your practice concerns? Email sallymck@mckenziemgmt.com
Interested in having McKenzie Management Seminars speak to your dental society or study club? Click here.
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Ken Rubin, CPA, PFS
Ken Rubin and Co.
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The IRS Crackdown on Independent Contractors
By Ken Rubin, CPA, PFS

In order to increase their profits, some dentists choose to pay their associate dentists as independent contractors. By doing so the dental business owner avoids paying Social Security taxes, Medicare taxes, Workers Compensation Insurance and Retirement Plan Contributions on wages that are paid to independent contractors. But the risk and consequences of paying associate dentists as independent contractors has recently spiked - big time!

The IRS uses the following 20 Factor Test to determine if a worker is really an employee or independent contractor.

1. Instructions. Workers who must comply with your instructions as to when, where, and how they work are more likely to be employees than independent contractors.

2. Training. The more training your workers receive from you, the more likely it is that they're employees. The underlying concept here is that independent contractors are supposed to know how to do their work and, thus, shouldn't require training from the purchasers of their services.

3. Integration. The more important your workers' services are to your business's success or continuation, the more likely it is that they're employees.

4. Services rendered personally. Workers who must personally perform the services for which you're paying are more likely employees. In contrast, independent contractors usually have the right to substitute other people's services for their own in fulfilling their contracts.

5. Hiring assistants. Workers who are not in charge of hiring, supervising, and paying their own assistants are more likely employees.

6. Continuing relationship. Workers who perform work for you for significant periods of time or at recurring intervals are more likely employees.

7. Set hours of work. Workers for whom you establish set hours of work are more likely employees. In contrast, independent contractors generally can set their own work hours.

8. Full time required. Workers whom you require to work or be available full time are likely to be employees. In contrast, independent contractors generally can work whenever and for whomever they choose.

9. Work done on premises. People who work at your premises or at a place you designate are more likely employees. In contrast, independent contractors usually have their own place of business where they can do their work for you.

10. Order or sequence set. Workers for whom you set the order or sequence in which they perform their services are more likely employees.

11. Reports. Workers whom you require to submit regular reports are more likely employees.

12. Payment method. Workers whom you pay by the hour, week, or month are more likely employees. In contrast, independent contractors are usually paid by the job.

13. Expenses. Workers whose business and travel expenses you pay are more likely employees. In contrast, independent contractors are usually expected to cover their own overhead expenses.

14. Tools and materials. Workers who use tools, materials, and other equipment that you furnish are more likely employees.

15. Investment. The greater your workers' investment in the facilities and equipment they use in performing their services, the more likely it is that they're independent contractors.

16. Profit or loss. The greater the risk that your workers can either make a profit or suffer a loss in rendering their services, the more likely it is that they're independent contractors.

17. Works for more than one person at a time. The more businesses for which your workers perform services at the same time, the more likely it is that they're independent contractors.

18. Services available to general public. Workers who hold their services out to the general public (for example, through business cards, advertisements, and other promotional items) are more likely independent contractors.

19. Right to fire. Workers whom you can fire at any time are more likely employees. In contrast, your right to terminate an independent contractor is generally limited by specific contractual terms.

20. Right to quit. Workers who can quit at any time without incurring any liability to you are more likely employees. In contrast, independent contractors generally can't walk away in the middle of a project without running the risk of being held financially accountable for their failure to complete the project.

There is also a safe harbor provision which allows a business to continue to treat a certain class of worker as independent contractors if they have set a precedent by always historically paying workers of that class as independent contractors in the past. Our experience and the collective experience of our peers in the Academy of Dental CPA’s (“ADCPA”) has been that in 2013 the auditors have become unreasonable and extremely aggressive in classifying workers as employees.

In 2013, both the IRS and State taxing authority (California Employment Development Department) have dramatically increased their audits of dentists for improperly misclassifying their workers as employees. Above and beyond IRS and EDD penalties, the California Labor Code can also assess penalties as high as $15,000 for a first time violation. The government has now gotten serious about policing this, and the penalties for non-compliance are severe.  
In the event of an audit it is pretty much indefensible to pay hygienists, assistants and front office as independent contractors. Be sure to consult your Dental CPA to make sure you are not placing yourself in jeopardy.

Ken Rubin is the owner and operator of Ken Rubin & Company, CPA’s, a Dental CPA firm based in San Diego. Ken Rubin also owns and operates Ken Rubin Practice Sales, a San Diego based dental practice transition company. He is the co-founder of the Academy of Dental CPA’s (“ADCPA”) and a frequent author and lecturer. 

He can be reached at ken@kenrubincpa.com or by calling 619-299-6161
His website is www.CaliforniaDentalCPAs.com

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Jean Gallienne RDH BS
McKenzie Management
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Handling Complaints
By Jean Gallienne, RDH BS

Many times when a patient has a complaint - whether it’s about the front desk, an assistant, the doctor, or hygienist - the patient will only share the complaint with a person on staff whom they have rapport and trust. This is, if you are fortunate enough to have the patient come to a team member with their complaint, rather than use the many other mediums available in this day and age. Handling complaints before they are put on an online review page is imperative.

Team members are often not given direction or training on how to handle patient complaints. Many times we don’t even see it coming, as the person who the complaint is shared with may not have been privy to the information or incident that took place until the patient is face-to-face with them. Are your team members like “deer in headlights” when a patient has an issue? No matter how big or small it may seem to anybody on the team, it is obviously a big issue to the patient who has taken the time to voice his or her concerns.

The complaint may have been a miscommunication. Perhaps the patient was not listening or had a skewed perception at the time of the incident. The problem may not actually be the fault of your team at all - but to do nothing at all or become defensive is the worst thing you or your team can do.

Every day, patients walk through your practice doors to have dentistry performed by you and your team. Each and every one of these patients has a different level of dental education, and some may not be comfortable telling your staff when they have an issue. There are many procedures a patient may think are a big ordeal, when really they are very routine occurrences. Let’s take a look at one scenario that may happen. How and what is said during this communication may be the difference between retaining a patient and having a patient move on to another practice.

Tom comes into your practice and is very happy with the new patient exam. He has a hygiene appointment with Mary and then starts to have his restorative procedures done. Six months later Tom returns for his hygiene appointment. At the beginning of the appointment Mary asks Tom, like she always does, “What problems or concerns about your teeth do you have?” Initially Tom says nothing. Then, because the hygienist has gone through the charts, she specifically asks about the fillings that were last done and how they are feeling.

The patient may answer, “They are doing great and I would never know that I had anything done!” This would be the perfect time for Mary to ask for a referral by commenting, “That’s great! Would you please share with your friends, family, and coworkers how happy you are with our service?” On the other hand, if Tom says he is having pain in the upper right where the doctor did a filling, the hygienist should direct her attention to this area first, inform the patient of what she sees, and inform him that she is going to have the doctor come in and take a look.

Even if the hygienist does not see anything wrong, she should still have the doctor come in and take a look. She may even inform Tom: “I don’t see anything wrong, I looked at the x-ray and the filling is not that big. However, it is a composite and sometimes they remain sensitive for a longer amount of time. There may also be a high spot that needs to be adjusted, sometimes when you are numb it is hard to determine if there is a tiny area that may need to be adjusted. Let me have the doctor come in and take a look.”

This allows Tom to see that the doctor stands by his/her work and wants the patient to be happy and comfortable. Since the hygienist already told the patient what may be wrong, even though she did not see anything, if the doctor decides there is something wrong and it is one of the above mentioned problems it builds the patient’s trust that much more.

If Mary had handled this differently, maybe because she didn’t want to get behind schedule by having the doctor come in or just didn’t know what to do, the patient may be leaving your practice. As we all know, actions speaks louder than words. Training your team on all aspects of handling patient experiences, both positive and negative, will make a big difference in your patient retention.

Interested in improving your hygiene department? Email hygiene@mckenziemgmt.com and ask us about our 1-Day Hygiene Training Program or call 877-777-6151

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