6.3.16 Issue #743 info@mckenziemgmt.com 1-877-777-6151 Forward This Newsletter

Is Your Overhead Out of Control? Here’s Why.
By Sally McKenzie, CEO

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Looking around your office, you can see all the updates that need to be made. The reception area could use a makeover, and there’s plenty of technology you’d like to invest in to improve practice efficiencies and patient care. The problem? Most of your money goes to overhead. In fact, no matter how hard you and your team members work, overhead costs seem to dictate your every move.

Unfortunately, this is a common scenario in today’s dental practice – and I know how frustrating and stressful it can be. Overhead costs should be no more than 55% of collections, but all too often they reach well beyond that industry benchmark. This leaves dentists feeling overwhelmed as they try to get their practice back on track.

If this describes you, the good news is you don’t have to do it alone. I can help you get your overhead costs under control so you can finally start meeting your full potential. To get there, you have to first understand why overhead has become such a problem. Here, I’ve put together three factors that could be contributing to your skyrocketing overhead costs, and what you can do to overcome them. 

1. Recall Isn’t a Priority
This vital practice system represents thousands of dollars in potential revenue, yet dentists often ignore it. If you want to get overhead costs under control, I suggest you invest in this system. Trust me, you’ll be happy you did.

Start by empowering your Patient Coordinator to take ownership of your recall system. Task this person with contacting a specific number of overdue patients every day and then getting those patients on the schedule. This will not only get more patients in the chair, it will help boost your patient retention numbers. And that, of course, will put a dent in those overhead costs.

2. You Have Too Many Team Members
When tasks aren’t getting done, many dentists think that means it’s time to hire another employee. This will help make your practice more efficient and increase your production numbers, right? Not necessarily.

If tasks aren’t getting done, it might be because your employees need more guidance from you, the practice CEO. I suggest providing employees with detailed job descriptions so they know exactly what systems they’re accountable for and what their role entails. This will ensure they understand your expectations and how their performance will be measured.

It’s also important to provide your team members with proper training to give them the confidence they need to excel in their role. This will translate into improved efficiencies and increased production – and a reduction in your overhead.

Still think you need to hire a new team member? Here’s how you can tell it’s time. Look at how long patients are at the front desk. Check in and check out takes about 10 minutes per patient. There are 480 minutes in an eight hour work day. If your practice sees 15-22 patients a day, the front desk is spending 150-220 minutes with patients, which is easy for one front desk person to handle.

If the practice works a normal 8-hour day and one front office person spends more than 240 minutes with patients, it might be time to bring on a new team member. But before you do, I suggest you analyze what is going on with the employee and look for possible inefficiencies in your business operational systems.

3. Team Members Get Raises No Matter What
You want to keep your employees happy. After all, they work hard for you and have stayed loyal to your practice. So you give them a bump in pay every year, no matter what.

While you might think a little extra money will motivate your employees to improve their performance, it won’t. Think about it. If you give out raises whether team members earn them or not, why would they try to improve? In their minds, they must be doing something right. The result? They don’t make any changes and practice production stays the same while your overhead costs continue to soar.

Payroll costs should be between 20-22% of your revenue, with an additional 3-5% to cover payroll taxes and benefits. If you’re giving out raises without any increase to your revenues, I can guarantee your payroll costs are well beyond that benchmark.

It’s time to stop giving out raises just because. Make sure team members know exactly what they need to do to earn a raise. This will motivate them to improve their performance, helping you meet practice goals and reduce overhead.

If overhead costs are holding you back, it’s time to figure out why and start making changes. Addressing these problems will help get you back on track, transforming your struggling practice into a thriving practice.

Next week: Get overhead costs under control

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

Interested in speaking to me about your practice concerns? Email sallymck@mckenziemgmt.com
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Nancy Caudill
Senior Consultant
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Are Production Adjustments Hurting Your Practice?
By Nancy Caudill, Senior Consultant

You probably don’t spend a lot of time thinking about production adjustments and how they impact your practice. You make adjustments when you need to and expect team members to do the same. The problem is, it’s easy for these adjustments to get out of control and really start eating into practice revenue.

What exactly are production adjustments? They can be made from your practice management software with codes that cover Credit Card and Debit Adjustments, Miscellaneous Adjustments, as well as Refund and Insurance Adjustments, to name a few. These adjustments reduce gross production; your practice collects money based on net production.

If your practice makes too many production adjustments or doesn’t use them correctly, it could cost you thousands of dollars every month. So what can you do to avoid this in your practice? Here’s an overview of how these adjustments can lead to problems, and tips to keep them from hurting your bottom line.

You Give Away Too Much Dentistry
If you’re like many dentists, you offer free or discounted dentistry to family, friends and other professionals, or simply because you feel guilty charging a patient full price. While it’s nice to offer free services when you can, too many of these “doctor courtesy” adjustments could really hurt your practice.

Most dentists have no idea how much dentistry they give away each month. Decide just how much free dentistry you can afford to offer and then stick to that number, no matter how many family and friends ask for a discount.

Bad Debt and Collection Adjustments Are Too High
These adjustments should be no more than 2% of gross production. If yours are more than this, it indicates a problem. It likely means you’ve made unclear financial arrangements with your patients, and/or that your system for collecting unpaid balances is broken. I suggest taking a look at these systems and determining how to make improvements, whether that means providing more training for your Financial Coordinator, developing and distributing a detailed payment policy, or creating scripts to help make collection calls more successful.

Incorrect Insurance Adjustments
If PPO adjustments seem high in your practice, it’s probably because your Financial Coordinator is posting the adjustments incorrectly—a mistake that could be costing you big.

While there is no industry standard for PPO adjustments, some offices reduce their gross production for each PPO plan so very few adjustments need to be made to posted accounts. Other practices post their office fees, which requires a much higher PPO adjustment once the insurance check is received.

It’s important to make sure your Financial Coordinator understands how to correctly post adjustments as well as how much to collect from each patient. Provide the proper training and encourage this team member to speak with insurance representatives. This will help him or her learn how to properly adjust patient accounts and determine exactly what patients are expected to pay. 

To help avoid problems with adjustments and improve how you use production and collection adjustments, I suggest creating more specific adjustment codes. Here are some examples:

Production (Credit) Adjustments
• Employee Courtesy for Dentistry
• Family Courtesy for Dentistry
• Senior Courtesy
• Cash Courtesy
• PPO Adjustment
• Bad Debt Write-Off (smaller balances that are uncollectible but not turned over to a collection agency)
• Collection Write-Off (accounts that are turned over to a collection agency)
• Small Balance Write-Off (used when a patient doesn’t return and has a balance less than $10)
• Collection Agency Fee
• Doctor Courtesy (used when the doctor elects to reduce the patient’s fee)
• Transfer Credit to another account/family member
• Corrected Post-Credit

Collection (Debit) Adjustments
• Refund to Patient
• Refund to Insurance
• Refund - No Check Issued (used when the credit balance is small or the patient’s mailing address is incorrect and the patient can’t be contacted)
• NSF Check Recharge (used when a check is returned from the bank because of insufficient funds)
• NSF Fee
• Recharge Collection Write-Off (used when the collection agency collects on an account that was written off when turned over)
• Transfer Debit to another account/family member (should equal the “transfer credit” totals)
• Corrected Post-Debit
I also suggest creating a monthly monitoring system to identify and reduce these red flag adjustments that are costing you money. This will give you more net production, allowing for increased collections. Include the average adjustment over the last 12 months and the new goal.

It’s important to know how much money you’re losing to adjustments each month. Follow these tips to get adjustments under control and start bringing in more revenue.

If you would like more information on how McKenzie's Consulting Coaching Programs can help you implement proven strategies, email info@mckenziemgmt.com

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Belle DuCharme, CDPMA
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Mental Weight Loss with Training and Delegation
By Belle DuCharme, CDPMA

“Life is denied by lack of attention, whether it be to cleaning windows or trying to write a masterpiece.”- Nadia Boulanger

“Just put it on my desk and I will get to it.” - Famous last words of many struggling, chaos-driven dentists and dental managers of bustling practices.

As “sooner or later” gets to be later and later, the desktop becomes a giant stack of mail, receipts, business memos, requests from staff for days off and vacations, letters from insurance companies wanting updated credentialing, and sticky notes in different colors signifying something that you forgot months ago.

“Once I have taken care of something, I put it in my desk drawer so I know it was resolved, except there isn’t any more room in my desk drawer.”

If you pick up anything that requires thinking, it usually gets the least attention. Many of the dentists I have spoken with say the front office puts all of the mail in their wire “inbox” on their desk daily. They then sort the junk mail and toss it or shred it. Why not train the front desk person to sort the mail, throw out the junk advertisements and shred the credit card offers? The Business Coordinator is pulling out the checks to post, surely she/he can go over invoices to be paid and other statements that need to go to the bookkeeper or at least clear them for the dentist/manager to give the final okay before submitting to the AP department.

If there is something that needs immediate attention like licensing renewal, credentialing, HIPAA or OSHA updates, have your Business Coordinator collect the necessary information to the best of his/her ability and submit the final documents to you for approval and signature.   

Are magazines, articles and other reading materials stacking up in your “sooner or later” box? If the dental assistant or other team member has down time, have them read through and mark any material relevant to the practice, or better yet they can give a monthly report on interesting and educational material so all can benefit. They can categorize a storage box for relevant articles so you can more easily access them in the future.

Paying special attention to anything that has a “date due” is especially important. Overdue payments can cost big in interest and penalties, and overdue licensing or permits can get you into hot water with your license to practice.

A few offices that received a required update in credentialing from a large dental insurance company put the letter unread in the doctor’s inbox. When payment checks started to go out to all of the patients enrolled in plans under this insurance company, panic forced a call that informed them their credentialing was not updated and it would take maybe a couple of months to correct the payment process. This could have been easily prevented with a better system for mail organization and delegation.

Running out of shelf or cabinet space? Are you a collector or a hoarder? Old, outdated material that you haven’t looked at in a few years can be collected and stored if you have to keep it, but much can be recycled or donated. Old computers, phones, answering machines, printers and other useless outdated technology takes up too much space and should be processed for recycling. 

Many practices lack space for private areas to discuss treatment plans with patients. The dentist’s messy desk is usually the last resort for privacy, as it is quickly cleared and stacks of stuff are pushed into drawers or hidden in boxes in the closet.  

Are there numerous types of technology to get important stuff off your desk, out of your head and into a device? Yes – and some are great at providing reminders too. However, there is no technology to actually do what you have to do, so it is only as good as the operator. Using too many calendars or organizational software systems is just another big messy “inbox” to sort through. 

David Allen wrote a book called Getting Things Done, The Art of Stress-Free Productivity. This book is worth the time to read or listen to. He validates the fact that all of us are inundated with too much “stuff” and we need help with understanding what should stay, what should go and who or what can help.

For help organizing and training your dental teams for better production and collection, call McKenzie Management today.

If you would like more information on McKenzie Management’sTraining Programs  to improve the performance of your team, email training@mckenziemgmt.com

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