9.23.16 Issue #759 info@mckenziemgmt.com 1-877-777-6151 Forward This Newsletter

Are Hygiene Salaries Hurting Your Practice?
By Sally McKenzie, CEO

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You know how important your hygienist is to practice success. This person is a key producer who you want to keep happy, which is why you usually opt to pay a guaranteed salary. With this payment structure, hygienists never have to wonder how big or small their paycheck will be each month; they earn the same amount, no matter what.

Do you see the problem here? If there’s no potential for your hygienist to earn more money, chances are this person won’t focus on increasing production numbers. There’s no motivation to excel, so why bother.

Though this is a popular payment structure, it can be hurting your practice and keeping you from reaching true success and profitability. Don’t believe me? Here’s a look at the problems it can cause and another payment option that benefits both you and your hygienist. 

Your hygienist’s wages are well beyond the industry benchmark
In order to have industry healthy overhead, hygiene wages should be no more than 33% of hygiene production. If that isn’t the case in your practice, you’ll probably see your overhead over 62% of collections.

Let me give you an example of what this looks like. Let’s say your hygienist makes $45 an hour and works 8 hour days. That’s $360 a day. If the hygienist produces $1080 a day, or three times his/her salary, you’re in great shape. The hygienist gets one-third in compensation, one-third is applied to practice expenses, and the last third comes back to the practice as profit.

Unfortunately, this happy scenario doesn’t play out in most practices, especially if the Scheduling Coordinator isn’t scheduling the hygienist properly or if the recall system is full of weaknesses. When these vital practice systems struggle, practices have trouble reaching production goals.

This might not be the hygienist’s fault, but it doesn’t matter. You’re paying hygiene the same whether the department meets production goals or not, and when it doesn’t your practice suffers.

You tasked your hygienist with recall
Many dentists think it’s a good idea to ask their hygienist to contact recall patients during their down time. They convince themselves this will help get more patients in the chair and boost hygiene production numbers. Besides, if hygiene isn’t producing and you’re paying the same wage no matter what, they might as well be doing something.

Sorry, but this is actually costing you money. Do you really want your $45 an hour hygienist working the phones? No, you want this person chairside. Remember, you need to start looking at your hygienist like you would an associate. Ever ask an associate to dial for dollars? I didn’t think so. The bottom line is, your hygienist should be focused on producing. I suggest you task another team member with reaching out to recall patients to boost hygiene production, not your hygienist.

There’s a better way
Now you can see the problems that come with a guaranteed salary, and you’re probably wondering how you should compensate your hygienist. I recommend considering a guaranteed base plus commission. That way hygienists have the guaranteed base pay they’ve come to depend on, along with the opportunity to grow their wages with increased production.

While this is the best option for both you and your hygienist, there’s a chance you will meet some resistance to the idea at first. After all, most people don’t like change, especially when it involves their paycheck. Take the time to explain how the model benefits both the hygienist and the practice. The hygienist’s earning potential is no longer limited, and there is opportunity to grow each month. This has the opportunity to make the hygienist’s job more fulfilling, as well as lead to bigger pay days.

Another tip? When it’s time to hire a hygienist, play up this payment structure in your ad. The candidates who respond will understand the benefits of this model and will come prepared to excel in their role, and that will boost practice production numbers as well as revenues.

If you’ve used the guaranteed salary system for years, I understand it can be difficult to change. But the truth is, this payment structure has the potential to hurt your practice and limit your hygienist. Switching to a system that offers a guaranteed base pay plus commission will likely increase practice production and revenues. Your hygienist will be motivated to meet and exceed daily production goals, putting your practice on the road toward true success and profitability.

Next week: 5 benefits of a two-tier hygiene salary system 

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
Interested in having McKenzie Management Seminars speak to your dental society or study club? Click here.
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Belle DuCharme, CDPMA
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Paperless Practices Are More Profitable and HIPAA Compliant
By Belle DuCharme, CDPMA

How many times have you heard this: “We can’t locate (patient name)’s chart. It’s probably misfiled or on the doctor’s desk somewhere.”

During business staff training, I ask attendees if their office is “chartless”. About 70% of the time the answer is yes. When asked whether the practice is “paperless” only 5% says yes. Here are some of the reasons I hear:

We like our health history form and it is easier for the patient to fill it out on paper than on a tablet. 
It takes too much time to do it electronically in the office.
Our patients are older and don’t like the tablet or pad so we don’t offer it to anyone.
We like to write personal notes on our statements so we print and stuff them.
We have a problem with attachments for claims and would rather print and mail them.
We like to print out the route slips for each patient because it has so much information and can be used to make sure treatment is posted to accounts properly by the end of day.
We don’t have downloadable form capabilities on our website so we scan in the completed forms and then shred them.

Here are some reasons to switch to paperless:

1. There is a high risk of PHI (protected health information) in paper form lying on the business desk or visible in the treatment rooms where other patients, contractors or sales people have access.

2. Patients have more confidence in paperless practices because they too know their PHI is more secure and the information is encrypted for their protection.

3. PHI is on a need-to-know basis in your practice. In paper form, anyone can have access to it. This can make patients think twice about the security of your practice.

4. Shredding is not always done on a timely basis and I have witnessed stacks of papers on top of shredders awaiting someone with spare time to shred. Also, many shredders being used are not cross shredders, so someone who wants to steal will not be deterred by a cheap shredder.

5. A secure email is much safer than a fax machine. You can sign up for eFax as an alternative to the non-compliant old fax machines.  

6. PHI entered directly to an iPad or tablet is password protected.

7. You don’t have to worry about storage or losing paper records if digital records are backed up to a secure and HIPAA compliant location. 

8. Doing statements electronically saves you between $2.50 and $5.00 each statement.  E-statements cost about 79¢ each to send through your provider.

9. You can offer to email statements of treatment and receipts instead of printing them.  Many businesses now offer this service because it is driven by customer demands.

According to an article written for DrBicuspid in August 2016 by Lindy Benton, CEO of Vyne, “a conventional dental office uses an average of 10,000 sheets of paper every year just to populate paper charts—not including the file folders themselves. Printing the billing or “walkout” statements for patients generates an average of 50 sheets of paper a day or another 10,000 pieces of paper a year.”

For many practices, eliminating paper entirely can be contrary to patient/customer service because many patients still want paper. But technology can save money with claim attachments, which is patient friendly because it speeds up the processing time for claims payment. It has been estimated that without claim processing technology, it costs the dental practice about $11.00 per paper claim (including labor, supplies and mailing costs).

HIPAA violations have the potential to become large problems if it is determined the practice has been careless in taking the necessary precautions. The chances of an audit are increasing, but taking a few steps to safeguard your PHI electronically, by restricting information to a need-to-know basis and making sure paperwork and files are contained, can drastically minimize the risk.

Want to learn more about running a profitable and efficient dental practice? Call McKenzie Management today for advanced business training and consulting services for better practice management.

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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Kelly Lennier
Senior Consultant
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Need Cash Flow? Pay Attention to These Monthly Reports
By Kelly Lennier, Senior Consultant

If you’re like most dentists, you probably don’t care much for the business side of running a practice. You’d rather spend your time diagnosing and treating patients, not worrying about overhead costs or looking at various reports to monitor practice financials.

While you’re certainly not alone, this attitude is a sure way to keep you from achieving success. Like it or not, your practice is a business – and if you neglect it, you and your team members will suffer. That means knowing how to run a practice, from being able to read reports to find more opportunities for cash flow to guiding your team members to success.

How can you be a better business owner? Here are a few tips:

• Know where money is being spent and what percentage of that money is going to specific areas of overhead. Learn how to read the Profit and Loss Report and do so monthly to properly manage practice overhead.

• Hire enough employees and train them to work efficiently. Offer them guidance through detailed job descriptions and evaluate their performance based on specific measurements.

• Establish yearly, monthly and daily production goals for every producer.

• Conduct yearly strategic planning sessions. Use these sessions to establish goals to keep the business profitable as well as to ensure those goals are being met. If they’re not, get your team involved. Determine which areas are falling behind and develop a plan to address the problems you and your team members identify. Empower them to take control of their systems and do their part to contribute to practice success.

• Never pass up the opportunity to increase cash flow. It’s your job to make sure you’re tapping into all income streams. Run specific reports from your practice management software every month to look for these opportunities. Be a leader and guide your business in a specific direction.

Here’s a look at some of the reports you should run every month:

Accounts Receivable Report
According to industry standards, Accounts Receivable should be 1x your net production. Not sure where yours is? Run your Accounts Receivable report, and make sure what you’re looking at is your true Accounts Receivable number. While you might think it’s at 1.2, it could actually be closer to 1.7 if your Financial Coordinator includes thousands of dollars of credit balances in the A/R report, which is way off the industry benchmark.

Outstanding Insurance Claims Aging Report
So how can you improve your A/R to net production ratio? One way is to look at the Outstanding Insurance Claims Aging Report every month. That cash is just sitting there waiting to be claimed.

When looking at the report, make sure there are only a small number of claims over 60 or 90 days late. The goal is for insurance companies not to be overdue at all, but if they’re late your Financial Coordinator should know why.

It’s also important to train your Financial Coordinator to call insurance companies that are 15 to 20 days past due if claims are submitted electronically and still outstanding.

Accounts Receivable Aging Report
Review this report every month with your Financial Coordinator. If you find delinquent accounts, determine why they’re delinquent and make a plan to collect. Remember, unless a patient tried to pay with a bad credit card or check, the Financial Coordinator is responsible for any shortfalls.

So how do you handle delinquent accounts over 90 days past due? Your Financial Coordinator should have already made two phone calls to talk with the patient about the unpaid balance. From there, it’s time to send a letter offering a small bookkeeping adjustment if the full balance is paid by a specific date. Why the adjustment? If it goes to a collections agency, you’ll be charged a fee; it’s better to get paid before it comes to that. Keep in mind the longer the account is outstanding, the more difficult it will be to collect.

If you don’t receive a response by the due date, write the account off as bad debt and hand it over to the collection agency.

Speaking of bad debt, about 2% of net production should be written off as bad debt; any more than that signals a breakdown. Review your Adjustments Report along with the Aging Report to see how many dollars are being written off to bad debt.

Now is the time for you to take control of your practice and own your role as practice CEO. Finding opportunities to increase practice revenue is an important part of that role. Read practice reports each month to find opportunities. Once you take the proper action, you’ll have a much more profitable practice.

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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