Be Proactive for Financial Success in 2017 and Beyond
As I write this, I’m on a plane heading back to my new home in Ohio. I’ve spent the last week in a dental practice, along with one of my consultants, in what I’ll call Anytown USA. While I was waiting to board the plane home, I decided to read The Wall Street Journal and reflect on the country’s new president-elect and the unknown possibility of change.
Over the last three decades, I’ve witnessed the various economic highs and lows that come with a new president and have learned that if you don’t know how new policies will affect your business, and thus do nothing to prepare, the change could be disastrous. You may not be able to directly impact what will happen to taxes, healthcare, etc., but you do have the ability to make sure you’re not a financial casualty, as long as you choose to be proactive. If you’re not, well, make sure you have your water wings ready and waiting, because the sea of red ink may just carry you away.
The dentist whose practice I visited last week is being proactive. This is a general dentist who has been practicing for nearly 20 years. Last year, his practice revenues came in at a little more than $1 million.
When he called me, he said he was worried about his recall system and just felt like something was off. He was right, and trusting his instincts led him to make that initial phone call to McKenzie Management for help. And it’s a good thing, because while he knew the practice was having problems, he had no idea just how bad those problems really were.
Let’s start with his patient retention rates. Over the past 13 years, nearly 8000 patients visited his practice. Not bad, right? Unfortunately, only 1194 remained active. If you’ve done the math, you know that’s an 85% patient loss! Ouch. From January through May, he had 2267 patient charts in the file yet barely half were active, which translates to a 53% patient retention rate.
In the first five months of 2016, this doctor treated 20 new patients a month. The problem? Forty patients left the practice every 30 days. In fact, the loss of patients DOUBLED in the first five months of the year as compared to the previous year. And the carnage didn’t stop there.
The unscheduled treatment plan report revealed an average of $86,000 a month in lost revenue in 2016 versus $42,000 a month in 2015, another figure that DOUBLED in the first five months of this year.
While these numbers are more than a little discouraging, this doctor didn’t sit back and ignore the situation. He may not have known exactly where the shortcomings were, but he made an effort to find out. He contacted us for help and now we have a plan to get his practice back on track.
With the proper training, we anticipate his practice will begin capturing a minimum of 75% of unscheduled treatment within the next few months, providing an increased revenue potential of $65,000 per month.
In reviewing the hygiene department, we found its current potential for appointments is 1565 a year. However, hygiene only actually treated 1060 patients. That’s a loss of 505 appointments, which is 3.1 openings per day for two hygienists and a lost revenue potential of $215,036 per year. We also found 219 past due recall patients. Based on two appointments per year, this represents an additional $77,964 a year in potential revenue opportunities. We project that with some system corrections, the doctor can make significant income gains in this area. Yes, things are looking up for this doctor – but the work doesn’t stop there.
Hygiene produced a dismal 6.4% of perio production. Why? Thorough assessments, patient education, scripting and communication are all lacking in this practice. Once the dentist puts all this in place, however, he’ll add $40,000 a month in revenue potential.
The practice collected 98% of production last year and so far this year BUT accounts receivable over 90 days are only at 35%! Not great, but with training and system improvements the practice is looking at retrieving another $20,000 per month.
And he thought he just had a recall issue.
Clearly the practice needs to tighten key systems. Improvements are also necessary in employee training, organization and communication. This doctor is very fortunate because his team has a sincere desire to improve in 2017. They’re genuinely motivated and want to do their part to turn this struggling practice into a thriving practice.
As this example illustrates, you can’t control the economy at large but you do have powerful influence over your own financial situation. The end of the year is a mere few weeks away, and the decisions you make today will determine whether you look at the year that was and count it as one of your worst, or one that tested you and your practice to become your best.
Need some help getting back on track? Give me a call 877-777-6151 and I’ll be happy to perform a baseline analysis on your practice, complimentary. Rather than waiting for the government’s next economic stimulus package, create your own! It’s just a phone call away.
Next week: Thinking about hiring a new team member in 2017? Read this first.
For additional information on this topic and more, visit my blog: The Lighter Side
Interested in speaking to me about your practice concerns? Email email@example.com
Employee Betrayal and the Employee Policy Handbook
Office Manager Training Case File 4155OM
“Dr. Kee” (names have been changed) had been practicing dentistry for seven years. She felt that she knew enough to get her through those beginning years – she never had any real difficulties with the business until some of her staff began demanding pay increases that she could not afford.
It started when her two senior dental hygienists invited her to join them for lunch to discuss their ideas for practice improvement. One had been with her for three years, the other for four years, and she trusted them. Lunch turned out to be a request for raises from both of them. Immediately she felt “ganged up on” and betrayed. “What could I do, I felt taken advantage of and gave in to their requests.”
Dr. Kee reached out to McKenzie Management because she no longer felt in control of her practice. It turned out that Dr. Kee had a verbal agreement for salary and benefits with each of her employees, but the problem was that each was different. One hygienist had a paid three week vacation every year, and the other (who had the same hours) was given one week paid each year.
Dr. Kee sent her Office Manager “Bea” for the two-day Office Manager Training, and at my request the doctor came too. Dr. Kee felt that her office manager would be the one to take control of the staff and dictate any new ideas. Under the circumstances, the two of them needed to create a united stance or the staff would bypass Bea and go directly to Dr. Kee.
Bea had many years’ experience as a dental office manager and ran a tight ship when it came to collections and making sure the schedule was productive. However, she felt that the lack of employee policies was causing turmoil. None of the staff had written job descriptions or titles that indicated accountability except for Bea. Bea was frustrated because when she asked for help, no one stepped up to help but would say “I wasn’t hired to do that.”
During the training session we created job descriptions and areas of accountability for each staff member. Accountability means there are areas within the job description that the employee has to accomplish to produce positive results. An example would be contacting unscheduled patients in recall and from the unscheduled treatment list, making a minimum of five outbound calls a day to these patients, and recording the results on a monitor, noting whether an appointment was made or why it wasn’t.
We also drew up a plan for the initial start of an Employee Policy Handbook which would specifically state what vacation time and holidays would be observed for all full-time employees. There would be no separate verbal agreements for vacation time. We went over the issues of Performance Reviews and Salary Reviews to understand the difference. Raises would no longer be automatic, but were based upon the employee’s performance and dedication, as well as practice profitability.
Dr. Kee asked for a source that would help her complete the handbook, making it legal per her state laws. McKenzie Management recommends http://www.mckenziemgmt.com/ss-manual.php. Bea said that she would support Dr. Kee in getting it accomplished as soon as possible.
As we went through the training material, Bea and Dr. Kee began to realize how little they knew about managing a dental practice. Dr. Kee had never looked at the overhead numbers and realized that her practice operation percentages were not healthy. She was worried about how the staff would react to the changes that were to be made. We concurred that their current salaries were more than adequate, but unless the practice improved with some growth there wouldn’t be salary increases for a while.
Since completing the training course, Dr. Kee has seen improved accountability and production in the office. Need help with your practice? Call McKenzie Management today for customized training and consulting programs.
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