5.19.17 Issue #793 info@mckenziemgmt.com 1-877-777-6151 Forward This Newsletter

The Top Reasons Overhead Costs are Out of Control
By Sally McKenzie, CEO

Printer Friendly Version

No matter how hard you try, you just can’t seem to get ahead. The long hours you put in each day are taking their toll, and you’re not sure how much longer you can keep up the pace. You’re starting to think you’ll never reach your financial goals, and it’s clear your team members are worried too. Out-of-control overhead is holding you back, both professionally and personally.

This is a stressful situation, and sadly one I see in many practices. Dentists and their team members work tirelessly, yet high overhead costs keep them from making any progress. They pay bill after bill each month, and rarely have any money left to invest in their practice or their retirement fund. These dentists are frustrated, overwhelmed and aren’t sure how to dig themselves out of this financial hole. 

If this describes you, I want to help you take back control of your practice. That means getting overhead costs down to no more than 65% of collections. Seem impossible? It isn’t. First, you need to figure out why your overhead costs are so high. Read on for some of the top culprits and how you can squash them in your practice.

1. You give employees raises when they’re not earned. I know so many dentists who give out raises every year no matter what. They want to keep their team members happy, after all, and they think a bump in pay will motivate them to improve their performance. Unfortunately, the opposite is true. When team members receive a raise, they think they must be doing something right. They have no reason to improve, so they don’t.

That’s why it’s so important to only give out raises when they’re earned, not just because a loyal team member asked for more money or because a year has gone by. Create job descriptions with clear performance measurements that outline how raises can be earned and when they can be discussed. Make it clear raises only will be given if they’re earned. Trust me, this will motivate team members to meet and even exceed your expectations.

Remember, payroll costs should be between 20-22% of your revenue, with an additional 3-5% to cover payroll taxes and benefits. Anything over that will contribute to skyrocketing overhead costs.

2. You never raise your fees. I know, I know. Raising your fees makes you uncomfortable. But if you don’t raise your fees from time to time, it will hurt your practice.

Many dentists worry they’ll lose patients if the cost of dentistry goes up, but if you’re providing top-notch service and exceptional patient care, patients will stay loyal. In fact, most patients expect fee increases. 

Bottom line: Raising your fees is the fastest and easiest way to grow profits. To make it work for your practice, I suggest you establish a solid fee schedule that’s fair to both you and your patients. Base the increases on actual data and make sure your rates align with other practices in the area. This will help alleviate your overhead woes and get your practice back on track.

3. You have too many employees. When tasks aren’t getting done and team members start asking for more help, many dentists think that means it’s time to hire another employee. They have visions of this new person improving practice efficiencies and production. Sounds good, but that isn’t always how it works out. Often, nothing really changes – except your payroll costs, or course.

I find that training and coaching existing staff is more cost effective. When team members are properly trained, they become more confident in their skills and better at their jobs. They’re happier, more productive and more efficient, and that ultimately helps reduce high overhead costs.

Ok, so how do you know when you actually do need to hire a new employee? Look at how much time patients spend at the front desk. Let me break it down for you. Every patient takes about 10 minutes to check in and check out. There are 480 minutes in an eight hour work day, so if you have 15 to 22 patients a day, the front desk spends 150-220 minutes seeing patients. One front desk person can easily handle that work load.

If the practice works a normal 8-hour day and one front office person spends more than 240 minutes with patients, then it’s time to hire a new team member.

Now let’s focus on assistants. If procedures are streamlined, including room set up, seating and dismissing patients and clean up, one assistant can efficiently see 13-14 patients a day while maintaining two treatment rooms and using two operatories. If you see more patients a day, not counting hygiene exams, then you can justify hiring a second assistant.

If you’re experiencing high overhead costs, it’s doing nothing but holding your practice back and it’s time to consider making changes. With a little guidance, you can finally start meeting your true potential and reap the benefits of a thriving practice. Contact me and I’ll help you get started.

Next week: Follow these tips to reduce overhead and grow your practice

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.
Be sure to find us on Facebook! Facebook Page

Forward this article to a friend.

Belle DuCharme, CDPMA
Printer Friendly Version

Postponing Patient Communication Sabotages Patient Relations
By Belle DuCharme, CDPMA

Front Office Training Case #FO412

“Francie Smith” (names have been changed) signed up to take the Front Office Business Course at the request of her employer, “Dr. Blie”. Dr. Blie was at the end of her rope. Francie was not explaining payment arrangements to patients or showing how their dental insurance plans worked. She overstated what the insurance would pay when she didn’t actually know for certain if they would or not. When she checked out a patient who needed to return for a filling, she wouldn’t provide an estimate because “it was such a small treatment plan.”  By not communicating with patients about dental plan coverage or giving them written estimates, she was giving the false perception that the patient was not expected to pay anything at the time of service.

Speaking with patients is a necessity in all dental practices. Dentistry is an extroverted business requiring better than average communication skills. It is not just about explaining diagnosed treatment in layman’s terms; it’s about making a connection with words that convey confidence, knowledge and caring. Developing these skills depends on the desire to improve patient interaction plus perfecting communication with practice and roleplay to hone and polish verbal presentations. 

Francie explained that it paralyzed her to give estimates because she did not like giving people unwelcome news, and the insurance never covered as much as the patient hoped it would. To avoid this confrontation, she simply dismissed the patient by saying, “We will bill your insurance and if there is a balance we will send you a statement.” The Accounts Receivable had risen to over 300 statements sent monthly, mostly to patients with insurance that had paid, but some with insurance that had denied payment based on eligibility, frequency limitations, non-covered services or maximum reached for the calendar year. Francie never called these people, she just kept sending statements.   

After completing the Front Office Training, Francie realized it was extremely important to communicate total charges, estimated insurance benefit and out-of-pocket costs to patients at the time the treatment plans were presented and appointments were scheduled. To help Francie with developing her communication skills, we developed a letter to the patient that can be edited for each situation.

Dear Patient, (name)

Thank you for being a great patient in our practice; we want you to know you are appreciated and your opinion matters to us. Because providing quality and comprehensive care is important, our goal is to establish effective communication and encourage you to ask questions and seek information regarding your dental care and payment policies. In our experience the dental benefits (insurance) offered by your employer are designed to help you get some preventive care and some basic restorative care. Major care or treatment of diseases and surgeries will require more out-of-pocket costs. This is typical of most plans because the maximum paid out for covered services in a year averages $1,000 per person.

Whether our office is in or out of the preferred provider organization (PPO) network, there will be co-payments or coinsurance and deductibles that you may be required to pay.

We strive to get coverage information prior to your arrival so we may be able to communicate the coverage to you. We present to you a treatment plan and an “estimate” of your financial portion based on the information obtained by calling your insurance plan. If there is a difference at the end of treatment between the estimate and the actual payment from insurance, we will explain this to you. If you have any questions please do not hesitate to call us, as we are here to help you.


This letter was included in the welcome packet information to new patients and was modified and sent to patients with balances along with a copy of their EOB.

Improving communication helps foster and develop great patient relationships. To learn more about this process, call McKenzie Management today and sign up for a customized Front Office Training session with one of our instructors.

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

Forward this article to a friend

McKenzie Newsletter Information:
To unsubscribe:
To discontinue receiving the Sally McKenzie management newsletter,
click on the link at the very bottom of this page for instant removal,
To report technical problems with this newsletter or to request technical help,
please send a descriptive email to: webmaster@mckenziemgmt.com
To request services, products or general inquires about The McKenzie Management Company, LLC activities
please send a descriptive email to: info@mckenziemgmt.com
If you would like to have any of your dental practice concerns answered personally by Sally McKenzie,
please send a descriptive email to her at: sallymck@mckenziemgmt.com
Copyrights 1980-Present The McKenzie Management Company, LLC - All Rights Reserved.