| Add RSS Feed

August 10, 2008

By Sally McKenzie, CEO

Open the newspaper, turn on the television, step into an elevator, or stand on the street corner ... it seems that no matter where you turn or who you talk to, everyone is much more aware of how far the dollar isn't going these days. We bristle at the price of gas and try to squeeze every mile we can out of each tank. We shake our heads at the cost of groceries and life's other basic necessities.

Certainly, in the current economy, it can be easy to wring your hands and lament your misfortunes. However, many dentists fail to recognize that they are among the few professionals with far more control over their financial situation than most. The problem, however, is that dentists often don't pay much attention to what's happening under their own roofs. They just have this general sense that everything seems to be going up except practice revenues.

In fact, I suspect at this moment most dentists reading this could probably rattle off the price per barrel of crude oil but would likely struggle if asked what their current accounts receivables are. What percentage of practice overhead goes to payroll? I would bet most of you don't know, and please understand you are not alone. Is your hygienist producing 33% of her/his salary? Any clue? All you know is that it seems more of your revenues are going to cover practice overhead than you care to think about.

The first step in controlling your own practice economy is having some understanding of your numbers and how your office compares to the following overhead benchmarks.

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

Oftentimes, payroll is what gives most dentists the biggest shock. Yours may be orbiting so far above the benchmark it should be in a different constellation. But before you push the panic button and cut your staff in half, take a look at what might be causing payroll to spiral out of control. Is it low production, overpaid staff, or lack of accountability? Let me explain.

Here's your wake-up call for the day: Employees want to be held accountable. A McKenzie Management, Inc., study based on hundreds of personal interviews and auxiliary personnel surveys revealed that dental employees want the opportunity to take ownership of their responsibilities. And they want to feel that they are rewarded based on their individual ability to achieve what is expected of them. Dentist after dentist feels obligated to keep giving employees more money regardless of productivity. Doctor, it's time to tie raises to performance, and raise — or perhaps establish — performance standards.

Set guidelines for raises when you hire an employee and explain to current staff when raises can be discussed and under what conditions they are given. Make certain your employees know what is expected of them. Like you, they appreciate knowing what the rules of the game are. Job descriptions are a must for everyone.

Use performance measurements to determine raises. While there are any number of models out there, systems that are based on individual jobs and focus on specific job-related goals and how those relate to improving the total practice are the most effective.

Hygiene holdup

Another major contributing factor in inflated overhead is low hygiene production. Typically, this is the result of a weak recall system. If you have a guaranteed salary paid to the hygienist and she has more than .5 openings per day, there's a very good chance that this is affecting your overhead.

However, before you pledge to promptly implement a production-based compensation system for the hygiene department, remember hygienists can only produce what is scheduled. If you want to point fingers, look first at the recall system. Hygiene schedules commonly appear to be overbooked. But practices typically pay minimal attention to those holes that creep into the workday. Holes in the schedule equal holes in production equal increases in overhead. If patients aren't in the chair, the hygienist can't meet production goals no matter how good she or he is.

It's probably time to designate a patient coordinator. This is the point person who is responsible for keeping a steady flow of patients streaming into the hygiene treatment rooms. The coordinator's job has an enormous impact on production/overhead. And this person can't be expected to be "Do-it-all Diane" who has to pull and file patient records, prepare the schedule, and handle other tasks as well as make sure the hygienist's schedule is filled.

At a minimum, the coordinator would work 15 hours per week and would be expected to maintain the recall/retention system as well as new patient correspondence for an active patient base of 750. If this person were to dedicate 16 to 30 hours to the position and the practice had an active patient base of 1,000 to 1,500, she may also be responsible for scheduling the hygiene department to meet specific production goals at three times the hygienists' daily wages, filling cancellations, maintaining hygiene department statistics, interviewing new patients, developing a marketing and budget plan, and implementing a marketing plan.

Follow the rule of 33

Look closely at fees. The hygienist's salary should be no more than 33% of her/his production (excluding doctor's fees). If the hygienist receives a guaranteed salary, the expectation must be that she/he produce three times her/his wages. If the hygienist is paid, for example, $45 per hour and the cost for the prophy, not including the dentist's exam, is $90, the hygienist is making 50 cents on the dollar — well above the standard. However, that is OK as long as the hygienist is then scheduled for a 4910 or quad scaling and root planing. The importance of 33% is at the end of the day, not so much hour by hour.

Another day and several dollars

Many practices are uncertain as to how many hygiene days they actually need to adequately meet patient demand. Too many and you have hygienists sitting around. Too few and you have patients waiting too long for appointments. Use this formula to determine exactly how many hygiene days your practice needs.

1. Count the number of patients seen in the past year for oral health evaluations.

2. Multiply by two.

3. Add new patients receiving a comprehensive diagnosis annually. For example: your practice has 1,000 active patients + 300 new patients = 1,300 x 2 = 2,600 possible hygiene appointments.

4. Compare to the hygienist's potential patient load. If she/he works four-day weeks, sees 10 patients per day, works 48 weeks annually, 1,920 hygiene appointments are available.

5. Subtract 1,920 from 2,600. This hygiene department would be increased 1.5 days per week.

Pay attention to perio. While the majority of patients show signs of periodontal disease, few hygiene departments have incorporated interceptive periodontal therapy. Many are concerned that patients will react negatively. Yet, just as it is the physician's responsibility to inform a patient of a previously undiagnosed illness, it is also the hygienist's responsibility to inform patients of the presence of periodontal disease.

There are several ways to incorporate an interceptive periodontal program into the practice. I recommend you start at the front. The business assistant greets the patient and mentions the program. She hands the patient a questionnaire and a brochure educating the patient on the importance of addressing the signs and symptoms of gum disease. The patient checks any symptoms he or she has experienced, which opens the door for discussion in the treatment room.

Although overhead is affected by multiple variables, and hygiene production is a common culprit in burgeoning payroll costs, other factors play into the equation as well. When it comes to staffing, consider this: Check-in and check-out take approximately 10 minutes per patient. If your practice is seeing 15 to 22 patients per eight-hour day, one person should be able to effectively handle the front desk duties. If the doctor has 13 or fewer scheduled patients a day, not counting hygiene exams, one assistant can efficiently maintain two treatment rooms for a general dentist. This would include setting up the room, seating the patient, assisting the dentist, dismissing the patient, and cleaning up. Look closely at staff efficiency; things often aren't as they seem.

Sally McKenzie, Certified Management Consultant, is a nationally known lecturer and author. She is CEO of McKenzie Management, which provides highly successful and proven management services to dentistry and has since 1980. McKenzie Management offers a full line of educational and management products, which are available on its Web site, www.mckenziemgmt.com. In addition, the company offers a vast array of practice enrichment programs and team training. Ms. McKenzie is the editor of the e-Management newsletter and The Dentist's Network newsletter, sent complimentary to practices nationwide. To subscribe, visit www.mckenziemgmt.com and www.thedentistsnetwork.net. Ms. McKenzie welcomes specific practice questions and can be reached toll-free at (877) 777-6151 or at sallymck@mckenziemgmt.com.

| Add RSS Feed