Sally McKenzie, CMC
Case Profile: Set in a big-10 college town in Ohio, this practice represents a textbook case of over-high overhead and a doctor on overload. With annual revenues nearing the one-million-dollar mark, is this practice positioned for growth or coming undone?
Symptoms: Payroll is higher than 26 percent of income, exceeding industry standards by 6 percent! Office expense, which typically averages between 2-3 percent, is over 9 percent. But these trouble spots may not fully account for the doctor`s current financial difficulty.
Observations: As anticipated, there`s more here than meets the eye:
- Doctor`s schedule is booked out six weeks.
- Three clinical assistants are doing the job of two.
- Between the two hygienists, there are about 1.5 openings per day.
- A bonus plan based on production and collection is in place for each department: business, clinical and hygiene.
- The doctor is trying to develop a cosmetic practice and has been taking CE courses to the tune of over $2,000 per month for the last seven months.
Discussion: Without questioning the wisdom of trying to grow a cosmetic practice in a college town, let`s look at its present effect on the practice. Apart from the financial drain of a couple of thousand dollars every month for CE, there are the time constraints. In the last 12 months, the doctor has only worked 46 weeks. Adding insult to injury, all that "vacation" time has been taken in the seven months since he started with this CE. That packs a double whammy. First, his schedule`s booked out so far that patients are getting miffed. Second, with his vacation time already used up, he won`t have the luxury of a real vacation, and thus may be running on empty for a long while. Now, don`t go thinking I`m not in favor of CE. Au contraire, doctor, I`m a staunch supporter. Whenever possible, though, it`s better to spread it out, so it doesn`t place such a heavy burden on doctor or practice.
As for salary percentages being higher than the industry average, here are three contributing factors:
- Hygiene openings - Between the two hygienists, there are 1.5 openings per day, when there actually shouldn`t be any more than .5.
- Overstaffed clinical area - Currently, there are three assistants, one of whom is pregnant and will be leaving the practice. One assistant can assist with up to 13 patients per day. Without doing a clinical analysis, the schedule reveals that two assistants are quite sufficient.
- Bonus program - If daily goals are met, bonuses are awarded, with no regard to the cost of production. This bonus program is so out of whack that an $8.50-per-hour assistant actually is earning $15.93 per hour.
Treatment Plan: First, schedule hygiene to the goal of no more than the recommended .5 openings per day. Next, in terms of overstaffing in the clinical area, when the pregnant assistant leaves the practice, do not replace her. A third assistant typically is not needed unless more than 25 patients are being seen per day, in which case, another doctor would be needed.
The bonus program, as you`ve heard me say before, is a losing proposition for you. What`s more, it rewards your staff for doing their jobs, and takes away your own financial incentives. Try other kinds of rewards and direct recognition for a job well done. Remember to look for the right balance between performance and reward.
A final note about developing the cosmetic practice: You`ve put in the time and money, doctor; now, get the word out so you can start reaping the rewards.
Sally McKenzie is president and chief operating officer of Dental Partners, Inc., a full-service, in-office dental management and practice-acquisition company. She continues to serve as president of McKenzie Management, a division of Dental Partners, Inc. She can be reached at (800) 288-1877; e-mail [email protected]; or visit her web site at www.mckenzie-mgmt.com.
