Sally McKenzie, CMC
Case Profile: Far removed from the hype and fanfare of "The Derby", this Kentucky settlement is a pleasant reminder of less complicated times. Ranchers, farmers, and retirees predominate the community as well as the patient base of this 10-year-old general practice. Admired by their patients and doing everything "by the book," doctor and staff are dazed and confused by their profitability or, more accurately, their lack of it.
Symptoms: To quote the doctor, "Other than bein` dirt poor, this practice is as good as it gits."
Observations: What a congenial place! Doctor and staff are genuinely nice to each other, ever-so-kind, and respectful, too. But talk about "watching the grass grow" - this practice makes a leisurely pace look like a canter!
Exaggerations aside, here`s what I found in this practice just 12 short months ago. Laboratory expenses equaled 10 percent of revenue. While this does fall within the industry standard, it does not automatically equal profitability. An average of only 1.2 crowns and bridges per day, five days a week, 48 weeks a year simply does not justify such a huge lab expense. Further investigation revealed deficits in their pricing. While the lab fee was $125 per unit, the doctor charged only $500 per crown. An informal survey showed this to be below the usual and customary fee for the area; however, the doctor was taking a full 90 minutes for a crown preparation, with an additional 45 minutes to seat the crown. This translated into a production of only $375 for 135 minutes, or $167 per hour! Adding insult to injury, the very laid-back business administrator graciously accepted a minimal, or even no, down payment up front. Declining to take a single cent 30 to 90 days after paying $125 to the dental lab is a surefire formula for a fiscal flop.
Treatment Plan: The first thing recommended was an increase in the fee charged for crowns. The price should be a minimum of five or six times the lab fee. The practice must also establish and implement an appropriate financial policy to present to patients. No pleas, no ultimatums - just a straightforward message that this is what is expected, and this is how we do business. We also recommended a reduction in the amount of time the doctor spent per unit. To accomplish this the doctor must: strive to work faster; delegate expanded duties to the dental assistant (per state law); and use a dental lab technician who understands the doctor`s preferences in occlusion, contacts, and shade characterizations, which will save time at the front end. By minimizing the need for adjustments, the right lab can also save the doctor additional time on the back end.
Let`s examine what actually happened to the doctor`s production per hour (pph) after he acted on our recommendations. Raising the crown fee from $500 to $625 (five times the lab fee) over the course of a year brought pph from $167 to $222. Cutting just 10 minutes from the crown prep and five from seating brought the $222 pph to $250. (Note: If the socioeconomic level of the community could have supported an even higher fee - as is the case in some areas of the country - the doctor might have ultimately raised his fee to $750 (six times the lab fee), resulting in a production per hour of $312.50.)
Finally, we encouraged the doctor to market his practice toward increasing major restorative work to the recommended 50 percent of total production. Currently, his figures are in the 30 percent range and gaining steadily.
Sally Says: My grandmother had a vintage saying: "Do your homework; fill what`s empty; empty what`s full; scratch where it itches; and make sure you sweat." Following this sage advice, we turned a sleeper into a champion.
Sally McKenzie, a proponent of advanced education for dental professionals, has recently launched The Center for Dental Career Development in La Jolla, Calif. A Certified Management Consultant, nationally known lecturer, and author with more than three decades in the dental profession, Sally is a consultant to the Council on Dental Practice of the ADA. McKenzie Management and Associates, Inc., provides in-office analysis of the business, clinical, and hygiene departments; conducts on-site staff training; and offers a full line of educational management books, audiotapes, and videos. Call Sally toll-free at (877) 777-6151; send e-mail to: [email protected], or visit her Web site at: www.mckenziemgmt.com. For information on The Center for Dental Career Development, call toll-free at (877) 900-5775 or visit www.dentalcareerdevelop.com.