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Issue #23-7.3.07
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Overhead: Staff Inefficiency Will Cost You Big
Okay, I’ll admit it; overhead is not exactly an exciting issue. Your Profit & Loss statement is probably not a compelling read, except perhaps the ending, which tells you whether you’ve made money or lost it. And “knowing the numbers” is not nearly as interesting for most of you as “doing the dentistry.” That is until those numbers start interfering in your day-to-day practice. You’re not sure you can afford that new piece of equipment, or you want to move into that fabulous new office but can’t handle the payments, or you start to seriously consider cutting staff to control payroll.
Oftentimes, until there’s a real problem, overhead is left unchecked to silently climb higher and higher. Many dentists dismiss early warning signs with comments such as “It’s just part of running a dental practice.” Not necessarily. Or dentists may be concerned about it but don’t want to rock the boat. “I think my staff does a pretty good job and I don’t want to upset anyone.” You think your staff is doing a pretty good job but the numbers don’t exactly back that up. And even if they are, there is always room for improvement. Or dentists will make some overture to staff to improve overhead systems only to run into barriers such as, “That’s the way we’ve always done it.” This a convenient smokescreen designed to shut down your inquiry fast.
But how do you reach past the excuses – both your own and your team’s – in order to make more and spend less? First identify your goal. The gold standard for overhead for general dentistry is 55% of collections and to get there, you’ll need to establish the following budget targets:
| Dental supplies - | 5% |
| Office supplies - | 2% |
| Rent - | 5% |
| Laboratory - | 10% |
| Payroll - | 20% |
| Payroll taxes and benefits - |
3% |
| Miscellaneous | 10% |
Payroll tends to be one area that drives overhead up significantly. It should be between 20-22% of gross income. Tack on an additional 3-5% for payroll taxes and benefits. If your costs are higher, here’s what may be happening:
- Too many employees.
- Raises based on longevity rather than productivity/performance.
- Under producing in hygiene.
Let’s look at #1 because it’s a major culprit. Oftentimes, doctors are talked into hiring “helpers.” However, helpers are not producers. They tend to increase expenses, not profits. That is unless the “helper” is a patient coordinator who is going to make sure the schedule is full and production goals are met.
If tasks aren’t getting done, and the team is crying for more hands on deck, look at staff efficiency before you hire yet another employee. For example, check in/check out takes approximately 10 minutes per patient. There are 480 minutes in an eight-hour workday. If your practice is seeing 15-22 patients per day, which would total 150-220 minutes of patient contact, one person should be able to effectively handle front desk duties. But if the business employee is spending more than 240 minutes handling patients – or half the day, an additional staff member is warranted.
Next, look at the division of responsibilities among your business staff. Preferably, one person has uninterrupted time to handle billing and delinquent account follow-up as well as insurance claims. That person takes responsibility for the financial aspects of the business. The other person, serving as a patient coordinator, handles telephones, schedules treatment, and is responsible for making sure patients are in the chairs. Having clear job descriptions is essential in ensuring accountability and spelling out who is responsible for what.
Patient dismissal should take two minutes. Covering counters, chair switches, and light handles requires less time than spraying to clean and disinfect surfaces. While the doctor is anesthetizing a patient, the assistant can effectively use the time to ready the second treatment room, sterilize instruments, and prepare to seat the next patient. In addition, if your state allows expanded functions for assistants, take advantage of it.
The next time you’re tempted to hire another employee to “help out,” look first at increasing staff efficiency. You’ll likely make more and spend much less.
Sally McKenzie is CEO of McKenzie Management. a nationwide dental management, practice development and educational consulting firm. Working “on-site” with dentists since 1980, McKenzie Management provides knowledge, guidance and personalized systems that have propelled thousands of general and specialty practices to realize their potential. Sally can be reached directly at 1.877.777.6151
Interested in speaking to Sally McKenzie about your management concerns? Email her at Sally@thedentistsnetwork.net