The Dentist's Network #80

Michael Moore, Esq.
Director McKenzie
HR Solutions
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Separating Yourself From A Bad Employee, PART II

In my last article, we talked about how the good employee can go bad, how a solid policy can dramatically reduce the possibility of that employee leading you into a crisis, and what the potential legal liabilities can be for a termination gone wrong. It cost CinCom Systems well over $200,000 in damages and attorney fees to learn the lessons we are about to go into here.

Trying to correct behaviors in these individuals is useless by the time that serious disruption and confrontation is occurring. Whether because of a hidden personality disorder, continuing dislocations in personal life, or just meanness, you cannot help this person get back to productivity and team spirit. The decision to terminate must be made, and quickly, for both business reasons and the doctors’ peace of mind.

As I counsel on all terminations, you must prepare a termination letter. If there are previous counseling documents that were given to the employee, those must be copied again and must be attached to the termination letter. Many employers are under the misapprehension that they will be better off if they put nothing in writing, and, in fact, do not give the employee specific reasons for termination. Although addressing that issue is the subject of another article, do not give in to the wish to avoid the letter.

The letter should be short, but direct, summarizing the past issues, past counseling (whether or not you gave any documents to the employee confirming that) and behavior and performance concerns. If you have specific data that shows loss of patients or revenue, make sure to include that in the letter. If there have been patient complaints, make sure those were documented and identify them.

Hopefully, you have an employee relations policy and the employee has received that policy. Your termination letter should refer to the specific provisions in the policy that the employee has violated. For example, the McKenzieHR policy handbook has a non-exhaustive list of behaviors that justify termination. If the employee has, for example, threatened another employee, reference the specific provision, and any others that apply. Your letter should include information on the employee’s pension or profit-sharing, outstanding sick leave or vacation (if you have a cash-out sick or vacation policy), conversion of health insurance and any other benefits issues.

Finally, if you feel that it is necessary to re-key the premises or make other changes, if your employee policy provides that the employee may be charged with the cost of such actions, if the circumstances warrant, you may be able to deduct that cost from the employee’s last check.

There must be a meeting. You should not, and cannot, avoid sitting down face-to-face with the employee unless circumstances absolutely do not allow it. If the employee, for example, has walked off the job, hasn’t shown up for work, and you are not sure if they are returning, it would be permissible to have the letter delivered to their home by courier, making sure to follow up with letters sent both by regular and certified mail.

If before the meeting you have reason to suspect that the employee may become abusive or even violent, prepare. This does not mean hiring a security guard to stand outside the room. The presence of a large man in a uniform might cow some individuals, but only inflame others. We recommend that you (1) hold the meeting after patients and co-workers have left the facility, (2) have someone else in the room with you, and (3) notify the police in your area of the possibility of some disruption, and have the number on speed dial.

An additional consideration is the employee whose spouse or significant other is the potentially violent actor. If the other person comes to the office, of course they must be politely told that they will have to wait outside the office.

In the last part of this series, we will address some specific issues in terminations that can go a long way to reducing the confrontation, as well as documenting for your protection.

Mike Moore is ranked among the best in employment law and has been named one of the top 10 lawyers in Ohio. As Director of McKenzie's HR Solutions, Mike is the creator of the Employment Policy and Handbook, geared to providing dentists who are unsophisticated in the legal arena with a step-by-step policy manual.

Click here to hear Mike present “7 Elements of an Effective Employment Policy.” Email Mike at mike@thedentistsnetwork.net.

Interested in having Mike speak to your dental society or study club? Click here.

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Sally McKenzie, CEO
McKenzie Management
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Convert Emergencies to Comprehensive Exams & Seize the “Teaching” Moment!

Turn on the television or the radio. Open a newspaper or a magazine. Visit a few online sites. What do you find? Advertisements. Wherever there are consumers there are ads for products. We are flooded with snippets of information that we quickly cast off or never even see because we’re not ready to consider them, relegating each to wallpaper behind far more pressing details that have immediate relevance in our lives.

But when the time comes and our car is showing the wear and tear of many miles, or we’re noticing the little lines curve around our smile, or the fridge is no longer adequate for our needs, we begin to open ourselves up to the messages around us. We pause to consider the new car promos. Those anti-aging creams capture our attention. And we listen to that Best Buy advertisement on television rather than hit the mute button.

Such is the case when the emergency patient sits in your chair. Up until this moment, that person may not have been interested in what you have to offer. But their situation has prompted them to consider not only immediate treatment, but quite possibly comprehensive care as well. Yet dental teams miss this opportunity time and again. According to the industry standard, 85% of all emergency patients should be converted to comprehensive exams. If yours is lower, it’s time to develop a plan to seize the “teaching moments” that emergency cases present.

When the emergency patient calls your office, what’s the reaction? Irritation? Frustration? Increased stress? Depends on the time and the day? Within the first 60 seconds of contact with that emergency patient, your practice should be laying the groundwork for conversion to comprehensive exam. No matter what the circumstances - full schedule, stressful situations, etc, emergency patients must be treated with compassion and understanding.

Listen to how the emergency patient calls are handled. Are these conversations warm and welcoming? How would you feel if you were an emergency patient calling your office? Would you be glad you chose this practice or would you feel that the practice’s primary concern is the payment rather than the patient? I recommend dental teams develop phone scripts to help them effectively communicate with emergency patients from the very first word. The script provides a general guide to assist all staff, no matter who picks up the phone, in gathering necessary information, conveying essential details, and continuously expressing a helpful and caring tone and attitude throughout the exchange.

When the patient enters the practice, welcome them and greet them with a smile. Assure the patient that the clinical team is excellent and they will take very good care of them. Let them know about how long their wait will be. Ask them if they would like assistance completing their paperwork. If the patient is in considerable discomfort take them into a consultation room or other quiet area where a staff member can help them complete practice medical forms and other documents. The focus should be on making the process as easy and comfortable as possible for the patient.

When the patient is in the chair, take steps to seize this teaching moment. Just as scripts are essential at the front desk when answering phones, they are critical when educating patients about the value of ongoing dental care. Moreover, they are a safety net that prepares the staff to know what to say, how to say it, and when to say it. If the patient is highly anxious, the team should have a specific script and protocol that they follow to put the patient at ease. If the patient is concerned because they don’t understand why they need a specific procedure, the staff should be prepared to respond through educational videos, printed materials, dental models, etc.

Anticipating patient concerns and preparing for them enables staff to educate patients confidently and seize the teaching moments effectively. What’s more, patients appreciate the effort to help them understand. The dental team isn’t just trying to get them out of the chair as quickly as possible so that they can return to their regular schedule.

In stressful situations, people remember not necessarily what you did but rather how you made them feel. Nothing could be truer when caring for an emergency patient. Take steps to make sure you make your emergency patients feel good about your staff, your care, and their decision to choose your practice. Seize the teaching moments and watch your conversion rate increase significantly.

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 solutions that have propelled thousands of general and specialty practices to realize their potential.

Interested in speaking to Sally about your practice concerns? Email her at sally@thedentistsnetwork.net or call 1.877.777.6151.

Interested in having Sally speak to your dental society or study club? Click here.

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Thomas L. Snyder, DMD, MBA
Managing Partner
The Snyder Group, LLC
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Extending Your Career with a Deferred Sale or Partnership

Many practitioners’ retirement plans have been severely compromised by the Great Recession. Adding two to five years to one’s dental career is not an uncommon theme for many doctors who lost much in their retirement plans as well as personal portfolios. One alternative strategy is to recruit a doctor who will work first as your associate and within a few years purchase your practice. If you have a timeframe for retirement that is in excess of three years, you may consider a short-term partnership and buy-out. Either way, you can recruit your successor now and be assured that your exit strategy is complete. Waiting several years to find your successor may prove to be problematic as there will be more retirees looking for buyers as well. This means increased competition for finding the right candidate.

We have seen a surge in partnership formation and deferred sales over the past eighteen months, in fact, at the highest level in our firm’s history. This is not an uncommon situation as other transition professionals have experienced the same trend in their part of the country. Many of our new clients have now fallen into the category of a delayed retirement, so they are being pro-active and doing something about it now. Whether structuring a deferred sale or developing a partnership with a short life cycle, here are a few fundamental issues that need to be addressed at the outset:

“Locking in” the Practice’s Value
Associates do not like paying for something that they helped grow. If you have untapped potential in your patient base, your associate will be able to thrive and revenues can increase 15% to 25% per year in the first year. If you establish a baseline value and let your associate work as hard as possible, you will not be penalized for what you may lose if you wait and have the practice valued later and give up that lost gain. If your associate economics are designed properly, you should generate a 30% to 35% profit margin. For example, if your associate generates $300,000 annually, that is a $90,000 to $105,000 increase in your net income per year, so using a baseline value is not such a bad idea.

Any value that you think you’ll lose by having a valuation prepared immediately before a deferred sale or partnership will be offset by the current increase in your net income from your associate’s unbridled efforts. When it’s time for the sale or buy-in, the practice’s intangible asset value, (goodwill, covenant, reputation, etc.) which typically comprises 75% of a dental practice’s value, remains the same except for a cost of living adjustment made at the time of the buy-in or sale. Tangible assets (equipment, technology, supplies, leaseholds, etc.) will be re-appraised at the time of partnership or sale to account for “wear and tear” of existing equipment as well as the potential purchase of any new equipment or technology since the baseline valuation.

Contract Agreement Preparation
Agreements outlining the transition should be prepared within 6 months of the initiation of the associate/employment phase. The associate’s employment agreement should, however, be prepared prior to employment. Next, you’ll need to prepare a Purchase Option Agreement that memorializes the future transaction. In the case of a deferred sale, you’ll also need an Asset Purchase Agreement and possibly an Employment Agreement if you plan to practice on a limited basis after the sale. For those considering a partnership, you will need to have a Shareholder’s Agreement or Operating Agreement based on the tax entity of the future partnership. In our experience, knowing all the terms and conditions of your partnership in the employment phase is critical to avoid any problems that may derail your partnership if you wait until its formation. For example, how will income be shared? Will there be a mandatory buy-out of your remaining partnership interest?

Consideration Payment
If you adopt a “deferred transition” strategy, the host doctor has effectively taken the practice off the market, so it is not unreasonable to request a down payment as consideration for this action. This is especially true in the case of a deferred sale: requiring a percentage of the future purchase price as a deposit is not unrealistic. This deposit is non-refundable and only returned to the associate in the event that the host doctor changes his or her mind about the transaction. If someone is unwilling to make a financial commitment today for something they intend to own in two to three years, you should be concerned. Realistically, however, this request is not always made for many partnership opportunities, as the relationship is more long standing and you may need additional time to “size up” your future partner. However, if you intend to have a short term partnership and you are older, you may want to consider some financial commitment within the first year as well. The same issue of taking the practice off the market still applies in partnerships. By structuring win-win agreements, a long-term deferred practice buy-in/buy-out can be quite successful for both parties.

Dr. Thomas L. Snyder is Managing Partner of The Snyder Group, LLC, a nationwide practice transition and financial management consulting firm. With more than 75 years of experience in the field, The Snyder Group can provide you a full range of services relating to practice transition matters and retirement planning. They can be reached directly at 1.800.988.5674.

If you would like additional help, email Dr. Snyder at drsnyder@thedentistsnetwork.net.

Interested in having Dr. Snyder speak to your dental society or study club? Click here.

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