The Dentist's Network #90

Dr. Lorne Lavine
Dental Technology Consultants
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Why the Web Makes Better Sense

The Web is your best friend. Whenever you need a bit of information, from a bank account balance to tickets to your favorite concert, the Web is always there for you. The added convenience, flexibility and unbound potential of the Web is why you may be utilizing it on a daily basis. In effect, the Web allows you to accomplish tasks in an instance, whereas before mundane tasks were time-consuming and the means to accomplish them were inefficient.

If the Web isn’t your best friend now, it will be shortly. In every industry and every market, Web-based technologies are replacing traditional client-server applications. The dental profession is a little tardy in adopting the Web, but we can see hopeful signs here and there that indicate a revolution is in the works, the biggest of which is Web-based dental software to help you manage your practice.

By far, the biggest benefit of Web-based dental software is that there is no update procedure. Whenever you use the software you’re always using the latest version. As an IT professional and a dentist, I know that one single benefit will immediately impact every office that spends any degree of time and money keeping their software up to date.

The second best advantage of the Web is a huge gain in data security, which may sound strange until you review what may currently be happening in your practice. In many instances, your data is probably stored on a server located under a desk or in a storage closet, highly susceptible to hard knocks, theft, flood, fire and the like. In comparison, with Web-based dental software your data is stored in a secure facility in multiple locations on multiple servers. Disaster, theft and untrained care are not an issue. Ever.

The third advantage is closely related to the second. The often overlooked, mismanaged and mundane chore of backing up your data is no longer a concern. I could write a book if I documented every horror story I’ve personally witnessed when a practice learned their backup wouldn’t restore, or the backup failed to contain the right files. What’s really advantageous with Web-based dental software is that your data rests in a continuous backup loop. That means your data is backed up with every change to your data.

The next advantage is about money. You should realize a savings in IT services, hardware upgrades and down time. Web-based dental software doesn’t require beefy workstations, or servers for that matter. And the one thing that comes with servers and workstations is technical assistance from an IT professional. Even if you have the skills to do setup and maintain a network on your own, you should factor in the value of your own time. If your computers can access the Internet and are loaded with a Web browser then you can use Web-based dental software, generally speaking.

If you’re in the market for new software, the next advantage reigns supreme for you. With Web-based dental software you’ll pay a small monthly subscription fee rather than a chunk of change in up-front licensing fees followed by monthly or annual maintenance fees. Of course, you may need to convert your existing data, you must purchase training for you and your staff, and there may be an implementation fee of some sort. As an example, Curve Dental charges around $3,000 for data conversion, training and implementation. The monthly subscription fee is $297 for up to two doctors, which includes everything you need to manage your practice, including charting, in addition to technical assistance and upgrades.

Your practice will realize a better HIPAA compliancy benefit with Web-based dental software. In the HIPAA world, a server becomes a big liability, subject to 19 physical and technical requirements, such as Server Access Policies and Controls, Disposal and Re-use of Media (backup tapes, etc.), and requirements for "emergency availability." The traditional legacy systems can only address 4 of the 19 points, whereas Web-based dental software handles all 19.

The last advantage is about implementation and setup. Once you send your data for conversion you don’t have to worry about it again. Implementation and setup encompasses a username and password. Once you enter these and click “enter” your implementation and setup is done. I don’t think you can make it any easier.

I am aware of just a few Web-based practice management applications available today. Each has their own particular competitive advantages, but I’m putting my bet on Curve Dental for two reasons. First, their software has a wonderful interface, which means it’s amazingly simple to learn and more efficient to use. Secondly, the team behind Curve Dental is a seasoned group of true software professionals, from a technological capability standpoint to an experienced and proven management team with incredible vision, who know how to deliver customer service.

Any doctor looking to switch to new dental software would do well to first look into the Web, but not just for the reasons mentioned above. An investment in traditional client-server software today is probably not the best place to put your money. Client-server applications are rapidly being replaced by Web-based software. Your investment will reap a bigger return when placed in a boat moving with the flow of technology, rather than in a boat with a very heavy server anchor.

Lorne Lavine, DMD is the Founder and President of Dental Technology Consultants. Dr. Lavine holds two prestigious certifications, the A+ Certified Technician designation and the Network+ Certified Professional. These designations demonstrate proficiency in computer repair, operating systems, network design and installation. Dental Technology Consultants provides dentists a full range of services relating to the implementation of technology.

Interested in having Dr. Lavine speak to your dental society or study club? Click here. Dr. Lavine can be reached at drlavine@thedentistsnetwork.net.

Hear Dr. Lavine’s FREE podcasts at The Dentist’s Network - HERE

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Thomas L. Snyder, DMD, MBA
Managing Partner
The Snyder Group, LLC
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Your Associate Can be a Profitable Investment

Among common folklore in the dental profession is the idea that associates cost a practice money. Nothing is further from the truth, if you do it correctly. Earning a 30-35% profit margin on the revenue generated by your associate is definitely a realistic goal! Before hiring an associate you must perform a cost-benefit analysis to determine the likelihood of that profitability. The steps listed below will help you analyze the economic benefits of hiring an associate, and will help you establish realistic expectations about your return on investment.

Step 1: Determine Production Goals
Your associate’s skills and experience will definitely affect anticipated production goals. Your fee schedule, as well as the services provided, will also influence overall potential production. To estimate your associate’s projected annual production, choose a daily production goal, then multiply by the number of days per year that your associate is expected to work. Then, depending on your practice’s service mix, geographical area, and fee schedule, typical daily production in the beginning should range between $900 to $1,800 per day. The more experienced the associate, the higher the daily goal should be.

Next, determine your practice’s overall collection/production ratio. For example, if your projected gross production is $800,000 and you historically collect 95% of your gross production, the anticipated revenue would then be $760,000. Next, multiply your collection/production ratio by the associate’s estimated annual production goal to establish the anticipated revenue from your associate.

Step 2: Assign Direct Expenses to the Associate
Allocate all direct expenses to your associate to get a better understanding of your potential investment. For example, if your associate requires hiring a new dental assistant, then list the dental assistant’s salary and fringe benefits as related associate expense. Additionally, calculate the cost of administrative staff that may have to be added due to a potential increase of office hours, if you are planning to extend hours or open an additional day. Next, estimate the associate’s dental supply costs by multiplying your practice’s current overhead ratio for dental supplies and multiplying by the associate’s anticipated revenue. Now, estimate the associate’s lab expense. A good rule of thumb at the outset is to project a 5% lab expense ratio. If you will be purchasing additional equipment or adding an operatory for your associate, include the financing in your computation. Finally, project the associate’s potential annual compensation as well as any fringe benefits that you may offer. Will you be providing a guaranteed salary for the first several months, then convert to a commission structure based on Net Production or Collections? Commission rates vary by region, so check with other colleagues in the area to see what the current ratios are.

Step 3: Apply the Formula and Get the Answer
To forecast the estimated profit margin for your associate, apply the formula below using your specific practice data. While the profitability of an associate is measured in pure financial terms, the advantages of hiring an associate often include benefits that defy measurement. If your calculations indicate that profit margins are less than the 30-35% goal, be sure to gauge the intangible value of increased family time, improved quality of life, or better access to care for your patients. Remember that the addition of an associate can provide not only economic sense, but also common sense, when it comes to achieving your personal and professional goals.

Associate Profit Analysis Summary
Daily Collection - $1200
(Assume 95% Collection/Production Ratio on Daily Production Goal of $1000)
# Days Worked Per Year x 196
Projected Annual Revenue - $235,200
(Assume 34% Collections)
Associate Compensation - $82,320
(6% Dental Supplies)
Associate Payroll Taxes - $6750
(8% Lab Expenses)
Associate Lab Expense - $11,760
Associate Supplies - $14,112
Assistant Salary (inc P/R tax) - $28,000
Uniforms - $3000
CDE Allowance - $1000
TOTAL EXPENSES - $146,942

Projected Annual Revenue: $235,200
Less TOTAL EXPENSES: $146,942
Associate Profit: $88,258
PROFIT MARGIN: 38%
($88,258 PROFIT / $235,200 ANNUAL REVENUE)

Next Steps After Doing the Math:

Contracts
Once you’ve assured yourself that the economics make sense, proper planning prior to employment is key. The first step is to have an employment contract prepared. Make sure you use an attorney who has dental experience, as there are nuances in a dental employment agreement that are unique to our proforma. For example, should a restrictive covenant be in force from the first day of employment or should it be graduated over time? Should your associate be prohibited from soliciting your patients as well as your staff? Should you place restrictions on the lab selection? If your associate leaves after a few months, on their own volition, after investing thousands of dollars in marketing, should you be reimbursed?

These are just a few of the key questions that need to be addressed in your associate employment agreement. “Off the shelf” documents will not do justice to these key areas, only properly prepared contracts will.

Consultant’s Assistance
Finally, we found it very helpful for you to consider engaging a practice management consultant to assist in preparing your practice for your associate. Try to select a consulting firm or individual consultant that has experience in practice transitions. Marketing your new associate to your patients and your community are also key ingredients to success. It starts with proper communication. Staff verbal skills are needed to properly introduce your new associate as well as convincing existing patients to accept the new doctor. Additionally, to make sure that your new associate meets his/her production goals, utilize scheduling templates to ensure that your associate will meet targeted goals.

Most importantly, if your associate is a candidate for your long term transition plans, make sure that you properly think about your exit strategy so that once you begin interviewing candidates you can present your vision for a successful relationship.

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.

Hear Dr. Snyder’s FREE podcasts at The Dentist’s Network - HERE

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Sally McKenzie, CEO
McKenzie Management
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Small Changes = Big Return

Certainly, the last year brought more change than most care to think about, as much of it was not easy. For many practices, 2009 was 12 months of panic. Dentists were distraught about holes in the schedule, the proliferation of no-shows, and the decline in treatment acceptance. The irony is that dentistry, while not recession proof, is recession resistant. And the issues and problems that came to the forefront for many practices in 2009, which were blamed on the economy, had been percolating beneath the surface long before the Great Recession hit. Had effective systems been in place, 2009 might not have been a breezy walk in the park, but I can guarantee it wouldn’t have been the calamity that it was for many dentists. If you don’t ever again want to face a year like you just did, I strongly suggest you commit to making economic change of your own in the coming months and ensure that regardless of the financial sector’s projections of boom or bust, you practice is well positioned.

Change #1 - Massage Your Message
This starts with the messages that you and your team regularly communicate to patients. Does your staff convey ordinary or outstanding, state of the art or status quo? Is the excellence of the team and the dentistry routinely conveyed to the patient? And, most importantly, have you even considered the messages you’re sending to your patients in every interaction, from the first phone call, to the emergency appointment, to the routine visit? If not, it’s time to listen up and script your success.

Use a well-crafted script to discourage patients from canceling appointments. When a patient calls to cancel, your business staff should ask for permission to put them on hold, access their file, and use the information to motivate them to keep the appointment. For example: “Mrs. Jones, I’m looking at the doctor’s notes and she emphasized that there is significant decay in that tooth. I know it is very important that you keep the appointment, would you reconsider?” The patient may still cancel, but in some cases, they will be convinced to keep it. Moreover, calling specific attention to the patient’s need for the appointment further underscores the value and importance of pursuing the recommended treatment, and emphasizing the need for care has never been more critical. Particularly since even in the best of economic times, many patients will put off certain procedures for as long as possible. Additionally, ensure that there is an established protocol to follow-up with patients who cancel. In many offices, it is months before anyone follows up on a cancellation.

Change #2 - Maximize Your Number One Resource
That would be your team. In practices from Maine to California the single, biggest contributor to inefficiency and mismanagement is a poorly trained practice team. The lack of instruction provided to business staff, in particular, costs dentists thousands upon thousands of dollars in lost revenues. Yet in today’s dental marketplace, a wide variety of affordable training options are available - many are right at your finger tips online or just a phone call away. Establish a training protocol in your practice to ensure that each member of your staff is prepared to fulfill their responsibilities to their fullest potential. You, doctor, will be the one to reap the greatest benefits of this change.

Change #3 - Monitor Your Management
If only the success of your practice were contingent solely upon the quality of your dentistry. But there are 22 systems and dozens of variables that affect your practice, all of which require ongoing assessment and monitoring. Hold regular staff meetings at least once per month to monitor management systems and lead your team in the right direction. Develop an agenda that includes all areas that affect the success of the practice, from new patients, to production, to the schedule, etc. Designate the amount of time you will spend on each item, and discuss only what is on the agenda. Involve the entire team by assigning each team member to report on their area of responsibility. Determine who will be responsible for carrying out tasks or changes identified in the meetings and establish deadlines. If possible, hold meetings off-site to eliminate outside interruptions.

Now is the time for change in your practice. A few relatively minor adjustments in your practice and no matter what financial twists and turns lie ahead for the economy at large, your financial forecasts are far more likely to be stable, if not robust.

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.

Hear Sally’s FREE podcasts at The Dentist’s Network - HERE

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