Practice Problem Solver

Consultants from across the country share their answers to the two most common questions they hear from dentists while consulting or lecturing.

This month’s guest consultant is Kathleen O’Donnell, M.A., vice president of coaching at Jameson Management. Ms. O’Donnell can be reached at 877-369-5558 or via www.jamesonmanagement.com.

Kathleen O'Donnell, MA

QUESTION #1: My team wants a bonus yet I don't take home enough as it is. Should I start a bonus program?
Not yet. A bonus program has to be fair to the team and fair to the practice owner(s). It is important to train the team on the realities of running a business. They need to understand the impact of fixed expenses and variable expenses. Whether patients are in the chairs being treated or not, fixed expenses must be paid each month. After all practice monthly expense obligations are met, the doctor has to be able to receive adequate personal compensation and save for retirement. Otherwise, what is the incentive for owning a practice? Collection dollars left after practice expenses and doctor compensation are practice profits. Some of these profits can be used for a team bonus program. However, often the profits also have to pay for practice technological improvements, remodeling and equipment upgrades, not to mention other team perks like trips and team cruises. Team members need to be educated about these cash-flow obligations before setting up a team bonus program. Help them to understand this and then motivate them to join efforts to raise collections in the practice.

Question #2 My payroll overhead seems too high. Should I cut positions?
First, do a little research on expense norms for the dental industry. Team wages, benefits and payroll taxes should total between 23% and 37% of collections. Even if you are above those norms in your practice, consider motivating your team to raise production and collections while keeping the same number of team members, and you will see those payroll expense percentages fall back into normal ranges. Inspire your team to get behind a total practice hygiene retention campaign, increasing new patients, following up on diagnosed-but-undone restorative and cosmetic treatment, reducing accounts receivables and filling voids in the daily schedule. Then you might come up with motivational incentive programs that reward them for their efforts and have fun while banding together to help the practice.

Have a question for a consultant? Please write to practice@advanstar.com. Answers will be posted in upcoming issues of Dental Practice Report Digital Edition.