12 ways to control the overhead monster

April 23, 2012
In tight times and with the increase in discounted fee insurance reimbursement, overhead control is critical to your dental practice’s long-term success. Linda Drevenstedt, RDH, MS, says to invest in people first, because they are your most valuable assets.

By Linda Drevenstedt, RDH, MS

Reprinted with permission from Linda Drevenstedt of Drevenstedt Consulting, LLC.

1. Control your overhead by taking action in two areas:

  • Increase production with your current resources of facility, people, and procedures ... OR …
  • Reduce expenses and control costs in all areas.

2. Crunch your numbers monthly, quarterly, and annually.

Numbers to crunch monthly ...
  • Production daily or hourly per provider; compare to set goals
  • Collection percentage over a three-month span: Benchmark = 97-98%.
  • Accounts receivable ratio: Benchmark = .7-1.0
  • Insurance outstanding over 90 days: No calculation, just look to see if is at "0," the benchmark
  • Recall percentages: 75-80% of active patients seen in last six months.
  • New patient numbers
  • Treatment acceptance percentages
  • Periodontal procedures percentage of hygiene revenues: Benchmark = 30-33%

Numbers to crunch quarterly ...

  • Overhead

3. Develop your clinical efficiency.
The 2010 ADA Survey of Dental Practice states you will increase your production by 26.1% with the use of two dental assistants, and by 70.1% with the use of three chairside assistants. From the consultant’s view here, that is only if you train and delegate to the letter of your current state law all expanded duties.

4. Fire or fire up your staff.
Staff is your largest expense. Poor performance drains overhead. Get them the training they need to improve performance, or let them work somewhere else.

P.S. To learn more about "crunching the numbers" and staff management, check out my associate, Jennifer's, seminar in June. Click here to download the flyer.

5. Review your overhead percentages:

  • Salary ratios: Overall 20-24%
  • Lab: 8-10%
  • Dental supplies: 5-6 %
  • Facility: 4-6% for renters; 5-8% for owners
  • General administrative: 6-10%
  • Marketing: 2-5%
  • Doctor salary: 20-25%
  • Retirement, reinvestment, and capital expenditures: 20-25%
Kudos to ALL business office team members, office mangers, insurance coordinators, financial coordinators and appointment coordinators on Wednesday, April 25, for Administrative Professionals Day. 75% of a dental practice's success comes from your efforts. Thank you for all you do for the patients, the dentist, and the team. 6. Get your hygiene department profitable.Hygiene salaries should be 30-33% of their production. Their periodontal therapy procedures should be 30% of their production. They need a radiology protocol to follow. (Our hygiene consultant, Julie, can help you achieve this. Call 800-242-7648.) 7. Base any raise for a staff member on these things:
  • Your local economy — growing? slowing?
  • Your practice annual revenue trend over the past five years — growing? flat? declining?
  • Local demand for staff — Are there jobs for them to go to if they don't get a raise?
  • Local wages — Check with local placement agencies, local accountants who work with other dentists, your colleagues, and surveys from dental industry sources; i.e., RDH eVillage for hygiene and DANB for assistants.
  • Overall Consumer Price Index and the Dental CPI.
  • Staff performance — Grade them A, B, C, or below. A's get the highest percentage, B's the next, and C's get cost of living (CPI %). Anything lower than a C gets NO raise and a 90-day improvement action plan. This is ONLY if the practice has increased. If the practice has been flat or declined, DO NOT GIVE RAISES.
  • Do this every year.

8. Learn to control open time.
Reduce broken appointments in hygiene especially. Someone at your front office must "own" the hygiene schedule and keep it full. Double-book "iffy" appointments. Dismiss chronic appointment breakers.

9. Have your fees balanced and increased annually.

10. If you are on PPOs, you MUST be clinically efficient, have a quality but low-cost lab, and have high treatment acceptance.

11. Increase new patient flow.
Today spend no money on Yellow Pages and most money on a great website with search engine optimization. Use social media to enhance your website placement. Ask for referrals and have great internal marketing.

12. Use competitive bidding to negotiate the best price for all equipment, technology, products, and services, especially capital expenditures.
Once per year get a competitive bid for dental supplies, technology support, marketing, etc.

In tight times and with the increase in discounted fee insurance reimbursement, overhead control is critical to your long-term success. People are your most valuable assets. Invest in them first to see how they can help you ... control the overhead monster!

Author bio
Linda Drevenstedt, RDH, MS, is president of Drevenstedt Consulting, LLC. She uses her wit and wisdom to coach, consult, and create courses that assist practices in reaching their potential by developing leadership in each person. Her experience spans dental assisting, dental hygiene, practice administration, and consulting, and she is a member of numerous speaking, consulting, and management organizations. Reach her at (800) 242-7648, send her an email at [email protected], or visit www.drevenstedt.com.