Monday, December 5, 2016

SMORGASBORD OF MANAGEMENT TIDBITS

Many thoughts and ideas that I want to share with you in these postings occur to me on a daily basis; some related, some random.  Every once in a while, my “Share-This File” simply spills over, demanding to be written as blogs that might be helpful or interesting to our readers, no matter how varied in content---hence, the title Smorgasbord (defined as a buffet meal with a large number of varied dishes).  

A smorgasbord of management pearls follows:

·        It is time to write your practice budget for 2017.  Using a budget to plot and monitor your practice expenses (overhead) is one of the most effective tools for maximizing your profits.  If you’ve never written a budget for your practice, begin now.  I guarantee you will marvel at the control you gain over your practice financial management with this relatively simple tool, an annual budget.  Last week’s blog provided details of the process. 

·        Online “Phishing” scams are on the increase and, unfortunately, dentists, physicians, attorneys, and other professionals are likely targets.  Be wary of internet inquiries sent in the name of a business with which you are not familiar.  By impersonating a business, internet crooks can often trick you or your staff into responding with personal information or clicking on a link or attachment that causes malware to be downloaded to your practice computer.  For more information, visit ADA Center for Professional Success.ADA.org and search in the Practice Management menu, clicking on Technology to find “phishing” and access information via your member login.  Or go to the Federal Trade Commission website, clicking on Scam Alerts and search “phishing.” 

·        Protected Health Information (PHI) is a fertile field of attack for cyber criminals.  Theft of PHI typically results from insecure sites, stolen mobile devices, or malware-infected computers.  Accessing your office computer system, thieves can steal your patients’ personal data as well as health records, and you, Dr., may be punished for the thieves’ success.  Two suggestions: (1) employ a skilled computer consultant, either in-office or out-sourced, to assure regular security risk assessments (SRAs) are conducted in your office and (2) investigate storage of patient data in the cloud VS in an office server.  Cloud computing is cost effective and a much safer way to protect patient health information.

·         And for your philosophical moments, four of my favorite quotations:

o    Coach Vince Lombardi – “The man on top of the mountain didn’t fall there.”
o    Author-philosopher John Maxwell – “He who thinks he is a leader but has no one following is only taking a walk.”
o    Saint Francis of Assisi (a paraphrase) – “Teach good character without ceasing; use words if you must.”
o    Practicon’s Product Development Division – “Our mission is to develop exciting products that are relevant and useful in everyday practice.”

Monday, November 28, 2016

STEPS TO WRITING A BUDGET


Operating your practice using a budget is a discipline, an excellent habit.  Writing an annual budget for your practice and sticking to it is a vitally important step in meeting financial goals.  A budget is like a GPS, alerting you throughout the year to the practice financial status and course corrections needed to stay on track to maximize profit.

A budget is a cash plan that allows better use of practice income.  In November or December of each year, the budget for the following year should be written.  However, if you miss that end-of-year period, go ahead and commit to a budget in January or February while most of the year is still ahead of you.  Keep in mind that a budget is not carved in stone; figures can be adjusted at the end of each quarter if predictions for any expense is significantly (more than 10%) over or under the budgeted amount.  The first year is the most difficult.  With experience, you will get more accurate in predicting income and expenses for each subsequent year.

Steps to writing an annual budget: 
·         Late in the year, project totals for the current year’s production and collections.
·         Set a goal for increase in both production and collections, perhaps 5% to 10%, for next year.
·         Break expenses for the current year into seven categories:      

Personnel, not including Dr(s). compensation
Occupancy, including lease or note payment, utilities, janitorial, maintenance and repairs, etc.
Administrative, including computer operation, office supplies, telephone, taxes, insurances, etc.
Equipment, furnishings, contingency fund (minimally three months’ cash to keep the office open in case of emergency/crisis)
Clinical supplies
Lab
Marketing

·         Make major decisions about the practice for next year, e.g.  

           Fee increase    
           Additional staff?
           Capital investment in building improvements or new equipment? 

·         Review the year-to-date Income and Expense (Profit & Loss) Statement line by line, deciding how much each cost will increase or decrease (cost savings) next year.
·         Divide the newly projected totals of each expense line item by 12 months to determine a monthly allowance for each.
·         When each month’s I&E/P&L statement is completed, analyze and justify overages or savings in each of the seven categories of expense.
·         Make adjustments (increase or decrease) in budgeted expenditures no more often than quarterly.
·         Share sufficient information with your staff so they can help plan, produce, collect, cut costs, and understand why fee increases are necessary.
·         Total Dr(s). compensation should be projected also so that the total overhead costs plus Dr. compensation = next year’s collection goal.  Collections in excess of total overhead plus Dr. compensation may be a bonus for the owner, used to reduce debt, or added to the Contingency Fund.     

Monday, November 21, 2016

HOW DOES YOUR STAFF HEALTH INSURANCE STACK UP?

In the current confusion of “do or don’t” health care coverage, many dentists wonder what colleagues may be doing about health care benefits for their staff members.  Let me share some trends with you, trends noted by experts in the field of practice management; most notably, The McGill Advisory which I highly recommend as an excellent practice management newsletter.

·         The percentage of dentists providing staff health insurance has declined from almost 75% in 2007 to 54% in 2016.

·         Many dentists who have dropped staff health insurance as a benefit  have encouraged staff to get healthcare through state exchanges where government subsidies help pay premiums.  However, with the current bail-out of health care insurance providers willing to insure clients under the Obamacare state exchanges, predictions are that dentists who have dropped staff coverage may choose to resume the benefit in order to attract and retain top-notch team members.

·         Most dentists who still provide this benefit now make it available to full-time team members only. Further, almost 75% of dentists offering the health care benefit do not cover a team member when a spouse’s policy provides coverage.

·         In those practices that still offer coverage, 38% of dentists pay 100% of premiums while 21% pay 50% to 60% of premium costs with the remainder offering some reimbursement that varies widely from 20% to 90% of premium costs.

·         52% of dentists who provide health insurance for staff choose PPO coverage while 15% provide fee-for-service policies.  HMOs have declined to less than 8%.

·         Cost saving measures include: (1) a waiting period, typically 90 days, for new team members before health insurance is implemented,  (2) significant increases in annual deductibles, and (3) switching carriers if a less expensive plan is available.

·         27% of dental practices now have plans with an annual deductible of $2500 while 44% have a deductible greater than $2500.

Monday, November 7, 2016

IS YOUR TEAM READY TO FACE A CRISIS?

As you may know, Practicon is headquartered in Greenville, NC--and that was a tough, wet place to be over the weekend of October 8-9, 2016. We knew Hurricane Matthew had plowed across Florida and soaked the southeast coast as it blew north. We didn’t, however, expect the hours-long pounding our entire area received on Saturday night into Sunday morning.

Our local river, the Tar, with all its tributaries as well as the larger rivers downstream simply could not hold Matthew’s magnitude. F-L-O-O-D! Practicon, along with many other businesses, is located in an industrial park north of the Tar River on low lying land prone to flooding. On Monday and Tuesday following the hurricane weekend, all but one bridge over the Tar were closed so that most of our staff had to cross that one open bridge to get to work. We wrestled mightily with the decision to close the company or to remain open to serve our customers. Customers won! We remained open with the invitation to all staff members to stay home if they felt it necessary.

I cannot express to you the amazement and pride we felt as almost 100% of our 65 team members came to work every day of that scary week. Some even left their own flooded homes (They had moved in with family or friends.) to come to Practicon, to put service to our customer FIRST!

Our biggest problem that week was that UPS and FedEx did not make pickups. The USPS, though operating on late schedules, made pickups, actually outperforming the other carriers. Failure of those two major carriers led to yet another example of Practicon staff heroics--a large order had to reach a dental school by a prearranged deadline. One of our team members volunteered to drive his own car to the closest still-operational UPS shipment center in Wilson, NC, about 40 miles away. By detouring around flooded roads and closed bridges, Mike made it in time to get the shipment on the last UPS truck of that day, on its way to meet the school’s needs by the date promised. Extraordinary customer service that was!

Incidentally, Hurricane Matthew was a sort of repeat of an even worse storm, Hurricane Floyd, that hit eastern NC in 1999. During that awful time all Tar River bridges were closed for days. Unwilling to fail our customers, many of the Practicon staff members met at a local mall at 6 AM each day to travel in vans 128 miles to the office, winding their way west, north, and then south to get to Practicon. The 128-mile journey was repeated at day’s end for almost a week. So, the Practicon team has a history of tremendous loyalty to customers, determination to open Practicon doors if at all possible, and teamwork that marks our company as a most unusual, caring place to work.

Enough--you get the idea as I unapologetically brag on Practicon’s team. Question--would your dental team put the practice and patients first in a similar crisis?  Many of you would, no doubt, answer “Yes” to that question while others may not be so sure. As you ponder the question, I have a suggestion: You, the dentist/owner might ask yourself, “Do I put my team members on a pedestal at all times just like I want them to put our patients and loyalty to the practice on a pedestal marked #1 at all times?”  If you can answer “Yes!” to that question, chances are your staff would react to a crisis just as competently as our team did.


I can say unequivocally from more than 30 years of consulting work with hundreds of dental offices, that those dentists who cultivate a close, caring, appreciative, warm, respectful, professional, fun relationship with staff, making them feel necessary, important, and involved in the practice in meaningful ways, have a team that is ready to face a crisis. Any crisis. In summary, I hope that you have learned in your practice what we have learned at Practicon:  our staff members are the backbone, heart, hands, and feet of our company. We strive to make sure Practicon is a superb place to work with team members who are like family in the way we care for each other and in the way, therefore, they respond to and care for our customers. It is a WIN-WIN for all of us! It can be the same for you and your staff if you make it so.

Monday, October 31, 2016

PLUG THE MONEY LEAKS

In  my 35 years of practice management consulting work, I have observed most dentists pay close attention to the “big picture” numbers for production, collections, capital improvement costs, and perhaps, the monthly Profit and Loss Statement for the practice.  In contrast, the secondary numbers, those relatively minor expenses that get paid automatically or small Accounts Receivable balances that get ignored, receive little to no attention or oversight.  These numbers represent a major “hole” in the practice finances, leaking dribbles and dabs that add up to over-spending while under-collecting.

Over-spending happens when cost details go unchecked or there is no practice budget, no specific dollar amount allotted monthly for various expenses  When these factors are missing, there is no mental alarm that flashes for the staff member responsible for bill payment when a cost escalates. 

Some examples of practice expenses that should be monitored and comparatively shopped at least annually include merchant rates paid for credit card services (I’ve seen rates vary as much as 2.5% to 3% between different vendors.).   Telephone rates and the cost of IT support are other costs that differ greatly between providers.  The various insurances a dental practice must carry should be put out for bids each year to several reputable agents.  Many practices fail to search for opportunities to save money on dental supplies such as reduced shipping charges  on ordered supplies (Check out Practicon’s new fantastic flat-rate shipping rates.) or by joining supplier buyers’ clubs (such as Practicon’s Premier program) that can save frequent buyers thousands of dollars over the course of a year.  Some suppliers will even allow an office to place an annual order at a significantly reduced cost for frequently used supplies to be delivered monthly. 

Contracted services such as janitorial, landscaping, medical waste pick-up, document shredding services, even reception room magazine subscription rates, should be checked minimally every six months to determine if the contracted price is the amount for which your office is billed monthly.  There are recorded jaw-dropping accounts of dentists being cheated when they allowed bills from vendors to be debited from the practice bank account automatically.  A dishonest vendor can implement price increases throughout the life of a contract, and the dentist or his/her bookkeeper is totally unaware of increases since the monthly payment is made as an unchecked routine.

Another major loss of money occurs when Accounts Receivable (A/R) are not monitored and worked regularly.  The dentistry has been delivered; and a statement has been sent, been sent again, and been sent yet again with no response from the patient.  Or third party claims get put aside to handle later and never filed.  Or if they are filed, failed reimbursement is not pursued.  What to do?  One business staff member should be thoroughly trained and made responsible for managing A/R with regular billing cycles, timely filing of third party claims, and proper follow up for all outstanding monies due the practice.

The recommended guidelines for aged A/R:

            Current – 50% to 60% of total A/R
            30 days – 15% to 20% of total A/R
            60 days – 10% to 15% of total A/R
            90 days – under 10% of total A/R
            120 days and over – sent for outside collection action       

Suggestion: spend time with your business staff member responsible for the type of financial details outlined here and your bookkeeper, if not one and the same person, to assess how these potential money leaks are affecting your practice.  You may be surprised by the additional money in the bank that results from working such seemingly minor aspects of your practice finances.