Monday, November 12, 2018

ANNUAL PLANNING RETREAT

One of the Best Days of Your Practice Year

Question: How many successful businesses operate year after year with no time out for: planning; evaluating current performance against the prior year; setting new goals; updating employees on the leader's vision for the future; and on and on?

Answer: None.

Think of your dental practice as a business focused on the same types of goals: growth, patient (customer) care and satisfaction, and profit. To facilitate success, a planning retreat is a necessity, scheduled on the practice calendar toward the end of each year or, at the latest, by January of the following year.

A day-long retreat should be held off-site, out of the office. All team members, including full-time and part-time, should attend, and should be compensated at their regular wage rate. All doctors associated with the practice should also attend. A Retreat Agenda should be distributed a few days prior so that team members can consider ideas to be discussed and submit suggestions to be added.

The Agenda can be organized using the following Practice Systems Inventory as a template. Under each heading, note details, questions, and comments that are appropriate for your office. Add or delete items to customize the Inventory for your practice.

Practice Systems Inventory
  • Personnel Matters—personal achievements, staffing needs, personal time off, coordination between front and back, teamwork, fun times, etc.
  • Physical Facility—signage, building inside and outside, and grounds
  • Business Desk—workstations, responsibilities, equipment, processes, etc.
  • Operatory—staffing needs, organization, training, emergency system, equipment, inventory control, sterilization, etc.
  • Scheduling for the dentist—patient hours and scheduling pattern; administrative hours, meeting schedule, personal time off, etc.
  • Scheduling for the hygienist—evaluation of Recare System
  • Patient Flow—process to schedule and welcome new patients, paperwork—accuracy and appearance, verbiage to be used with patients, etc.
  • Financial Matters—production, collections, write-offs, accounts receivable, accounts payable, expenses, overhead control, third-party payers, etc.
  • Administrative Matters—practice administrator's role, troubleshooting office work systems, office manual, central office calendar, delegation to staff, etc.
  • Marketing—new patient goal, marketing budget, activities, etc.
Professional counselors, such as experts in personalities, interpersonal relations, and teamwork can also be brought in to enrich team members' experience and participation. Discussions of new methods, materials, or equipment for the office might be facilitated by an outside resource person. The practice administrator or the dentist(s) can lead discussions of work systems and processes, such as scheduling, case presentation, website and online postings, changes in systems, and so on.

Ideas for an annual Planning Retreat should be limited only by the team's imagination, the doctor's preference, the cost, and the available time.

Be sure to check out our Free Resources for Your Practice for additional insights, information, and practice management tips.

Monday, November 5, 2018

CALCULATING SCHEDULING GOALS VS PRODUCTION GOALS VS COLLECTION GOALS

BE SURE YOU CONSIDER ALL THE FACTORS

The most successful dental practices set and work toward specific financial goals—scheduling, production, and collection goals. The show rate (the number of appointments kept divided by the number made) and the collection rate (percentage of production actually collected) affect these goals dramatically. Consider the following calculation:
  • $1,050,000 annual collection goal, calculated by adding:
    • Overhead costs, plus
    • Dentist's compensation, plus
    • Debt service, plus
    • Desired profit for doctor/owner—return on investment (ROI)
Based on this annual figure, we can calculate the daily goals:
  • $1,050,000 / 190 work days per year = $5,526 per day collection goal
  • $5,526 per day collections / 95% collection rate (0.95) = $5,817 per day production goal
But here is where we also have to take the show rate into account. This is simply the number of appointments kept divided by the number of appointments made for any given period, not including emergencies, last-minute fill-ins, etc. For example:
  • Out of 70 appointments scheduled for a period
  • 59 appointments were kept, so
  • 59 appointments kept / 70 appointments scheduled = 84% show rate
Now, considering an 84% show rate, we can calculate a scheduling goal:
  • $5,817 per day production goal / 84% show rate (0.84) = $6,925/day scheduling goal
By now, you can probably see the potential problem:
  • $6,925 per day scheduling goal - $5,526 per day collection goal = $1,399 per day disparity between scheduling, production, and collection goals.
Hopefully, this example will help you understand how overlooking an important factor, such as show rate, can have a serious impact on any calculated projections, and, most importantly, on practice income.


Be sure to check out our Free Resources for Your Practice for additional insights, information, and practice management tips.

Monday, October 29, 2018

A WALK DOWN MEMORY LANE

Remember your first day working in a dental office? I clearly remember mine. After years as a classroom teacher, I felt as if I'd walked into a perfect fit for my interests, skills, and temperament. Enthusiasm for the profession bubbled to the surface of my work life immediately. Passing years have proven my intuition correct. My love of dentistry and my enthusiasm for the profession has never waned.

Soon after I began work, I came across a piece written by a dentist, Dr. Earl Mabry. I've since lost track of Dr. Mabry, but his thoughts have inspired me all these years. His writing described my own enthusiasm for my new career path so well that I paraphrased Dr. Mabry's text and kept it in my files permanently. I have read and reread it over the years, often sharing it with friends and clients. Perhaps Dr. Mabry's thoughts will help you rekindle that sense of enthusiasm you felt when you began in dentistry.

  • Enthusiasm can change your life; create happiness, not only for you, but for those around you. All we need to make us really happy is to be enthusiastic about something; comfort and luxury are not the chief requirements of life.

  • Enthusiasm is the power that lifts one dentist above the others. It is more powerful than intelligence, more salable than skill.

  • Ask yourself: Was your best hygienist or dental assistant your best technician or the most enthusiastic about her/his job?

  • Dental enthusiasm is caring. It is an insatiable interest in your patient's welfare; a rapturous excitement in what you are capable of doing for your patient; an honest concern for those who work with, not for, you.

  • Enthusiasm is a genuine smile, an encouraging word, a pleasant mood, a willing ear. It is deep seated.

  • The word itself comes from the Greek "en," meaning "in" and "theos," meaning "God." Enthusiasm means "God within" or "inspired by God."

  • You can fake a smile and excitement, but enthusiasm comes from within. Happiness is the enthusiastic anticipation of doing something new and different.



Be sure to check out our Free Resources for Your Practice for additional insights, information, and practice management tips.

Monday, October 22, 2018

THINKING ABOUT SELLING YOUR PRACTICE TO A DSO?

GET ANSWERS TO THESE QUESTIONS FIRST

According to practice transition experts, 10% to 15% of practice sales are now made to corporate entities, primarily Dental Service Organizations (DSOs). If you're considering sale of your practice to a corporate group, first examine all the details with due diligence, and get answers, not only to the following questions, but to any other concerns you might have as well.
  • How will the value of your practice be determined? Most corporate evaluations are based on future earnings, not on past earnings before the dentist's compensation is deducted, as is the case in traditional sale evaluations. Be sure that you understand the method of calculating practice value based on a multiple of the future practice Earnings minus the dentist’s compensation but Before deduction for Interest, Income Taxes, Depreciation, and Amortization (EBITDA).
  • What multiple will be used to calculate this value? In other words, will EBITDA be multiplied by 4, or 5, or 6, or X to determine the value of your practice?
  • Will your accountant and/or attorney be provided with a complete explanation of the evaluation method? Will they be free to negotiate with the corporate buyer? Is there a limit to the time the evaluation might take?
  • Can you contact other dentists who have sold to the same DSO? Talking with them might help you determine the multiple used to evaluate other practices similar to yours in your region. Keep in mind that the multiple is influenced by many factors, such as cash flow, profit level, group or solo practice structure (with group being preferred), multiple office locations, etc.
  • Will accounts receivable (A/R) be included in the sale? Will patient credit balances also be included? How will A/R and credit balances be evaluated? Remember that, in a traditional sale, these two items typically remain with the seller.
  • What will be included in the sale? Can you retain the building if you desire? Must you sell all furniture, decorative items, art work, etc.?
  • Will a portion of the selling price be retained by the corporate buyer at closing to protect against any practice liabilities? If so, how much will be withheld? When will the seller receive the withheld amount?
  • Will you, the seller, have to continue working in the practice following the sale? If so, how long? How will compensation be calculated? Will benefits be included? Will you be free to set your own clinic hours, personal time off, vacation time, and so on, or must you meet the demands of the corporate buyer's schedule?
  • If the seller is to be compensated based on collections, what is the percentage you will receive? Is there the possibility of bonus pay? What is the average collection percentage in other practices owned by the same corporation?
  • Will you, the seller, receive full appraised value at closing? Or will you be expected to accept equity (stock) in the corporate entity as part of the purchase price?
  • If equity is to be substituted for cash, how and when can the stock be liquidated? If sold, must the corporation approve the purchaser? Who determines the value of the stock? Furthermore, how will the equity/stock be taxed—as compensation or as capital gain?
  • What information and paperwork related to the practice will the corporate buyer require? Obtain a complete list of items to be submitted, such as agreements, covenants, contracts, tax forms, insurance policies, financial plans, seller's retirement plans, benefit arrangements, etc. that the buyer might demand. Are you willing to provide such information?
  • Will your practice modalities be affected or dictated by the buyer? Will you be free to order supplies, instruments, and equipment as you choose? Or will the new corporate owner buy supplies and equipment only from their central vendor? Will you be comfortable working under such conditions if you must agree to work in the practice for a period after the sale?
This is far from an exhaustive list. Seek the counsel of an attorney and a CPA with extensive experience in negotiating the sale of dental practices to corporate buyers, just as you would if you were making a sale to another dentist.


Be sure to check out our Free Resources for Your Practice for additional insights, information, and practice management tips.

Monday, October 15, 2018

STAFF PROFESSIONAL DEVELOPMENT

WELL WORTH THE TIME AND EFFORT

Human resources professionals agree that many employees who might well turn out to be long-term, productive, loyal team members are being lost due to the sink-or-swim way in which they are brought into the work situation.

We in dentistry are often so pressed to bring a new team member up to speed quickly that we don't consider the individual's need for training, professional development, and a feeling of growth as a team member. Both new employees and seasoned veterans in your practice need frequent interaction with you, doctor, to understand your expectations and your opinion of their progress and performance.

A One-on-One sit-down meeting with each team member is an integral part of this process, and should be scheduled by the dentist or practice administrator. This is your opportunity to ask how employees see their career progressing, and to provide feedback about continued professional growth.

You might consider using a questionnaire similar to this:

Team Member Development

Please answer the following questions after giving them serious thought. We value your skills, talents, and contributions to the practice and to our patients' care. We want to know how you feel about your role here.

  • Name two or three things about which you feel most proud in your work.

  • What are two or three professional goals you would like to achieve or develop further? Are there new responsibilities you would like to take on?

  • What are the main challenges or problems you are now facing in your work?

  • What can I do to help handle or change these things?

  • What would help you feel more successful in your work?

  • Do you need additional training on some part of your job?

  • Which continuing education courses would you like to attend?
Appraiser comments:
  • Your most outstanding accomplishments since our last one-on-one discussion have been:

  • Two or three things I would like to see you take on are:

  • I will help you with:
Commitment:

As we have discussed, we will work together to achieve the goals you have set for yourself. We will meet again to assess progress in six months.


________________________
Team Member

________________________
Appraiser

________________________
Date

To make this type of one-on-one discussion most productive, meet with a new team member twice: six months after beginning work and again in another six months as a follow-up. Thereafter, schedule an annual professional development meeting with each team member.

Discuss pay raises or any changes to compensation at a separate meeting. If team members know that a raise will be discussed during the professional development meeting, they might focus on that news rather than on goals, responsibilities, and professional growth.


Be sure to check out our Free Resources for Your Practice for additional insights, information, and practice management tips.