Jennifer Schultz Blog

Thinking Beyond the Short-Term

7/29/2015

There is a common business phrase, “It’s hard to see the forest through the trees.” It refers to getting so caught up in the day-to-day details of running a business you can’t see the bigger picture. This happens in dental practices more often than you would think, especially when it comes to spending money. Decisions are made based on the information in front of them, versus on a longer-term strategy to reach their goals. This is the type of thinking that can hinder growth and profitability.

Should I hire the front desk person that has more dental experience at a higher hourly rate, or the one that just graduated from school for an entry-level wage?

Should I have my front desk team continue to handle administrative dental insurance tasks, or pay to outsource it to someone who can focus on insurance?

In these situations your initial reaction can be to take the less expensive route, but will that really get you farther in the long-term? For example, an experienced front desk person might have more effective scheduling processes, which can increase production. Or outsourcing insurance tasks to someone who has more experience and time to focus on it could increase collections, as well as free up your team to close treatment cases or collect money.

It is normal to miss potential in our own business. What potential might you be overlooking due to the illusion of a short-term gain?

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Adjusting for Better Profitability

6/11/2015

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A common complaint that I receive from doctors is that they are writing off too much money! Unfortunately, many of these practices group their adjustments together in general categories, such as miscellaneous write-off. While this will track total adjustments, it does not allow the practice to identify where the write-offs are coming from, which makes it difficult to determine how to reduce the write-offs.

This is why it is critical for the dental practice to have a consistent naming system to help track the adjustments. This may seem like a small detail, but it is the one of the best ways to start understanding your write-offs, so you can make the necessary changes to increase profitability.

When you review your adjustments report you should be able to see what the adjustment was for just by looking at the name of the adjustment. If all of your insurance adjustments use the “insurance write-off” adjustment, it doesn’t give you enough information to understand the specific amount per insurance company.

Here are some naming suggestions for different types of adjustments.

Insurance Adjustments – These need to include the name of the insurance company, for example Delta MN Adjustment. This will help show you where the bulk of your insurance write-offs are coming from, and understand which insurance companies are the most profitable.

Marketing Promotion Adjustments – Each short-term marketing promotion should have it’s own unique name, for example Winter 2014 Whitening Promo. This will allow you to do analyze the effectiveness of your marketing promotions, and help you determine what is working and what isn’t.

Discount Adjustments – Many practices provide special discounts based on a specific circumstance, each of these should have their own specific name. For example, Friends and Family Discount.

Misc. Adjustments – It is best to use the generic “Misc. Adjustment” label in your dental practice software as little as possible. If you do need to use it, make sure to include a note as to why the adjustment was given. The note needs to be detailed enough so that anyone that reads it can understand the situation.

This is another one of those assumingly simple processes that goes a long way. Unfortunately, in a busy dental practice it is easy to skip this step. That is why it is critical that the team is not only trained in your specific process of naming adjustments, but that they also understand why it is important.

Don’t be afraid to have multiple adjustment types in your dental practice software. The more detail you have, the more information you will have to base decisions on to help the profitability of the practice.

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What is your true dental practice expense?

10/14/2013

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When I speak with dentists what I hear most often is that they look over the reports they receive from their accountant. However, they often don't really understand what the numbers should be and end up comparing them to the year before.

Accountants focus on saving you money on your taxes. Therefore, most accountant reports include expenses that are tax deductible however are not true expenses. For example, depreciation and amortization are not expenses that you write a check for. This can be confusing and often inflate your expenses. So when calculating your true expense these numbers are not used. Also total loan payments are often not included either. Interest is included but principal payments are not.

Knowing your true expense is important in understanding your overhead. It has been said before but it isn't about what you produce but what you put in your pocket and that is the difference between collections and true expenses. This number will also tell you how much you need to collect each month to break even. When calculating dental team bonuses it is important to know and understand your expenses as well. This ensures that you are paying a bonus from your profit after your expenses have been met.

Action Plan: Do you know your true expenses? If not, what needs to happen to calculate that number? Put it on your to do list or delegate it to someone who can.

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Thinking Beyond the Short-Term

Adjusting for Better Profitability

What is your true dental practice expense?

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