Is this a question you ask your Accounts Manager regularly? Dentists who are frantic about their profitability always seem to be bugging their staff about the collections. What’s worse, they try to “save” their way out of bad financial situations and that’s the wrong solution.
Now don’t get me wrong. You should save money where you can, but the fact is that most of your expenses are fixed. Instead of asking, “What are the collections today?” you should be asking, “What percent of my collections goes to staff pay?”
Why? Because the percentage of staff pay tells you what kind of manager you are and whether your staff are efficient or not. It’s hard to be profitable if you have a high staff pay percent. On the other hand, a low percent of staff pay pretty much guarantees profitability.
Percentage of staff pay is figured by taking your staff pay and dividing it by your collections. Keep in mind that staff pay includes matching payroll taxes, unemployment, 401Ks, uniforms, health insurance, etc.
A profitable dental practice is under 25% but a really profitable dental practice runs under that. A dental practice collecting $100,000.00 with a 70% overhead has the same profitability as a dental practice collecting $60,000.00 with a 50% overhead.
Except the dentist in the $100,000 a month dental practice is working a whole lot harder!
Really profitable dental offices are run by dentists who train and demand production from their staff. They keep them focused on the product they are delivering. So next time you have the urge to ask your front desk, “What are the collections today?” take a deep breath and ask yourself, “What percent of my collections go to staff pay?” If it’s more than 25% you need to train your staff better so they are more efficient and productive. When you do this, your collections will go up and your percent of staff pay will go down.
With proper training, staff can become more productive. And you don’t even need to pay them more!