{"id":571,"date":"2015-02-27T01:14:30","date_gmt":"2015-02-27T01:14:30","guid":{"rendered":"http:\/\/blogadvancedpracticemanagement.webaloo.com\/?p=571"},"modified":"2015-02-27T02:03:20","modified_gmt":"2015-02-27T02:03:20","slug":"dental-office-overhead-statistical-trends","status":"publish","type":"post","link":"https:\/\/blog.advancedpracticemanagement.com\/blog\/dental-office-overhead-statistical-trends\/","title":{"rendered":"Dental Office Overhead Statistical Trends"},"content":{"rendered":"

\"Dental<\/a>KDV* recently released their bi-annual overhead survey for general practitioners. It\u2019s the best\u00a0of its kind for our area and it\u2019s quite useful in analyzing expenses and setting budgets. Their last overhead survey was done in 2012. Since then, dental office overhead has remained\u00a0right around 65% of collections (in 2012, 64.7%). The typical GP practice in this survey of\u00a0mature area offices collects about $69,000 per month and nets about $290,000 per year\u00a0(before taxes). In the 2012 survey, the average monthly collections were $65,000 with a net\u00a0of about $272,000.<\/p>\n

Over 45% of dental office overhead is staff wages. Gross wages come to about 26.9% of collections, up\u00a0slightly from the previous survey. Including benefits, staff costs are about 31%.<\/p>\n

Since staff costs are your major controllable expense, it\u2019s a very important area to focus on \u201cResult Control\u201d\u00a0(not just \u201cCost Control\u201d).<\/p>\n

This is the time of year where many Doctors are looking at staff compensation. According to our recent\u00a0survey, about 40% of Metro area practices and 56% of Outstate area practices have, or planned on, giving.<\/p>\n

We recommend these three criteria:<\/p>\n

    \n
  1. Market Rates:<\/strong> Regardless of \u201ccosts\u201d, you have to meet the market to attract and keep good staff.\u00a0For example, nowadays, assistants are in higher demand, especially in Outstate areas, so they can\u00a0command higher wages.<\/li>\n
  2. Practice Growth and Profitability:<\/strong> The way I look at it, the staff\u2019s slice of the pie is about 25% of\u00a0collections. I recommend that each year our clients compare their gross wages to collections to see if that\u00a0percentage is increasing or decreasing in their practice. Of course, the object of the game is to not have the\u00a0staff salaries as a percentage of collections grow faster than the practice.\u00a0However, if you have good practice growth, it\u2019s likely the staff salaries have decreased as a percentage of\u00a0collections, thus giving you more potential to award raises for those that deserve it (see below).<\/li>\n
  3. Merit:<\/strong> Individual performance and contribution to the team effort.\u00a0So the market rate sets the base floor of pay. The practice\u2019s growth and staff salaries give you a budget and\u00a0individual merit helps you decide how to allocate those dollars.<\/li>\n<\/ol>\n

    Would you like our help in setting up a budget for 2015?\u00a0Just ask your APM consultant! Call (952) 921-3360. We\u2019d be happy to help!<\/h4>\n

    *KDV is an area Accounting, Payroll and Wealth Management firm that works with over 100 area dentists (www.KDV.com)<\/p>\n

     <\/p>\n

    More On Overhead Trends<\/h2>\n

    Lab costs have decreased from 7.1% to 6.6 % of collections. This is most likely due to more offices with\u00a0CAD\/CAM technology (CEREC\/E4D). At the same time, \u201cProfessional Supplies\u201d are up slightly from 7.2% to\u00a07.5%.<\/p>\n

    Professional banking and other fees are up from 2.2% to 2.4%. More patients using credit cards means more\u00a0bank charges (more about that in another issue). Professional fees, including consulting and accounting,\u00a0should be under 2-\u00bd%.<\/p>\n

    A quick pitch here: our fees typically come to less than 1% of our clients\u2019 gross production and rarely over 2%.\u00a0We feel that with a little help from your friends (us!) you get way more than that in return through leveraging\u00a0your and your staff\u2019s time and talents with good business practices.<\/p>\n

    Surprisingly, the advertising percentage has not really increased. It\u2019s around 1.7% of collections. Given the\u00a0typical practice writes off well over 10% of its production due to PPO discounts, I would think that more\u00a0Doctors would be spending more money on advertising to enable them to cut back a bit on PPO participation\u00a0and the serious discounts and expense incurred. So, for example, if you\u2019re collecting less than 80% of your\u00a0production (and I can\u2019t believe I am saying this\u2014there used to be a time when no one collected less than\u00a080%!), you probably are participating in more PPO\u2019s than you need to. Ironically, the Doctors in the best\u00a0position to peel off PPO participation are the ones that are temperamentally less inclined to do so. There are\u00a0few decisions in your practice that have more potential risks and rewards than those to do with PPO\u00a0participation, so please make use of our expertise in this area. We have made or saved many Doctors many\u00a0$1,000\u2019s.<\/p>\n

    Incentives and Budgets: About 33% of practices have a staff bonus\/incentive plan. On a scale of 1-10, the\u00a0Doctors with these plans rated them at \u201c7\u201d. I\u2019ve seen incentive plans work miracles. I\u2019ve seen them fall flat or\u00a0eventually fizzle out.<\/p>\n

    Good incentive plans have to be tied in with a good business plan. The staff has to know how they can win and\u00a0what each individual has to do to contribute to the practice\u2019s growth. Just setting a production or collection\u00a0target with no concrete ways to get there is a sure way to frustrate the team.<\/p>\n

    Mathematically, all the incentives we recommend are in light of the above overhead statistics so that the more\u00a0incentive you\u2019re paying, the better your ratios are getting. Everybody wins.<\/p>\n

    If you\u2019d like our assistance in setting up an incentive program, let us know. If you already have an incentive\u00a0program, please check with us at least once a year so that we can make any necessary adjustments. All\u00a0incentive programs need to be tuned at least annually.<\/p>\n

    Other Trends<\/h2>\n

    Some highlights from our recent Fee\/Wage\/Technology and Insurance Participation Surveys:<\/p>\n

      \n
    • Digital Communications<\/strong>\u00a0– (Demand Force, Lighthouse, Smile Reminder, RevenueWell, etc.) continue to\u00a0come on very strongly. 38% of practices now use this. Just a few years ago, it was under 10%.\u00a0Like any other kind of software, signing up is just the first step\u2014we can help your team get the most out\u00a0of it. Digital communication technology should turn into freed up staff time, perhaps reduced\u00a0cancellations, increased recall visits, more reviews, more patient testimonials and more production!<\/li>\n
    • 21% of general practices now offer Invisalign<\/strong>, Clear Correct<\/strong> or other orthodontic treatment<\/strong>. 34% use laser\u00a0caries detection<\/strong> (e.g. Diagnodent), 7% are using digital impression scanners<\/strong> and 73% of offices have\u00a0digital radiography<\/strong>. (By the way, that means 27% of offices don\u2019t; thus, we do not feel there is any huge\u00a0urgency to convert to completely electronic health records. We don\u2019t see any evidence of any Government\u00a0Agency pushing hard to enforce that. So, by all means, move to electronic health records but don\u2019t do it\u00a0out of some fear of government deadline or some jive sales talk).<\/li>\n
    • 43% of offices said they were chartless<\/strong> with 72% having terminals in the treatment rooms, which, of course,\u00a0correlates very closely with digital radiography (73%).<\/li>\n
    • 50% of hygienists now use magnifying loupes<\/strong>.<\/li>\n
    • 78% of offices have websites<\/strong> and 38% have mobile websites<\/strong>.<\/li>\n
    • 6% of offices reported they have Cone Beam Imaging<\/strong>. The average fee charged is $300.<\/li>\n<\/ul>\n

      PPO\/Insurance Participation<\/strong>: PPO participation and write offs continue to dig in. Participation with Delta\u00a0Premier (87%) and Delta PPO (30%) remains about the same as last year. 7% of Doctors reported they had\u00a0dropped participation in a PPO in the last 12 months and 4% plan on dropping a PPO in the coming months.\u00a0However, 12% have joined a PPO network in the last 12 months.<\/p>\n

      Again, if you\u2019re considering joining or dropping a PPO, please check with us first.<\/p>\n

       <\/p>\n

      Your Top Issues<\/h2>\n

      In descending order, Dentists\u2019 top issues are:<\/p>\n

        \n
      1. Insurance PPO\/Third Party Write<\/li>\n
      2. Production, growth, filling schedules,<\/li>\n
      3. Attracting new patients, marketing<\/li>\n
      4. Staff issues, motivation, teamwork and costs<\/li>\n
      5. Technology, keeping up, costs, going<\/li>\n<\/ol>\n

         <\/p>\n

        Fees<\/h2>\n

        Metro Area fees were up 2.4%. Outstate Area fees were up 3.2%. Wages were up about 1.8%.<\/p>\n

        Our Website Is Your<\/span> Tool Chest<\/h2>\n

        We have detailed Overhead, Technology, Wage, Fee and Benefit Surveys on our website. Plus, numerous\u00a0Bulletins, articles and interviews that address a wide range of subjects.<\/p>\n

        We are your source for reliable, practical information. In a world full of big insurance companies, corporate\u00a0dentistry and governmental complications, we are the pros that are on your side. That is, the Doctors who\u00a0are and want to continue to practice independently, deliver top-notch service to patients, take good care\u00a0of their staff and earn a good living doing good!<\/p>\n

         <\/p>\n

         <\/p>\n

        Photo Credit: Dollar Photo Club<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

        KDV* recently released their bi-annual overhead survey for general practitioners. It\u2019s the best\u00a0of its kind for our area and it\u2019s quite useful in analyzing expenses and setting budgets. Their last overhead survey was done in 2012. Since then, dental office overhead has remained\u00a0right around 65% of collections (in 2012, 64.7%). The typical GP practice in […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"wds_primary_category":0,"footnotes":""},"categories":[36,4],"tags":[37,39,38],"class_list":["post-571","post","type-post","status-publish","format-standard","hentry","category-bulletin-articles","category-dental-practice-management","tag-dental-office-management","tag-dental-office-overhead","tag-dental-office-staff-salaries"],"_links":{"self":[{"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/posts\/571","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/comments?post=571"}],"version-history":[{"count":0,"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/posts\/571\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/media?parent=571"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/categories?post=571"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.advancedpracticemanagement.com\/blog\/wp-json\/wp\/v2\/tags?post=571"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}