Archive for category: Collections

Break the Overhead Stranglehold

Break the Overhead Stranglehold

High overhead is choking off profitability in many practices. Let’s start with the numbers. Levin Group recommends the following overhead percentage targets for general and specialty practices:

  • General Practice – 59%
  • Orthodontics – 49%
  • Pediatric Dentistry – 49%
  • OMS – 50%
  • Periodontics – 51%
  • Endodontics – 49%
  • Prosthodontics – 64%

Most practices run 8-15% too high and don’t fully understand what that means to their bottom line. Look at these examples.

  1. If a practice has overhead that’s 1% too high, it’s losing $1,000 of annual profit (take-home income) for every $100,000 of production.
  2. If a practice is 1% too high and has $800,000 annual revenue, it’s losing $8,000.
  3. If the practice is 4% too high, which is quite common, with $800,000 in revenue, it’s losing $32,000.

Imagine what you could do with that extra income each year! How about going on a dream vacation or maxing out your retirement accounts?

Overhead control alone can contribute heavily to a doctor’s financial independence.

So how do you get overhead under control? Here are three tips that will make a difference:

  1. Measure every category of office expense against comparative information. The ADA and other associations publish relevant statistics to measure against your performance.
  2. Analyze the largest expense, which is usually staff labor. For example, if it’s over 25% in a general practice, the office isn’t getting the proper return on investment. This could be either due to waste or under-producing, but either way it’s costing the practice.
  3. Identify opportunities to reduce costs. Most practices fall into spending habits for supplies. Examine all costs and question sales representatives about how to lower your costs. These conversations often lead to cost reductions. If a sales rep is unhelpful, look at other manufacturers and suppliers.

Additional Resource

Want to get your financial house in order? Check out the Finance Reference Set by clicking here.

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Three Things About Financial Management

Three Things About Financial Management

Financial management is a critical aspect of running your dental practice.

The first thing to focus on is cash flow. Too many dentists simply go to the office, treat patients, pay the bills and see what’s left. Instead, you should give serious thought to cash flow factors, such as when patients pay, how they pay and whether they pay at all.

Design a system to have patients make their payments as early as possible relative to the time of treatment. Then use a Levin Group consulting innovation known as a one day rule to collect 99% of all money due to the practice. The one day rule states that patients will be called the day they are overdue. This is followed by a nine-week follow-up process. Together, these two methodologies enable Levin Group clients to collect 99% of all the money they’ve earned.

Another critical component of managing practice finances is budgeting. Very few dental practices have a budget, and many of those that do pay little attention to it. This is how practices get into financial trouble and doctors end up with lower income.

Most doctors have no idea where their revenues stand for the year and whether they’re on budget. With today’s profit margins being squeezed, we see many new management consulting clients whose income is flat or declining.  The solution is to establish a budget, track each line item continually, and make adjustments as needed throughout the year to hit your financial targets.

Additional Resource

Interested in improving your financial management skills? Read a free excerpt from Dr. Levin’s essential book, Practice Finance, by clicking here.

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3 Things about Collections

3 Things about Collections

Collections continue to be a problem for many dental practices.

Too many front desk team members don’t feel comfortable asking for payment from patients. That reticence can cost your practice thousands of dollars every year.

Here are three things you can do to improve collections:

1. Collect at the Time of Service

Make that your standard policy. Your practice should function like other retail businesses, which all collect at the time of purchase. By doing so, you will receive a higher percentage of your fees sooner and reduce the potential for overdue receivables.

2. Train Your Front Desk Team to Ask for Payment

Your practice is a business, and collecting fees in a timely manner is part of running a financially successful business. Fixing your collections system can yield an immediate and profound boost to your bottom line. Train your team using scripting, which will enable them to be comfortable at asking patients for payment.

3. Make Collections Easier by Offering Patient Financing

With dental insurance covering less, patients today have more out-of-pocket costs than ever before. Giving patients the option of financing through a reputable third-party provider can make treatment––elective services and larger cases––more affordable. You also eliminate any potential collections issues by receiving your fee upfront (minus a small financing charge).

Additional Resource

Download Dr. Levin’s free whitepaper “The 9 Areas of Expertise: Collections” by clicking here.

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Today is Team Appreciation Day

Today is Team Appreciation Day

How do you get your practice team and others around you motivated? The answer is simple. Start appreciating them… and let them know it!

Most dentists would say they appreciate their teams. If you feel that way, answer these questions

  • Do you express your appreciation to every team member every day?
  • Do you notice the little things and try to see things from each individual’s point of view?
  • Do you find many ways to compliment team members… about what a good job they’re doing, how fast they’re learning, that they’re making a difference?

These are the techniques great leaders use to motivate their team. They know that when you show your appreciation, team members feel better about themselves and will be self-motivated to perform better.

Additional Resource

For more team-building advice, view Dr. Levin’s video, “Building the Best Possible Team.

Attitude is Everything

Attitude is Everything

In the introduction to my book, Get a Life and Keep It!, I discuss how important it is to have the right attitude. For those of you who haven’t yet read the book, here’s an excerpt:

Leaders lead by example, and a dental team is always watching the doctor. If your outlook is not positive, you will find it difficult to motivate others and many won’t find you believable or persuasive.

Enthusiasm and great attitudes equal credibility in the minds of others.

If you want people to trust you, you will need to display an astonishing level of enthusiasm through an extremely positive attitude.

Do you want to have a great attitude? If the answer is yes, and I certainly hope it is, then all you have to do is make up your mind that a great attitude is what you want.You decide that from now on complaining, excuses or whining will not characterize your life. You will not react to circumstances with a “why did this happen to me?” mentality.

I wrote this a number of years ago, but it resonates more now. There will always be setbacks, challenges, bad days and long nights, but overcoming these obstacles usually starts by having a positive attitude.

Additional Resource

Dr. Levin’s book Get a Life and Keep It!, which focuses on the Levin Group mission of “improving the lives of dentists,” is available here. Click the “Read an Excerpt” button to read a sample.

Worth Repeating

Worth Repeating

Everything seems to be getting more complicated these days. I’m reminded of some of the advice I gave dentists in my book, 43 New Rules for Increasing Practice Production. Here’s an excerpt:

Rule #32 – Simplicity is Key

One of the key principles taught by Chris Zook, author and leading business strategist, is that businesses get in trouble because they gradually become more complicated and bureaucratic. Zook talks extensively about the importance of simplicity and repeatability. I have observed thousands of dental practices that ran well when they were smaller but became chaotic and stressful as they grew.

One of the major reasons for this is that they did not have the right step-by-step systems in place. As I have often said, systems must be up-to-date and documented. In addition, systems must be simple, so they can easily be used correctly. Dentistry keeps getting more and more complicated, with new materials, procedures and technologies emerging continuously—all the more reason to implement systems that simplify practice management.

As you work to grow your practice in 2016, keep your systems in mind. Are they helping or hurting you? If they’re impeding rather than supporting growth, it’s time to replace them.


Additional Resource

Read a free excerpt from the 43 Rules for Increasing Practice Production by going here and clicking on the “Read an Excerpt” button.

Go and get grab your copy now!