The Economics of Dental Hygienists

Analyzing Your Hygiene Profit Potential
Editorial by Jim Du Molin

Last week I started talking about dentists and dental hygienists, and how you, the dentist, need to think like a capitalist. The first step in this capitalistic venture is preparing the operatory space for the hygienist – as I mentioned last week, it’s both an investment and a risk, and it’s one you need to consider fully.

Next you need to actually hire a hygienist. Let us assume that the dentist is working four days per week and that 25% of his or her time is spent performing treatments that a hygienist could perform. This means that there is at least one day of potential hygiene production per week.

Let us further assume that based on the dentist’s fee schedule, a hygienist would average $700 per day in production. Collections at 96% would reduce this to $672, from which we have to deduct variable costs (disposable supplies and materials used in treatment), salary, and employer taxes. Our estimated profit before indirect overhead costs is $292 per day.

Daily Gross Profit on Hygiene Production

Production $700
Collections (96%) $672
Minus variable costs (9%) – $63
Minus salary – $288
Minus employer taxes – $29
Profit before indirect costs $292

This is the first level of profit to be realized from hiring the hygienist – direct profit on the hygienist’s production. Adding just one day of hygiene per week provides $1,168 of passive income per month and $14,000 per year.

More importantly, the dentist is now free to use his or her time more productively. Previously, 25% of the dentist’s time (two hours per day) was used to perform hygiene treatments. Let’s say that he or she could bill $88 an hour for those treatments. Now, the dentist can use these two hours to perform more complex and more costly treatments – at, say, $313 per hour. That’s an increase of $225 per hour, or $450 per day.

Assuming that collections are 96%, and variable costs including lab and supplies are 24%, the marginal net profit on the additional production is 72%. Therefore, if daily production increases by $450, the extra net profit will be $324. Remember, that’s $324 everyday. In an average 16-day month, that comes to an additional $5,184 in profit per month.

Adding the dentist’s additional production to the hygienist’s production, the total additional profit is $6,352 ($1,168 + $5,184) per month.
However, there’s more to the story: capitalists have to take risks, and smart capitalists can make lots of money… but I’ll get to that next week!

Dental Credit Cards Not Having An Impact on Dental Practice Bottom Line

Thousands of dentists across the US offer their patients dental credit cards to cover dental work that needs to be done. Only one third of dentists report that dental credit cards have helped increase dental practice income.

Dental credit cards are popular, but some dentists believe the dental credit cards are too expensive for their patients, according to our recent survey.

37% of dental practices get more money from CareCredit and other cards, while 24% get less money from credit cards now than five years ago. Only 14% don’t use dental credit cards at all.

The slight majority (37%) think dental credit cards improve their bottom line, while 14% think the dental credit cards aren’t worth it.

Here are some dentist comments:

  • “They’re bad news. They set up your patients for financial failure. Many of my colleagues say,
    ‘Well, it’s THEIR problem, not mine, how they take care of their dental financing.’ I disagree — if we set our patients up for financial failure, we are complicit in their problems.”
    (California dentist)
  • “Too expensive!” (General dentist)
  • “CareCredit charges very high interest rates for longer term ‘loans.’ We learned the hard way that the 18 month
    ‘interest-free’ option is not affordable–for us.”
    (Michigan dentist)
  • “Patients are less willing to pay the high interest rate even with my paying 6 months of it.” (Texas dentist)
  • “Many people are reluctant to apply for MORE credit these days. I don’t blame them. Who wants another credit card? I heard that the average American has nearly $20,000 in credit card debt! Ouch.” (Ohio dentist)
  • “We love the outside financing companies because we no longer have to mail out as many statements and our collections rate has increased tremendously!” (Alabama dentist)
  • “Care Credit is the only dental credit program we offer.” (Illinois dentist)

Read more: Dental Credit Cards Not Having An Impact

Is Dentist Practice Production on the Rebound in 2011?

dental production for 2011Dentist practice production hasn’t declined for all dentists, with 46% reporting increases to their production in the first quarter of 2011, according to our recent survey.

24% of practices have seen an increase of up to 10%, and another 16% are seeing increases in the 10 – 20% range. Only 6% have seen production increase by 20% or more.

The slight minority (38%) have seen their dental practice production decrease this quarter. Only 16% have not noticed a change.

Here are some dentist comments:

  • “The recovery has not trickled down to the worker level yet. Now we are feeling the pinch of higher gas prices and also the increase in consumer goods.” (Texas dentist)
  • “During these economic times, being lazy is not an asset. It is a time to dig in, work hard, market hard and effectively and make sure that you have the capacity to handle the demands your marketing (internal and external) will place on your practice.” (Michigan dentist)
  • “The measuring rod is not the practice’s production, it’s the practice’s collections! I am actually producing more but my collections rate has decreased. The insurance companies are making me take more write-offs if I am a “preferred” provider for them and the insurance companies, in general, are paying less for the same procedures than they have in past years. I guess they are trying to build up their coffers before health care reform takes full effect!” (Alabama dentist)
  • “Our production has increased significantly the past 6 months, especially the past 3 months. This may not necessarily be due to a slightly better economy but likely due to more people feeling like they can no longer continue to delay treatment, improved office marketing (including increased Internet dental marketing) and an emphasis on internal marketing. We have actually decreased our advertising costs compared to last year and have become smarter with our marketing.” (Ohio dentist)
  • “The economy has not picked up from what I see, only significant stress, clenching, fractures. I will note that I have not seen any slowing in Botox, and dermal fillers treatment, whether for TMD or cosmetic.” (Minnesota dentist)
  • “Production seems to be up due to pent-up demand. Patients who had been delaying treatment were continuing their treatment.” (Tennessee dentist)
  • “I took Jim Du Molin’s signage advice and new patient flow has increased noticeably. Thank you so much!” (Nevada dentist)

Dental Practice Production for Dentists in 2011

Dentist Continuing Education May Cure Dental Burnout Symptoms (video)

Dentist Continuing Education May Cure Dental Burnout SymptomsEveryone feels burnout now and then, but dentists are especially at risk for professional burnout.

Said one dentist, “Burnout to me is manly the result of the negative light in which most dental patients view the dental office experience.”

Another dentist advised, “Taking continuing education to learn and improve techniques rejuvenates my practice. It keeps me fresh!”

The Wealthy Dentist conducted a survey asking dentists if they have ever suffered from professional burnout in their dental careers.

Click on Play to watch the video to hear more of  what dentists have to say about burnout

What do you do to avoid professional burnout?

Dentists: Are You No Longer a Wealthy Dentist?

Dentists: Are You No Longer a Wealthy Dentist?Dentists’ incomes are dropping according to a report published in the May issue of the Journal of the American Dental Association.

The ADA and data from the Agency for Healthcare Research and Quality’s Medical Expenditure Panel conducted a survey to analyze trends in real gross billings per dentist visit, rates of collection of gross dental patient billings, number of visits to a dentist, percentage of the population who visited a dentist, population to dentist ratio and average real practice expenses.

The survey results reflect a random sample of approximately 4000 to 7000 dentists in private practice.

The survey found that the downward income trend was driven primarily by a decrease in dental patients seeking dental care.

The decline in dental care use, although most notable during the economic downturn, appears to have started before the downturn began.

A smaller portion of the U.S. population is seeing a dental care annually, going from 40.6% in 2005 to 38.6% in 2009.

Marko Vujicic, PhD, an American Dental Association economist, told Medscape Medical News that another study confirmed that an increasing number of Americans say they can no longer afford the dental care they need. Many states cut Medicaid dental benefits at the same time that employers cut back on dental insurance benefits, which left more of the general population without dental insurance coverage.

Further ADA surveys have shown that the reason dental patients don’t go to the dentist more often is that it now costs too much (34%). More than half of consumers (51%) who have not been to the dentist in the past five years report that high costs are an important factor. About 26% of consumers had a previous bad experience with a dentist and one-quarter do not feel that it is necessary to go to the dentist until a problem occurs.

According to the ADA the average gross billings per owner dentist in 2009 was $727,630 for a general practitioner and $1,004,820 for a specialist.

Quality dental marketing seems to help buck the downward income trend by helping dentists acquire more new dental patients. Investing in the latest dental technology also helps add to the dental practice bottom line, according to dental accountant Bassim Michael.

What has your experience been this year? Has your dental practice income dropped?

For more on this story see: Dentists’ Incomes Dropping, Says ADA Survey

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