Dental Practice Management: North Carolina Senate Bill Wants Dentists To Do It Themselves

Senate ruling on dental practice managementLast week in our post, Dentists Beware: The Government May Want To Tell You How To Manage Your Practice, we reported on the story of the North Carolina Senate and Senate Bill 655, which would require the North Carolina Board of Dental Examiners to examine all business contracts entered into by dental practices in their state.

Dr. Clifton Cameron, a dentist in North Carolina reported to the Fay Observer that, “Senate Bill 655 would give the Dental Board complete control of how dentists in North Carolina run their practices so they can keep fees charged to patients artificially high and insurance acceptance artificially low.”

We wrote that we couldn’t find the reasoning behind such a move by the NC Senate and Board of Dental Examiners, but the Board did post the following to their website:

“The Board has become increasingly concerned about the expanding scope and nature of management company services and agreements, and their impact on the control of dental practices by the licensed dentists.

The bundled services offered by management companies typically involve some combination of (1) administrative management services; and (2) financial management services.

Based on its knowledge of the operations of dental practices, and after reviewing management arrangements with dental practices for almost ten (10) years, the Board has identified features of management arrangements which it has determined to be highly likely to create a situation where the ownership, management, supervision or control of a dental practice is impermissibly conveyed to an unlicensed person or organization because either separately or when bundled, those features interfere with the licensed dentists’ professional decision-making and their exercise of clinical skill, judgment and supervision in the dental practice.”

After we ran our original story, several doctors commented. A New Jersey dentist wrote:

“In New Jersey, the state board already forbids outside management. My partner and I spend about 20-30 per week running my business instead of on continuing education or, patient care.

The real argument isn’t whether or not I could be one of the practices recruited by management companies, but the unfair advantage it would bring to my practice over anothers’. Lower overhead, decreased fees, increased insurance acceptance, large marketing budgets would destroy competition and lower practice values and access to care.

Management companies specify laboratory selection, supply selection, employee selection, and continuing education budgets. While they bring lower overhead, they take money from the practice as well. If you fail to be attractive, your practice cannot contract with them.

Giving this advantage to a small percentage of dentists is unfair to the majority of dentists that do not wish to join or would not be accepted. I have 10 dentists within a 0.5 mile radius. We can’t all be Aspen Dental Centers. The other 9 practices would suffer, and that wouldn’t be fair.

This is about the only aspect of dental life in New Jersey that makes practicing here worthwhile. Defeat it. Resist, North Carolina!”

Another dentist responded with:

“Have they gone mad over there? Sounds like there’s something they are not telling us about…It sounds like the insurance companies are in bed with the politicians again….”

Indeed, it could be a game changer that would impact North Carolina dentists and how they manage their dental practices. The North Carolina Office of Research, Demonstrations and Rural Health Development reports that there is already a severe shortage of primary health care providers in North Carolina, particularly in the State’s rural areas.

But perhaps this isn’t about patient care at all — or making dental practices transparent.  Perhaps this is about lawmakers just playing politics.

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?

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