INFOGRAPHIC: 4 Symptoms of a Sick Dental Practice

Posted by Jason Smith on Sun, Mar 30, 2014

You run a successful practice and you're making a good income - but you know things can be better. You've tried practice management and marketing with short-lived results. You're not willing to settle with the status quo, but you don't quite know where to look or what to do about them. You see the signs of problems under the surface, but you're out of ideas for how to deal with them.

Check out our new infographic, 4 Symptoms of a Sick Dental Practice, by clicking on the preview image below. It's designed to show you a few things that could be amiss in your practice's finances and help you determine whether the worries you have are minor - or the start to something serious.

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Topics: dental advisor, Practice Transition, dental retirement, dental tax, dental financial planning, dental accounting, Financial Planning, business of dentistry, Tax Advisory

How Your Practice Can Survive a Few Slow Months

Posted by Brogan Baxter on Fri, Mar 28, 2014

tortoisePut simply, the secret to making it through slow times as a dentist is great planning. If you have a good idea of what’s coming, and you have a plan in place to deal with it, you’ll be able to get through short periods of low production with relatively low financial impact.

Your most potent weapon is thorough information on historical financial trends for your practice. Four years of data or more will get you the best results but use what you have. This will give you a good idea of when production drops tend to happen, and will help you determine why. For example, if your practice is located in a vacation area and you tend to have less production in the summer months, you can safely bet that’s going to be a trend. You’ll be able to plan for that drop occurring on a yearly basis.

There are a few ways you can use that information.

  1. Schedule vacations: If you know a specific month or season is your slow time, close the practice for a week. You and your staff can have a vacation, and then you can condense four weeks of work into three, and avoid spending on overhead when you don’t need to.
  2. Cut hours: You don’t need to schedule at full capacity if you know that you’re going to be light on work. Lighten the load of hours during slow periods – maybe only have one assistant work each day, for example – and then when production ramps up again, you can go back closer to capacity.
  3. Reactivation campaigns: Do you have patients who haven’t been in for a while, and have fallen through the cracks? Get in touch with them, and get them in for a cleaning and a checkup, or schedule them for the operative work they’ve been putting off or haven’t scheduled yet.
  4. Run promotions: Things like giveaways and discounted procedures can bring in patients who might otherwise have avoided a trip to the dentist.

More than anything else, you must have an adequate safety net in place. If you don’t, you’ll be tempted to cut your pay or adjust your cash flow to make up for slow times, and that’s not advisable. It’ll hurt your home finances and lead to stress. Instead you should have 1 to 1.5 times your typical practice monthly expenses in your accounts at all times. You should have access to a line of credit that can cover between ¾ and 1.5 times your monthly practice expenses as well.

You need to be proactive with your taxes and expenses as well. Use your practice’s trends to shape your tax payments and your purchases. You should be adjusting tax estimates on at least a quarterly basis. Not only will this account for the fluctuations that happen when a slow month does happen, but it protects you from a nasty tax surprise. And a five-figure tax bill will hurt a lot more if you’re fresh off a dip in production.

That goes for expenses as well. Boring cash flow is a lot better than “lumpy” cash flow – in other words, paying off a large expense all at once is not ideal. When lean times hit, you’re going to be a lot happier paying off four months of $10,000 checks rather than one for $40,000.

Proactive planning – in taxes, in expenses, in savings, and in reactions – goes a long way towards helping your practice get through a lean month or two without suffering too much.

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Topics: dental advisor, dental financial planning, dental accounting, Financial Planning, business of dentistry

Reducing the Risks of a Partnership Failing: Part 2

Posted by Brogan Baxter on Sun, Mar 16, 2014

handshakeLast week I talked about the preparation that needs to be done before hiring an associate to make sure your partnership works out. After all, 75% of them end up failing, so it looks like dentists need some help. Once you’ve made the hire, though, the work isn’t over. You need to plan for what happens after the hire is made and the buy-in is triggered, and you need a plan for what happens when you’re ready to call it a career.

You’ll be coexisting with your new partner hopefully for several years at least, before you ride off into the sunset. Your practice will not function in the same way it did when you were the only executive in charge. You’ll have to work together to make things work. Communication is key, and regular management meetings are a necessity.

Decisions must be made about how decisions will be made when you’re working as partners. How will you develop strategy as a team? Who decides when new equipment is needed, what equipment you should buy, and how? What will your schedules be – will you work together, or trade off shifts? What happens if one of you wants to run a personal expense through the practice but the other partner does not? You need answers to these questions before the situations come up.

Another thing that’s helpful is finding a new corporate accountant. This should be someone who hasn’t worked with either you or your new associate before – any accountant who’s associated with either of you might have more loyalty to one than to the other, and because of that, one of you will be favored. That’s a bad way to start out a partnership.

And since that partnership won’t last forever, you need to plan for how you’ll dissolve it once you’re ready to retire. Phasing out slowly is the best option for all involved – it helps your long-time patients get comfortable with your partner and with the idea of you leaving, your partner gets to ease into being totally in charge, and you don’t have to give up working all at once.

Any plan should be focused on making sure that you don’t have to stop working before you’re ready. You created this practice and it’s your life’s work – it’s yours as long as you want it, and as long as you’re an asset rather than a liability. But at some point, your 50% stake will need to be passed on to your associate. The deal should be fair and also flexible. It benefits all parties involved.

Whatever happens, don’t fall into the trap of thinking there’s one right answer that works for everyone. The only right transition is a custom transition. Your situation is unique, and so is your associate’s. Your plan needs to reflect that, and serve the unique individual needs that each of you have.

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Topics: dental retirement, dental financial planning, business of dentistry, Tax Advisory

Reducing the Risks of a Partnership Failing: Part 1

Posted by Brogan Baxter on Fri, Mar 14, 2014

equal75% of new associates hired in dentistry never become a partner. There are a lot of reasons for that, but one of the primary ones is that many practices that hire fail to devise and implement a good transition strategy. Not enough preparation is done beforehand to make sure the hiring and the full transition process goes smoothly from the beginning.

The first step is to research every angle of the process. Answer four main questions before hiring an associate.

  1. Can you afford it? How many practices do you know who hired an associate who was gone in less than a year? Don’t bring someone in hoping your finances will improve. If you don’t have the money or your overhead cannot currently support the hire, the time isn’t right.
  2. How will the associate buy in? There has to be a carrot to motivate the associate. Triggers should be in place that activate the associate’s transition to partner, like time put in, a production goal, or a combination of the two.
  3. What happens to pay after that? Once the associate has bought in, they will need a pay jump since they will have a new big loan from their recent buy-in. You need to know already how much of a jump that’s going to be, and what’s going to happen to your salary as well.
  4. How will your stake be treated? The endgame is for you to retire. Full control then will be turned over to your new partner. You need to decide ahead of time at what price you’ll sell your remaining stake in the practice to your partner. You should also clarify when that’s going to happen, and what will trigger that sale.

It’s absolutely key to make sure the partnership is equitable. No 51-49% splits – the associate has to be treated as an executive from day one. With the massive debt today’s dental school graduates incur, you won’t be able to compete with corporate dentistry if you aren’t offering stable salary from the start so keep this in mind. They have to be treated as your equal as much as possible to make the transition smooth when you do eventually leave.

If done right, all of this planning will help your staff, patients, and revenue make it through the transition from you to someone else pretty cleanly. But if not, you’re likely to end up looking for a new associate.

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Topics: Practice Transition, dental retirement, dental financial planning, business of dentistry

The Top 10 Tips for a Successful Dental Practice Start-Up

Posted by Four Quadrants Advisory on Thu, Dec 19, 2013

diggerThis guest blog post was written by John Fiore, dental finance expert and Senior Vice President at Bank of America Practice Solutions.

With every chapter, every experience, and every challenge you will encounter in your dental career, there is opportunity. Take the opportunity to grow, the opportunity to learn, and the opportunity to avoid costly mistakes so frequently made by new practice owners before they even open their doors for business. Here are my top 10 tips to making your practice start-up experience a successful one.

1. Do a little homework and prepare yourself

During this recession and as the economy slowly rebuilds, it is my opinion that dental practices have resurfaced in good shape and overall failure rates for practices remain very low. However, practices occasionally do fail and when this occurs, it can be a life-defining disaster, both professionally and personally. There was a time not too long ago when you could build a practice from scratch and have the luxury of a consistently booked schedule of patients soon after your grand opening. I will tell you that this is rarely the case today. So, as soon as your mind is made up to become your own boss, start getting an idea of the unknowns that lie ahead. Speak with current practice owners to find out what particular challenges they faced, what they did to prevail, and what they would do differently today. Gather a useful amount of information and become comfortable with the upcoming challenges that you are likely to face.

2. Build a network of trusted advisors

From the day you decide to start a practice, you will be meeting many people. As you filter through all the advice and various relationships you will be establishing (or have already established), it is important that you position yourself with industry-specific advisors who will help you with the many crucial decisions you will be making for your start-up venture.

There are several trusted advisors that are vital to your project and in no particular order they are as follows:

Dental-specific Contractors: This is very important. Trying to save money by cutting corners with a general contractor who is not experienced in building out dental practices can lead to unnecessary overruns and possible frustration with your equipment specialist and architect. Dental specific contractors exist in every market in the U.S. and are easy to find. Your equipment specialist should know reputable contractors they have worked with in the past on other projects, and your state annual session usually includes dentalspecific advisors. Also, check with colleagues who have already opened their offices and may have valuable feedback about contractor performance.

Dental specific CPAs: As we know, a general dentist can do root canals, but an endodontist is highly recommended for more difficult procedures. Similar to a dental specialist in this situation is a dental-specific CPA for your practice. As with general contractors, there are thousands of general CPAs who would like to earn your business. In fact, you may already have a relationship with some of them. Though I’m not recommending you make a change from your current CPA, I would encourage a conversation with a dental-specific CPA who works with a minimum of 25 dental clients and can lend another perspective on the value of using specialized CPA services.

Dental Equipment Specialists: Quite often this group is looked upon as a source whose primary interest is selling you as much equipment as the lender will approve you for. In most cases, I have found that this is not true for the better equipment specialists. A good equipment specialist is truly looking out for your best interest and can be one of your most insightful advisors. Typically, equipment specialists are very tenured and plan on staying in the dental field for their entire careers. It is very important to these specialists that you are well-positioned as a start up to succeed because they plan to provide you with updated equipment and the latest technology for many years to come. As with your CPA, it is not uncommon to see dental practice owners maintain career-long relationships with trusted equipment specialists.

Dental-specific Lenders: Currently there is a large amount of interest in dental practice financing from a plethora of lenders including local, regional and national banks, money loan brokers and SBA lenders. You will find some lenders are very experienced with financing dental practice start-ups and others are simply general small business lenders. General small business lenders are typically looking to lend against the collateral in the transaction and not really interested in the “soft cost,” which includes your build out or tenant improvement and working capital. Dental-specific lenders who provide start-up financing are very familiar with the cost of your new project, which may run upward of $450,000 (and of which only a third is equipment costs). Working with a lender who understands the project breakdown is very important.

As your business grows, other dental-specific advisors might cross your path, which can play a major role with key business decisions. You may have a need for dentalfocused attorneys and practice management consultants who will help bring your practice to the next level. Practice management consultants can be an excellent source early in your practice plans and can assist with establishing internal control systems and personnel decisions. They are truly focused on helping you become and stay efficient while growing your practice.

3. Secure financing

Although over the past few years there has been a significant amount of press about how banks have pulled back with lending to small businesses, I have not seen this to be the case with dental-practice financing. There is no shortage of banks wanting to lend to dentists. However, you might find that your local bank and others are unfamiliar with the cost and funding allocation requirements for a start-up practice. Fortunately, there are many major lenders who are very familiar with your needs and are willing to provide you with the required funds. Also, make sure your loan decision isn’t based solely on interest rate. Although the rate is important in keeping your payments lower, it should only be one factor when deciding on a lender. Here are some other loan features to consider:

Loan Term: Similar to your home mortgage, you should consider the longest term available (i.e., 10-15 years). This will provide you with lower payments as your begin to grow your revenue stream. If your business does better than expected, you can always pay down your loan similar to your mortgage. Loans can typically be prepaid if you elect to do so after three to five years without a penalty.

Pre-payment: Loan pre-payment options will vary from lender to lender. As you build and open your dental practice, your loan pre-payment terms are less important in the earlier years and pre-paying your loan may become an option after your practice is no longer considered a start-up and is looked upon by lenders as an established practice. This occurs when you have demonstrated proven practice collections, your business revenue less your business expenses and personal expenses provides adequate cash flow, and the new loan you are considering is in your best interest or more attractive than your existing loan.

Loan Structure: The payment structure is crucial and by having a loan with graduated payments in the first two to four years provides breathing room and flexibility as your practice grows. Graduated payments can range from interest-only payments for six to 12 months to a tiered payment structure for up to three years.

Interest Rate: Rates can be fixed for the term or adjust with prime or other rate indexes. Although payments might be less with an adjustable rate, rates will eventually begin to rise, so locking in with a competitive fixed rate for the next seven to 15 years is your best solution.

Lender Service Levels: As a start-up, you will have immediate banking needs such as merchant (credit card) processing, direct deposit accounts, business credit cards, etc. During construction of a new practice, better dental-specific lenders have internal processes in place to pay the building contractor, equipment companies and other vendors that may require deposits and incremental payments. They will also make sure all disbursements are made as planned so you can stay on schedule.

4. Have a business plan

You will learn, if you haven’t already, how to present a treatment plan to a new or existing patient. You’ll want to be very specific with a comprehensive exam, diagnosis and a course of action involving quality care. Similarly, developing a plan for how you are going to run your business from A to Z is instrumental in the success of your practice. You can find business plan templates for your start-up dental practice from the ADA resource center, dental specific lenders, and possibly your state dental association.

5. Develop your business acumen

The one opportunity that comes to mind when I reflect on the worst economic downturn since the great depression is the need for new dental practice owners to develop business skills and acumen. We all know the lack of business curriculum that is taught in dental school. With this in mind, from the moment you graduate and become licensed, it is wise to make a personal commitment to allocate a certain amount of time to learning the business of dentistry. Ask your school professors for suggestions of other dentists you can speak with who are already running successful practices. Begin to explore what type of business model and practice philosophy you would like to incorporate in your practice. You might be surprised how a colleague or school alum who once had the same anxiety you have about starting a practice is willing to lend a hand and share successes. Remember, these contacts are already living the dream of practice ownership and can help you save time and money as you begin your journey. Other suggestions include attending practice management seminars in your area and downloading articles on the business of dentistry.

6. Maintain a high level of credit worthiness

This is really not a secret; I hope you already know how important your credit score is, both personally and professionally. A negative or low credit score can have a significant impact on qualifying for a practice loan, the amount of money you may qualify for and the interest rate you receive. If you are not sure what is currently reflected in your credit file and would like to obtain your credit score, you can go to www.myfico.com; or to obtain a free copy of your credit report, go to www.annualcreditreport.com. To inquire about a reported creditor on your credit bureau you can contact one of the major three reporting credit bureaus: www.equifax.com (800-685-1111), www.transunion.com (800-888-4213) or www.experian.com (888-397-3742).

7. Keep your debt load at a manageable level and don’t over-extend yourself

Visit the next dental trade show or speak with your colleagues and you will hear the current buzz in the industry about the amazing technology that exists today in the dental profession. I guarantee you will hear from the companies that sell such equipment about the value the latest technology will have on generating revenue in your practice and why you can’t live without it. While this may be true, you need to be very careful that you do not acquire equipment before you can justify the cost of such an acquisition. New technology can be very expensive and can be a burden on your cash-flow if you are not ready to optimize the use and see immediate revenue or expense savings. This is also true with equipping all your operatories right from the start. Typically a 1,500-square-foot office has room for four operatories with many dentists equipping two as a start-up, as there will be always be time later to equip your third or fourth room when your practice is at a level to support it.

8. Stay on budget

We have seen new dental start-up total cost range from $250,000 to $500,000 with an average cost of just less than $400,000. The total amount includes your landlord allowance (some landlords provide an allowance toward the build out), your construction costs (for a leased space), your equipment needs (dental and office hardware/software), dental supplies, office supplies and working capital (typically $75,000 to support your expenses while you see new patients and see insurance reimbursements). Once you are approved by a lender and your project begins, it is crucial that you and your team remain on track to finish your project within budget. It may be helpful to apply for a little more than you may be forecasting to allow for any unforeseen overruns that may occur while your office is being built. Lenders may accept a slight overage than original plans but an overrun of 10 percent or higher of your original amount may create concern from the lender, so try and stay on track.

9. Establish professional/practice goals

A goal is nothing more than a target that needs to be believable, achievable and measurable. Once a goal is established, the measureable component will help you stay focused and will force you to adjust and reinvent ways to achieve your goal along the way. Professional goals can include the number of new patients per week or month, number of hygiene appointments, amount of monthly production, collections, etc. Try and be disciplined, as only you are responsible for the overall performance of your business. A simple tool of having specific goals for you and your team might make the difference between success or challenges.

10. Maintain your associate position as you are growing your business

No one is more familiar with your debt load than you are as you begin your pursuit of practice ownership. Between your student loan debt, your car loan, your mortgage payment if you purchased a home (if not, rent can be as much as a mortgage), and now your practice debt, the numbers will seem enormous and it will be very important to maintain guaranteed (predictable) income after you open your practice and while you are building your practice revenue. Once your practice is built and opened for business, we have found that maintaining an outside associate position for two to three days per week helps you better predict cash flow and pay your bills while you are adding patients to your new practice. You may consider associating for up to three days per week and reduce your associating days as you add days to your own practice. This associate position will typically be in another town or city to avoid taking patients from the dentist you currently work for.

John Fiore is Senior Vice President at Bank of America Practice Solutions and has been entrenched primarily with dental practice financing since 1992. John has seen, first-hand, the key disciplines successful practice owners live by, why certain practices struggle and how crucial it is to be surrounded by the right set of resources to ensure a successful outcome.

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Topics: dental advisor, Practice Transition, business of dentistry

Create a Patient Referral Program

Posted by Four Quadrants Advisory on Thu, Dec 19, 2013

larryThis guest blog post was written by Larry M. Guzzardo, author and expert in practice management solutions.

Consider the type of patient you would like in your practice. Stop spending time putting out fires that consume valuable time and energy, with problem patients. Spend more time with your preferred patients and their friends. Birds of a feather really do flock together.

Patient surveys show that the majority of patients find out about dental practices from other friends who are already patients. This has consistently been the method of choice for patients to identify and locate a new dentist.

Traditionally, all professional relationships have been developed through personal contact. Your practice will not be any different. Just ask other health professionals such as your CPA or attorney. They know, all too well, the power of a well-placed referral.

Yes, it is true, advertising works. It’s just that it works with the wrong group of individuals. Anyone can create large volume if you give away dentistry at a discount or accept every patient who calls. It is far more rewarding to build a practice of patients who seek you out because they are looking for the unique dentistry you are trained to provide. Far, far more rewarding to have them curious about the problems you can solve for them, because their friend raved about you and your staff.

If you would like to build a practice upon the referrals of your most preferred-type patients, well then, just ask them to refer their friends. Take these action steps to get started:

  • Get comfortable with the idea yourself.
  • Discuss the idea with the staff at your next staff meeting.
  • Make a list of the characteristics of your most preferred-type patient. Get agreement on what you are looking for.
  • Practice with the staff ways you can ask for a referral that will be comfortable for them. Help them to create an outline of what they would like to say without making them remember a script.
  • Review the schedule each day and decide what patient you would like to ask for a referral.
  • Ask every staff member to select a patient.
  • Track how many patients are asked.
  • Document the date and who asked.
  • Track what patient referred the most new patients.
  • Set a good example. Do not be surprised when the staff follows suit after watching the doctor take the lead asking for referrals.

Look for opportunities to ask for a referral, such as after the patient has complimented the practice. Be proactive. Create opportunities that lead to compliments. During a post-treatment evaluation of the patient’s progress, ask them if you have been able to meet with their expectations.

“Ms. Jones, I have to admit, we really enjoy having you here in our practice as a patient. Have we lived up to your expectations?”

“Gosh Doctor, you and your staff have been fantastic. I couldn’t be more pleased!”

“Ms. Jones, we’re glad you feel that way. We work hard to create a rewarding experience for all our patients. Matter of fact, if you have any friends who are looking to have any dentistry done, and want to tell them about us, we would be happy to take just as good care of them as we have of you.”

Let patients know they are special in your practice and a referral from them would be considered a compliment. Patients like to be acknowledged and given permission to refer. For all they know, you have all the patients you can handle. Patients rarely make a referral based on a logical point of view, more often than not; their decision to refer will be based purely on emotion.

What evokes or influences emotion:

  • The first impression of your office – Your personal appearance and the appearance of the office.
  • The history your client brings; IE: stereotypes, expectations, past experiences.
  • Snap judgments or biases by patients about certain procedures/ services w/ consideration of all the evidence.
  • Reliance on irrelevant information.

Patients will feel positive about you when they experience gratitude, acceptance, happiness, relief or excitement. Emotions such as anger, disappointment, sadness, disgust, hurt, frustration, fear, and confusion have the patient feel negative about you.

When patients feel good about themselves because of the experience they had with you or with your office, they tell others. The ensuing reputation that develops keeps your name where it should be. Social pressure has a stronger influence on people than mass media.

Positive emotions are around when:

• We help the patient “fit in,” belong, satisfy long burning desires.
• We tap onto core values held by the patient.
• We present a solution to a problem.
• We surprise them with something extra.
• The procedure makes the patient feel important.
• The patient feels competent.
• We show genuine concern for them.
• They decide on what makes them feel better. (Not you or us.)
• Accepting treatment has some excitement built into it.
• We are sincere in our dealings with them.

Your objective should be to create an experience that so overwhelms your patients with its positive side that small problems are insignificant. You cannot expect a patient to say anything about your practice if you simply meet their basic expectations to be greeted by name, seen on time, treated with courtesy, compliant with OSHA regulations, provide a pain-free experience, office to be clean and, up-to-date equipment and furniture.

Are all relationships with the patient and each staff member healthy? Friendliness alone is not excellent service. All staff must be:

  • well-trained in their jobs
  • confident
  • communicative
  • reliable
  • courteous
  • credible
  • energetic
  • knowledgeable
  • attentive and caring
  • an attitude of “I can do it for you now”

What systems are in place to provide responsiveness (availability)? What’s your ability to solve a patient’s problem – help them get what they desire? Can you create value for the fee paid? Can you help the patient understand what they are paying for and what makes the procedure so expensive? Can patients get answers to questions?

Develop a referral base.

1. Create a list of patients, specialists, and other professionals who currently refer to the practice now.

2. Create a list of specialists and other professionals who do not currently refer to the practice but know you or about you and can talk to others. Identify what these individuals should know about you. Create a strategy to keep them up-to-date.

3. Consider what information should be available for patients to help build your reputation.

4. Identify patients who are always into new things, the innovators, ask about what they are trying or would like to try. Then have samples available for them to use and give to others.

5. Focus on those who have referred before.

6. When you take up a suggestion from someone, tell everyone else, for example mail an announcement letter.

7. Ask vendors if there are ways you can get their information to patients. Also, get them to help you with names or contacts.

8. Provide service to someone influential – even one of your best referral sources, specialist or member of their staff. Make the offer even if they never take you up on it. Let well-known people like your pastor, rabbi, or preacher know, that as a favor to them, you would donate your services to someone in need if they asked
you. To pay back this favor, this “well-known” person will quietly promote you on their own.

9. Find out what group (professional or social) your best patients belong to – offer to make a presentation at their next meeting or help them with a donation.

10. Always follow-up quickly with good referrals sources after their last interaction or appointment with you. Send something about what was discussed, like an article or brochure, or even a short thank-you note.

11. Be prepared to discuss what is going on in dentistry. Provide a comparison of procedures or products.

12. Be seen as a leader among your peers.

13. Network with companies or organizations through current patients. Offer to help those new to the area, speak to the Human Resource Manager, provide emergency services to select groups (become the doctor of record).

14. Every patient should be given a Post Treatment Evaluation.

15. Select patients every day to be given a “TLC Call” after difficult treatment.

16. Make an attempt to learn why a patient has left the practice.

17. Talk with personal trainers, spa owners, dieticians, and healthcare educators.

They always want to know how their ideas work. Find out what they promote and see how it relates to what you do. You can also provide them with information they can give to others. Become a resource for them, a person to learn from.

It is not enough for you to be good at what you do. You must also be good at promoting what you do. There is no amount of money to be spent that can influence a potential patient, in the same way, as a testimonial from a satisfied patient with first hand experience of what you really can do.

Larry M. Guzzardo who has co-authored two books, “Powerful Practice” and “Getting Things Done” conducts in-office practice management consultations exclusively for dentists to enhance trust, create organization, increase profits, and the development of patient relationships that last. Larry has presented numerous workshops including, “Winning Patient Acceptance,” “Business Communication Systems,” and “The Leadership Challenge.” For information call 800-782-5770 or visitwww.larrymguzzardo.com

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Topics: Financial Planning, business of dentistry

Renegotiating Dental Insurance Contracts

Posted by Four Quadrants Advisory on Thu, Dec 19, 2013

terriThis guest blog post is written by Terri Bradley, an expert in dental practice management consulting.

Imagine that you were happy with your insurance contracts. Imagine that your office had the perfect fee schedule, that when patients presented you with their insurance cards you were happy to see who they were contracted with. Imagine! The reality is, of course, that is rarely the case. What many practices do not realize, however is that it is never too late to renegotiate your office’s fee schedule, or re-evaluate your insurance contracts.

In fact, renegotiating can be both beneficial andprofitable to your practice, and is not as difficult – even impossible – as you might think. In this article, I’ll give you some tips and advice on:

  • what questions to ask before a renegotiation
  • what to look for to obtain a more favorable fee schedule
  • navigating the confusing aspects of insurance contracts/negotiation

Begin by answering some important questions about the insurance carriers your office is contracted with. For instance, when was the fee schedule last negotiated? I recommend asking for a new fee schedule annually, as it gives your office a chance to receive higher reimbursement on some of your most common procedures. However, keep in mind, you can ask at any time, and should if you feel your current reimbursement is inadequate or out-of-date.

You should also be looking at the billing guidelines for your carriers and the volume of patients per carrier, to see which are the most profitable to your practice. By answering these questions up front, you are well on your way to beginning a successful renegotiation of your contracts.

When the time comes for you to renegotiate, there are a few things to keep in mind that will ensure you receive a more favorable fee schedule. For example, if you are a specialist, or if there is not a lot of competition in your area and a carrier is looking to become contracted with your specialty, carriers may be more willing to give you a higher fee schedule.

Another factor that can help in renegotiation is your relationship to the carrier. If it’s good, carrier representatives will be more willing to participate in the give-and-take of negotiation, and ultimately agree to higher fees. When renegotiating, it also helps to focus on the most common procedures done in your office. This way, you get what you really want for your practice: a better fee schedule on the procedures that make up the bulk of your office’s income.

Understanding “rental” insurance carriers, and how to negotiate with them

It’s important, too, to examine not only which insurance companies you are contracted with but which ones you are billing. Many carriers rent out their contracts to other carriers, thus allowing people contracted with those others to use provider networks, i.e. your office.

For example, if your office is contracted with ABC Insurance, but they have rented out their contracts to XYZ Insurance, you may be billing XYZ Insurance while being contracted with ABC Insurance. There are carriers who rent their contracts out to dozens of other carriers. While the contracts are rented out, your office must accept the rental carriers and their fee schedules. Who the carriers rent out to can change frequently, sometimes monthly, thereby changing which carriers your office is contracted with and whose insurance you must accept.

The renting of contracts can be complicated, so be sure to keep track of which companies you are billing and which you are actually contracted with. If you find yourself billing one company more than the one you are contracted with, it may be beneficial to remove the “middle man” and contract directly with the other insurance carrier (in this example XYZ Insurance). Rental contracts are a key issue when renegotiating your fee schedule, so be sure to carefully examine which carriers you are billing the most in order to get the best fee schedule for your practice.

Remember, renegotiating your fee schedule is never impossible, and in fact conducting annual re-negotiations is beneficial and profitable to your practice. Understanding how your insurance contracts work, and knowing what you want out of them, gives you a solid footing to begin re-negotiation. Though it can seem complicated, renegotiating fee schedules is something every office should do and can benefit from.

Terri Bradley brings 22 years of experience – ranging from Practice Administrator of a multi-doctor specialist office to Practice Management Consultant. She is a ‘go to’ resource for comprehensive consulting, dental and medical billing and cross coding, and insurance billing and renegotiation. She specializes in consulting for Oral and Maxillofacial Surgery practices, and presents OMS coding and billing workshops and courses for private practices around the country.

Terri is a member of the prestigious Academy of Dental Management Consultants, is certified with Human Resources Specialists Bent Ericksen & Associates in both Employee Law Compliance and Integrated Performance Management (IPM), and presents to PracticeWorks User Groups regularly.

Learn more about Terri’s speaking engagements and webinar series at Terri Bradley Consulting.

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Topics: Financial Planning, business of dentistry

Telephone Skills in Dentistry: What You Don't Say Means More

Posted by Four Quadrants Advisory on Thu, Dec 19, 2013

larryThis guest blog post was written by Larry M. Guzzardo, author and expert in practice management solutions.

Dentistry is part art, part science, but all about people. In dental school, the “people” part of the equation was overlooked, and it takes a number of years in practice to realize it’s importance. Dentistry is a service business, and communication is paramount to its success. Communication, by definition, is “the exchange of ideas, messages, or information.” It is not tangible. In fact, communication is one of the most dynamic elements of the human condition. Effective communication begins with listening and opens the door to understanding.

You’ve heard many times before, we come into this world with two ears and one mouth and we should use them in that same proportion. In conversation, this simply means that you should listen twice as much as you talk if you want to get a reputation for being an enjoyable person with whom to converse.

The art of a good telephone conversation centers very much on your ability to ask questions and to listen attentively to the answers. You can lace the conversation with your insights, ideas, and opinions, but you perfect the art and skill of conversation by perfecting the art and skill of asking good, well-worded questions that direct the conversation and give other people an opportunity to express themselves. Ask open-ended questions that cannot be answered with a simple “yes” or “no.” Open-ended questions encourage your patients to expand on thoughts and comments. And one question will lead to another. You can ask open-ended questions almost endlessly, drawing out of the caller everything that he or she has to say.

In order to be an excellent conversationalist, you must resist the urge to dominate the discussion. The very best conversationalists seem to be low-key, easy-going, cheerful, and genuinely interested in the other person. They seem to be quite content to listen when other people are talking and they make their own contributions short and to the point.

In fact, good conversation has an easy ebb and flow, like the tide coming in and going out. Whether it is between two people or among several, the conversation should shift back and forth, with each person getting an opportunity to talk. Conversation in this sense is like a ball that is tossed from person to person, with no one holding on to it for very long. Listening is the most important of all skills for successful conversation. Many people are very poor listeners. Since everyone enjoys talking, it takes a real effort to practice the fundamentals of excellent listening and to make them a habit.

There are the four major rules for active listening in a conversation. They are powerful, practical and proven techniques to increase your influence with other people dramatically. The first key to effective listening is for you to listen attentively, without interruptions. When you pay close attention to another person, you convey to that person that you very much value what he or she has to say. Individuals you are speaking to find this very flattering, and they will respond warmly to your attentiveness.

The major reason why most people are poor listeners is that they are busy preparing a reply while the other person is still speaking. In fact, they are not even listening closely to what the other person is saying. We act very much like boxers waiting for the other person to let their guard down so they can jump in with a quick verbal punch and take over the conversation. In addition to listening without interrupting, you should give the speaker a few verbal cues every now and then to indicate you are listening. Be active rather than passive. Indicate that you are totally engaged in the conversation. Say things like; “Oh”; “Hmm”; or “I see”. The second key to effective listening is to pause before replying. A short pause, of three to five seconds, is a very classy thing to do in a conversation. When you pause, you accomplish three goals simultaneously.

First, you avoid running the risk of interrupting if the other person is just catching his or her breath before continuing. Second, you show the other person that you are giving careful consideration to his or her words by not jumping in with your own comments at the earliest opportunity. The third benefit of pausing is that you will actually hear the other person better. His or her words will soak into a deeper level of your mind and you will understand what he or she is saying with greater clarity. By pausing, you mark yourself as a brilliant conversationalist.

The third key to effective listening is to question for clarification. Never assume that you understand what the person is saying or trying to say. Instead, ask, “Let me see if I understand you correctly. Can you explain that again?” This is the most powerful question I’ve ever learned for controlling a conversation. It is almost impossible not to answer. When you ask, “Can you explain that again?” the other person cannot stop himself or herself from answering more extensively. You can then follow up with other open-ended questions and keep the conversation rolling along. The fourth key to effective listening is to paraphrase the speaker’s words in your own words. Start like this; “Let me see if I’ve got this right. What you’re saying is . . .”

By paraphrasing the speaker’s words, you demonstrate in no uncertain terms that you are genuinely paying attention and making every effort to understand his or her thoughts or feelings. And the great thing is, when you practice effective listening, other people will begin to find you fascinating. They will want to be around you. They will feel relaxed and happy when they are in contact with you.

The reason why listening is such a powerful tool in developing the art and skill of conversation, especially on the telephone, is because listening builds trust. The more you listen to another person, the more he or she trusts you and believes in you.

Listening also builds self-esteem. When you listen attentively to another person, his or her self-esteem will naturally increase. Finally, listening builds self-discipline in the listener. Because your mind can process words at 500-600 words per minute, and we can only talk at about 150 words per minute, it takes a real effort to keep your attention focused on another person’s words. If you do not practice self-discipline in conversation, your mind will wander in a hundred different directions. The more you work at paying close attention to what the other person is saying, the more self-disciplined you will become. In other words, by learning to listen well, you actually develop your own character, your own personality, and become more like-able.

These are my best pointers to help you listen better on the telephone.

Stay focused. Prevent yourself from being distracted by other staff members or external noises and concentrate on what your caller is saying.

Detect emotions. Listen to the emotion in your caller’s voice. Does it match or endorse the words they are using?

Ask questions. Ask questions to gain more information on points you need to clarify.

Don’t interrupt. You listen more effectively when you’re not talking, so refrain from interrupting your caller. Let them finish what they are saying; interruptions may break their train of thought.

Don’t pre-empt. Avoid pre-empting what your caller is going to say, chances are you will be wrong and miss some of the content of their conversation.

Paraphrase key facts. Paraphrase and reflect back to check you have heard the key facts and content of the caller’s conversation correctly. It also lets the caller know you have understood them. Statements such as “What I’m hearing is…” and “Sounds like you are saying…” are great ways to reflect back and paraphrase.

Pen and paper handy. Have a pen and paper on hand and get into the habit of making short quick references to any questions you want to ask or points you wish to raise or comment on. When your caller has finished speaking refer back to your notes and take action. If you are thinking of answers and responses while the caller is speaking, you are not listening.

Say it again. If you are having difficulty listening, make the necessary adjustments. You might say, “I’m afraid I missed that last point. Please repeat that for me.”

Watch the stereotypes. Avoid stereotyping individuals by making assumptions about how you expect them to act and what you expect them to say. This will bias your listening.

Be aware of the barriers to listening

  • We think we’re right and the other person is wrong
  • We feel we have to provide help right away
  • We prefer to talk rather than listen
  • We are waiting for gaps or pauses to jump in with our response

Larry M. Guzzardo who has co-authored two books, “Powerful Practice” and “Getting Things Done” conducts in-office practice management consultations exclusively for dentists to enhance trust, create organization, increase profits, and to develop patient relationships that last. Larry has presented numerous workshops including, “Winning Patient Acceptance,” “Business Communication Systems,” and “The Leadership Challenge.” Larry can be reached at 800-782-5770 or Larry@larrymguzzardo.com if you have further questions.

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Topics: Financial Planning, business of dentistry