Evaluating a practice management company

We have been away for several months because we took advantage of an opportunity to get deeply involved with a group practice that had some needs for which our services were a good fit.  

Far more interesting are the reasons that the opportunity came about.  This practice had been affiliated with a practice management company (also known as a MSO or DMSO).  At some point in the middle of last year, the management company encountered some financial issues and stopped paying a number of bills.  What started as a delay to pay for what I will term “luxury” type services – services that could be eliminated in difficult times – evolved into failure to pay the most basic of invoices on things like supplies and rent (rent!).  

If you are a practice looking for an organization to handle the business management of your practice, you obviously need to look first at the financial arrangement and time commitment laid out in the contract, but here are some areas of concern/potential red flags:

To share or not to share

One of the most frequent questions I get from owner doctors relates to whether or not critical information should be shared with staff.  The argument usually goes something along the lines of the following: “If I show my income statement to my office manager – who is making $20 per hour—and they see that the net profit in the practice is $250,000, they’ll wonder why I am making $250,000 per year while they are making $40,000.  I’ll either get constant requests for a raise or I’ll have to replace my office manager.”  

On the other hand, you can’t expect a manager or key person to make important decisions for your practice while flying blind.  If you ask a person to handle your purchasing, you cannot reasonably expect a person to buy supplies without knowing the budget, historical spending or important product costs.  If you make decisions without information, you’re pretty much asking for bad decisions.  Also, if you are too guarded with information, the people in the office may think you are hiding something shady.  

Here are some guidelines for information sharing:

Practice rescue: Bringing the patients back

When we last left our story, we had a problem with the front desk staff turning off patients by being dismissive and generally unpleasant.  The doctor was busy in the back trying to treat patients and tended to steer clear of the front desk in his quest to provide the best patient care possible.

Very clearly, our first task was to address these individuals who probably had skills applicable to other areas, but it appeared that making folks feel at home was not one of those skills.  Seemingly, the most obvious solution would be to simply terminate these 3 people and replace them with others who had more of a friendly demeanor about them.  

As a general rule, I do not enjoy firing people nor do I ever look to that as a first solution to a problem.  Personally, I've been fired without having the chance to make a situation right, and it sucks.  In addition, these people had experience in the practice and may have had skills applicable elsewhere.  We’ve dealt with a number of staff people who aren’t the super friendly type when patients walk in the door, but may be absolute superstars when it comes to financial, technological or receivables matters.  That should definitely be explored.

The conversation with the front desk staff began very frankly with a discussion of what we had heard and observed within the office.  That was followed by the standard denials and pushback.  That’s never an issue.  No one likes to hear that they are considered to be the source of a problem, but once we let the dust settle a bit, we were able to get into a discussion of the problems.

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Practice rescue: Where did all the patients go?

One of the most perplexing problems for any practice is one in which new patient flow was strong for a period of time and now that patient flow has steadily or suddenly dried up.  

From my perspective, this is even more challenging than the office that throws open its doors and no one shows up from day one.  In that case, you need to change everything up and try a fresh approach.  In the case of a declining practice, you are tempted to hold onto what worked for the practice in the past.  Maybe that’s a good idea and maybe it isn’t.  Figuring out what to change and what to keep in place is a challenging exercise.

To discuss this problem, I’d like to introduce a orthodontic practice that I’ve worked with recently.  In the late 2000’s the practice was humming along nicely signing 20-25 new patients per month.  In 2010, that number dropped to 15-20, and by 2012, the office was consistently under 10 new patients per month. 

In mid 2013, results weren’t getting better so our group took a look at things.  Here are some details on our practice rescue:

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Practice rescue: Steps to start fixing a failing practice

Today, we kick off a recurring series that we like to call “practice rescue.”  In this segment, we discuss stories and lessons from practices that have been struggling to the point of potentially shutting down or downsizing substantially and the steps we have taken to turn things around.  

While we fully recognize that by the time we get to some practices, they have passed the point of rescue, or in some cases, the solutions and/or personalities may not be a great fit.  What you get there is an unsuccessful or laterally moving mess.  And in the coming posts, we are certainly planning to discuss some of those.

In the majority of cases, however, opportunities can be found and grabbed or weaknesses can be rectified.  Then one morning, you take a look at results and you have the makings of a successful, happy practice.

To start, we’d like to discuss some of the key principles employed in effecting a practice rescue.  I am not outright suggesting that anyone use this as a path to implementing their own practice rescue, but if you wish to do so, so be it.

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Your new office: less cost, better results

In our last post, we left off with the question of how, in this day and age, with the level of competition that exists for new patients, how can I possibly keep the cost of construction and equipment under $500,000 - $600,000?  

Here, we discuss some methodologies for you to accomplish just that task. Now, by no means do we intend to suggest that you somehow cut corners or have an office that is less than acceptable.  Nor are we suggesting that you have some bleak, stark office that resembles the inside of an asylum.  

Keep in mind that if you start 20 patients per month in a more expensive location, your return on investment and ability to repay is substantially lower than if you spent 40% less on the facility and started 18 patients per month.

Here are some things we’ve seen over the years that help to keep cost under control while allowing to create a professional, inviting environment for patients.

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Getting your new patients to show up

As we mentioned in our last post, one key to getting a patient to show up for his or her new patient appointment is to limit the time between the call for the appointment and the actual appointment date.  After 7 days, potential patients begin to get antsy and look elsewhere for a provider of services.  

Sure, in a perfect world, it would be nice to tell every potential new patient, “Hey come on in today.  We’ll see you whenever you get here.”  And if you happen to have a nonpatient hole in your schedule, you should certainly try to get that space filled with an interested consult.  Of course, the world is not perfect and the reality is that you have days that are full of patients eager to see you.  Simply fitting in an appointment as vital and time consuming as a consult just isn’t always doable. 

So what to do.  Here are some potential methods to ease that backlog:

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New patient consultations: how long is too long to wait for an appointment date?

In doing some deeper analysis on data in the US and abroad, we looked more closely at the percentage of patients that show up for their consultation appointments (i.e. the show up rate) and the percentage of consultations that actually start treatment (i.e. the batting average). 

Intuitively, we would guess that certain events would cause a patient to be more or less likely to show up for his or her appointment and then sign a contract after going through a consultation.  Specifically, if a patient calls for a consultation appointment and is scheduled to be seen that same day, the chances of that patient showing up are much greater than if the patient’s appointment got scheduled 6 months from the date of the call.  Pretty simple, right?  If you make someone wait 6 months for an appointment, they will probably find another provider.  Even if you are a major star in the industry, folks want to get started when they want to get started.

But exactly how quickly do things drop off when it comes to the time a patient has to wait for a new patient appointment.  Like banana left in the refrigerator, things tend to go downhill pretty fast.  Here are some specifics:

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3 tips for hiring and training to maximize staff performance

Unless you’ve hired James Bond, no member of your team is great at everything.  Running your business takes a wide range of skills and finding that absolutely perfect person to handle every single thing is damn near impossible.  Marketing talent may come at the expense of skills with collecting money from past dues.  

We recently had one office manager who had years of experience in the dental field.  She was outstanding in building relationships with patients, handling billing disputes and staying on top of the day to day glitches that befall every office.  But this person did not have a comfort level with the latest tech (like the nuances of digital x-rays) and did not want to push the practice’s social media efforts.  

Clearly, the solution here is not to terminate such a valuable person.  Rather, the answer is to complement the person’s skill set with either the other people or systems.  Note that I did not say to hire someone just because that person may have a skill that no one else has.  Your first consideration priority needs to be on having a properly sized staff.  

Let’s look at some of the considerations in ensuring that your staff has complementary skills.

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Find the right person for the job via a test

In our last post, we discussed the qualities you might want to find in your office manager.  This begs the obvious question of “how do I determine up front, whether or not a candidate for the job has the skills I seek?”  The skills could be the ones we discussed earlier or a skill set that you find to be appropriate for your practice. 

The classic solutions are rather limited in their benefit.  Anyone can fluff a resume and interview questions elicit only so much information.  A short trial work period is usually impractical, especially for an office manager who has to be able to be productive from day 1.  You cannot lose valuable patient trust or potential new patients while someone is in the trial phase (note: this may work better for an entry level position less critical for the daily operation of your practice).  

Here’s one oft-used solution that has provided substantial benefit to us in the past, no matter what the available position or required skill set: a test.  With a test, you provide a standard set of written or oral questions that the interviewee can respond to orally or in writing. For us and our practices, the resume is usually the first hurdle.  The number of candidates can be narrowed substantially from the resumes.  Those who make that cut will get the test.

Some ideas for setting up your test:

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3 ways to improve your new patient show up rate

In our last post, we discussed the useful number known as the conversion rate.  One component of that conversion rate relates to patients who have made an appointment, but do not show up for that appointment.  In our scheme, the percentage of the patients that show up for their new patient consultation is known as the show up rate.  Like the conversion rate, the computation is very simple: take the number of patients that showed up for a new patient appointment divided by the number that made a new patient appointment for that period.

Like the conversion rate, this number will result in a percentage between 0 and 100 (if the number is greater than 100%, you probably have an issue with the process that computes this number).  Also like the conversion rate, we’re concerned with the trend and performance over time.  If your show up rate is 80% for 6 months straight, drops to 40% in one month and then goes right back to 80%, we’ll look at that one aberrant month, but not spend too much time stressing about it.

In a lot of ways, getting a patient to show up for that first appointment represents the last major hurdle in getting a patient into your system.  

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Turn old inquiries into new patients

As we progress toward the end of the year and demand begins to decline into the abyss of the holiday season, you are probably looking for source of potential new patients – probably not for the rest of this year, but certainly as we head into the new year.  A recent post discussed the fact that generating fresh demand from patients is extremely difficult at this time of year, but most practices miss out on a hidden treasure trove of potential new patients.

These potential patients are essentially any patients that have made any type of contact with you in the past, but for whatever reason, did not sign up with you.  Let’s take a look at these patients and some ideas for marketing to them:

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Marketing Monday: Positioning your practice for success

In a previous post to Marketing Monday Bart did an excellent job of identifying the most attractive segment of the orthodontic market.  In his blog post Bart pointed out that through extensive research and real world experience working mothers aged 35-45 years old is the best segment of the market to focus your advertising and promotional efforts.

In a much broader perspective identifying the target market is one part of an overall marketing plan.  Technically speaking developing a marketing plan is a 6 step process resulting in a plan that effectively communicates the value of your services to customers, builds a relationship with your customers and differentiates your organization from competitors.  The most critical step in the marketing planning process occurs in step 3; segmentation, targeting and positioning (STP). 

Marketing Monday: Monthly payment down, profits up

         Despite the occasional positive economic news out there, the world economy still is not flourishing.  Growth in the US is still slow and uneven.  Europe is getting its house in order.  Growth in China and India have generally slowed.  And if you are located in a place with a thriving economy, your practice growth is still potentially limited by competition.
  

So what can a practice do to achieve material long term growth in profit without investing funds in a potentially expensive and uncertain marketing campaign on electronic media?  Reduce your monthly fee and watch profits grow.

Introducing the MPE Tool Kit

Any good engine needs a set of technicians and tools to run smoothly. To this point, we’ve given you some insight and data from the technicians. Now, it’s time to bring out the tools. Today, we officially introduce the MPE Toolkit to help you improve results if they are where they are not where you want them to be or to give you a hand in taking results to another level if things are good, but could be better. Today, we will re-introduce one of the tools and introduce a new one. Over the next several weeks, we’ll add new ones to the kit. As always, if you have an idea for a new one or a suggestion as to how we can improve the current ones, please let us know. Check out the new set of links to the right. We’ll keep the links to our toolkit items there and add to the set as we introduce new tools.

Want patients? Here's who you need to impress.

In today’s exciting Marketing Monday installment, we discuss a fundamental concept underlying your marketing and how you design the business side of your practice.  You cannot advertise, market or effectively do business without knowing to whom you are directing your marketing or your services.  In sum, who is your target market?  Who will be the people that make decisions about whether or not to utilize your service and what factors push them to selecting one service provider over another?  This doesn’t affect just marketing.  I taught a small business startup class and in the 10 week period covering a broad range of topics, we discussed knowing the target market in about 8 of them.

In today’s post, we answer the question, “Who is my target market?”

Case study: turning production into collections

A short case study involving a common problem for practices.  Your production in a practice is a certain amount, say $80,000 per month.  If you maintain that performance over time, you would reasonably expect to collect somewhere near $80,000 on a monthly basis.  What do you do if those numbers don't match up?  Perhaps this illustrative case study can give you some helpful information.

Dateline: Milwaukee, Wisconsin

The situation: A 3 office practice generating $130,000 per month in new patient contracts was collecting $70,000 per month.  Of the contracts being signed, about half of that was turning into collections.  Clearly, this was not acceptable to

Marketing Monday: The most wonderful time of the year

As you probably know, in the orthodontic business, there's a lot of seasonality.  In other words, new patient demand tends to be substantially higher during certain parts of the year than others.  And clearly, the peak points tend to come when children are out of school for an extended period and have available time to be seen for lengthier appointments like consultations and initial bandings.  And children tend to be out of school for those extended periods during spring break and summertime (there's also a bump for a lot of practices during Orthodontic Health Month in October, but that is for another day).  Even though children are out of school during the holidays toward the end of the year, household finances tend to be geared toward holiday shopping and activities are pointed toward holiday festivities.  Not good times for new patient contracts.  Not good times at all.

If we turn our focus to the summer period and examine it even further, NOW is the prime part of the prime season for signing new patients.  Usually, in early June, right after school lets out for summer, families take vacations, enjoy quality time, make divorce related-arrangements or engage in other family-related matters.  As a result, historically, we have not seen a substantial increase in June new patient contracts  when compared with other months for a given practice.  But, as June expires, so do those family obligations.  That means that the summer selling season is upon us.  Now, you may say, "Isn't this post coming a bit late?  Haven't all the patients who are going to sign a contract already made new patient appointments in June, July or August?"  The answer is no.  Remember from last Marketing Monday that patients most typically want to be seen within 14 days maximum.  Those that haven't been seen are probably looking to move on if a better offer arises.  Plus, quite a number of people haven't sat down and made that appointment yet.  Here's what you need to be doing to take advantage of the opportunities presented during this important time of year:

Podcast 1 - Taming the beast: managing your employee costs

Here at MyPracticeEngine, we like to bring you information in a variety of ways.  One such is the podcast.  In this particular discussion, we discuss what is generally the largest, most significant cost in a dental or orthodontic practice: employee costs.  Within the verbal goodness, we discuss what makes up employee costs, how to tell whether or not your employee costs are too high given the size of your practice and techniques -- not including firing people -- to bring things under control if costs are too high.

Enjoy the podcast and let us know if you have any comments, questions or suggestions for future topics.

The 5 most important numbers to know

 To expand on item #1 from our post on the importance of information in your practice, here are the 5 most important values we have seen that drive success in dental and orthodontic practices:

1    Collections – No matter how you practice, the end result is collecting money from patients and insurance companies.  If you do great work, sign lots of patients and don’t collect the funds, you will end up with lots of good memories when being evicted from your office.  As such, ensuring that you are paid for your efforts deserves your attention.