Monday, August 26, 2013

“What Should Our Hygiene Production Goal Be?”

When I start working with a new client, I start by analyzing their dental hygiene business and provide an overview of what their opportunity for growth is.  One of the main questions I get from these clients is:  “How do you determine what our Hygiene Production goals should be?”  I have found most dental practices will set a random number on what they feel is in line with industry standards. However, these industry standards are usually based on inconsistent data. For example: The industry standards do not take into consideration if there are different fee schedules, or if the numbers are based on the gross revenue vs. adjusted revenue. Also consider, some offices do not credit the hygiene team with the same procedures as the others.

Your hygiene production goals need to be based on the needs of your specific practice, and your practice alone. And keep in mind, you can use industry information as a comparison; but it is important to understand the variables that exist behind those figures.

Here is the simplest way to figure out your Hygiene Production Goals.  In fact, I would encourage you to develop your annual plan based on these figures, so you can ensure you are targeting the right goals each day, week and month.

What is the breakeven point for hygiene?  Your breakeven point is what you need your hygiene team to produce each month to cover your hygiene overhead, and provide a 30% profit margin.  As you may recall from my earlier blogs, your hygiene team should produce 3-3.5 times their salary and benefits.  With that being said, the easiest ways to figure out your break-even amount is to take your hygiene compensation, plus the all benefits paid to your hygiene team; and then multiply that total by 3.5. If you are unsure of the amount of benefits paid, you can estimate it is around 20% of your total hygiene compensation.  (20% is based on the current benefit trends found in most dental groups across the country.)

Here is an example:

You pay your dental hygienist $40/hour.  In September, she will work 8 hours/day for 20 days; making her total compensation $6400/for the month.  If you add in benefits at 20%; your total hygiene compensation and benefit expense will be $7680.

Now, take your total hygiene expense $7680 and multiply it by 3.5.  This will provide you the total revenue needed to provide a break even, yet profitable margin for your practice.  In this example, this hygienist must produce a minimum of $26,880, or $168.00/hour. 

Please note, the $26,880 needs to be the money youcan collect.  This is especially important for the groups that accept multiple PPO plans.

Look at historical data.  Once you have your breakeven or baseline production goal identified, you should look at your production trends from the past year.  If your hygiene team is producing above your break-even point, then you will rely on your historical data. 

I like to look at the previous calendar year when looking at historical data.  As you know, there are certain months that trend lower than others; and this data is extremely helpful in setting realistic goals.

Set your goals with a little stretch.  In fact, I would encourage you to plan for a minimum 3% organic growth each year.  This growth should not include the fee schedule increase.  But it may include an increase in hours, and of course production per hour.

Taking time to set accurate and meaningful production goals for your hygiene team will help you confidently hold your team accountable for what you know the business needs.  Remember, hygiene is intended to bring you a healthy profit margin to your practice.

Need help setting your production goals?   Please email to set up a strategy call.

Monday, August 12, 2013

Newest Member of the Capital Study Club Extended Family!

Megan Avery Paige

Dr. Mike Montalbano sent along information on this local LVI event. This is an opportunity to learn more about neuromuscular dentistry right here in Baton Rouge.