Expense Series Part 2

Without a doubt, the costs associated with employing staff and hygienists are the single biggest operating expenses that a practice will have, in fact, staff and hygiene costs on average are just about 31% of collections for a general dentist in the Portland area. So how do you know if your staff costs are in line?

Staff Costs

Before answering that question there are some things that I would like to address and that I like to adjust for before coming to any conclusions. The first is that for the sake of this entry, I am defining staff costs as wages and benefits paid to the entire practice staff (front office, assistants, and hygienists). The adjustments to be made are typically for family members or other employees being paid through the practice that wouldn’t be qualified as “practice staff” (i.e. adjustments for, personal assistants, marketing personnel, janitorial hours, etc). If you have these wages in your practice it is important to adjust for them as they are typically not included in practice surveys.

After we have adjusted your staff costs to achieve a true “Apples to Apples” comparison, you are then able to see if your numbers fall in line to the market averages of 31%. If your numbers are below this level some important questions to ask yourself are:

  • How qualified are my employees? If you are lucky enough to have found some all-star employee’s, you might find that one person in your office is able to do the work that it takes one and a half or even two in another practice.
  • Are there current job duties that are not being performed because of time restraints?  If the answer to this is yes, it might be that you are currently understaffed (assuming of course that the staff is using their clocked in time for work). One of the biggest indicators that a front office is understaffed is a growing receivables balance.  Collecting on old accounts can be one of the most time consuming activities and one of the first tasks to be ignored when the front office is dealing with limited time.
  • How is the hygiene schedule looking and do I need to add more hygiene days? As a general rule, you should be able to get a new patient into the schedule within 2-3 weeks (not including opening for cancelations).  If your hygiene schedules are booked out beyond this point you may need to think about opening the hygiene schedule for additional days.
  • Do I need to offer raises or additional benefits to stay competitive in the current market? If you think this might be the case, please ask your Fluence manager for our latest salary survey and ask that they go over it with you.

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When analyzing practice operating expenses it is always important to realize that no two practices are the same, and that there is no right or wrong way to run a practice. The purpose of analyzing your operating expenses is so that you have an idea of what your individual practice needs. Stay tuned next time for when we cover questions regarding staff costs that are above the market average.

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