Not long ago I got bullied into reopening a Facebook account by one of my clients. While this may or may not be his real name, Nathan Ho is a great dentist with a great product called Envision Stars that creates a software interface for Facebook that can add to your marketing outreach. Anyway, I opened back up my account and, on his insistence, I joined his group, Dental WinWin, as well as The Business of Dentistry and Dental Nachos. I like reading the challenges and the posts offering solutions to their predicaments. For the most part, I rarely respond to any questions in these groups. I am always surprised at the range of solutions offered by those posting since they typically have little or no understanding of the real problem. Yesterday someone posted about how expensive it has become to hire a hygienist and that in his area they were being paid as much, if not more than, an associate dentist. I read about 20 of the resulting suggestions and then just couldn’t help myself. It seemed that everyone was missing the point. I agree that hygiene compensation has moved way out of the realm of reality when we look at pay, overhead, and profit. It is as if the universe of commerce and economics doesn’t apply to hygiene pay.
I am going to state my case with the idea of offering a solution that is long overdue. If we begin with the end in mind, we should seek a system that allows our hygienist(s) to make more and more while lowering the actual percentage of production/collections that they are paid. Reread this: They make more money and it costs us less of the overhead.
Here is the original post without the sender’s name:
I practice in the North Los Angeles area and have been interviewing to replace my hygienist. Every applicant has been asking $430-$500/day (regardless of how many hours worked, but will not work more than 8 hours). When asked what their daily production was at their previous practice to justify their salary, the majority of them did not know their production numbers. One applicant required 1 hour for 1 Quadrant of SRPs, while another told me she “prefers to work on her own terms”. Is this the norm for hygienists in the LA area or have I been dealt an anomaly hand of demanding applicants? What are you guys paying your hygienists, and how much time are they requiring for recalls and SRPS? If I remember correctly, aren’t new DENTIST graduates being offered $500/day in SoCal? Surely hygienists can’t be paid as much as a dentist??
Basically, the responses bordered on a pity party and weird off-hand quips with no real resolution to his inquiry. This was my response:
“This is a wake-up call for the business of dentistry. For decades the average dental office has been increasing its participation with insurance companies. At the same time, we find that in the average city, 76% of the working population has dental insurance. Keep in mind that when you are in-network the reimbursement rate for hygiene procedures is at a much lower rate than other dental procedures. Looking back over the last two decades, reimbursement is less, overhead is more, yet hygiene pay has not been impacted. This in in direct opposition to the fact that dentist employees (associates and even owners) pay rate has continued to be adjusted downward in response to these economic pressures.
Please do this to see the actual impact of not understanding this reality. Run a production by provider report for all of the last 12 months. Then have your CPA look at your QuickBooks and list the total pay for each hygienist. Be sure to include taxes, benefits, workman’s comp, continuing education, uniforms and the cost of an assistant if they do assisted hygiene. Just to be clear: You now have the total pay for each hygienist and the total production by each hygienist. Divide each individual hygienist’s pay by their production. While most hygienists are paid hourly or per day, this math will convert this format of pay to a percentage. Welcome to the reality of not understanding the business of dentistry. Most offices, for the first time, will see that the actual percentage paid to their hygienist is 40%-65%. Would you pay your associate doctor that amount? Of course not! Hygiene is not and should never be a ‘loss leader’. You would end up jeopardizing any profit you might reap. This is the basis and a strong argument to leave hourly wages or per day pay for any producer and replace it with a fair commission that would also allow other benefits. Don’t get me wrong. I want my associates, hygienists, and team members to make more than they could anywhere else. Bottom line is the bottom line of a well run and managed business. Nothing else really matters. The ripple effect of this change will be seeing your hygienist magically engineer their schedule to be more productive. Recall effectiveness will climb because hygienists will feel the pressure to inspire their patients to return. They will feel the need to be accountable for their performance because it will affect their pay for the first time. This form of pay answers every concern this doctor has about fair pay, and time given for procedures. Our practices are consumer driven businesses where our patients vote with their feet and their wallets. How you structure your pay has to be tempered by the realities of a sound business strategy. There is no position in our office immune to the effects of economics including our own.”
No more preaching. Next week we will delve deeper into the structure of a successful hygiene business model. This is how you Summit.
Michael Abernathy, DDS
PS. I have been working with the CPA firm DuckettLadd to produce some video content for their client base of dentists. During this process, they developed a Dental Cash Flow Budget in the form of a spreadsheet that allows you to plug in estimated income and expense figures in order to evaluate the positive and/or negative effects on cash flow. I know you will be impressed and find it very useful and informative. Check it out here: www.pppfordentist.com
NOTE: PPP in this context doesn’t mean what you might assume.