It Pays to Pay!
Integrating the right team bonus program in any medical or dental office can be a major catalysts to the success or failure of the practice. As an example, with one of our practice management clients, Endeavor has played an active role in creating steady growth over a six year engagement - that’s production growth from $675,000 to $4 million…in six years! We’ve helped a number of practice start-ups that have gone from zero to $200,000 per month in less than five months. Others from zero to $160,000 per month in seven months! Never would any of these feats have been realized had it not been for team bonus programs.
Have you ever gone to the car wash and had your car cleaned or dried by the owner or manager rather than one of the employees? Perhaps they were busy or shorthanded and management had to pitch in?! Did you notice a higher level of service? Probably. The reason is because the manager/owner has a high level of vested interest in the business, and therefore your level of service was higher than from the non-owner employee.
The same can be said for your practice. The vested interest you have in your practice is much greater than that of your employees. But, what if you could increase your team’s level of vested interest and their feeling of “ownership” in your practice? What if your team became more like business partners than employees?
What if staff worked together as a team to ensure patients’ treatment can be worked into the schedule today instead of waiting until next week? What if time was spent explaining to a patient what might happen if they fail get that broken and decayed tooth fixed with a crown?
What if staff became excited as they showed patients the veneers on their own teeth and talked to about how great his or her new smile would look if they too got veneers? What if your financial coordinator figured out a way for the patients to afford their dental work with a combination of financing, insurance and treatment in stages?
Could this impact the amount of dentistry that patients decided to do in your office? What if you performed 50% more of the dentistry that you recommended? Wouldn’t that mean 50% more revenue on the same number of patients? How would that impact monthly income in your practice? Would this lower your stress level? What would this be worth to you?
A competitive bonus program will incentivize your staff and provide them a sense of ownership in your practice. The right bonus program might also even lower your stress because it brings a willingness of your staff to take on more responsibility. The right bonus program is a win/win for staff, the patient and can bring great benefit to your bottom line. The right bonus program will not cost you money, but will make you money! The right bonus program can change your practice, change your life and the lives of your staff.
On the other hand, the wrong bonus program can actually do harm to your practice and even be a disincentive for staff. Untold number of dentists have tried bonuses in the past that didn’t work for them. Staff rarely, if ever, made bonus – or if they did bonus, the bonus was so small that there was no incentive value. This is typically due to other issues limiting growth in the practice, which needs to be addressed before implementing the bonus program.
On the flip-side, over the years, Endeavor has had to “unravel” practice bonus programs that were developed by well-meaning dentists or “consultants”, but have actually ended up costing the doctor thousands…tens of thousands of dollars - staff was taking home a great bonus while the doctor’s income suffered.
Implementing a bonus in your office can be a bit of a dilemma. Your practice will have growth with a bonus, but the practice needs to be in a growth mode first before implementing a bonus. In other words, if the practice is not turning a profit then the bonus dollars will just come out of the doctor’s salary.
A bonus system is also not the end-all-be-all. Most medical/dental offices have several other issues that need to be cleaned up first before a bonus program is implemented. That is to say, a bonus program will not fix the wrong employee, or weak or non-existent systems, or poor case presentation techniques.
Upon engaging a new client, Endeavor typically begins working on several aspects of the practice…internal systems, organization, hiring the right people, efficiency, case presentation, phone techniques, etc., to set-up the practice revenue so there is now income available for the bonus to draw from. Once at peak level of performance, in combination with the bonus we very frequently see practice revenue increases in the 50-100+% range.
We also develop financial benchmarks that must met for a consecutive 90 days before implementing a bonus program - production at $25,000-$30,000 per doctor and hygiene treatment room per month. The practice should also be producing around $25,000 per employee per month.
A practice with four treatment rooms and four employees should be producing around $100,000 per month. We also want to see employee payroll expenses (bonus included) around 25-30% of collections. Payroll employee expense below 25% is typically an indication of a capacity blockage, and the resulting cost in lost production far exceeds the perceived savings.
There are a number of basics in the bonus program - many nuances and variables that cannot be covered in a blog post, so engaging the right consulting firm to help implement a bonus program so you get it started right and avoid some potential pitfalls.
There are probably fifty bonus formulas in existence…collections…production…production minus write-offs plus collections and on and on…
Once the proper program is established, the bonus must be calculated and paid monthly. Anything beyond that makes staff wait too long - staff needs instant pudding! It is also important that everything is open and “above board.” Each staff member should know how the bonus was calculated each month and how much of the bonus each staff member received.
Things to consider…if staff gets the bonus too often then won’t they come to expect it? Of course they will! If doing their job, they should come to expect it every month! If someone expects bonus without working hard, then you have the wrong person working for you!
The end all is that you receive after you give. You give first then you receive. So, when you distribute bonus, this should mean that your practice has received many times over - if bonus is 15% of profit, your practice profit margin is much higher than if bonus was not given. Lower stress, smoother running practice, happier staff, better patient care, growing practice, wealth, etc.
Want to double your revenue in 2017? #weshouldtalk