Benchmarks Part II

In our Silkin Management Group blog posted February 5th on our blogsite www.silkinmanagementgrp.com we discussed the idea of having and knowing benchmarks for various areas of a health care practice. This is important information for any practice owner to know so that he/she can compare how they are presently doing against basic productivity benchmarks that should be able to be easily achieved. We work with our clients on all of these areas and, where they are falling short of these benchmarks, we help them figure out why and implement the proper actions to achieve them.

In Part 1 we went over benchmarks for Production in a health care office, specifically for dentists, veterinarians and optometrists. In today’s blog we will go over benchmarks for Net and Collections percentages.

Net

Obviously, you don’t want to get your gross production into a higher range and then find out that you aren’t taking home a commensurate amount of money. Producing more without netting more is not the way to go! So, here are the minimal net benchmarks for you to know and what we work with Silkin Management Group clients to minimally achieve.

1. Dentists should be netting 40%


2. Veterinarians’ net should be at least 30-35%


3. Optometrists should be taking home 30-35%

Collections

Collections follow production and result in actual income to your practice. But if you aren’t collecting a very high percentage of your production, you are throwing money away. The basic benchmark for collections percentage is 98% of your production. That can and should be achieved. It is not hard to do.

Many of our new clients aren’t aware of how much money can slip between the cracks. A change of just 2% in your collection rate can equal thousands and thousands of dollars in your pocket (or out of your pocket if the collection rate goes down).
To give you a dollars and cents reality on what this can mean, let’s take a typical example. Say your practice is producing at a $50,000 a month level. Every 1% change in your collection percentage equates to $500. So if your collection percent goes down 1%, you lose $500 and if it goes up 1% you make an extra $500. Simple, right? If you are collecting at a 95% rate, 3% below the benchmark mentioned above, you are losing $1,500 per month. Most doctors feel that 95% is good. But the reality is you are losing $1500 a month which is $18,000 a year, straight out of your pocket. That is net income money as it doesn’t cost you any more to collect that extra 3% as long as you have the proper systems in place and trained staff. What if your collection rate was 93% (which many of our new clients are very happy with when they walk in our door). They are losing $2500 a month or $30,000 a year in net income at a $50,000 a month production level. We all can easily imagine what to do with $30,000. A new car? Pay off some bills? School tuition? Retirement funding?
You can do the math using your collection percentage with your level of production compared to the 98% benchmark. Try it and you might find it eye opening.

Silkin Management Group can provide you with all the tools to increase your gross, net and collections to the benchmarks presented. If you are interested in finding out how, call us at 800-695-0257 or email us at: info@silkinmanagementgroup.com. If you’d like to visit our website, check here: www.silkinmanagementgroup.com

Lyn Ribisi
Appointment Coordinator
Silkin Management Group

WHERE IS MY NET PROFIT?

At Silkin Management Group, we don’t try to just increase the production of your office, we just as importantly want to see a nice increase in net profit for you. Why work on increasing production if you don’t make more money? That would be totally foolish.

You have worked hard all week, the office atmosphere has been snap, crackle, pop; the staff have been getting along with each other; and you are proud of the team spirit they have each shown. In fact, your staff have almost read your mind and anticipated your every need. The patients have all arrived on time for their appointments, and the majority of them have even listened to you and accepted your treatment plans!

Now it’s Friday afternoon, the staff have their paychecks, which include production bonuses because the office has done so well this week. But you look at your bank balance, and you are surprised and seriously disappointed at the lack of funds left over for you.

Where did your net go?

Did you work hard all week to earn less money? The bank balance should be going up, not down!

You wonder if it's worth it. You worked hard all week - only to earn less money. All of that increased production may just have landed you into a higher “office-overhead/higher tax-bracket” situation. It's that frustrating income vortex - the place where despite producing and collecting more, you take home the same or less. And after a few of these "successful" weeks you shake your head and realize that if you have much more of this kind of success, you'll go broke.

A Silkin Management Group consultant would take a look at what might have happened:

• Do your staff work overtime? Do you have systems in place to prevent this without being notified?


• Do you have redundancy in your staff scheduling? Are you scheduling for efficiency? Do you have 5 staff members on duty when 4 staff will do during the slower times of the day?


• Can you consolidate your equipment loans into one loan, thus saving you interest and lowering your payments?


• Can you reduce the amount of inventory the practice holds?


• Are you collecting all you bills? Are your collections at 98% at least?


• Are any staff functions overlapping?


• Do you have an efficient office communication system whereby staff are not interrupting other staff when they are doing their jobs, thus reducing efficiency?


• Do you have any monitoring system to know, factually and statistically who is productive and who isn’t?


• Is there any gossiping going on in the office?


• Are there any problem staff members who aren’t being handled?

These are just some of the areas that Silkin would look into to help you with the management of your practice and figure out any problems with your net income. Your net should be between 35%-55%, depending on your profession, and area. If it’s not, there’s something wrong with the management of your office.

If you would like help with this area of your practice, feel free to contact us at: info@silkinmanagementgroup.com or call 800-695-0257. You can also visit our website: silkinmanagementgroup.com

All the best,
Lyn Ribisi
Appointment Setter, Silkin Management Group

Please visit our other blog at: silkinmanagementgroup.blogspot.com