The main financial goal in every orthodontic practice is profitability. However, in the majority of orthodontic offices, only 10 percent actually have established departments and budgets to facilitate achieving this goal. Often times, without budgets in place, operating costs are generally out of control thereby creating a tremendous negative impact on the productivity and the effectiveness of the overall practice.
Most orthodontists enter into the world of business with great intensions of running a successful orthodontic practice and ending each month with a profit. However, being inexperienced in this crucial area, departments are not formed, budgets are never created, and tools are never implemented to monitor the progress of the practice.
Repeatedly, Orthodontists do not realize their practice is in trouble until they start to realize they have created more debt / bills than generated income. The majority of orthodontists who experience this frequently become stressed out, worried and often times tense, commonly leaving staff members to undergo the burden of supporting the failing practice. In return, staff members become anxious, no longer focused, and productivity of the practice in all areas start to decline.
To prevent this common scenario, a well run orthodontic practice needs a key person, most likely a well trained office manager, who will be in charge of this essential part of the practice. The office manager should establish departments within the practice and assign one key individual staff member to be in charge of each department. For starters, the following are primary departments that I recommend being established.
- Financial department
- Marketing department
- Ordering department
- Lab department
- Staff Salaries department
- Case acceptance department
Next, the office manager should establish a budget for each department. The office manager should then hold a meeting with the individual staff member heading that specific department to discuss monthly goals. Goals / budgets will change from month to month based upon previous month collections of the practice. The following are my recommended budgets for each department and are based upon the total generated income of the practice per month.
- Financial department ~ delinquent accounts 3%
- Marketing department ~ 6% (due to the decline in orthodontic starts)
- Ordering department ~ clinical supplies 6 – 8%
- Ordering department ~ business supplies 2%
- Case acceptance ~ 80% and above (of all new patients)
- Staff salaries 18-22 %
By establishing departments and budgets it allows the office manager a place to go to monitor the productivity and the effectiveness of the overall practice. Each assigned staff member should provide a detailed report to the office manager regarding their department at the end of each month. The office manager should review these reports and hold a month end meeting to discuss the efficiency of the practice. Once budgets are reviewed and staff members have reached their individual goals they should be rewarded accordingly.
In many offices, bonus systems are in place based upon over-all production and collections of the practice per month. I’ve never agreed with this type of bonus structure. Most employees of the practice can’t contribute to the over all effectiveness of collection and production as a team. Meaning the treatment coordinator is in charge of production and the financial coordinator is in charge of collections – everyone else on the team hopes that those two employees are doing a great job so that they can benefit with a bonus at the end of the month. This type of bonus structure does not provide a win – win for all concerned.
I do however recommend implementation of a bonus system in an orthodontic practice by establishing individual goals for each department and setting rewards based upon reaching those goals. There are many different types of bonus systems that can be implemented related to individual staff members and their departments. Assisting each department leader in meeting these goals is critical to achieve the overall success desired for a well run orthodontic practice.
To learn more about setting goals, creating departments, job descriptions and or bonus systems, I provide several orthodontic training workshops through out the year. In addition, I provide workshops on several other topics including increasing case acceptance, marketing and building a successful schedule. For more information regarding my upcoming workshops you can visit orthodontic-consulting.com & go to the products section and or product section of the website.