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Professional News Articles : : ON PRACTICE MANAGEMENT by Janyce Hamilton : Consultant close-up: Sally McKenzie

Consultant close-up: Sally McKenzie

October 03, 2006

Sincerely empathizing with the fact that dentists are working in a small, intimate part of the body all day long and still have to deal with being a CEO and human resource manager is Sally McKenzie, CEO of McKenzie Management in La Jolla, CA.

Ms. McKenzie, for the record, once worked in a dental practice, but is not a dentist, and has never been married to a dentist. If you have seen her speak, she certainly knows dentists, inside and out—she's found that 90 percent neither know their financial situation nor have a business plan. If you haven't yet seen her speak, get to know a little about her through a transcript of a conversation I had with her, below.

The discussion

Janyce Hamilton (JH): You have been a lecturer on the circuit to dentists and their teams for a long time. Where did you get your real dental experience?

Sally McKenzie (SM): Lecturing for 26 years, I worked as a dental assistant and practice administrator for 13 years prior to founding McKenzie Management in 1980.

JH: Why did you decide to start a company to help dental practices?

SM: I had reduced the accounts receivable of two dentists in Columbus, OH, and they encouraged me to quit teaching dental assisting, which I was doing at the time, to go help other dentists as I had helped them.

JH: What do you remember seeing as a dental assistant that gave you real insight and impetus to go out on your own to change things?

SM: There were no systems or standard operating procedures that produced measurable results. The dentists who I helped convinced me that many dentists had the same issues and that I should go and help others the way I had helped them. 

JH: How have things changed over the decades?

SM: Computers containing patient and practice information have made the biggest difference in order to get statistical data to manage the practice. The biggest problem today that has been there for 26 years is patient retention. The majority of dentists are solo practitioners and if you consider how many years they have been in practice, say 15 to 30+, why are they still solo? If they had retained 50 percent of the patients that came through their doors in the years they've been in practice there should be many dentists.

JH:  Why the heck are half the patients slipping away today?

SM: No loyalty to a dentist. One on every street corner.
#1 reason they don't go to a dentist is they do not perceive the need;

#2 is fear;

#3  is money.

JH: What are the biggest expenses where dentists' money is going down the drain? Is it the supplies?

SM: We don't normally see dental supplies out of line from the 5 percent industry standard. Labor is the highest overhead expenditure. It should be 19-22 percent of revenues. Anything higher is usually but not always indicative of an under-producing hygiene department. Hygienists get a guaranteed salary but have openings in the
schedule.

JH:  So do you suggest a hygienist's income be tied to productivity?

SM: Yes, hygienists should receive no more than 33 percent of what they produce, not including doctor's exam; one-third to hygiene, one-third to overhead, one-third profit back to the practice.

JH: How can they decrease supply expenses?

SM: They need to make sure that whoever is ordering supplies is armed with a 5 percent of revenues budget. Usually these employees have no budgets.

JH: What is the biggest service/vendor expense where dentists are losing money?

SM: Laboratory is not one. They generally aren't doing enough work to
constitute lab charges. Facility or rent can be high because they do not take into account the 5 percent of revenue ratio when signing a lease. Accountants can be another one. They are vulnerable in this area and know they have to have one but accept usually whatever is charged.

JH: How can they investigate ways to save this loss?

SM: They need to do basic bookkeeping in house and not have an accounting firm do bookkeeping which they usually don't like to do anyway. Before signing a lease they need to know how much per month divided by .05 and that is what they have to collect each month. If it's more than they are collecting now then they need to have a business plan that will increase the revenues.

JH: What are the biggest misunderstandings in practice management gurus concerning staff?

SM: No job descriptions and no accountability and no way to measure the performance of the employee.

JH: Tell me about your success stories, and how much their investment was total in hiring you to accomplish these things?

SM: The cost of consulting can be as low as $500/month to over $45,000/ year depending on the size of the practice. Larger practices means more things have to be analyzed than small solo practices. We typically average an increase in revenues of 25-35 percent after three months. So after McKenzie Management is done with a dental practice, it's possible to double your income while working the same amount—many times the increase of 25-35 percent realized comes from the hygiene department.

Dentists are so concerned about what the cost is versus their return on that investment which, when it comes to management consulting, is residual year after year after year. It's not just for right now. Once they have the information they have it for life if they use it.

We had a practice in the Midwest that was producing $1 million a year. And, 12 months after we were there, they were doing $2 million a year and not working any harder.

JH: What do you see for the future survival of the dental practice in the next decade or two?

SM: It's a good time for dentistry. Technology, shortage of dentists, increased patient awareness, cosmetics and implants. I believe the business of dentistry will still just be the same as it has in the 26 years I've been consulting with them. They will still have staffing, scheduling, overhead, cash flow, etc., issues.

For a free weekly newsletter and all past issues, and access to her dental practice management library, go to Ms. McKenzie's website, www.mckenziemgmt.com, call (877)777-6151, or e-mail: sallymck@mckenziemgmt.com. You can also get a free assessment online of your practice: www.mckenziemgmt.com/cons-practiceassessment.htm.

Janyce Hamilton is a Chicagoland freelance dental writer and editor. Send suggestions for topics to be covered, or any comments on this column, to review@cds.org.

Copyright 2006, Chicago Dental Society