Planning for 2014 Hygiene Profits

By Heidi Arndt

A starting point for a successful year

Have you set your hygiene goals for 2014? Did you define your goals to ensure you are profitable? Have you communicated your goals to the hygiene team?

When you developed your financial plan for 2014, how did you project hygiene revenue for the year? Most dental practices will set a random revenue number on what they feel is in line with industry standards. However, the “industry standards” published by consultants and in articles are usually based on inconsistent data.

For example: The industry standards do not take into consideration if there are different fee schedules, or if the numbers are based on the gross revenue vs. adjusted revenue. Also, consider that some offices don’t credit the hygiene team with the same procedures as the others. As you can see, the data can be inconsistent and may not relate to how you are looking at revenue in your group.

Your hygiene production goals need to be based on the needs of your specific group, and your group alone. Keep in mind, you can use industry information as a comparison; but it is important to understand the variables that exist behind those figures.

Here is the simplest way to figure out your Hygiene Production Goals. In fact, I would encourage you to develop your annual plan based on these figures, so you can ensure you are targeting the right goals each day, week and month.

What is the breakeven point for hygiene?

Your breakeven point is what you need your hygiene team to produce each month to cover your hygiene overhead, and provide a 30 percent profit margin. As a note, your hygiene team should produce 3-3.5 times their salary and benefits. With that being said, the easiest ways to figure out your break-even amount is to take your hygiene compensation, plus the all benefits paid to your hygiene team, and then multiply that total by 3.5. If you’re unsure of the amount of benefits paid, you can estimate it’s around 20 percent of your total hygiene compensation. (The 20 percent is based on the current benefit trends found in most dental groups across the country.)

An example: You pay your dental hygienist $40/hour. In September, she will work 8 hours/day for 20 days; making her total compensation $6,400/for the month. If you add in benefits at 20 percent; your total hygiene compensation and benefit expense will be $7,680.

Now, take your total hygiene expense $7,680 and multiply it by 3.5. This will provide you the total revenue needed to provide a break-even, yet profitable margin for your practice. In this example, this hygienist must produce a minimum of $26,880, or $168.00/hour.

Please note, the $26,880 needs to be the money you can collect. This is especially important for the groups that accept multiple PPO plans.

Look at historical data
Once you have your break-even or baseline production goal identified, you should look at your production trends from the past year. If your hygiene team is producing above your break-even point, then you will rely on your historical data.

I like to look at the previous calendar year when looking at historical data. As you know, there are certain months that trend lower than others; and this data is extremely helpful in setting realistic goals.

Set your goals with a little stretch
In fact, I would encourage you to plan for a minimum 3 percent organic growth each year. This growth should not include the fee schedule increase. But it may include an increase in hours, and of course production per hour.

Taking time to set accurate and meaningful production goals for your hygiene team will help you confidently hold your team accountable for what you know the business needs. Remember, hygiene is intended to bring you a healthy profit margin to your practice.

Communicate your annual plan and your goals
Your dental hygiene team must know what the annual plan looks like and how it’s figured. The practice manager and doctor should sit with each dental hygienist and review their individual annual plan for the year. During the meeting, you should discuss how the daily goal is figured and how they trended to this goal the previous year. If the dental hygienist has trended below the break-even mark, provide him/her with some tools or suggestions on how they can improve their performance and obtain their goal for 2014. Creating clarity around the annual plan and goals will help your dental hygiene team understand their role in the practice success. This also gives them something to reach for. After all, we all want to be winners and to be successful!

Reward it!
If your hygiene team continually exceeds your break-even point, reward them. One way of doing this is to design a commission style pay, but you may also consider a share at the profit above their daily breakeven. Placing an incentive around your revenue goal will help your dental hygiene team “buy in” and take a personal interest in making the goal each day and month.

Make 2014 a profitable year for your hygiene team by setting yourself up for success from the start. Set your goal, communicate it and reward it!

Heidi Arndt, RDH, BSDH has worked in the dental field for 18+ years. Her experience ranges from working as a treatment coordinator, dental assistant, and practice manager before graduating from the University of Minnesota with a bachelor’s degree in Dental Hygiene. In 2011, Heidi founded Enhanced Hygiene. She is dedicated to helping dental practices realize their total hygiene profit potential through the development of their hygiene team, quality patient care, patient-centric service and by empowering the entire team.

Leave a Reply

Your email address will not be published. Required fields are marked *