to encourage them to refer their friends and co-workers? Because they are “birds of a feather,” are they more likely to have the trust transferred to them compared to someone who picked him from an insurance list? How about retaining existing patients? What could be done to upgrade the office systems and customer service? Who is more likely to have the trust to spend their dollars on elective services than existing patients?

Let us consider some business data here. Most dental practices report an overhead of 60 percent. Some run a higher overhead than that. That means, for every $100 of services rendered, $60 goes to payroll, benefits, rent, supplies, electricity, and etc., leaving $40 for the dentist-owner before taxes. This is assuming a 100 percent collection. If the col- lection is 95 percent, the owner would have $35 left before taxes. It is a fallacy to consider this as the owner’s profit. In any business, the salaries of the principals are considered part of the overhead. So a CEO, CFO and HR director’s salary and benefits are legitimate business expenses. How then do most owners who wear all these hats and more, seldom pay themselves a salary? Setting that aside for now, the owner has $35 left out of the $100 produced. If that owner accepts a 30 percent discount, leaving $5, how many more patients would he or she need to see to make the same amount as previously … 35/5 = 7 times as many. Would seeing that many more patients to earn the same ‘profit’ take its toll on the office and the dentist? Would that not increase staff and supply costs? How will that impact the overhead percentage?

The numbers in this example may not fit your own particular case. However, these are the types of considerations business people normally go through to guide their decisions every day.

Without getting into the weeds about fixed and variable overhead, there are two ways to impact overhead. Increase collection and decrease expenses. All expenses are subject to review, including staff expenses. Better collection policies and more elective services provided increases collection. Be well trained in these elective services to provide them at the highest quality levels and promote it internally. Communication skills need to be at

least as high as the technical skills.

I did not advise this dentist to sign up or not to sign up for this plan under his consider- ation. My goal, simply, was to bring up these various considerations so that he would make a well thought through and informed deci- sion. If that informed decision is to sign up for that plan, by all means, he should do it.

When we are faced with decisions on busi- ness matters of a dental practice, it is best to make informed decisions rather than knee- jerk ones. Look … before you leap. I hope that this column gives you a few factors to consider. f

DR. PRABU RAMAN (UMKC 83) Practices in Kansas City–North. His practice is devoted to neuromuscular dental care, including comprehensive treatment of TMJ/TMD symptoms such as jaw pain, neck pain, Fibromyalgia, migraines, headaches and etc. He achieved LVI Mastership and is a Master of the International College of Cranio Mandibular

Orthopedics. He is also a Fellow of the American College of Dentists & Pierre Fauchard Academy. Dr. Raman currently serves as an ADA delegate and MDA trustee. Contact him at Dr@MidwestHeadaches.com.

On behalf of the Special Olympic Athletes and the Missouri Dental Association, we sincerely thank you with deep gratitude and appreciation for your VOLUNTEER efforts at the Special Olympics Special Smiles in May!

ouri Dental

Dr. John Haynes Dr. Suzanne Beck Mary Cameron

Dr. William Marshall

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Dr. John Nelson Robin Meyer Natalie Foley Jennie Welker Emmy Barker John Ebeling Alexis Austriaco Annie Ernst Kimi Kaur

Please contact Stacey at the MDA if you are interested in being a volunteer in the future. ISSUE 4 | JUL/AUG 2013 | focus 37