This week we wrap up our series on “recession-proofing” your practice, so you can not only survive a recession, but actually thrive and continue to see great profitability and growth.
Topics:
1:05 – Strengthening your hygiene department
10:01 – Getting out of reduced-fee insurance plans
21:40 – Organizational systems and staff training
30:28 – Adjusting your case acceptance process
34:35 – Managing your overhead
Links:
Checklist for “Recession-Proofing” Your Practice - https://www.mgeonline.com/recession-proof/
Insurance Plan Analysis - https://www.mgeonline.com/fees-and-plans-analysis/
MGE Power Program - https://www.mgeonline.com/power-program
Listen to full episode :
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Questions From This Episode
Why is hygiene so important for recession-proofing?
Hygiene should produce about a third of your monthly production, and 60% of doctors' charts have outstanding treatment that you can only sell face to face when those patients come back through hygiene. Sabri recommends a hygiene compliance of 80%, and says she has never seen a practice start there. In her experience, 35% is generous.
How can you improve hygienist productivity?
In a 100% PPO practice, a hygienist should produce about $1,200 to $1,500 a day. Productivity drops when low compliance leaves only simple cleanings on the schedule, and when hygienists do not charge for scaling or gross debridement. Doctors should give the hygienist a written treatment protocol and make sure the hygienist understands how to charge.
What is the first step to getting out of PPOs?
Break down your patient base by type of PPO, the compensation for each plan, and the number of patients on it, using the insurance plan analyzer. Get hygiene compliance and internal referrals in place first, train the team to answer "do you take my insurance?", and drop plans gradually. Sabri says even dropping Delta rarely loses more than 30% of the patients.
Why do you need an office manager and a trained team?
A real executive office manager puts the team together, trains and coordinates it, and keeps overhead in check, which the doctor cannot do chairside. Jeff and Sabri stress that the doctor and the office manager both need to be trained, and that every team member needs training materials, manuals, and time set aside to learn the job.
How should you manage overhead in uncertain times?
Eliminate waste, but do not just chop expenses. Ask whether each one could benefit the practice if you used it properly, such as marketing calls that the front desk is not converting. Make sure every new obligation, like a staff member or a CEREC, fits within your overhead percentages and will earn its return, and review overhead more often during inflation.
Episode Transcript
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Jeff: This is part two of a two-part series on recession-proofing your practice. There's a lot of talk right now about whether we're in a recession, not in a recession, or going into a recession. Regardless of all that, there are certain things you want to do in your practice to ensure that you not only weather the economic storm or survive, but can actually thrive despite it.
In last week's episode, part one, I was joined by Sabri Blumberg, the Deputy Chief Operating Officer here at MGE. Sabri is responsible for all of MGE's technical delivery. She created a recession-proofing checklist, which is available to download on the episode webpage. It's really cool, and she started to get into the seven points you want to take a look at in your practice, to make sure it's robust enough to be successful during any time of economic uncertainty. So I've got Sabri back with me this week. Sabri, are you all hooked up over there?
Sabri: I'm ready to go.
Jeff: Good. I think we just jump right in, because we have a lot to cover. Last week we covered two of the seven points. The first had to do with new patients, if you missed it, and the second had to do with procedural blend and profitability. I have the cheat sheet here with Sabri's seven points. The third one is the hygiene area. Obviously we've talked about how important hygiene is, and we go over it in the MGE Program and on our online platform, DDS Success. But as far as recession-proofing, what am I going to focus on in my hygiene area?
Sabri: The first thing is to understand why hygiene is on this checklist. It's on the checklist for two reasons. One, it's a source of revenue in the practice. About a third of your overall production each month should be hygiene production. The second is all the sales, or potential sales, that you can get out of hygiene that will fill the doctor's schedule. Sixty percent of doctors' charts in the United States have outstanding treatment in them, and most of these patients you're going to see because they're coming back through hygiene. That's why hygiene is such an important part, not just of a dental practice, but really the foundation of your dental practice. We talked about this last time: unless you want to be new patient dependent, which means starting your practice from scratch pretty much every month because you're only focusing on new patients, you must focus on your existing patients.
That gives you two options. One, you can have your receptionist try to sell that treatment over the phone by reaching out to patients with outstanding treatment, which never works. If you couldn't close it in person, the chances that somebody is going to sell it over the phone are slim to none.
Jeff: It would also be weird. "Are you ready to do that crown yet?" "No, I'm not." "Okay, thank you."
Sabri: Right. You get some success off of that, but for the amount of effort you exert versus the return, it's not worth it. It's much easier to get these patients back on the hygiene schedule and, when you're face to face with them, sell them the treatment they need. Most of the doctor's schedule should be filled with existing patients who have accepted their treatment and are doing it. That's why we need a busy hygiene area.
Jeff: So as far as recession-proofing goes, what am I looking at?
Sabri: You're focusing on two areas. The first is hygiene compliance, getting it up to 80%. If your hygiene compliance is not 80%, which quite frankly it usually isn't, I've spoken to five or six thousand dentists over the years and I've never seen somebody come in with 80% compliance.
Jeff: What do you normally see?
Sabri: I would say 35% would be generous. Somebody over 35% is an outlier.
Jeff: Sorry to butt in, but I want to make sure we're clear on the concept. Hygiene compliance is the percentage of your patients who are regularly showing up for their hygiene visits. So if a doctor has 1,000 or 2,000 charts, the average you're seeing is that 700 of every 1,000 patients are rarely showing up for hygiene.
Sabri: That's correct.
Jeff: That's terrible.
Sabri: It is. Then what they have to do is focus on all these new patients to make up for the patients they're losing because they're not keeping them compliant. It's a silly business model. It's expensive, and it makes it difficult on everybody. Just keep the patients you have.
Jeff: If folks want to check their hygiene compliance, we have a downloadable hygiene formula, a little spreadsheet they can use. We'll put it on the episode webpage. I'd definitely recommend that they do that. And I think you also have a whole episode dedicated to hygiene.
Sabri: We did, and I recommend they listen to that for how to get your compliance up and the actions necessary to get to 80%.
Jeff: Now you have me on the spot. I forget the episode number, but it was on hygiene. I'm sure they can look it up. It has the word hygiene in it, so it won't be hard to find.
Sabri: The second area is the productivity of the hygienist. How do you gauge that? The national average in the United States, if a practice is 100% PPO, is that a hygienist produces anywhere from $1,200 to $1,500 a day, depending on where the practice is located, because fees and PPOs vary.
Jeff: Let me stop you there. So the hygienist isn't PPO, but all of the patients are on a PPO, so I'm taking a reduced fee, and that hygienist should still be doing $1,200 to $1,500 a day.
Sabri: Correct. That's the national average, so if you're just doing the usual, you should be doing anywhere between $1,200 and $1,500 a day. If you're not, one reason is that you have such low compliance that only your super-compliant patients are showing up in hygiene, and usually the only thing they need is a cleaning. They don't need scaling, limited scaling, gross debridement, or whatever else the hygienist can do.
Jeff: And an important point is that the hygienist should actually be using all of their skills, all the things they're legally allowed to do in your state. Otherwise that lowers your overall production, because you're not getting the other things that would augment it.
Sabri: Right. The second thing that lowers production is when the patient does need treatment, say a gross debridement, and the hygienist doesn't charge for it. Just like a doctor, a hygienist comes out of school bright-eyed and bushy-tailed. They want to use all of their skills and really help patients, and they have the idea that whatever they present or tell patients to do, the patients will magically do. Then they've been out of school for a couple of years and they've been beaten down by patients: "What does my insurance cover? My insurance doesn't cover that, and I don't want to pay anything extra, or I don't want x-rays." After a while it gets easier to just do it without charging for it and without getting hassled by the patient.
Jeff: So the patient needs a gross debridement, and they say, "It's just a cleaning," and the hygienist doesn't charge for it separately from a prophy. Or a couple of teeth need scaling, and they just scale it and call it a day.
Sabri: Right. The problem is twofold. The first is the obvious lost productivity. More importantly, there's no accountability on the patient's part. If you charge the patient for it and tell them, "Because you haven't been showing up on time, and maybe you could get a little better educated in home care, we have to get you back to zero now," the patient has some responsibility for the situation they're in. If we clean it up now, in the future they don't have to do that again. Maybe they'll be more compliant and have better home care. It's not good for the practice or the patient to not get the work they need and be charged for it. They need to pay for it. Those are the things that lower your productivity.
As a doctor, you have the responsibility of making sure your hygienist understands your treatment protocol, and that it's in writing. You also have the responsibility of making sure the hygienist understands how you want to charge. Just those couple of little things will improve your hygiene.
Jeff: That makes sense. So hygiene focuses on productivity and sales. Perfect. That's point three. Point four, which you have listed as getting out of PPOs, managed care, and reduced fee plans. It was interesting when you gave the example of a hygienist in a 100% PPO practice doing $1,200 to $1,500. If you're dumping PPOs, what does that average become, whatever's normal in your area?
Sabri: It usually becomes anywhere around $1,800, but I've seen it go all the way up to $3,000 a day, depending on the fees and the philosophy of the practice, because it basically gives you carte blanche to do whatever you feel is best for the patient and charge what you think it's worth. And it does that for every other procedure in the practice.
Jeff: I know I beat on this very heavily. You've helped a lot of our clients navigate through it. We have a whole episode on dropping PPOs, and I'm probably going to do another one, because it's getting a lot of traction with folks and becoming critical. And when you say critical, if I'm facing a situation where profitability is at a premium, because salaries have gone up, everything has gone up, and economic uncertainty looms, then it's more important that I'm getting $1,800 a day from that hygienist than $1,400.
Sabri: That's correct.
Jeff: We could spend three hours on this. We've done two-hour live streams about getting out of PPOs. If someone listening says, "I want to get out of PPOs," what would be their first step?
Sabri: The first thing you have to do is break down your patient base by type of PPO, the compensation for that PPO, and how many patients you have participating with that plan.
Jeff: Types, number of patients, and compensation. And we have a spreadsheet for this, the insurance plan analyzer. I know we've had a lot of downloads in this episode, but I'll put it up there. So I do those three things. What do I do next?
Sabri: You have to have a couple of things in place. First, you need high compliance in your hygiene, so I would get your hygiene compliance sorted out before you start dropping PPOs. There are a couple of things I do to lay the groundwork. I make sure the practice is getting new patients not just from marketing but also from internal referrals, the "free" new patients. I make sure the staff is trained on how to handle patient questions if you're out of PPO. When the phone is answered and someone asks, "Do you take my insurance?", whoever's answering doesn't just say "No, we don't" and lose that patient. They can absolutely still come to you. There are some other things, and as I said, hygiene compliance and diagnosis and sales all become very important. Then you gauge all of that against the list you made at the beginning. There might be a few PPOs you can get rid of right away because the compensation is so bad, or so few of your patients are on them.
Jeff: That's really the tell, and that's why we have that spreadsheet. Say I take a PPO that's a large portion of my practice, 30%, but the fees are so bad. I enter it in the spreadsheet, and it also tells me how many patients I could afford to lose. I might find that I could lose 50% of these patients and not lose a penny in revenue.
Sabri: That's correct. Even when you're dropping an insurance like Delta, which is probably the most dramatic one to drop, you're not going to lose more than 30% of the patients. You'll retain the other 70% in the practice.
Jeff: And you've seen that play out universally?
Sabri: Oh God, yes, time after time. Even when the person is on an HMO or Medicaid, where they really have to change providers in order to get any benefits, you still retain a large amount. Medicaid becomes a little trickier, because it depends on factors like whether you have a pediatric practice. We've had pedodontists who dropped Medicaid entirely, and even they survived, believe it or not, and they're much better for it. For an HMO the retention numbers usually go down to about 50%. But the point is not to be scared of whether you'll have a practice left or of the work that goes into going to a fee-for-service practice. What I would be scared about is having the destiny of my business controlled by an outside factor. That's the problem with managed care. You can no longer control your profitability. In the last year and a half, as inflation has become more of a situation, with wages and supply costs rising, your overhead goes up, and the insurance companies you're contracted with are lowering your fees and there's nothing you can do about it. So you end up working your butt off for very little productivity.
I was talking to a doctor in the Carolinas last year who was producing $100,000 a month, 100% PPO. You would think $100,000 a month is a healthy practice. His profitability was so bad that he was literally not taking a paycheck. His only solution was to get out of PPOs, and this is only getting worse.
Jeff: I have a question. Was he producing $100,000 at adjusted PPO fees and collecting $100,000?
Sabri: Yes, he was collecting that.
Jeff: So his collection percentage is good. Do you remember what his unadjusted production would have been?
Sabri: It was closer to $160,000. This was a single practitioner with two hygienists, so his hygiene was actually healthy. He had good new patients, enough space, and a very productive, competent doctor doing regular bread-and-butter dentistry. From every angle, this person should have had a comfortable business and a comfortable life, and he wasn't making any money.
Jeff: I was doing some math while you were talking. He's writing off 37.5%: producing $160,000 and collecting $100,000. That's not unusual, but those numbers don't seem to get tracked anymore. Back in the mid-2000s, as PPOs grabbed more and more ground, a doctor in a lot of PPOs would still keep track of adjusted versus unadjusted production. You would see this huge disparity and could figure out that either whoever does their collections is terrible, or they have a lot of managed care. So this doctor is producing $160,000 and collecting $100,000, writing off 37.5% of what he produces, even though his supply costs, employee costs, and everything else have gone up and still don't change, because he's working on PPO patients. Theoretically, if he dropped his PPOs, he could probably lose 30%, 40%, maybe even half of his patients, and work less, and he'd still collect that $100,000 at full fee, because he would need less staff, fewer supplies, and less of everything. So even if he lost half his practice, his profitability would go way up. This ranks high.
Sabri: In general, this ranks super high right now, because when you're going into an environment where things aren't on automatic and aren't normal, you need more control. That's what you started last week's episode with, the ability to pivot quickly and change as environmental conditions change. If you can't change your fees, that's terrible.
I want to stress, every time we talk about this, that dentists have gotten the mindset, maybe from other dentists, that you cannot survive in a dental practice unless you take managed care. I'm telling you now, you cannot survive dentistry if you take managed care.
Jeff: We've seen lots of folks who survive well without taking any managed care.
Sabri: And I've also seen a lot of guys not surviving because they're taking managed care. You just talked about one. It's not as difficult as you think.
Jeff: Let me ask you one more thing. People are going to be in any variation of mix as far as the number and types of PPOs. If someone says, "I seriously want to get out of these," is this something you'd say to do on your own, like building an IKEA dresser, or do you suggest they get professional assistance?
Sabri: I would definitely suggest professional assistance, for two reasons: mitigating risk, and mental support. I've seen people get all gung-ho and drop everything at once, when this is usually done gradually. Even the guys who dropped everything and did it in the worst possible way survived better than they did with managed care, but it was stressful. You want some guidance so you can do it gradually and make it easy on your staff, your patients, and yourself mentally, so everybody is on the same page. I was talking to one client's front desk, and they had gotten gung-ho and dropped all the plans. The patients found out when they showed up, and in some cases after the procedure. They were still fine, but you're subjecting your receptionist to irate patients. That's obviously not what we recommend.
Jeff: There's a way to do this and a way not to. If you want professional assistance, you can go to the downloads page, download the insurance plan analyzer, and request a consultation, and we'll do that with you. That's number four. Number five was a longer one, because you grouped things. It had to do with having a fully functioning office manager and an effectively trained team with good organizational systems. What would you have somebody focus on here?
Sabri: First, you need an office manager. By office manager I mean somebody who is running your organization, who understands how to expand it and keep it profitable. A real executive, not somebody who only understands the systems of dentistry. They need to understand how to schedule and file insurance, of course, but more importantly they understand how to manage and expand a business efficiently and effectively. That's where you start. They will put your team together, train your team, coordinate your team, and use the resources of the business properly so your overhead doesn't go out of control and you expand smoothly. When we say get out of PPOs, who's going to do that? The doctor, chairside? That's not going to work. Who's going to fix the hygiene? The office manager. The correct office manager is a critical piece. It also keeps your team focused.
Jeff: It's interesting. Over the years, the MGE Power Program has gone through various iterations. It started primarily as training, with some training for the doctor and some for the office manager, and that didn't work. The doctor and the office manager had to be schooled together and work hand in hand. Sometimes we'll see folks who don't want to train an office manager, and just want to be trained themselves. That doesn't work either. The MGE Power Program that everybody hears about is training for both the doctor and the office manager, and we don't consider that somebody has effectively done the Power Program unless they at least have an office manager who is effective and in training.
Sabri: You forgot one scenario: we train the office manager and not the doctor. That doesn't work either. It's your business as the owner and you need to take responsibility for it. You have to understand what's going on in your business, and you need to run your office manager.
On the point about making sure your team is properly educated: when you hire somebody, they need to be able to do their job. The better they do their job, the more production output you'll have, the more new patients, the more referrals, the better hygiene compliance and sales, all the things you expect a human being to do. You are responsible for making sure that team member is properly educated and trained to execute the duties you want them to execute. That means staff training: the correct training materials, lineups, manuals, and time set aside to do these things. Most people don't do that.
Jeff: I'll put a link to the Power Program on the episode webpage for people who want to know about it for the office manager. On our online platform, DDS Success, we do a lot of staff training, and I'll put a link to that too. We made it our primary resource for getting staff trained properly, because it's so important. There's positional training for the basic positions, like reception.
Sabri: Exactly. And then there's creating an environment that's pleasant to work in. There are lots of pieces to that, and I won't get into it too deeply, but the one thing I'll mention is that not everybody is right to work in your office. It doesn't necessarily mean there's anything wrong with your office or with that person. It's just a bad fit. They really should be doing something else, and everybody would be better served if that person weren't part of your team and you found somebody excited about being part of it.
Jeff: What's interesting is that knowing whether somebody is a good fit for your business is hard if you don't have an organizational system in place, you don't have an executive running the place, and the doctor isn't knowledgeable about how to run a business. Then you can't even detect a bad fit, because it's totally opinion.
Sabri: I've seen cases where the office manager is trained as an executive and the doctor isn't, which is the model that doesn't work. The office manager realizes this person is a bad fit, and the doctor pushes back: "But they're such a nice person." Yes, but they've spent eight hours on the phone and haven't scheduled anybody. It boils down to them being able to do the job effectively and being part of the team, meaning they get along with their teammates. Both things have to be present.
Jeff: Staff issues have always been a big deal, and they're still a really big deal right now. I thought it would level off a bit as the employment market cooled, but it hasn't. I still see it on message boards and in inquiries from new clients: "This person wants this amount of money, I can't find a good this or that." If anybody listening is convinced it's hopeless, would you give them a positive message that it's still possible to build a decent team?
Sabri: Absolutely. If you know what you're doing in that area, you can put together the right team. People are out there. If you think there's nobody to hire, go sit on a bench in the mall for a second and look at the sheer number of people in your neighborhood. But don't make it weird when you're looking at people.
Jeff: Don't stare at one specific person.
Sabri: You get the idea. You may have to be more creative about how you find these people. It might not be as easy as throwing an ad out there and getting hundreds of applicants. That's not the time we're in right now. But the right team is out there for you.
Jeff: One last thing I wanted to ask about. Wages come up as a big thing right now, and there are different viewpoints on them. You started hearing about hygienists wanting $65, $69, or $75 an hour, and I'm not saying that's a bad thing, but they used to get $42. These are astronomical increases. From an employer's perspective, it's "these staff want all this money." But I have no problem paying somebody if they're producing it. And from the staff's perspective, they're being squeezed just as hard as the office is. The normal reaction would be to increase fees like everybody else is doing. If I'm not increasing my fees and I'm still married to tons of PPOs, I can't increase wages and I'm going to get priced out of the market.
Sabri: That's exactly right. This is a wake-up call. Regardless of how great this person is, they're going to work for a paycheck. They don't know you from Adam. Even if they think you'd be a really good fit and want to work for you, there might be somebody else who is also a really nice guy and is paying five bucks an hour more than you, and they're going to go there. They have to survive.
Jeff: That's what we found with hiring here. Our starting salaries had to go up by 30-something percent in the last two and a half years just to stay competitive. Otherwise you can't hire anybody. It's not a big deal, everybody's earning more, but then we raised our fees.
Sabri: You have to.
Jeff: All right, I've got my last two points here. Easy points on our cheat sheet. The next is sales. I bring it up here and there because ultimately what drives income in a business is sales. Treatment acceptance is the other term people use. It's a pretty way of saying sales. We've done multiple episodes on sales, but if I'm listening to this, what am I going to dig into to make sure my practice is recession-worthy?
Sabri: A couple of things. One, you need to be able to close. When I say you, I mean the doctor, not your staff. Closing means having the patient up to the point of paying the money. That doesn't necessarily mean the doctor is the one taking the money, or that they don't have a treatment coordinator. They just have to have the skill set. If your staff member suddenly goes skiing and breaks their leg, God forbid, your entire practice revenue isn't suddenly interrupted because you don't know how to do this. Sales is what drives income in any business, whatever name you want to give it: sales, treatment acceptance, or patient compliance.
Jeff: Some people consider sales a four-letter word. Dr. Greg Winteregg had a great article, a funny pun, that salespeople think sales is a four-letter word. It's really not. There's nothing wrong with getting somebody to accept something they need.
Sabri: The bottom line is that you as a doctor can't help get the patient healthy unless they accept the treatment, which means they buy the treatment, which means you sold them the treatment. Without sales, you're not going to help a lot of patients. Nobody wins in that scenario. Your business doesn't win, and your patients certainly aren't thriving. So the doctor has to be able to sell. It doesn't matter if they have treatment coordinators, a front desk person, or an office manager who is also really good at it. They have to have that skill set themselves.
The second part is being able to sell enough. If I need to produce $10,000 a day, I can't produce that unless I sell $10,000 worth of treatment each day, whether that treatment is scheduled for that day or not. That means I need patients with a need for treatment in front of me, either in hygiene or as new patients. That's where we go back to those prior points. We need new patients, but our main source of revenue should be patients of record, which is why you need high hygiene compliance. If you don't have high hygiene compliance, the only patients in your hygiene schedule are your very compliant patients, who have already done all their treatment because they're compliant. They were your top 20%, and they're easy to sell.
Jeff: This is where you'll see a practice where the doctor has been practicing for 12 years, has 5,000 charts, and has one hygienist four days a week. They complain that all their patients have already done all their treatment. No, they haven't. They're only seeing 20% of their patient base.
Sabri: Exactly. So now they become new patient dependent. You need to make sure your hygiene is healthy, you need to make sure you're getting new patients, and you need the ability to close those patients when they show up in front of you, not your staff.
Jeff: That gets us to our last point. We just did a couple of episodes on this: managing overhead.
Sabri: That's an obvious statement. You can't spend more money than you have. But where overhead ordinarily goes off the rails is the little expenses that add up and weren't planned for. "It's just $100 here, $100 there," and before you know it you have no profit left. Or making financial decisions without knowing what your overhead is: who are you hiring, do you need that piece of equipment. The other part of managing overhead is not committing to financial obligations without being really sure, A, that it falls within your overhead percentages, and B, that you're going to recoup the investment. An example we see a lot is getting a CEREC, or a cone beam. These are good things to have, and I'm not saying you shouldn't have them, but you may not be in a position where you're going to make money from them right now, and they can throw your overhead out of control.
Jeff: What woke me up to that years back, and it's not that I don't like CEREC, I think it's a great machine, was seeing newer clients come in who had one. When you did the lease payment math against what they had actually been spending in lab fees before buying it, they were paying more for the CEREC than they had been paying in lab fees, and it also required their labor. So you ask whether it's really the right thing to buy.
Sabri: Right. So when I say managing overhead, I'm not just talking about controlling your spending. I'm also talking about new obligations. Whether you're putting money into a staff member, a piece of equipment, the space next door, or marketing, it must have the return you're looking for.
Jeff: In a recessionary environment, or if you're concerned about economic uncertainty, you really drove two points hard during the whole COVID evolution. One was eliminate all waste. If you're spending money on something you absolutely don't need, get rid of it if you can. Sometimes it's an obvious expense and sometimes it's not. The other side is, if you're analyzing whether to keep something or dump it, ask whether you're just not using it. Someone might have a piece of equipment or a marketing effort that could benefit the practice, but they're not really utilizing it at all.
Sabri: We see this with marketing a lot. The phone calls are coming in and they're not converting them at the front desk because they haven't trained their front desk properly. What does that have to do with overhead? Everything. If you're paying a receptionist X and paying Y for marketing, and you're not maximizing your receptionist while the marketing is producing leads, you are wasting money. So it's eliminating waste, but that doesn't mean just chopping expenses. You have to look at an expense and ask whether it could actually benefit your business, and a lot of them do. You're just not planning on how to use them. That boils down to having a good office manager and you wearing your hat for financial control of the practice and utilization of the resources you've already paid for, like your patients. That's why we say maximize hygiene. You've already paid for these patients.
Jeff: I think the big overriding theme is eliminate waste and utilize what you have to the max. I've been asked a lot on this overhead issue how often you should review it. The normal answer was once a quarter, or when you add a big expense. The first thing they should do is really dive into their overhead and figure out what to get rid of and what to use.
Sabri: What I see sometimes is people saying, "I can get rid of this staff, and I can get rid of this marketing." No, that's not what you need to do right now. You need to use these things. You can't get rid of your marketing, ever, and you need staff. You can always change the marketing channel to a more effective one if it's not getting you anything. But is your marketing not getting you anything, or is your front desk not converting those calls? You have to look into that before you just get rid of it.
Jeff: You're pretty dead on. The most ridiculous expense I ever saw was an oral surgeon client talking to one of our Power Client Managers about overhead problems. His office was spending $10,000 a month on fresh flowers. I'm sure it was beautiful and smelled great. Our Power Client Manager told him to stop that, buy some silk flowers, and get on with it, because he wasn't taking home enough profit to pay his bills at home. He did, and it all turned out fine. There are obvious ridiculous expenses like that, but I think you're spot on that the culprit a lot of the time is not that you're spending too much on something you don't need. It's that you're not using what you have. Are you using your staff to get the hygiene compliance you want? To get the people with outstanding treatment back on the hygiene schedule, to talk to patients and ask who they have in their house who doesn't have a dentist, and get them scheduled? The things you've already paid for, use them.
To answer how often to check your overhead: when you add a new expense, or once a quarter. After you've dived in and eliminated the waste, you can look at it more frequently, maybe once a month, especially if there's continuous inflation. What you need in times like this is more control.
Sabri: That makes sense.
Jeff: Those were all the points. These are the points to be more resilient in a recession, and we have that recession-proofing checklist you can download. I definitely recommend you check it out. Truthfully, if I did all these things and really maximized them, it would be great to do in any event.
Sabri: You just hit the nail on the head. These are the basics that should be in place regardless. If you have these things in place, you have a healthy practice.
Jeff: You gave an example earlier, off mic, about the health of a human being, and I thought it was a great example. If somebody eats well and is in good shape, they're going to be more resilient to the stresses of life than somebody eating Doritos and garbage all the time. Somebody really healthy who is really stressed out will probably come through that stress much more easily than somebody who has already beaten up their body.
Sabri: Doritos is going to be mad at us now. I do like Doritos. I recommend Doritos. They just can't be a major part of your diet.
Jeff: Exactly. Sabri, this was awesome. Thank you so much for joining us this week.
Sabri: Thank you.
Jeff: That about wraps us up, folks. If you want to find out more about MGE, you can find us online at mgeonline.com or call us at (800) 640-1140. All the downloads we mentioned will be on the downloads page, if you want to check those out. If you like this episode and want to hear more like it, don't forget to subscribe or follow, depending on the podcast platform you're listening on. Folks, have a great week, and we'll see you in next week's episode.