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The business of dental hygiene

The business of dental hygiene

Deborah Dopson-Hartley

When you see the words “the business of dental hygiene” what do you imagine? Perhaps you see a treadmill where high volume and financial reward are the main focus of the dental hygiene department? Or do you see a hygiene department where quality patient care and profitability are congruent, operating with systems and protocols that would not allow one to compromise the other?

The fact is, the hygiene department is the second largest production center in the dental practice, and provides support for the practice as a whole. After all, patients who are maintained by you in your hygiene department are much more likely to stay in the practice, accept treatment recommendations and refer other patients to the office. This makes your hygiene department a business within a business, and it makes you an executive of this department who will be held accountable for its success. Success means that you will have the hygiene department you want, working the way you feel is in the best interest of everyone concerned, caring for patients with everything you need to provide outstanding treatment and having a compensation package that you are in control of.

Paying attention to the business side of practice does not imply that patient care will suffer. While the goal of helping patients progress from infection and disease into health and wellness never changes, the costs connected with doing hygiene business have changed drastically. (1)

In order for hygienists to provide the excellence to which they are committed, everyone needs to be fully aware of the costs associated with the daily operations of running the business of dentistry and dental hygiene.

The series of columns that I will write this year are designed to help you understand that there are two sides to every department: clinical and business. When you learn the foundational principles of running a successful hygiene department, you can have the equipment, materials, products and the supplies you want, along with the help, support and time you need to get the job done.

While this column does not aim to provide specific costs of dental hygiene procedures or dental office operations, it does provide an overview of the relationship between them.

Monitoring Operating Expenses

We’ve all heard the saying, ‘it’s just the cost of doing business,’ but how many of us truly understand what that means?

Take into account that today there are approximately 67 product categories needed for the hygiene department to function. (2) This is only one portion of the five larger expense categories that are monitored by the dentist monthly. Beside supplies, the other major categories include staff (labor), lab services, rent, and marketing and advertising. It is entirely appropriate that the dental hygienist should understand and monitor operational costs.

Costs associated with operating and staffing a dental office has risen considerably over the last decade.’ It is important to remember that every time a dental procedure is performed, unrelated (or indirectly related) operating expenses are also being incurred. Knowing operational costs can help you to understand how fees are established. Remember, fees should represent the practice’s vision, values and quality. They must also take into consideration the hourly overhead that contributes to hourly production. When you are aware of the significance of hourly production, you become more aware of the importance of effective scheduling.

The Costs of Dentistry

To calculate how much hourly income it takes to run an office, we need to know how much it costs to keep the office running per hour, the overhead expenditures. Understanding how to manage the overhead expenses is a key facet for success in any dental practice. (3)

In determining cost per hour, remove from consideration all capital expenditures and subtract the lab. Divide the overhead by the total hours all producers see patients. This gives you the cost per hour without the lab costs. Divide this figure by the number of providers. For example: one doctor and one hygienist would be two providers.

Fixed costs (rent, office expenses, utilities, advertising, insurance, etc.) are calculated without lab fees, staff costs and dental supplies. Let’s use national averages to determine a practice’s fixed costs. Divide the yearly revenue by the number of hours per week times the number of weeks per year. Then divide the result by the number of operatories. Let’s use the figures from the 2007 Dental Economics/Levin Group practice surveys for our examples. Their survey showed that the medium gross practice production was $800,000 with the gross production per doctor as $560,000 and $125,000 per hygienist with an average overhead of 63%. Let’s break these numbers down further: Daily production per doctor averaged $3,200/day or $400/hour and $996/day or $125/hour per hygienist with a combined office total of $4,196 per day or $524.50 per hour (one doctor and one hygienist) for hourly production. Now divide the total hourly production of $524.5 by the 63% overhead expenses, and it leaves us with $331 per hour of profit.’ In other words, if a dental office can net $331 per hour after the 63% overhead expenses, that office should fall into profitability revenue bracket. (4)

Common Costs for Common Procedures

Let’s walk through a typical procedure and compare the cost per unit to perform it. We will begin our cost analysis with a simple and basic dental procedure–a recare exam and adult prophy (code D1110 + 120). We will use the average national fee schedule for the fee-for-service cost, which is $150.

With help from research done by The Dental Advisor (www.dentaladvisor.com), a publication for evidence-based research, we can look at the some of the common costs associated with patient care. (1) The figures used were calculated by combining wages (19 percent to 22 percent of gross income) plus benefits (an additional 15 percent to 18 percent) of all those involved in the procedure, then multiplying that figure by the amount of time the procedure takes to complete. The total operating expenses associated with the procedure (Figure 1) begin when the patient is seated in the operatory and end after they are dismissed from the office.

The following key indicators from The Dental Advisor will help you get a grasp of the general expenses and operational costs of patient care. (1)

* Sterilization, which includes infection control, sterilization equipment and supplies, and all OSHA compliance materials, costs $3.67 per patient.

* The costs for seating a patient (supplies used and changed per patient) total $2.98.

* An adult hygiene procedure, including sterilization, seating the patient, and hygiene materials, costs $11.11.

The Cost of Dental Hygiene

Next let’s examine the overhead associated with the most used procedure selection in hygiene, the adult check up and prophylaxis without X-rays. Included in this calculation are labor and fixed costs, and the recare exam (Figure 2).

For this appointment, labor time (business staff, hygiene and doctor recare) accounts for 55 percent of the costs, whereas overhead (associated fixed costs) accounts for 37 percent of the costs. As you can see, the two largest overhead costs in dentistry are labor and the fixed cost. One doesn’t change much or often, and the other does. It’s difficult to understand what the dental hygiene profit is when so many dental hygiene overhead items like rent, administrative staff time, and billing and equipment costs are shared with the office’s overhead?

Dental Hygiene Overhead

There is another saying, ‘If you don’t control overhead, it will soon control you.’ Your dental office can decrease hygiene overhead by decreasing hygiene’s compensation, finding lower wage earners to perform the same job responsibilities (for example, preceptor-trained staff) and/or controlling hygiene supplies.

In my experience as a full-time dental hygienist for over 30 years, I always wanted to try new products, and I made sure they worked before I considered purchasing them for my patients. One of the key elements that helped to influence my thinking towards change was cost. Was making a product or equipment change going to be more cost effective or more costly to me, the patients, my hygiene department and the practice?

An easy way to control supply costs is to look for manufacturers’ ongoing promotions, like ‘buy one, get one free,’ where the price reflects the purchase of two items rather than one. Another way is to shop convention floors, look for quarterly specials, or simply ask your authorized dealer representative for the highest-quality product at today’s best price–and then scrutinize those prices closely. Also, make sure that the oral care products you’re using and recommending have evidence-based research behind them.

What Do All Those Numbers Mean?

In dentistry, we are often very focused on the patients, the schedule and getting to the end of the day. Not that there is anything wrong with that. Buy now you may be able to see that, without the ability to organize the business in a financially prudent manner, it becomes difficult to have both what you need and want for your hygiene department.

Simply put, no business can exist without accountability towards continued profitability. So set goals and achieve those goals, because they are imperative when it comes to the future of the business, patients having a place to come back to, and everyone’s job security along with increases in compensation.

Can The Dental Hygiene Department Really Be a Profit Center?

Absolutely, without question, dental hygiene departments can be one of the most profitable aspects of the dental practice. In the next column, which is scheduled for the May/June issue of Access, we will look at how you can develop a strategic plan for developing a highly profitable, patient-focused hygiene department and get rewarded handsomely for you efforts.

References

(1.) The Dental Advisor 2007; 24(5).

(2.) Dimensions of Dental Hygiene 2006; 5(8): 22-5.

(3.) Dental Economics 2007; 130 (6).

(4.) Dental Economics 2007; 154 (9).

Deborah Dopson-Hartley, RDH, is an international speaker, writer and consultant and is the founder of ‘The Business of Dental Hygiene’. She is currently the hygiene professional manager for Zenith Dental. Before an injury halted her clinical career, she was known for 14 years as one of the most profitable hygienists in the country. She can be reached by email at dhartley@zenithdental.com, or visit her Web site at www.DeborahHartley.com.

Figure 1. Operating cost of a single procedure (1)

28% Employees’ wages, including taxes, payroll

and benefits

35% Owners’ compensation

14% Material cost and lab fees associated

with the procedure

10% Facility and equipment costs (utilities,

maintenance and repairs)

13% Business expenses (advertising, banking

expenses, uniforms, education, waste

management) and discretionary expenses

(auto, entertainment, gifts, travel)

Figure 2. Adult check-up and prophylaxis visit (exam, no X-rays) (1)

Business Staff 10 mins $4.72

Hygiene set up, seat & treat 50 mins $31.44

Recare Exam / Doctors 10 mins $47.20

Associated Fixed Costs 60 mins $56.00

Staff & Fixed Costs = $139.36

Cost of an adult hygiene procedure $11.11

Total costs Adult Check-up and Cleaning Visit $150.47

COPYRIGHT 2008 American Dental Hygienists’ Association

COPYRIGHT 2008 Gale, Cengage Learning