The Million Dollar Masterclass: Hiring & Payroll - Profit Center or Pain Point?

Hey, practice owners. Welcome back to our next edition of Million Dollar Dentistry with my buddy Gary Katie. Gary, I want to show you what I got. I wore out my, my first edition copy, so I actually bought another copy, Million Dollar Dentistry. And I would suggest anybody who has, who doesn't have a copy either get one like this or I think at the end we'll give them the. A link to download their own copy and read it. It's a great read. It's short, concise, covers, really everything that you would need to build your solo practice into a million dollar practice. And it was written in 2006. What I got was seventh edition, which is just as relevant today as it was in 2006. So how you doing, Gary?

I'm so good. It's funny you said that. If you want to turn your solo practice into a million dollar practice, it's funny that you say that because I had a guy, he goes, gary, my practice is doing a million and a half. How do I get, how do I get to two? I go, you buy two books.

There you go. That's a $3 million practice right there.

And by the way, if you want to solo practice and you're looking to do multiples, this is how you scale. I just see, I just got off the call with somebody from Austria. Austria is doing the same thing. The consolidation that's going on. So we got our first Austrian practice. So this, this thing has gone global. Steve, it's been pretty cool, man. It's been really, really fun to do this.

You speak Austrian? Is that a language?

No, they speak German over there. I speak English and Italian. I am getting my Italian citizenship. So, you know, we'll have a little villa over there and we'll bring all the, all our dental friends over. It's going to be a good time.

I'm with you. When you need to go, like, evaluate that practice, just count me in.

Oh, perfect. Let's get it. We'll get Paula and the girls and we'll go. I just said girls, girls. Yeah, that, that wouldn't work with the ladies anyway. Let's get to it, Steve. Come on.

So we did. This is the seventh edition, seventh chapter. Following your book, Million Dollar Dentistry. Again, you don't have to have the book to follow along. It helps. And we'll give you some, again, some links to, to get it. I see a lot of, I see as people coming into the webinar, a lot of returns and a lot of new people. For those who don't know, ask any question you want. We will answer every question that gets asked. We may or may not be able to get to it in the recording, but the platform, which sounds like a fancy word, I'm not sure what it means, the little box over here, it says comments and questions. Put your question in there. We'll get it, we'll save it. And worst case is Gary will get all these after the. The after we broadcast this, after webinars over. And he can reply, you know, tonight or in the morning, whatever. Whatever works for you. But we promise to get to every question, no matter how complicated or simple. If you want to say, you know, how are the Suns doing? Or why did the Yankees stink this year? Gary will absolutely answer both of those for you. He knows. So ask any question you want, and we'll make sure we get to them either tonight or first thing in the morning. So, Gary, chapter seven is turn your. Turn your payroll into a profit center. Yeah, we've really sort of followed Larry, Larry, dds, starting up a practice, how to really get the most out of his team. How to CPR is chapter three, cash in your pocket. Now, chapter five, why your team hates you. And again, anybody watching, if you haven't seen those episodes or read those chapters, they're very good to kind of help you get your practice, get your arms around your practice. This one I like, specifically because it's how to turn your payroll into a profit center. You and I are business guys, so that we're the term profit center. You know, we just know. But I'd like to start off and ask, you know, for. For docs who are listening, practice owners who are listening. Can you kind of explain what is a profit center and how is it different than just a department?

Yeah. Yeah. Great, Steve. So this was born where. I don't know about you, but when I talk to dentists, you can't shrink your way to growth, right? So so often they want to shrink their way to growth, cut expenses and then be more profitable. Another way to look at it is there's three types of expenses. There's productive expenses, there's consumptive expenses, and there's destructive expenses. Destructive expenses are like me, if I buy a bottle of wine, it cost me $20. That's a cost. But the real cost is my life will be over, my wife will leave me, I will lose trust with the people I serve. So that's a destructive cost. A consumptive cost is one where you spend a dollar and you might get a dollar back. Or it's like it's a consumptive cost is like you go on vacation, but you're not going to get a return on that investment. You might get like relaxed and there's like, there's, there's peripheral returns on investment, but it's like you spend money but you don't plan on getting it any back. Turning your payroll into a profit center, Steve, is what we call a productive expense. See, this is where a lot of doctors get stuck. For instance, they go like, you know, a lot of practices can't get past their number because they have one person at the front desk, for instance. And at that front desk, a person can't possibly answer the phone, fill the schedule, do a treatment plan. But you're sitting there as a doctor and you're going, well, that's an expense to me. I can't add another expense. Could be because I'm not profitable. But actually, when you start to get this thinking, you're going to have counterintuitive thinking that allows you to see as long as you have a structure in place and accountability is in place, that when you invest in that salary, you're going to get multiples back. That's, that's a productive expense. Turning your payroll, which is normally looked at as an expense, into a profit center. But there's things that need to shift, belief wise and structurally in order to make this happen. Is that clear, Steve? Was I, was I clear in that communication?

Absolutely. And I think a lot of, and you know, as anybody who's watched one before knows, I read ahead, so I dog ear the pages, I wear out a highlighter, I put little sticky notes in there for myself. And, and so, you know, I know what's coming in the conversation. And some of those questions are like that. And again, we've got some questions here and I'm going to let them group up. Gary?

Okay.

They seem to be two or three different things, so I'll kind of take a note and ask them as they become relevant in the conversation. But I think that the, the concept here is, is not to think of it as, oh, that's payroll. Every two weeks I write a check and that's that. And then over here in this little box is production. And at the end of the day we say, how much production do we have? And if we get really fancy, we deduct our insurance write offs. And now how much collections do we have? And that's kind of it. And what you're saying is, is to compartmentalize those things and don't look at it as sort of taken from one Pocket, the production pocket over here to the left, what the doctor produced, and moving it over here to, you know, office expense, which we just have to have. But what you're saying is look at them each as their own functioning unit and measure. Which I think is the important part, Right. Measure the, the results you get from each role is what you say, including things like team leader, which we'll get to here in a little bit. How you measure them, which most docs don't understand. They know production, they know, maybe if they think a little deeper, collections, but they don't say, how do I measure what a team leader does? Or how do I measure what my associate does? Or how do I measure what my hygienist does more than production? Is that kind of how it works?

Yeah, yeah. If I talk to most doctors, they look at lagging data, which is like production collection and what's in my bank account. That's the data that they know. Once you get this model down, you're going to look at leading data that's going to indicate and allow you to get profitable. Take the time off, be able to go on vacation with peace of mind. Not, not, not. Base your, your evaluation on feelings, how you feel. What one of the biggest blind spots, Steve, that I see that when I, when I introduce doctors to this concept, by the way, it just makes profitability simplified. This totally simplifies. Dennis didn't leave dental school being a CPA. And they usually talk to their CPA about. Most CPAs are about shrinking and saving and risk adversity. What this is about is really looking at the facts and knowing where is the return coming from. And it's a game changer. It really changes everything. One of the key elements I want to add to our conversation right now is the 80, 20 rules. The Pareto principle. You know, it, it's like eight. You know, you wear, you know, 20% of your clothes, 80% of your time. You know, you walk on, you know, 20% of your floor 80% of the time. And when people used to have carpeting, you would see the trek down the carpeting road. Right? Because that's where you walk. The same is true in a dental practice. 20% of your team produces 80% of your results. That is where you have a problem because you're spending your. What is the biggest expense in dentistry, Steve? And the line item, what is it?

The overhead?

Yeah. Your payroll. So it's a service business. And now, Steve, let's, let's compound this because of the supply and demand issues right now. Dental team members. I'm hearing all kinds of crazy stuff about demanding one of the number one questions. And if you get on my calendar after this session, I'll help you go deeper inside of this. But a lot of people are coming in requesting higher salaries just because of the supply and demand in, specifically in dentistry. And if you give, you know, let's say, $3 more an hour, that becomes a fixed cost, and that comes right out of, let's say, your son or daughter's college tuition fund because it raises the cost. But if you do what we're going to talk about on today's session, you do it on performance. Now, they're helping Earn that $3 an hour. And you can do that all day long, because when you're sharing 10% of your increase above what you're normally doing, magic happens in the revenue numbers.

You said something, and I want to kind of focus in on this. Drill down a little bit. You said payment should be, or, excuse me, payroll should be viewed as an investment that generates a return, which is an important word, not as an expense. And I want to take a second and you know, Gary, I remember many years ago, I'm gonna date myself because if I ask my kids, you know, I tell them about an Oldsmobile commercial, they'll look at me like I have two heads or something. They don't even know what that is. But I remember years ago, I remember an Oldsmobile commercial that said it had the best investment value of any car being made. It the second year is worth 85% of what you paid for it. And I remember thinking, holy cow, GM is promoting the fact that you're only going to use lose 15% of your investment in one year. I don't know how that's an investment. The idea of an investment is I put money in and I get more money back. Now you're in your team or in your practice, you put money into, say, a treatment coordinator, recare coordinator, a. An associate. I think what you're saying is when you look at it as a profit center, don't look at it as just what I'm paying these people. Also add what I'm getting back, and we're going to talk here in a minute about how we measure those things, which was really interesting when I read the chapter about each position. You know, the doctor and production is kind of easy, but team leaders and dental assistants are a little more interesting in the way that you frame up how to view their return. But the question really is a return on investment is getting more Back. And I've got a question here that says, and I've got a point to all this, it really dovetails with this question I've been watching here. How do I know if I'm paying my team too much? And I think I know your answer because I read the chapter. But how do I know if I'm paying my team too much?

Well, you first have to set the standard by which you want to get back from whatever you're investing inside of that team member. So the first way to look at this is, you know, are you in the threshold of where we like to see the dollar amounts for, you know, payroll to go? Because if we want to get the practice to a 35% profitability, let's say around 65% overhead, you know, you want to appropriate about 25% of your dollars to payroll. Now, where this expense gets high is, is that usually there's only a treatment coordinator generating it, a hygienist. You know, usually it's three times whatever you pay them per hour like you do these crazy benchmarks. But you can actually get ahead of that when in fact, you look at first your P Ls, and most people don't look at their P Ls. So the first thing I would, you know, when we do this analysis and we sit down with docs, is it in. Is it around the 25%? So if it's in there, then I know now most practices when I first start with them, the doctor doc doesn't even know or it isn't broken outright. And it looks less, but it's more. And there's just. It depends on the accounting firm that you work with. But we like to get it at 25. Most people are what I call stepping over cotton rolls, you know, and I mean stepping over dollars to get to cotton roll pennies. Like they're. They're dealing with the commodity. If you just focused in on this one particular area of payroll and got a return by position, this is. Then all of a sudden you can get it down to 25% or even less. So there's a way to do that. And the way you do that is you take what you want to create and let's say you want to make a million dollars a year, you know, gross, and you want to work four days a week. So you have certain amount of days, and you have one hygienist. You reverse engineer how much you need to do per month, per day. Now watch this. Per provider. Then you map out that measure over the team member. Now we have a benchmark for each team member. So now the appointment coordinator needs to schedule the doctor and end that day at 5,000, Steve and the hygienist to let's say $1,500 or $1,200, whatever the number. We figure it out. Now all of a sudden that appointment coordinator is not sitting there getting 20 some dollars an hour or $18 an hour. They now are, yes, they're getting paid that, but now they're at least if you filled your schedule, the 5000 and 1500 and it stayed that way and it ended that day, now all of a sudden that appointment coordinator has paid for their payroll for that day. That is their minimum accepted outcome. And then we do that with each team member and so on it goes to each team member. So now you have everybody playing the same dollar game that you need to run your business at that dollar amount. So if you're doing a million, your overhead for payroll should be 250,000. And you'll get it to that number as long as you have a benchmark by day, by person and your, your.

That'S your target, that becomes your, you know, if I'm going to invest, you know, here's what I want my return to be. If I'm going to invest a dollar, you know, or $100,000, I want it to come back as a $10 by the end of the year and that's a 10% return. I don't want it to come back as 85 cents. So how many times do you see somebody and you know, you know, in the good old days of practice ownership, you get the staff that all that, you know, and this might be new to you, Gary, you may have never heard this. We need more people, we need more help, we need an extra person. Front desk, I want, you know, I want an assistant. And the DOC views it, the practice owner views it in terms of making things easier, but doesn't say, okay, what do I get for this? Do I get more production? Do I get higher, a bigger spread on my profit margin, on my return, on my investment? So they add that person, even if it's a part time person, and suddenly now they're making less money, struggling more to make payroll, haven't made anything easier. And they just don't even start out the right down the right way. They don't look at it as an investment. They just look at it as, you know, shutting somebody up or making things easier.

Well, I see this happening all the time. And here's what do you know who the biggest arsonists are the people who start fires. Firemen.

There you go. They know how, they know how to get away with it.

Well, not only that, they want to put out the fire. So before we take any new position on. Because sometimes it's legit, but the first thing you need to do is evaluate the efficiencies of what's actually doing. Because it's easier to put in a system and it's easier to clean up. Like Steve, I'm telling you, there's 50% of the actions in the front office because no one's accountable for nothing.

Mm.

Therefore there's no accountability anywhere. Here's the way it works. Because you're rewarding the team member on time. You're, you're paying them a dollar. A dollar versus outcome based. They fill time to meet the deadline. So let me, let me explain. If you pay somebody $15 an hour, their reward is stay more hours. So they there I've even seen practices where they have all this overtime that they can't control. And it's because they give free rein to their team to just go past the hours. So that's how the team makes. And again, not every team, please don't misunderstand me. There's good people, but, but whatever you incentivize, you're going to have them do more of fill time. Under this model, when you put a measure in, that's the minimum return on investment per day. Now the team member looks at their role and going, hey, I'm not paying for myself here. If I don't hit my measure now they're taking responsibility. And then the next thing is we put a bonus. When you go above that number or at least hit that number consistently every day. Now all of a sudden you're getting paid a bonus. So the bonus is on a reversed engineered number from what the doctor wants to do per annum, per month, per day now mapped out. And now there's an agreement for what the return on investment is by position. Then when you consistently do at least that number as an appointment coordinator. Look at this, Steve. $10 per day per column. I have appointment coordinators making $30 additional a day. And guess what they calculate that times. Let's say they work 16 days. That's $480 in bonus. Only gets paid when the company can get collects 85,000. Now you have the team member driving what they need to drive as an intrapreneur. Intrapreneur is an entrepreneur that works inside of a dental practice. They're thinking like entrepreneurs. We Call them intrapreneurs. They have their own business inside the business. They know what their measure is. If they're not hitting it, they're self diagnosing whether they're being effective or not. You don't have to reprimand them and they want to hit this. You're now paying them on outcomes, not paying them on activity. Filling time to do more, do more busy things or create. And by the way, people are unconscious about this arson thing. They don't even know they're creating busy work. It's subconscious. These aren't bad people working in dental practices. These are good hearted people that have integrity. But they're going, I need to make more money. The only way I know how to do that in this game is work more hours, so I better be busy. But am I being efficient, being outcome based? It's sort of like, do you ever go away on a vacation the day before you leave? You're so efficient because you have a deadline. That's how I invented this system. You have a deadline every day. Your deadline is the measure that when added up annually. By the way, this is how doctors take more time off. They always say to me, how am I going to take more time off? Well, if you're measuring every day and you're looking at things that are going to create the backside. So when you're measuring treatment presented and accepted in July, you can do the same amount of dentistry in three weeks that you could do in four. I can give you a week off a month because you're much more efficient. But if you don't close it in July, it's not going to show up in August.

Well, and there's a big difference. So two things jumped out. One was, somebody told me this a long time ago, don't confuse activity with productivity. We're busy as can be and we, you know, we build eleven hundred dollars today and we need ten thousand, you know, to break even. But we were crazy busy. And if, if I get a paycheck every two weeks to run this practice and be busy, that's what we're going to do. We're going to feel crazy busy and thrilled to just get out of here at the end of the day.

Exactly.

That's the practice owner, that's the leadership that created that. It's not the employee that came in and said, I'm going to do this. It's what gets rewarded or what gets, you know, what gets a positive comment, oh, thank goodness for putting out all those fires today. Well, tomorrow you're going to come in and light a bunch more fires to use. You know, use your analogy there.

Exactly. Let me give you this, Steve. This is going to. This is advanced conversation for your smart readers, Right? Watch this. This is awesome. You know, I just, I love this distinction. What happens is that you always win the game you're playing. So I'm going to say that again. You always win the game you're playing. Now, there's four personality types inside of a dental office. Humanist, methodical, spontaneous, and competitive. There's 10% of people are competitive. And those are the people that automatically are the ones on your team that are in the 20% that cause the 80%. They're competitive people. They understand that the game is. If you don't get paid, you can't run a business. They just know it inherently 75%. And then there's 5%. Did I do the math right? No, no, not 15%. So it's 75. Did I do that right? 15.

75, 15 10. Yep.

Yeah, I got it. All right. Not bad. I'm a little slow today, Steve.

I had to write it down. Gary, I gotta be honest with you. I needed a calculator.

All right, Here we go. 75% are humanist. Methodicals. Humanists, you know what their currency is?

Not.

Not measures, not money. In fact, they hate money and measures. And that's why we turn it into a scoreboard for the impact that you're making on humanity. And then they can receive it. But there, you know what they think. I go, how'd you do today? They go, she goes, I did great today. You know, I did so great today, Steve. I did so great. Why'd you do great? Because I had eight patients and they are in love with me. They said, thank you. They love their cleaning. And I said, what was your revenue for the day? What's the measure? You know, there. And we did, you know, $382.52, you know, and we paid you more than that as a hygienist. So just so you know, I know that you like being acknowledged and that feels good. And you have good relate patient relationship skills. Awesome. And I want you to know, like how we call it the triple win. The patient has to win, the team member has to win, but the practice ownership has to win. And here's the missing element in the archaic business models being deployed. There's no measure per day per team member so that they know whether they won their game or not for the win of the practice, the mothership. Because if the mothership can't pay his or her bills, then you don't have a job being acknowledged because that acknowledgments don't pay the electric, they don't pay payroll, they don't pay the dental supply bill. And that's the missing element. And it's not their fault. It's not team members fault. In fact, we just, it's team members have no idea about money. We just launched our wealth mastery simplified class for dental team members, teaching them about money. And once here's what we've learned, when they understand about money, they have more compassion for the business owner. Also, when we put in our dream program and the bonus program, they have to figure out a hundred dreams. So they start dreaming like, I want to go on a Disney cruise and I want to send my daughter to this to Tulane or Baylor or whatever. And they put the money aside from their bonus. Now they're driving and they want to create more money for their bonus because they're driven by their personal dreams. See, team members, this was a lesson I got long ago. My team members are not there to make me rich. Most doctors expect that you can't think that way. You got to set them up with the game that they're, that they're willing to play from their purpose with these measures so that everybody wins. And you're going to give them Scooby Snacks when they do. And guess what? They always win the game they're playing. When you give them a game that has the mothership win as well as the patient and as well as the team member, it works awesome. And you turn your payroll into a profit center. Steve, come on.

And I. You know something? As you were talking, that popped in my head. I remember a practice I worked with several years ago, and one of the complaints is they were always getting out late and they produced, you know, not quite what they needed. So they needed some help. We came in, cleaned it up. But the interesting thing was we started to produce about one and a half times what they did the month before. And we were finished at 5 o'. Clock. Not we. You know, I'm a business guy, so I didn't do any of the hard work. They were finished right before five o' clock every day. Because what we did was reframe what they're there to do. And it was almost, I think you're spot on. They felt like, all right, we should, the office manager, we should be really busy and if we work 10 or 15 or 20 minutes extra, it'll feel like we're crazy. Busy. And that justifies the busyness we're doing. But they never put a dollar amount. They never said, hey, we need $8200 a day in production, and we just did 63. We all went home happy because we were crazy busy and, you know, couldn't make payroll two weeks from now. So. And I know I want to make sure we get this covered. You said something about bonuses. I know you're a big fan of bonuses. You and I are very much alike in that I like to call them incentives. And I think, because only in dentistry, I think, is it you do you have to make that distinction. There's almost a second nature of all right, here's what I'm going to do. We're going to work really hard. You know, like I said, we're going to be really busy. We're going to get out here late every day, and then we're going to get to the end of the month and see how we did. And if we did good enough, I'll give you some bonus. I like an incentive with an intention. We want to grow our average production from 8,200 a day to 10,000 a day. If we do that, I'll give you this percentage. And I know you're a big fan of, you know, you might only be given 10% and your team goes home with some extra cash in their pocket. And if you look at that, I think I know where you're going to go with the answers. It is, don't look at that as an expense. You and what your investment came back times 10. Every thousand dollars you gave away, 100. And if you, if you produce 50,000 more dollars this month, you know, don't go crazy because you're writing checks for five grand. Say, thank goodness I'm writing checks for five grand because I'm banking 45 myself. So the question I got here is a doc wants to know how much should I pay in bonuses? And I think that opens a door for you to say, okay, you're looking at it like a dentist, not like a practice owner. But that's the question. It's that simple.

Great question.

How much should I pay in bonuses?

It's great. So first of all, I want to set some context here that'll have you understand you're doing a certain dollar amount. And the average dentist over the last 20 years is stuck like the flatline revenue in personal income has not changed. Now, here's the biggest problem with bonuses. When I first, when I was analyzing bonuses, because all the way back in the day Greg Stanley used to send out cassette tapes. And this is where I got obsessed because I loved it because he talked about a bonus system that was difficult to track. Here's the other thing. It became. And I love this guy, he's brilliant and he was way ahead of his time. But I actually was in a dental practice that deployed it and I was the administrator of it. And so being that was really great because how I got my start is I sat in everybody's chair and because I really had to understand what the mechanics of a business, the business model being deployed was. And in this business and every. I have not seen a bonus structure. By the way, I'm a phone, a fan, Steve, of incentives or bonus structure, but not. And I haven't seen one that works like this. And here's why. The flawed, the flawed systems, here's what they do. They're usually on collection. They're usually at the end of the month. They're done as a group. And here's what happens. They do the opposite. That what you want to do is motivate your team to do more. It does the opposite. They get demotivated. And here's. It does the opposite for the doctor. You increase your cost. Now it's a destructive expense, not a productive expense. So I sat and it took me 20 some years to perfect this, but I have it perfected. In tracking changing behaviors, taking ownership and accountability. It does at its root cause, Steve, all the things that doctors want their teams to do, because here's the difference. Most teams are playing not to lose their job. Most doctors, team leaders and spouses are playing to win the game. That's the problem. So if you don't fix that problem and you don't get them playing golf on the golf course versus you trying to play golf on a foot, they're on a football field and they're blocking and tackling all, all new initiatives. Again, not intentionally, only because they're playing not to lose, not playing to win. So how do we get them to play to win? Here's the. Here's the transformation. You bonus, you do you figure out how much money you want to make and how much time you want to spend doing it. So that's the first thing I do. Like, you know, we'll have opportunities. I always block 10 spots out for you and your community to get on the call with me. And I can. You'll be able to go right to my calendar and get on my calendar. And we'll talk about this specifically for each of you. You Know, for those of you that are ready, that are recurring, maybe you've come back and you're like, okay, I really want to take this on because this is a big pain point right now because a lot of people who. They have to hire people, and the people they're hiring are out of whack, and it's. It's throwing off. How do I. I don't want to pay this person more than the people that have been dedicated to me. How do I fix that problem? It's the number one problem I'm facing right now when people are calling in and getting on my calendar, Steve. But it's this. This fixes that problem. What it is, is we figure out how much money you want to make. And this is revolutionary for Dr. Steve. They go, nobody asked me how much money I want to make. They just go, I have to do like 10% better than I did the year before. Like, that's what I should do, right? No, I go, take how to do it out of the equation. All I want you to know is, have you ever figured out with your spouse and partner how much money you want to make for what you provide? And they're like, mind blown by that. And then once we find out how much money, they go, I go, how much time do you want to spend doing it? They go, I want to go from four days to three days. A lot of them are taking two weeks off. I go, you're taking four minimum. Or if you're taking four, I go, you're going to six. So I can simply press every time or money issue. So once we get. It's an algorithm. So it's like, here's how much time, here's how much money. And then how many other providers do you have? And we reverse engineer the number, and let's just say it's 5000 for each doctor, 1200 for each hygienist. Now, we map that out over each team. So the appointment coordinator they get, they get their measure is 5000 in each doctor column. 1200 for each hygiene column. Then again, I'm giving you cursory. There might be some nuances here with time, but just for a sense of time, I'm just doing this. That's your appointment coordinator. Your treatment coordinator gets the percentage of how much treatment is closed and paid for that day. It creates urgency. So again, there's nuance here. If you don't collect money on when you're presenting cases, and they can come later, we adjust for that. But I'm giving you what the Ideal is so treatment coordinator gets a small percentage and half a percent on all treatment presented and accepted. The hygienist, when they hit $1,200, they get 10% above that. Now you have your hygienist going from bloody profits to doing SRPs. The average, the average SRP percentage, Steve, is 4 to 8%. It should be around 35. So there's so much opportunity there. And this is mind blowing for most doctors. They don't go this deep. So now a hygienist can make 10% above that. You'll pay them 10% above that all day long and, and then 1% or a percentage coming out of their treatment room. By the way, all of this stuff adds up to about 10% on the revenue above what we call your BVM or your, what you're doing now and at a certain profitability. So let's say you're at 70% overhead, 30% profit right now, Steve, right on the revenue you're doing with everybody driving with no addition to fixed cost. Everything you would do above, let's say that a hundred thousand, 30% overhead, 70% profit because your lights, your rent, all that stuff is already taken care of. And now you're just generating it on all the levers and holes and opportunities that exist in a dental practice that you don't put your attention on. My grandfather said it best. He said win placers show in horse racing. The wind horse can win by a nose, but the payoff is tenfold from the place horse. And that's what's missing in a dental practice. There's so many opportunities that you just need to move a nose small amount to have the payoff be tenfold. And this is where a dentist, because they're not trained, they don't, they haven't thought all this out. I mean, I've done this with over 6,000 practices for 27 years. You get really good if you focus only on this for that amount of time.

We also have, you said something very, I think critical here. Break even. Dentists don't understand their break even or every incremental dollar. Now, as a business person, I understand I have a break even and that is, you know, heat, light, rents, employees, you know, or kind of fixed cost. There's a, there's a say my break even is $5,000 a day, up to $5,000 a day. I'm paying for everything it takes to run this place. After that I'm now making a profit and say I'm generating $8,000 a day. So I'm making three grand. But when I go from eight to 10,000, that extra $2,000 has no break even cost in it. They're already covered. So I get to keep 100% of every dollar after that. And not only that, but one of the things you said I think is significant. It's 10% of your revenue. No matter how big a check you write to your team, you're still keeping 90% of it. And it's what we talked before, it's new money. It's money that didn't exist yesterday and wouldn't have existed without your team doing that extra, that, that incentivizing them to move that extra, you know, move the ball a little more. So it, it's. So what you said at the beginning I think is spot on. Don't think of it as an expense, don't focus on it as money you're writing a check for. Focus on the roi. And I think that's, you know, back to this question. How much should I pay bonuses? I think the answer is, is whatever you want to pay for that investment, but don't. And I really think that highlights the way that a lot of practice owners have approached this in the past.

Well, I'm sorry, Steve, go ahead.

Yeah, no, they would just be thinking of it as I'm going to write a check for getting the same thing. And if they're doing that, they're screwing up. You're wrong.

What is the value of leaving at 5 o' clock on time? You know why I had doctors start, they supposed to close at 5 and then they go to 6:30. Why? Because they don't know how much enough is. They don't know what the enough mark is. So they keep throwing people in. And then they got to work overtime. And then here's the, here's the mechanism. You work overtime, then the team wants to leave, they leave, you can't find new people, and now you just crashed your whole business. So this handles time and like ending the day on time. It handles how many days a week you're doing dentistry from four to three. It handles your vacation. All of this gets handled when you flip the script and get everybody thinking in this manner. And it's not hard to do. You know, it's three steps. It's decide how much you want to do annually and how much time you want to spend. Reverse engineer, do the calculation and then put, then install the system and that's it. Then all of a sudden the team member is looking through the same set of eyes in the same set of currency as you are relative to the, their area of real estate that they're responsible for. I can't tell you like how many people are trying to still tell people and still write up job descriptions. Stop writing up job descriptions. People know what to do here. I always say stop delegating tasks, delegate outcomes, and then the team will figure out inside of the culture and the belief system that's in that practice. You don't have to box check like, you know, Jeff Lowe, he's like, you know, why is the person slumping or filing their fingernails? Look, because there's no game to play and there's. They're not playing the game to fill an outcome. They're filling time. That's why they're slumped over, filing their nails, not doing it. The minute you change the game, they have an intention and a purpose and an outcome and a reward and it's like, bam.

Yeah. And so I want to make sure we cover this because I've got the same question three or four different ways. And again, anybody who's watching, keep putting your questions in again, I'll lump them. But if it, you know, Gary's going to look through all of them and answer them all individually. I'm going to summarize because of our time constraints here, but it is. And we started this. How do I measure? And it's got measure in quotation marks, staff results. And you went through. And I know in the, in the book you go through it really well and we're going to give people at the end a way to get in touch with you and dig a little deeper into this. You know, this could be a, this could be a week long conversation. But you covered sort of the treatment coordinate. Some of them are easy. You know, a hygienist is easy. There's a, that's a production person. They produce this much and you can give them tools to produce more. But we probably all understand what that means. The doc is a little bit easy. An associate. We need them to produce this much. And I know you've got some things to say in the book about associates and how to pay them and how to bonus them, but pick somebody like the Recare coordinator.

Yeah, it's.

How do you measure that person's results?

Well, it's a real big one right now, Steve. Cause I'll tell you what's happening with the pandemic. A lot of people still, they're still out there, floating out there and they need to get people prompted in. So Recare coordinator, you know, what we'd like to do here is really, we have a tracker so we can track how many dormant people have come in. And we like to give them at least a dollar apiece. You know, a dollar is worth. You know, we have 2, 300 patients coming back. And you got to know how to, you got to know how to use the communication tools to create callbacks. Cause a lot of people aren't using phones anymore. Like there's a way to do it, but, but you want to have somebody head up the recare system to reactivate patients who have been dormant that need to come back, especially in the big cities. Like, big cities are coming back in September. So you really want to start now to fill your schedule. Because if you don't do that, you're not going to take advantage of this. And we see that this is the biggest talent shift. 50% of people are looking for another job in another practice. And a big shift in patients, too. The statistics are really interesting right now where patients are relooking and reevaluating who they're doing business with. When they come back, it's like been a blank slate and a re look. So they're like, hey, maybe it's time to upgrade who I go see. So it's really time to get those patients back in a recare coordinator. I like to do that. You know, if we, and we can kind of track it based upon the, you know, you don't want to nickel and dime this, but if you have, we have a dashboard that can say you have 1,000 patients that haven't been in, in 18 months. So if that number goes from 1,000 to 750, they get 250 bucks. Right? And they get their hourly on top of that. So it's, you know, it's a nice incentive for them.

And if you just, if you extend that a little further, if, you know, each patient is at minimum 100 bucks for a hygiene visit, you've just made like crazy amounts of money for that small number of patients, but incented somebody to, rather than, you know, filing nails or checking on ebay or whatever to, or checking Facebook to make some calls. And 250 bucks is a lot. It's a lot to them. But the revenue that comes off of that is an extraordinary amount for you. So again, it's not, it's not a $250 expense. It's an investment in. I don't know. Again, I'm not, I'm not good at math.

So I'll do the math for you ready? Yeah. Two profies. Let's just. In a PPO practice, you have to understand the average annual value of a patient. If you reactivate one patient, two profis, two exams, set of bitewings, $300 PPO fees, and the average adult with a good case acceptance system is about a crown to build up. Let's just call it a thousand bucks. It's not. It's not one. One hygiene visit. It's two hygiene visits, two exams, set of bitewings, and a crown of buildup. 1300 bucks. In a PPO practice, you paid a dollar for the reactivation of that, you could pay up.

That's a pretty good investment.

But see, the thing is, dentists, when they leave dental school, they're not trained to think like a business person. And the valuation of what one patient is actually valued to the practice. It's not their fault, Steve. It's not their fault.

No, no, no. So it might not be a direct thing like production, like a hygienist produces this much. And I can look on a little chart, at the end of the day, it's the patient, it's the schedule that's full. So appointment coordinator, if you got somebody who's just doing appointments, and by the.

Way, it's a big one. I'm stepping on you today. I apologize, Steve. I'm jacked up here.

Feel free. You got. You are just full of good ideas, Gary. And that's. And I want to make sure that we're going to have some things pop up here that help as we get near the end. Docs find out how to get in touch with you. So I'm going to have them here, pop the little box up that says, here's how to get a hold of Gary. I know there's a very limited number that you're going to allow, and we'll discuss it here in just a couple minutes. But I want to make sure that docs are able to say, hey, I want to talk to Gary Moore again. And seriously, you know, the Yankees thing and the Suns thing is. I don't know how much of that. You will. I think the bad news is you talk for two hours to that person and you know, but then getting back to business. So, yeah, appointment coordinator. How does that. How do I value that person? How do I put a number on it?

Well, here's, here's the deal, Steve. First of all, you know, understanding that you need two people minimum at a, at a front office in order to have a million dollar practice, to have the customer experience that you want them to have to have your schedule, be a perfect schedule and your cases be closed properly. You have to have two people. Most people have one person upfront. And even smaller practices, you can have two people and we'll show you that later. But here's the deal, Steve. You got to have. Everybody wants the perfect schedule. They will create it, but they need to know what the game is. And I mentioned it earlier, reverse engineer it all schedule it, and end the day with that schedule. And let's just say it's 5000 for the doctor, 1200 for the hygienist. Now all of a sudden, when they come out of the back room, what they're doing is they're saying, when do you want to come in? Instead of doing that, it changes the behavior of the, of the, of the appointment coordinator and the treatment coordinator. They look in there and you can pull up the days that you don't have 5,5000 in. So let's say they just closed the case with three crowns. You look on the day that there's a goose egg and you put that, you fill the treatment into that day. You say, I have available this day. Now let's say somebody's coming back for their. I just had a doctor, she goes for seventh try in because it's like they can't get their associate, couldn't get the, you know, the crown to fit or whatever that goes in on a day when you see $5200 in that doctor's schedule. So doctors always say to me, gary, I wish I had the morning with highly productive stuff, in the afternoon with non productive stuff, so I could just cruise my day out, have my revenue in and be done with it. So look, if you're doing Invisalign and you do it in the morning, your day's done. And then you're playing, you know, with house money. You know, the same is true. So it really gets you out of roller coaster days and it changes the behavior and it gets the scheduler to schedule the way you want them scheduled. Productive and then non productive. And your, your life is not a roller coaster ride. It's like nice and flat and consistent.

As opposed to just jam them in the schedule and you know when you want to come in and we'll see how you, how we did at the end of the month and write you a random check for a bonus dental assistance A little bit harder.

No, no, no, it's not. No, it's not. So see, dental assistance, this is where you turn the 20 into 80 into 100% of your team generating a hundred percent of the revenue. Here's how you do it. This is really highlighted here. The first thing is we don't call our dental assistants dental assistants. We call them ninjas. No, I'm not just an assistant. The ninja nation loves it. By the way, the reason why this is important because if they don't, they feel like they're the low woman on the totem pole, not valued. The minute they get that, they make a difference. By the way, they're the most trusted by the patient. They because they're like Manu Yamano, like, you're not trying to buy your Porsche in my mouth. So I think you're like the trusted person. That's the person that should be interacting with the patient. Usually in most dental practices, dental assistants, most are flipping chairs, cleaning rooms, sterilizing instruments, escorting people down the hall. But we want them to focus in on the revenue per day. How do you do that? You get them in the 5,000. Their, their scoreboard for how well they did that day is, did their doctor that they're assisting hit 5,000 a day. Now what happens? They walk into the morning huddle. We go, Doctor, Dr. Jones is at 4800. The assistant now looks, the ninja now looks into the schedule. And they go, oh, there's a filling that Mrs. Smith needs. I'm going to show her that. I'm going to take out the intro camera. I'm going to show it to her. We have a little time. I'm going to see if we can get it done. Doc, can we get it done before lunch? Yes, we can. Good. I'm going to make sure that I explain that she needs to get that filling done. And all of a sudden they're looking at the revenue impact of their day versus being activity based and being turning into. And by the way, this doesn't turn into a money machine for those docs out there that are going, is everybody to think about numbers and money? No, no. This is the scoreboard for how healthy the practice is, how healthy patients are and really allows you to benefit and bonus your team on the revenue above your benchmark, your break even point after your paid your salary, you're giving 10% of the 100% that's on the revenue. Above that.

Well, you also get a couple things in here. One was about staying on time. You know, your dental assistants are probably the key to keeping the train on the tracks and on time. And if, you know they can either put a little effort into it or you Know, take what happens. What do they say? There are three kinds of people. People who make things happen, people who watch what happened, and people who wonder what the hell happened. You want them being the ones who make things happen. When, when there's a, you know, when there's somebody out in, sitting out front who has a clock appointment and they got there early like you asked them, and you run over to 2:10 or 2:15, they're unhappy, the team's unhappy. Now we're working to a 5:30 again and you know, my kids playing Little league and everybody's unhappy. The assistant can, you know, and you said it earlier very, very well, Gary, way better than I could say it. You know, give them the result you want and then let them figure it out. And they will figure out how to get done. At 9 if you get, if you turn patients at 9 o' clock and 10 o' clock and 11 o' clock and 12 o' clock and 1 o', clock, you're going to be out of there at 5 o'. Clock. If you run over at 9, you know, move somebody around at 10:30 and that's your whole day. And your assistant's driving that. Everybody's unhappy. So revenue wise, happiness wise, streamline wise, keeping the train on the tracks wise, your assistance can also add to that. And again, there's your, there's your 5,000 day for the doctor and $1,200 a day for the hygienist, plus extra, right?

Yeah. Fear and scarcity usually drives this. When you live in not enough. And when you do this method, you get to enough, like, how much money do I need? And you break it down per day, per team member. Now all of a sudden you know how much enough is and your team knows how much enough is. And here's what it does. It creates automatic acknowledgments. It creates trust. Where does it create trust? When you see people on time and release them on time, they're going to trust you. They're not going to break and cancel. Because when you don't see them on time and you, and they run way over, what happens is the patient goes, I'm not going to spend three hours at the dental practice. I'm out of here. I'm not. I'm going to cancel it. So there's so many cascading things that this thing's fixed at its root cause. And the problem with dentistry is you can't be an octopus. You can't try to control all these things. If you don't have control Points in place and people owning those things. You can't possibly scale your business. It's always going to be stuck at the same revenue number. You know what gets you from a half a million practice, Steve to a million practice is not what gets a million dollar practice to a million and a half. And what gets a million and a half to three is completely different. You have to reinvent up the hill. You, it's not a straight shot just because you do one thing great and you try to keep doing it. All you're doing is I, you saw my car, I have a stick shift. It's like if I don't push the clutch in and that engine revs that, that motor is going to burn out. And I see docs just burning out because they keep applying the same strategy, wanting more, needing more because they have more expenses and their, their family needs more, but they keep applying the same strategy. Never. The successes that get you to hear Steve are the barriers to get you.

To hear so will we. I've got one last one. I want to make sure we get it. And for anybody who's watching that little box again, go ahead and click that. And that's getting you over to some time with Gary, which we'll discuss here in just one second. The last and most important how you measure staff results. Team leader.

Ah, all right, my favorite. All right, so team leaders are not office managers. Office managers hide behind a room. They usually are doing a lot of paperwork. By the way, they shouldn't be touching your P and L. They should not be doing your payroll. That should be all off sited because they'll have too much leverage. That's not a good place to be in. A team leader should really be managing the measures per day per team member and in a practice under 10 people, the team leader should double as a treatment coordinator. Because the same muscle that it takes to close a case and get agreements and hold the line on things is the same thing. Getting agreements, making sure the team has the agreements and that they hold the line on things. The same personality type and the same ability, the same muscle it takes to team lead and close cases all rooted in one thing. Management by agreement, who's going to do it, what are you going to do by when will you get it done? So under this model, once you have it built, the team leader should only be team leading about 10 or 15% of the time and doing a secondary job if there's under 10 people. Once you get to 10 people it's more of a full time job because you have HR in there, there's other things. But 10 people are under. This person should double. So now you get a ROI on that and then they should get their measure on the cases they close. So when you do it on case closed, they're, they, they're more than taken care of. And that's a great way to incentivize a team leader. Now once you go above that very small percentage of the collections because and you really have to have a team leader, if you go above 11 people, you do it on a small percentage of collections because it's because collections, everybody's job leads to that collections and they understand the way the game is played. And the ultimate and I only like one measure to max. Once you get past that and it's too hard to calculate a bonus, it doesn't work. One number is the key and, and then you know, you can escalate it if you really go above that. So I like maybe a quarter of a percent sometimes it depends. If it's a dedicated only team leader.

What do you call a stretch bonus? So here's what we need to be. We break even. Here's what we need to be break even and start sharing in it. And then here is out of the park. Here's a home run. Here's out of the park. And I think in a, you know, you've done this way more but I would suspect in an average 12 month period, you have a month or two that really suck, a month or two that are out of the park and you don't even know why, and a bunch of really good average, you know, above your break even numbers, which makes a really great year to grow into the next year.

Absolutely. And you know, that's why you do it on a wider angle lens. You don't just do it on a monthly, it's more done on a quarterly basis for a team leader. So there's some nuances here and if anybody wants to get that nuance addressed, I have time. You know, I created space for your readers and listeners, Steve.

So let's talk about that. You have graciously offered at every episode. You know, that's part of, part of our deal. And we appreciate you talking to our readers, listeners and viewers and also offering up a half hour of time for 10 people. I think you do that once a month. And I would say again, anybody who listens this and says, hey, that's me, I want to grow my practice some not sure how to do it. I'm getting Gary's book, Million Dollar Dentistry. I'VE read through it, and I think I understand it. Gary will spend a half hour with you, click the link, put your name and email address in. You're talking to Gary, and ask anything. And I think you have told me that you have gotten some really. Since we started this early this year, and we dabbled a little bit back during COVID days, but you've gotten some really amazing calls from practice owners who. Who are just almost afraid to reach out. Right?

Yeah. It's really interesting to me, Steve. Like, the people that have come, it's been so great because, you know, a lot of people have been wanting to make a change. They were just, like, kind of waiting out Covid. Like, I call it like a middle adopter. Like, the early adopters were when we had our Tuesdays. I can't tell you how many people were on every Tuesday during COVID when we walked everybody through furloughing teams and how to do ppp. And, you know, so many people go, thank you for what you and Steve did during COVID And now they're like, okay, I know I can't keep doing what I'm doing. I got to make my pivot. I got to get things cleaned up. I need to hire people. I need to bonus my team, because if I don't, they're going to go work for somebody else. You know, I know I can't just keep doing the same thing over and over more than ever. And, like, a lot of people have had a consultant before, they just weren't getting the changes that they needed. And they saw, like, if we kept applying, that they wanted to make a change and they didn't know how to have that conversation. Like, I've had so many people be vulnerable, transparent, and they know I'm nonjudgmental because I've seen it all. I mean, I haven't seen anything brand new in a while, but, you know, really heavy stuff and then really light stuff where people are, like, hugely successful and they don't know how to manage. Like, I had a guy in Indiana, he's like, I have two practices. I don't. I don't know how to do this. My, my founding doctor just left. I have a new associate. I've never managed people like, how do I manage this? You know, right around the corner from you, Steve. So, you know, it's just been really, really great. And people from all over small, small towns, in rural areas to a lot of major cities because of. Of the population shift in these cities, because they actually have to, you know, shift how they do it. So right now more than ever in my career, there's so many nuances to deal with, from rural practices to city practices to group practices to individual practices. Guys that want to sell and gals that want to sell. It's really an interesting time in dentistry, and I applaud people. It's a strength to raise your hand and say, yeah, let's do it. You know, so every month I sell out. I, you know, we have more and just so, like, I don't have to work overtime. And I'm actually doing that because I'm taking some vacation time this month. But Once we have 10, we push it into the next month and they get those. So, you know, and we've been doing that pretty much every month. So it's been, it's been really great.

I would say sign up, click the link. You know, even if you went five minutes, you have a specific question or just a general question, if you're exactly like Gary said, you're in Indiana and don't know how to do it, which is surprising. So that, you know, whoever that doc is probably went to University of Kentucky, but, you know, definitely not the Indiana University Dental school. But no docs. They don't teach you any of this in dental school. And I think that you and I have talked before. That's what overwhelms a practice owner. It's not the dentistry, it's not the treatment they love to do. It's the taxes, the employees figuring out a bonus, figuring out why a team comes in and hates them every day and figuring all that junk out. And you do that extremely well. You've done it thousands of times, literally, you know, wrote a book about it. And we appreciate you coming on. And you know, one more time, we're up to chapter seven next month. Gary, is when patience, try your patience. So I haven't read that far ahead. I am still a big fan of chapter four, what you should really be doing with your hygienist. And for anybody who hasn't read it, it's not what you think, but it is, it is absolutely worth read. So you know this chapter, chapter seven, turning your payroll into a profit center. I feel like we unpacked a lot. We had a lot of really good value. I think any doc who listens, listen to this. As a practice owner who struggled, took something away and is taking something away and they want to take away more. Click. Talk to Gary. You know, no obligation. Nobody's going to try and sell you anything. Gary just has offered a morning's worth of time to share with our readers and listeners. And, you know, I think it just, it's win, win, win for everybody. So with Gary, as always, parting thoughts.

You always win the game you're playing.

So I wrote that down.

Seriously, I love that you always win the game you're playing. So if you don't like the results, then change the game and the way it's played like we talked about in today's episode. And all of a sudden, you're going to see a dramatic shift in the outcomes that you that you play well.

Awesome advice as always. So listeners, viewers and readers, Gary, Katie, next level practice. Get your copy of the book Million Dollar Dentistry. And if you want to spend some time with Gary and chat with Gary, click the link, sign up. And if you have any trouble with that, just email me, Steve atthe profitable dentist.com and we'll make sure we connect you guys. But until next time, chapter eight, when patients try your patients. Gary, keep it simple. You always have the best advice. All right, practice owners, appreciate you tuning in. Your questions will all be answered, I promise. Until next time, Steve Parker, Gary Katie signing off.