Tamara’s Pearls of Wisdom: Dental Practice Management Tips

Dental Management Tips from AADOM’s 2024 Office Manager of the Year – Single-Location Practice

The year was 1995 when Tamara Whitley, the 2024 Office Manager of the Year for a single location, told her dental school husband that she dreamed of a day when they would work together in his dental office. He said, “Over my dead body will you ever work in my dental office.” With her dream dashed, she began to climb the corporate America ladder with Medco Health Solutions, Cigna, CVS & ADP.

Fast forward 27 years when Dr. Bill asked Tamara to use her years of business experience to find out why he had not received a paycheck for 9 1/2 years as the owner of Whitley Family Dental in Dallas, Texas.

In her quest to understand why their practice was inefficient and unprofitable, Tamara quickly learned that an old adage is true. “You don’t know what you don’t know until you know you don’t know it.”

She sums up her hard-earned knowledge as “How To Avoid the Iceberg When Your Dental Office is the Titanic.” Tamara’s icebergs have become pearls of wisdom, and it is these pearls of wisdom that now have Dr. Bill saying, “Over my dead body will you leave our dental office.”

Tamara often says, “Knowledge is power…but only when shared.” She shares these pearls of wisdom for 2 reasons: 1) to prevent others from having an unprofitable and inefficient dental office, and 2) so you will be “IN THE KNOW”!

Pearl #1) Know Your Numbers

There are lots of numbers that are tracked in a dental office, but none more important than the breakeven cost to do business. It is more important than production, collections, insurance write-offs, etc., but most offices have no clue how to calculate this critical number.

When I started to look under the covers as to why we were unprofitable, one of the first things I found was we were in 52 upside-down PPO fee schedules—34 direct contracts and 18 indirect. Upside-down means the fee schedule reimbursements were $50.00 – $250.00 BELOW our per hour breakeven cost to do business.

NO WONDER I was shoveling my salary, bonus and stock options to keep the practice running and meet payroll! NO WONDER Dr. Bill had not received a paycheck in 9 1/2 YEARS!

Dental school teaches our dentists how to be great clinicians, but they are not taught the basics of running a business. Your breakeven cost to do business is CRITICAL in every decision you make in the dental office.

• Knowing this number will help you decide if a fee schedule is profitable BEFORE you sign on the dotted line.
• Knowing this number will help you when communicating to patients why you must exit an unprofitable network.
• Knowing this number will help you evaluate if you can afford a new piece of equipment and how the monthly payment will impact the bottom-line.
• Knowing this number will help you with transparent conversations with the team that motivate them to surpass this critical number.
• Knowing this number will help you determine if raises and increases to bonus structure are warranted for the team.

We sometimes make things harder than they need to be, but the good news is calculating this number doesn’t have to be hard!

• Add each month (12) of TOTAL expenses found on the Profit & Loss Statement (P&L) – rent, mortgage, utilities, payroll including dentist’s salary, taxes, supplies, instruments, maintenance, office supplies, medical & life insurance, postage… EVERYTHING! Divide the total by 12 to obtain the monthly average.
• Divide the total expenses for the year by the number of hours the dental office works – this gives you the breakeven cost to do business per hour.
• Divide the per-hour cost to run your business by the number of operatories you have, and voilà – you have your per-hour per chair cost to keep your doors open.

Example Using Equation:

• The P&L expense line for the year = $840,000.00 – divided by 12 months = monthly average breakeven cost is $70,000.00
• Divide $840,000.00 by the hours worked in a year. If the office works 4 days per week, that equals 1664 hours per year
• In this example, the per-hour cost to run the office is $504.81 to break even. You must make this number per hour to keep your doors open
• Per operatory – divide your per-hour cost by the number of operatories you have – in this example, we have 4 operatories – this is your per-hour cost that each chair must meet to reach the practice per-hour goal of $504.81 = $126.20

I understand that many office managers may not have access to the profit & loss statement for the office. If you do not have access to the P&L, show this pearl to your dentist and have them give you the total annual expense line. I promise the dentist will be impressed that you are trying to partner with them to ensure you have a profitable practice AND to help them make educated and informed financial decisions for the office!

Pearl #2) Know Your Insurance Aging

There are so many pearls of insurance wisdom that I have learned when navigating around dental office insurance icebergs—like navigating exits from 54 PPO fee schedules—but this pearl will focus on insurance claims aging.

As I embarked on the journey of uncovering the reason why we were not profitable, I quickly learned that one of those reasons was insurance claims aging. I discovered 504 claims EACH over 500 days aging!!!

Days aging is the time period from the day you submit the claim to the insurance company to the day the claim is closed in your practice management software.

Our office submitted the claims to the insurance company, but we never followed up on those claims that were denied or needed additional information to be paid. Our office never checked the claims aging timeframe, nor did we close out the claims as being paid which skewed our production vs. collections reports. We just “assumed” that we were being paid for all claims!

Did you know that the insurance companies count on the “shoebox” effect?

I am dating myself with this analogy, but these insurance companies count on you putting the claim out of sight and out of mind in the proverbial shoebox. They count on you forgetting about the claim until after the contract timely filing date. They make more money when you forget.

Our office did just that – WE FORGOT…all because we had no process in place to ensure timely payment for the work that we had done. You can’t be profitable if you are not paid for your work!

Avoid the insurance claims aging iceberg by implementing a process to ensure timely payment:

• Assign responsibility to a primary team member for running the report – have a back-up team member assigned who can access the instructions on how to run the report
• Determine your office frequency for pulling the claims aging report. In the early days after the 10 1/2 month clean-up, I ran this report, and worked the new claims, EVERY.SINGLE.DAY.!
• Create an automated reminder on the day the report needs to be run
• Run the report and compare to the previous report to know if you have new claims
• Work any new claims IMMEDIATELY and DOCUMENT the status of the claim with any follow-up notations in terms of payment timeframe
• Establish an insurance follow-up folder on your server where the entire business team has access and can view the current issue logs for each patient
• Access the follow-up folder on the same day you run the claims aging report for any deliverables that are due, or past due
• Close the claim only AFTER you have confirmed the money has been put in the bank for the outstanding claim

The clean-up effort for those 504 claims would ultimately take me 10 1/2 months to resolve, follow-up on for what is missing, and get paid. When I think back on those 10 1/2 months, I did, and still do to some degree, have claims PTSD – post-traumatic stress syndrome. Have a process and you too can be claims PTSD FREE!

Pearl #3) Know Your People

I recently read that failure has a unique way of teaching us lessons that success simply cannot. Failure builds humility, sharpens our focus, strengthens resilience, and deepens empathy for others. It was the biggest failure of my professional career in Corporate America that taught me the lesson of KNOW YOUR PEOPLE.

After I had hired an AWESOME team of people who were just like me, my leader decided to teach me a lesson that I would never forget. He reorganized the entire department, took away my AWESOME JUST LIKE ME PEOPLE, and gave me people who were the exact OPPOSITE of me.

After some weeping, wailing, and gnashing of teeth because I was leading what I thought were “less than awesome people,” my leader introduced me to personality assessments as a tool in the workplace to get to know my people. People who were not like me. People who had different ideas on how to reach a common goal. People that have value even though they are not like me.

My leader taught me that high-performing teams have diversity of thought and action, and include a mixture of Lions, Otters, Golden Retrievers, & Beavers!

The personality assessment he used with me was the DISC Animal Model:

D stands for Dominant = Lion

I stands for Influencing = Otter

S stands for Stable = Golden Retriever

C stands for Compliant = Beaver

From that moment on in 2001, I vowed that I would use the DISC animals to learn who my people are, learn what made them tick, and learn how to flex my communication style to theirs in order to communicate more effectively. I have followed this communication philosophy ever since that critical life lesson, so when I became the Whitley Family Dental Office Manager, I knew I needed to KNOW MY PEOPLE! I knew I needed to build a culture of effective communication, so I introduced the team to the DISC critters!

There are several free versions of DISC on the internet, but the most simple version I have found is with Dental Post. Once you establish a free account with Dental Post, you have access to their simple 10 question DISC assessment.

We use DISC in 3 key areas of our practice to KNOW OUR PEOPLE:

1. Hiring
2. Monthly Team Meetings
3. Patient Communication

Hiring

We have learned that hiring the wrong person in the practice can be quite costly both financially and culturally, so we use DISC in our interview process to ensure we hire the right person who is a fit for our culture. Our interview process includes:

1. Determine the personality type for the position – for example, Otters (I) make PERFECT business team members who greet patients. Otters are the “people people” who LOVE people, love to talk, and build relationships. Beavers (C) make INCREDIBLE OSHA/HIPAA compliant officers because of their attention to detail.
2. Review resumes on Dental Post for the personality type we are looking for – for example, if I am looking for a business team member greeting our patients, I will scan the resumes for those who are Otters (I) and then contact them to determine interest in interviewing with us.
3. Administer the 10 question DISC assessment during the cultural interview – we have both a clinical/business interview and a cultural interview. The first thing we do in the cultural interview is to have the candidate take the 10-question assessment

Monthly Team Meetings

Prior to the first team meeting when I introduced DISC to the team, I had each person take the 10 question Dental Post assessment to determine their style. I asked them to keep their style a secret until the team meeting. Every person has components of all 4 styles, but the 10-question assessment helps identify the person’s dominant style.

During the team meeting, we did a fun exercise of guessing everyone’s styles and then we had the big reveal. We learned how each style likes to communicate. We identified the likes, dislikes and blind spots for each style.

Once we learned about the styles, the team realized that flexing to other’s communication styles makes for more effective communication. We continue each month to bring at least one example of successful communication between the styles.

Patient Communication

When you make personality assessments part of your culture, you naturally start looking at people in terms of the communication styles. Based on our patient interactions, we label our patients with each style by noting an L, O, G, B. The label helps us know how to flex to the patient’s preferred communication style.

For example, we have a bank executive that is a Lion. He is no nonsense, get in, get out, and get to the bottom line, so we flex to his style with no chit chat. We have an engineer that is a Beaver who wants to know all the data behind x-ray frequency and why we take probe depths measurements, so we flex to her style and show her how we are in compliance with the ADA X-rays & Staging/Grading guidelines – yes, she even tracks her own numbers because of her natural attention to detail!

Communicating with patients in their preferred style makes for very happy patients.

Take the time to learn and embrace your teams’ differences so you can KNOW YOUR PEOPLE!

Pearl #4) Know Your Vision

One of my favorite quotes in business is: “Vision, in the absence of execution, is hallucination!” This means that having a good idea, or vision, is pointless unless you actually put it into action and follow through with necessary steps to make it a reality. 

When I joined Whitley Family Dental, after my 27 year career in Corporate America, I quickly learned that our dental office was visionless.

Oh, don’t get me wrong!

Did we work hard every single day ensuring our patients were receiving high quality oral healthcare? ABSOLUTELY!! Did we have a business vision that we executed every single day while providing the necessary oral healthcare in order to have a profitable business? NO! This mentality of not seeing the dental practice as a business contributed to our iceberg of unprofitability. 

At one of our first monthly team meetings, I asked the team this question, “What is our business vision?”

They looked at me like I had 2 heads – LOLOL!

After much discussion of WHY a business vision is important to the success of the dental practice, we all agreed that our business vision MUST be patient centric. We agreed that everything we do in our office must point us to our North Star of “make it easy for patients to do business with us.”  

We mapped out all the things we would want if we were patients in our practice.

The list was LONGGGGG!

Examples include:

• Automatic patient engagement reminders
• Automatic direct insurance verification
• 2-way texting, online forms
• online appointment scheduling
• Google Reserve, where they can schedule an appointment while reading our reviews
• Multiple ways to send automatic billing statements via text, email, and snail mail
• Multiple ways to make payments via text, website, etc

We look for products, services, and workflows that will help us execute our business vision while keeping in mind Pearl #1 above—Know Your Numbers.
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When assessing new products, services, and workflows, we MUST be able to afford it, and we can only know that if we know our breakeven cost to do business. Making the final decision if we will bring on a new product, service, or workflow is easy. If the product, service, or workflow doesn’t point us to our business vision, then we don’t do it. 

After we bring on a new product, service, or workflow that points us to our business vision, we ALWAYS measure the success of the new product, service, or workflow in 2 ways:

1. Measure the return on our investment (ROI) against the breakeven cost to do business.
2. Have the patients give us feedback via surveys and/or online reviews. 

Steps to Develop, Execute & Measure Your Vision: 

• Allow plenty of time at the initial vision planning meeting to explain WHY a vision is critical to the practice’s success 
• Brainstorm items that the practice values 
• Develop the business vision specific to your practice 
• Outline the actions and responsibilities for the team to execute the vision 
• Measure the execution of the vision via team/patient feedback, surveys, and/or reviews  

 The moral of this story/iceberg is to KNOW YOUR VISION…and then go execute that vision every single day! 

 

Stay Tuned for Next Month’s Dental Management Tip for Single Practices

 

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Is Your Dental Office Manager Our Next Practice Administrator of the Year?

Each year, AADOM recognizes two members as Office Managers of the Year (single-location practice and multi-location practice) who exemplify leadership, actively pursue professional development, education, and community service, and have demonstrated the ability to increase practice efficiency and profitability through the implementation of systems, technology, and marketing strategies. Does this sound like you or the office manager of your dental practice?

Nominations for 2025 will open soon! Your candidate could be recognized at the 2025 AADOM Conference this September.