Hygienist

If you do not have a hygienist you can skip this section, although there is no harm in learning about management issues even if they are not directly relevant to you. Let's start by asking you a few questions:

1. Name an occupation that requires two years of school and pays $300 to $400 a day right after graduation! Oh, I forgot, the hours are flexible too!
2. Who is the main employer of dental hygienists in the US?
3. What is the average percentage of income a hygienist is paid, of the amount he/she produces?
4. What is the average daily salary of a general dentist, fresh out of dental school?
5. What percentage of total income produced by an associate dentist is paid to him/her?
6. What percentage of income produced is paid to a specialist?

Can you see where I am going with this?

We hire hygienists, fresh out of a two-year program, and pay them $300 to $400 a day or around 50% of their production! But let me ask you this; is this not the same percentage we pay our specialists?  So what is the logic behind this?

On average, most in-house specialists are paid approximately 50% of their production. What about general dentists? Don't we pay them around 20 to 30% of their production?

So somebody explain these facts to me:

• We pay dentists, who went through eight years of school, half of what we pay our hygienists!
• We pay our specialist and hygienists around the same percentage of income!
• Hygienists cannot work alone and have no other option but to work in our offices.
• Our other colleagues can work for themselves.

You know what happened here - we really, really screwed this one up!!

Let me clarify something before I go any further; I do not have anything against hygienists, and I believe they are a valuable part of the dental team. Most dental hygienists are extremely caring and good at what they do.

What I have problem with is how these numbers conflict with the principle of Business 101. I believe a fair pay to hygienists is 10% less than what we pay our associate dentists. In other words, about 15 to 20% of production would be a fair portion to pay our hygienists.

Here is my reasoning:

First of all, if we want to pay anything close to what we pay our general dentists, why don't we hire dentists instead? There are a number of advantages in hiring a dentist as opposed to a hygienist:

1. There is no need for your direct supervision.
2. They can compensate your work overload.
3. They can take care of your emergencies.
4. They can cover for you when you are on vacation.
5. If hired as independent contractors, they are liable for their work themselves.
6. They can gradually integrate into your practice as a full time associate.

These days, you can hire dentists for what you pay your hygienists in various areas of the country. There are also many dentists who, for different reasons, do not mind doing mostly hygiene work.

Another issue to consider is this: Isn't our average overhead around 65%? (For more on this, see the overhead test) So if I am not mistaken, by paying your hygienist anything over 30% of their production, you are either not making any money off your hygiene department or you are actually losing money!

To check this for yourself, just calculate the total collection during last six months that is the direct result of your hygienist’s work. Then add up all the paychecks, and taxes, and insurance you paid for your hygienist during the last six months. If the second number (cost) is higher than the first one (income), you have been losing money on your hygienist! If the numbers are equal you have made no money at all! And if the collection is slightly higher than the cost, it is still possible that you are overpaying your hygienist.

I believe that the minimum acceptable profit is to collect at least twice as much as the total costs (payroll, taxes, and benefits). Anything less makes absolutely no economic sense (unless the hygienist is your spouse)!

Even at this level, you can still hire a dentist and pay them the same amount! If you don’t believe me, place an ad in your local newspaper tomorrow that says, "Hiring general dentist, pays 33% of production." and you will see what I am talking about.

Yes, hygienists aid in marketing and take care of your patients who have been coming to you for a long time. But if at any point you forget why you brought your hygienist to your office in the first place, you may lose the concept of making money in your hygiene department altogether.

How to address this issue

If you already have a hygienist, clarify your reasoning using the open book approach (show them the numbers). Explain to them that in an office with an overhead of 65% (hopefully not for long after using this software!) you cannot afford to pay anyone anything over 25% of their production. Emphasize that even under these circumstances, the office is only making a very small profit of 10%, which is nothing compared to the investment, setup and license that you have provided. If they do not understand, try bringing in an associate who does not mind hygiene work and pay him/her 25% of production; you will soon see the benefits.

The situation is even more difficult when your hygienist has been with you for a long time, but don't forget the old saying: "Any time you stop a loss, it is considered a gain."

Some people may argue that one important role of a hygienist is to free up the doctor's time to do more productive work, so it is acceptable to pay them more than what they make. Well, if this logic truly makes sense, let’s look at all the other people in our offices who play the same role. Doesn't your lab technician also free up your time, allowing you to do more productive work? If so, then why do we pay our lab $100 for a crown and charge our patients $700? Maybe we should pay our lab technician $350 (50%) for each crown!

The fact of the matter is that all our employees are doing things that ultimately free up our time to focus on dentistry. However, we must pay them in a way that makes economic sense. Like any other business, what we pay our staff is payroll cost and what they produce should be more than what we pay them; otherwise, where is the profit in this business? 

As dentists, we often buy ourselves jobs instead of establishing businesses. We only look at what is left for us at the end of the month rather than analyzing the profitability of each department. Remember, if you have invested $200,000 or $300,000 in your practice, you should be able to take a salary for yourself and your staff, pay all the costs, and still have a reasonable profit left for you. If you don't generate a profit, you may be better off working for someone else and investing your capital elsewhere!

While it is important to be a proficient dentist, you must also be smart when it comes to business. Pay your staff, including your hygienist, a fair salary - fair to both of you!