Telephone Training, Partner Buy-In, and Consent

Issue #184-9.10.13

In This Issue: Are Your Patients Quietly Disconnecting? by Sally McKenzie, CEO Establishing a Baseline Value for a Partner Buy-In, by Dr. Tom Snyder Employee Consent for Advertising Materials, by Michael Moore, Esq. Sally McKenzie, CEO McKenzie Management Printer Friendly Version Are Your Patients Quietly Disconnecting? By Sally McKenzie, CEO From all outwardly appearances, things seem to be just fine in your practice. Patients are in the chair and you provide care for them. They like you. They come back – or at least a good number of them return. In fact, you are pretty sure that a lot of them come back. Illusions are so comforting, until we pull back the curtain.  Chances are very good that if you don’t keep a close watch on your patient numbers, you’re losing more patients than you think you are. And as you read that last sentence, you probably quickly reassured yourself that it’s okay if you’re losing a few patients here or there, because you are confident that new patients are scheduling all the time. Then you muster the courage to take a closer look, and you discover that not only are existing patients not returning, there aren’t as many new patients as you thought there were. But why? What is happening? Where’s the disconnect? Oftentimes, patients are lost at precisely the point where the patient experience begins – the telephone. Certainly, with email and text messaging, phone communication may be reduced somewhat in some practices. However, in our increasingly impersonal world, many current and prospective patients still want to talk to a real person. Thus, the telephone remains every bit as important as your website. But if you are like many of your colleagues, you don’t really have a sense of how effective your staff are on the phone. Frankly, if you are totally honest, you’ve probably never given it much thought. After all, you reason that “it’s just the phone.” Dentists commonly view the phone as merely a perfunctory duty. It rings, someone answers it, schedules an appointment, and that’s it. In fact, only 12% of dentists believe the telephone has a major impact on their practice, even though it is still the most common means for new patients to schedule appointments. And only 5% of practice staff are trained to properly handle patient phone calls. The vast majority simply wing it. Doctors are often so intently focused on what is happening in the treatment rooms, they have a misguided belief that the patient’s time in the chair dictates how they feel about the practice. They could not be more wrong. Yet, they shake their heads in bewilderment at the open appointment times, dwindling new patient numbers and sinking production figures and blame it all on the price of gas, the neighborhood, the weather, the politicians, the economy, and so on. It never occurs to them that staff are unwittingly disconnecting the practice from the patients. Few dental employees realize the powerful impact the phone has on the total success of the practice. And, truth be told, many would happily cut the line if they could. Why? Staff commonly view that ringing phone as an annoying interruption, rather than an opportunity to connect with the people whose business you and your team are dependent. And they have little comprehension of how that negative attitude comes across loud and clear to the person on the other end. It’s not that these business employees are incapable or unwilling to manage phone calls effectively. They simply have never been given the opportunity to learn how to maximize the telephone lines - not only to build solid patient/practice relationships, but also to boost new patients as well as doctor and hygiene production. It is not uncommon for otherwise very capable dental employees to drive new and existing patients away because they have never been trained on how to effectively communicate on the phone. When was the last time you tuned in to how your team comes across on the phone? If you were a prospective new patient calling your practice, would you schedule an appointment? Would you feel the staff are welcoming and accommodating? Would you find your telephone experience pleasant, or something you just had to endure on your way to getting in to see the doctor or hygienist? Would everyone who answers the phone be able to answer basic inquiries about treatment, procedures and insurance? Knowing the answers to those questions is critical to sustaining and building your practice. After all, if poor telephone protocol causes you to lose just 20 new patients a month and each would spend an average of $1,000 on dental care a year, that’s 240 patients and nearly a quarter of a million dollars. If you would like my team of telephone specialists to tune into what’s happening on your telephone lines, go here.                                                             Sally McKenzie is CEO of McKenzie Management, a nationwide dental management, practice development and educational consulting firm. Working on-site with dentists since 1980, McKenzie Management provides knowledge, guidance and personalized solutions that have propelled thousands of general and specialty practices to realize their potential. Interested in speaking to Sally about your practice concerns? Email her at sally@thedentistsnetwork.net or call 1.877.777.6151. Interested in having Sally speak to your dental society or study club? Click here. Hear Sally’s FREE podcasts at The Dentist’s Network - HERE Forward this article to a friend Thomas L. Snyder Director, Practice Transitions The Snyder Group Printer Friendly Version Establishing a Baseline Value for a Partner Buy-In By Thomas L. Snyder, DMD, MBA Director, Practice Transitions The Snyder Group As we have mentioned in prior columns, partnerships are on the increase as more doctors must continue to practice but still want to implement their transition plan. So, if you hire an associate with the expressed purpose of offering a partnership interest, one key question is, “when do I establish the purchase price for the partnership interest?” There are two schools of thought on this topic. One is to establish a baseline value within the first year of the associate’s employment, or secondly, value the practice immediately prior to the partnership being formed. I prefer the first approach. Some advisors will argue that valuing the practice later, particularly if you have a “gold mine of a practice,” will cost you money with the loss of appreciated value if the practice value is established at the outset. In our experience, most associates prefer not to pay for any growth in revenue that they contributed. Associates with any business savvy will not enter into a long-term relationship without knowing the economics of the future transaction, and hence, what their partnership will cost them. There is nothing worse than waiting to value your practice before your partnership commences, only to discover that your associate balks at the price and then decides to pursue another opportunity. If you are in the later stages of your career, this can have a devastating impact on your practice transition plans. Adopting an approach of establishing the practice’s value within the first year of employment makes the most sense, and here’s why. Human nature being what it is, delaying the valuation may cause some associates to “under-perform” if they realize that any extraordinary effort on their part may cost them at the buy-in time. Let’s examine both approaches. For example, let’s assume that practice revenue preceding the associate joining the practice is $700,000. The associate joins the practice in July of 2009 and he/she generates $90,000 of revenue for the remainder of that year. So, 2009 revenue was $790,000. Assume the practice value equals 65% of last year’s gross receipts. Therefore, the baseline practice value would be $513,500 as of December 31, 2009. Our rationale for establishing a baseline value within the first year of employment versus valuing the practice before the associate joins the practice is to account for the additional time that you may invest with your new doctor, as well as any financial risk you undertake at the outset, especially if you offer the associate a guaranteed salary for the first six months. At partnership formation, this baseline value will be adjusted for inflation as well as any new asset purchases made during the employment phase. This will be the actual price of the partnership interest.             Now let’s “fast forward” to January 2012 when the buy-in occurs. Over these thirty months of 2011, revenue has now increased to $1,000,000. So if you waited until 2011 to determine your value using the same 65% multiple, the practice’s value would have been $650,000! Your associate probably will take issue with that higher value. One can argue that by accepting the baseline practice value, the owner gave up over $68,000 in appreciated value (assuming the associate purchases a 50% interest). From a valuation point of view, that is correct. However, from a practical point of view that is only a portion of the picture. If you have hired a truly motivated associate who knows that he/she will not be penalized for increasing the total revenue of the practice, you will reap the reward of receiving additional net income during the employment phase. If you establish your associate economics properly, a profit margin between 30% and 35% per year from your associate’s efforts is not uncommon. Let’s see how these numbers may look if we use a 33% associate profit margin.   Associate Contribution Profit Margin at 33% 2009 (6 mos.) $90,000 $29,700 2010 $220,000 $72,600 2011 $300,000 $99,000 TOTAL: $610,000 $201,300 From this example, you earned a total net profit of over $201,000 in thirty months, so that does offset the loss of value appreciation, which in this example was $68,000.  Also, if the associate knew they had to pay for their efforts, this net additional income may not have been as high. So it is a trade-off. We believe that creating win/win relationships is the way to go, through establishing baseline values within the associate’s first year of employment. This is the best way to motivate an associate and provide them every opportunity to succeed. If they prosper, you will reap the financial benefits as well. If you would like additional help, email Dr. Snyder at drsnyder@thedentistsnetwork.net   Interested in having Dr. Snyder speak to your dental society or study club? Click here. Hear Dr. Snyder’s FREE podcasts at The Dentist’s Network - HERE Forward this article to a friend Michael Moore, Esq. Director McKenzie HR Solutions Printer Friendly Version Limiting Conflicts over Misappropriation of Likenesses of Employees By Michael Moore, Director McKenzie HR Solutions The growth of the internet, the proliferation of web site developers, and the rise of Facebook have created virtually limitless opportunities for businesses to put their goods and services in the public eye. Dental practices have recognized this opportunity and acted on it. The classic entre into internet marketing has been the creation of a website, followed by Facebook. Some sites have used only clip art to personalize the site, but more and more practices are filling the home page and other places with pictures and videos of the doctor, associates and employees. Even before this, some businesses, and I am sure dental practices were among these, had billboards and other vehicles to get themselves recognized. And those offerings often pictured actual employees. All good. However, we were recently consulted by a doctor with the following situation. He had employed a poor performing assistant for quite a while. We had worked with him to try and improve her performance, without success. He eventually concluded that he needed to separate her from the practice, and did so without any rancor. She applied for unemployment benefits, and he chose not to contest them. He believed he had seen the last of her. He was mistaken. Weeks after she was let go, the doctor received the following text message: I am requesting that you remove any pictures that contain my family, my vehicle or myself off your website or Facebook pages or any other social media you may use. You do not have a signed release to use these. It also includes the YouTube video you have posted. The question uppermost in the doctor’s mind upon receiving this text was what possible liability the practice may have had for continuing to use any likenesses of her – and whether this potential liability could extend to the picture of her pickup truck. This former employee either knew someone who knew something about the law, or had done some research on her own. In fact, all jurisdictions recognize a right to privacy. There are generally three ways someone’s privacy can be violated so as to give rise to a legal claim. One of those is proof that another has appropriated the likeness of someone, particularly in a commercial context. “Appropriation” can mean a number of things, but using an individual’s likeness in order to make money, without consent, is a frequently litigated fact pattern. In the case of our doctor, however, this demand was one without much punch behind it. This is because proof of the use of a likeness without permission is only the first hurdle someone must jump. The second one – proving the amount of money damages to which the plaintiff is entitled – is the stumbling block. Therefore, merely proving the use of one’s likeness will entitle one to a court order requiring the third party to take down the images, but without more, not entitle one to compensation. Unless you are Michael Jordan or the estate of Michael Jackson, proving that another profited off of the appropriation of one’s likeness will be near impossible. This makes the economics of filing suit a losing proposition for most people. A caveat here - in some states, there may be statutes which address misappropriation and grant statutory penalties or damages without proof of actual profit. Whether or not you practice in a state which has the common law definition of misappropriation or the more liberal statutory provisions, it is always better not to receive a text like the one quoted above. It could trigger a sleepless night, and internal recriminations, and even possibly the expense of consulting a lawyer. At the least, having gotten such a demand, the wise move would be to review the website, emails and any other advertising, to make sure that unhappy former employee’s face is deleted. And that means paying your web developer to get it done. I recommend, therefore, that you prepare and have all current and future employees execute a release. This is a simple document. It should state to the effect that in consideration of Jane Doe continuing to be employed [or being hired] by the practice, she gives consent to the practice to use her likeness in any advertising or promotional materials, including, but not limited to the practice website, Facebook or other social media. And further, that she releases the practice from all claims that she, her heirs or assigns might bring against the practice, its owners and employees from the use of such likenesses. Of course, this is another piece of paper to prepare, get signed, and properly filed. But once it is done, you need not be concerned about receiving a demand such as the one our doctor in the example recently received. Mike Moore is ranked among the best in employment law and has been named one of the top 10 lawyers in Ohio. As Director of McKenzie's HR Solutions, Mike is the creator of the Employment Policy and Handbook, geared to providing dentists who are unsophisticated in the legal arena with a step-by-step policy manual. Click here to hear Mike present “7 Elements of an Effective Employment Policy.” Email Mike at mike@thedentistsnetwork.net. Interested in having Mike speak to your dental society or study club? Click here. Forward this article to a friend

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