A Q&A with Greg Stanley on how to improve your bottom line
By Pattie Stechschulte
Editor’s Note: Greg Stanley, president of Whitehall Management, has been consulting with doctors, teaching seminars and speaking for local, state and national practice organizations since 1980 in the areas of practice development and wealth accumulation. Stanley heads a consulting team that provides strategic practice planning services for doctors throughout the United States, and he is actively involved in producing educational video and audio programs to support the growth of his seminar clients and make practice proven content available to doctors worldwide. Recently, he took the time to speak with one of our writers about how to manage a practice and how chiropractors can increase productivity through employee incentives.
Today’s Chiropractic: Can you describe for us how employee incentive programs work?
Greg Stanley: I had written incentive programs off as hopeless at one time because so many people have actually had negative experiences. In fact, most bonus programs that we encounter are actually more damaging to the practice than they are beneficial.
What we came up with were some things about bonuses that kept it from working and some staff really taught us this. One of the things they taught us was that bonuses had to be “dollar one” programs in order to motivate employees. Dollar one means that if the practice goes up one dollar, there is something in it for everybody, as fractional as that might be.
In another words, if a practice is now collecting $20,000 a month, you can’t say, “When we get to $40,000, you are all going to get this huge bonus.” That doesn’t mean anything to staff. The faith just doesn’t reach that far.
When I say bonuses don’t work, I mean that anything that is not dollar one typically doesn’t work. Another thing that doesn’t work is the profit adjusted bonus, where staff get bonuses after profits or overhead is taken out. They have no control over that. Your choice to go out and take on a new expensive computer system or some technology that they don’t even understand or believe in means that all of a sudden, they are not getting a bonus because of the choice you made. That can be difficult for staff to understand. So bonuses usually have to be dollar one in order to maintain parity.
Bonuses also should be big enough amounts to truly help improve someone’s lifestyle. It can’t be for a negligible amount such as $75 or $50; it’s got to be for something anywhere from $200 to $1,200 a month or more, potentially. A lot of doctors balk at the idea of bonuses until they sit down and really think it through and realize that they don’t have to pay this until there is a lot more money in their bank account to pay it with.
TC: What are your recommendations on setting up a dollar one bonus program?
Stanley: We suggest bonuses be paid hourly. Staff self-esteem tends to be tied to their hourly wage. We are against paying salaries. The idea that people will work harder if they have a guaranteed pay, not tied to their hourly work, is misleading. It should be paid on next month’s hours worked. It has to be paid on vacations and so forth that has already been tested.
Staff also has to feel that the bonus is protected and that you are not constantly scheming of ways to undercut costs. We suggest a bonus base that is based on collections—above this level of collections, the bonus begins. It should reflect where the practice is right now. That qualifies as a dollar one bonus; the idea is to get the base fixed where you are right now. Every $1,000 the practice goes up above the bonus increases next month’s hourly pay.
For example, if you are collecting $30,000 a month, for every $1,000 above that, staff should get an extra 15 cents a hour. Next month, we collect $40,000, therefore that is a $10,000 increase or 10 times 15 cents, which is $1.50 an hour bonus paid against next month’s hours.
A bonus has to be easy to administer and it has to be easy to understand. Bonuses are complex for several reasons, the most major being a staff fear that somehow it’s a scheme. But when you follow those rules, it tends to be very motivating.
TC: What are some examples of bad incentive programs?
Stanley: [Examples would be] programs that have some sort of closed-end element. If the doctor gives a certain percentage of the collections to staff, the staff will get a bigger income as the practice grows. The problem was that if the practice grew, doctors had to add one or two additional team members in order to sustain that growth. Then they’d have to divide the bonus now between more people and thus actually have less money. Staff can figure that out, and so it actually becomes a negative issue.
TC: Are there non-monetary incentive programs?
Stanley: Time off is always good. If people can somehow get more time off if a practice reaches a certain level. One incentive I have seen work is where if a practice hits a certain production level consistently, they will cut back a half a day and see if they can maintain the practice at that level and the staff gets the same pay they were getting before. Other than that I would have to say no, it tends usually come down to bonuses.
TC: How do you appropriately size your office for optimum productivity?
Stanley: You need one employee at the front desk per $30,000 of production. If you are collecting $8,000 a month and producing $30,000, you still need one at the front desk. If you want to grow past $30,000, then at about $22,000 to $25,000, you have to bring in the second person.
TC: What about the physical size of the office?
Stanley: You need about 350 square feet per exam room, so if you have three exam rooms we are going to need an office of about 1,000 to 1,100 square feet total.
TC: When you need to hire a chiropractic assistant?
Stanley: That is going to vary with the doctor, based on what he needs them to do. We actually start out having the insurance processor help with X-rays and exams to the degree the state laws allow. If that starts to overwhelm the employee, we bring in somebody to help the doctor do that. So you are probably going to see that somewhere around $30,000 to $40,000, you need somebody.
TC: How do you know when it’s time to downsize?
Stanley: We would hope that they would not have to do that. If a chiropractor has to downsize, it is not because they have too many employees, it’s because they are not meeting patients’ needs. When I say meet patients’ needs, it’s more than healing; patients want their healing needs met at a certain price. They don’t want to be pushed or mistreated or bullied into more care than they are comfortable with. If a doctor has to cut back staff, it is a signal that you are doing something wrong other than having too many people. So, yes you may want to go ahead and downsize, but remember you are going to be hiring those same people back as soon as you get your problem fixed.
TC: When should you add a second chiropractor?
Stanley: When you start to get up around a 1,000 to 1,200 visits a month, depending on the practice and the technique is when you need to start thinking about a second doctor. The biggest danger with second doctors is to bring them in too soon and to think that they will build a practice for you while you play golf.
There are some prerequisites in our program: you have to be seeing 1,000 visits a month minimum, and the staff have to be fully incentivized, running the practice by themselves. When staff is on fire, motivated and well trained, they will stand with the owner doctor against the wiles and trickiness of the second doctor. They will make that second doctor productive. Unless the practice is extremely third-party driven, you don’t survive a bad second doctor experience. You either get rid of them quickly or you will go broke.
TC: What about the length of appointment?
Stanley: We talk about productivity. Getting treatment time down is synonymous with productivity. Once the staff gets on fire, they want to do better. If the doctor is talking too long, all of the other productivity efforts have been sabotaged. Treatment time needs to be minimized. It is hard to make a change with existing patients, but you will find that new patients really come in for results, not your charming personality.
TC: How do you handle problems with staff personnel?
Stanley: The biggest mistake we make is not being specific. Unless you can be specific, people cannot change what they cannot understand. So we have to be specific and consistent, not angry. If you lose your temper, it looks like you have a problem, not the staff person. If you stay focused, gently support a staff person consistently in specific areas, you will recover the ones that can be recovered.
The ones with poor self-esteem or bad work habits just won’t respond. If you go on a bonus, you owe it to the other team members to get them another team member that can keep up. Be specific, keep good records and make it possible for them to make the improvements. I would discipline them privately, I would not try to shame them or humiliate them. But keep good records and be fair, treat them the way you would want to be treated.
For more information about Greg Stanley or Whitehall Management, contact him at (623) 934-2108 or visit the company’s web site at whitehallmgt.com.