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Nancy Kagan on Keeping Staff Accountable – Episode 38

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If you enjoy the charming sound of a Boston accent and getting advice from one of the dental industry’s most experienced consultants, then you won’t want to miss this episode of Dentist Money™ with Nancy Kagan. Nancy was a hygienist for several years, then formed a temporary dental placement agency before managing two successful practices for over twenty-five years. In 2004, she founded Summit Dental Partners with a mission to make dental practices more efficient and successful. In this interview she talks about keeping your staff accountable, protecting yourself from embezzlement, and what it means to be an “ostrich.”

Show Notes:

Podcast Transcript:

Reese Harper: Welcome to the Dentist Money Show, we are here in Boston with someone that I met and was impressed with, Nancy Kagan. I want her to introduce herself today because we have some interesting insights come from one of her colleagues recently and I was really impressed with how many detailed questions they were able to answer and the insight that they brought. Nancy is a practice management expert with an interesting background that I think applies to not only dentists but to hygienists and other members of the practice. Nancy, will you go ahead and introduce yourself? Again, thanks for coming on and it’s great to have you.

Nancy Kagan: Very well, thanks for having me. I am happy to be here. My name is Nancy Kagan, my company is Summit Dental Partners. We are practice management consultants. This is my twelfth year having my own company, but I have a long career in dentistry. I started out as a hygienist, had a short career in hygiene. About four years after graduation, I started a company called dental temporaries and I did staffing for dental offices for many years.

Reese Harper: Wow.

Nancy Kagan: Yes, as a hygienists back then, and it was awhile ago, there was no vehicle if you needed time off unexpectedly and you had a schedule full of patients there were not many options. I thought, wouldn’t it be great if I could get a temp and I wonder what that would involve? Dental Temporaries was born. I did that for eight years, and sold it when an opportunity presented itself for me to manage a dental practice that was under construction. I thought it was a great opportunity. I didn’t know anything about managing a dental office, so I sold Dental Temporaries and started my management career. Over the next 25+ years I managed two practices. The first practice was sold, I was transitioned, and they didn’t need me in the same capacity. In the second practice, the partnership dissolved, and I found myself out of work through no fault of my own for the second time. I thought, “I know a lot of people, l know how to run a practice, let’s give this a go.”

Reese Harper: Let’s give it a go! The entrepreneurship journey began. That is a scary jump.

Nancy Kagan: It was like jumping off of a cliff without a net, but I had to trust that I could make it work.

Reese Harper: Sometimes that is where the best thing that are born from. All of the pressure that you have to go through to make something cool happen. Can you say the name of your company one more time? I only want you to say it because I want you to say the word “partner” in a way that I cannot say it.

Nancy Kagan: Oh, you set me up here, it is Summit Dental Partners. How did I do?

Reese Harper: It was awesome.

Nancy Kagan: I want people to make sure they remember we are coming form Boston.

Reese Harper: Exactly, that is awesome. Let’s just jump into this a little bit. A question that I like to ask is, from your perspective, what are the biggest mistake or mistakes that you see in practice management? What have you been able to glean over the years of experience you have had?

Nancy Kagan: Hard to pair it down because they all kind of touch each other. I will do my best. I think the thing that is hardest for us is the issue of the staff actually knowing more than the doctor. There is kind of a blind faith sometimes put in dental staff because there is no business training in dental school or minimal, at best. Dentists buy practices and then acquire a staff or hire a staff that has experience. They usually have more experience than the doctor and there is a lot of guessing. We say that we don’t want anyone to guess.

Reese Harper: Guessing on both parts or guessing on the part of the staff or the dentist?

Nancy Kagan: What I am referring to is guessing on the part of the dentist to say, “oh no, I am pretty sure that we do a good job at that.”

Reese Harper: A lot of perception…

Nancy Kagan: Nothing to back it up. We say, “pretty sure, she is always on the phone,I think she is working hard,” those are not measurable metrics for me. You cannot build your business on a foundation of guessing. It has to be something solid. That is certainly the model that I have chosen in helping our dental offices.

Reese Harper: You would say there is a separation between the doctor and his daily duties and what happens at the front?

Nancy Kagan: That’s right. The management of the business.

Reese Harper: That is something that is common?

Nancy Kagan: Oh, very common, and very problematic. Sometimes when you are working in your business you don’t have a lot of time to work on your business so you are making assumptions that someone else is working on your business. If you do not have the knowledge base to know that counts receivable is three times what it should be, you assume your bills are getting paid so you think everything is ok. That’s the type of guessing I’m referring to that we try to eliminate.

Reese Harper: I really like that concept. In fact, you know, in our practice I find that financial knowledge especially is an area where no one had a business class or financial training. When it comes to numbers and quantifying data and metrics that is really kind of a subject area that a lot of dentists are uncomfortable with. It is an intimidating subject for a lot of them because they usually don’t even have that in undergrad. They typically are a science or possibly arts field. The left brain side is usually not as strong or there is not an interest level there, but it is so crucial in order to run a business right? Half of their livelihood is going to be based on whether the practice itself is functioning well not just their clinical skill, right?

Nancy Kagan: Sure, we hear all the time people say, “you know I really just want to work on my patients,” and I say, “but you bought a business.” The problem is the disconnect there. I get why they look at resumes or talk to people who talk the talk and then they think I’ve got myself covered because I’ve got Mary or Susie or whoever working on the administration. But unless you have measurable metrics, you are guessing that Mary is doing a good job.

Reese Harper: One question I kind of had as you were saying that is that I see a lot of pressure that these dentists feel to give up that side of their life right? They sell to a larger group, they are acquired, they just give up this roll and in some cases that might be an appropriate decision. Our audience tends to be an independent, entrepreneurial dentist that wants to still maintain control and have the upside of that endeavor. This is a comment to those who are trying to maintain their independence. What do you see in your experience, what is the upside, that people have by maintaining independence versus joining a large group? As a consultant do you see people faced with that question a lot? What do you tell them about that choice?

Nancy Kagan: I think there is a mindset that everyone has to own a practice. I do some speaking at the dental school and I will have an audience of students and I will say, “how many of you are working under the assumption that you will ultimately own your own practice?” Every hand goes up. There isn’t anyone who thinks they won’t like the business and they just want to treat their patients. It is not said prior to the purchase. It is generally said when they see what is involved with the ownerships. Then they realize they want to be hands off.

Reese Harper: This is hard, ya.

Nancy Kagan: We feel like it is important that our practice docs are educated about their options. They should know what they need to in order to keep an eye on business.

Reese Harper: I agree. Talk to me a little bit about some of the solutions or implementations that a doctor can do to really make a big difference day to day? What is your paradigm on that?

Nancy Kagan: We are all about responsibility and accountability. We talk about that a lot. Hand in hand with that is written systems that all have an accountability measure and are managed by a well trained staff. We don’t want to say, “what do you do for recall?” And have them say, “I don’t know, Mary takes care of that.” I want everyone to know what Mary does for recall, what recall is, and how is she keeping patients in the hygiene schedule. How often is she reaching out to them? What manner is she reaching? Is she emailing, texting, sending post cards? I want all of that to be written so there is no question about what Mary is doing for recall. Then I want to know if it’s working. The most important thing for us is to know that it is working. Does the data support that the system is working. It is trial and error based on the demographic and philosophy of the practice.

Reese Harper: Talk to me about how you would break down a practice. If you were trying to surgically cut it apart into departments and say these are the system’s that I am analyzing. How do you view that?

Nancy Kagan: From my perspective?

Reese Harper: Yes, if you are going to grade a practice and cut it apart into segments how do you look at it?

Nancy Kagan: We look at everything! Our engagements with all of our practices start with an eight hour visit. I need to stop, look, and listen.

Reese Harper: Tell me about the departments that you would look at and the way the dentist might be able to relate to.

Nancy Kagan: We are looking at the patient flow, the information that is gathered prior to the patient’s visit, how proactive is the practice, how ready for the patient is the practice, how does the practice hand off from the from to the clinical area, how does treatment get transferred from clinical area back to the front, how are co-payments collected? Lots of things from the administrative end. Then we need to look at the hygiene department. Is it hitting industry metrics? If not, why not? We are looking at procedures performed, percentages of production to the whole, we are looking at all of that.

Reese Harper: So how do financials come into play on that? Looking at production metrics and how do you dive into financials a little bit. I know they are the same thing but sometimes there are some discrepancies. Sometimes I will talk to a client who believes they are producing 120 thousand every month and his bank deposits are $70,000 or his bank deposits are $140,000. Sometimes the way they code things and keep track of things doesn’t really correlate. Is it easy for a consultant to reconcile the financial and the deposits with the practice management software? Is that easy to analyze?

Nancy Kagan: Certainly, if we have access. Everything has to tie up though. Everything has to make sense. If it is collected in your dental software, it has to be deposited in the bank. Barring some unusual exceptions where a dental is giving you a stipend for purchasing that goes in the bank, but it should all make sense every month. The dental software should tie out with the accounting software which should tie out with a bank statement. That is where you have to be mindful because that is where things happen that shouldn’t. If it doesn’t tie out there has got to be a reason.

Reese Harper: What are the one or two things that just don’t smell right when you are trying to find embezzlement, theft, or fraud? What are one or two things that you look for?

Nancy Kagan: We are always looking at the adjustments. First of all, the math has to make sense. I you are collecting 80% of what you produce, you should be adjusting 20%. If those numbers do not make sense then something is off. If you are collecting 80% and adjusting off 10%, where is the other 10%? Those numbers have to make sense, the percentages have to makes sense. But we are always looking at adjustments. They have got to be categorized correctly so you can know that that is money you are not going to collect. We see it all the time, unfortunately, we just saw an adjustment on a family members orthodontics, she wrote it off because she knew the doctor never looked at the report. She never printed reports, the doctor never looked at it, and she adjusted off the ortho. That’s where we really see a lot of the impropriety happen. It is usually in that space.

Reese Harper: It seems like it is more common, in my experience at least, I have been surprised that in dentistry compared to other industries it seems to have a much higher percentage of practices affected by embezzlement or fraud than other industries. It seems like there is a lot happening at the front. Would you say that is the case? Is there more embezzlement and fraud happening in dentistry?

Nancy Kagan: I may not know about other industries but it goes back to my original thought. There is someone at the front desk and they are aware that they have a doc who doesn’t know how to make sense of the numbers, who doesn’t look at reports, and isn’t involved. So if someone comes in and makes a cash payment for a co-payment, and they just put in an adjustment and call it a professional courtesy, they can foot that money in their pocket. The problem is that there is a lot of blind faith and there are often no checks and balances. For us it is all about checks and balances, if there aren’t any than you have someone there who has an inclination. We see it happen where really good employees hit hard times. We see it happen with prescription fraud, we see it happen with employees running their credit card through their own machine. They know no-one is looking at the credit card statement when it comes in to match it to the actual transactions. There is a lot happening there that needs to have some oversight. We understand how hard it is to do the oversight especially in a space you didn’t choose. We try to fill the void the best we can.

Reese Harper: We did a podcast about outsourcing and how dentists are hesitant to outsource things. They are hesitant to let other people into their lives to help them. I think they have been taken advantage of in some cases or maybe their lack of experience in business makes them feel like they can do more. They can keep more on their own plate, they did really well in school, they have excelled in a lot of ways, but sometimes they might hold on to tasks or jobs that they aren’t qualified to do. Do you see that happening? Where people hesitate to let go of these responsibilities? Why don’t they bring in a consultant to help them? Why do you think they do hesitate?

Nancy Kagan: Part of it is probably outsourcing costs.

Reese Harper: They don’t want to spend money.

Nancy Kagan: Cost is one. I think ya know, people are afraid of what people are going to find. Like I know something isn’t right, but I am really nervous about what you might find? So I might just let it go another week, month, or six months. They know they really need some intervention or somebody to come in with some fresh eyes and I think there is almost a fear of the unknown. If you find something, then I will have to do something. That is scary.

Reese Harper: They are busy.

Nancy Kagan: Right, you know we fondly use the word ostriches. We say sometimes you have to pull your head out and see what you have to see.

Reese Harper: That is good insight. If you could leave everyone with a main takeaway today, in practice management, something that you would say, “I would like people to remember this.” What would it be?

Nancy Kagan: I think there are two thoughts. One is to make sure that you have the right team. Make sure that everybody that is on the bus are people you want on the bus. Make sure they have the right seat and make sure everyone is facing and going the right direction. The root of it is the team. The other thing I might say is that you can’t change what you don’t measure. So just because you don’t measure it doesn’t mean it is ok, it just means that you are not looking. You have to be able to measure things in order to make change.

Reese Harper: I think that is really good insight. I really like that second comment, well, and the first one too. I think it is crucial for people to have the right team in place. Sometimes they are hesitant to let go of a family member or friend, someone they have had around a long time. We have seen a lot of cases where people are over compensating someone, like double what they should get paid, and it is hard to have that hard conversation. It is really important for the health of your patient’s, family, and practice. You have to make some of those hard decisions and get the right team in place.

Nancy Kagan: Without questions, cannot do it without the team.

Reese Harper: The other thing you said is to make sure that you do things by numbers and data.

Nancy Kagan: Right, let the data speak.

Reese Harper: Don’t make it be emotional. I think that is really good advice, it is super insightful. Thanks for taking the time today, again, this is The Dentist Money Show, here with Nancy Kagan. Thank you so much, it has been a pleasure.

Nancy Kagan: Thank you, it has been a pleasure.

Practice Management

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