Is a bonus system right for your practice?

Some of you are probably saying, “No way! I can’t afford to pay my team more money. I haven’t raised fees in three years and the insurance companies keep cutting reimbursements.” That’s an understandable reaction. After all, employee compensation is the biggest expense in a dental practice.

Yet, when a bonus system is tied to increases in production (and collections), it can be a win-win for the practice and staff members.

Here are three reasons why you should consider implementing a bonus system:

1. Your production has hit a wall

If practice revenue has been flat for two or more years, a bonus system can shake things up-in a good way. Practices can often get too comfortable, especially if there’s a long-term team in place. Everybody knows what to do. Things are proceeding as they always have. One day follows the next. Wash, rinse, repeat!

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Implementing a bonus system can serve as a powerful wake-up call. Set an ambitious production and collections goal. It can’t just be a production goal, because if a large chunk of the fees go uncollected, how can you pay a bonus? Also, make it a team-based bonus, so everyone is focused on the same goals.

2. You’re close to a production breakthrough

Sometimes, it’s hard getting over the hump. Let’s say your practice just missed reaching $1 million in production last year by less than $10,000, and this year the numbers look even better at the halfway point. So far, so good. But you’ve been in this position before and know that things can go wrong-energy dissipates, team members lose focus, momentum stalls. If you want to tilt the odds a little more in your favor, a bonus system can be a good way to bust through any barriers and surpass your goal.

A bonus system doesn’t have to be a permanent or long-term solution either. It can be used as a temporary management tool to accelerate progress toward specific goals.

3. You haven’t been able to give a raise in several years

In the new dental economy, many practices are struggling to increase production, which often means no raises for employees. If this continues to happen, team members end up leaving. If you have good employees, you want to keep them, not drive them away. Instituting a bonus program can be an excellent way for increasing production while rewarding staff members for their hard work.

Bonus systems aren’t right for every practice or every situation. But if your office has been facing any of these aforementioned challenges, you should consider establishing a bonus program. When the old solutions aren’t working, it’s time to look elsewhere!

For more on this subject, read a free excerpt from Dr. Levin’s book "The Bonus System That Works." DPM readers receive a 30 percent discount when they use code DPM30 at checkout.