Bonus Plans for Dental Practices

Bonus Plans for Dental Practices

The first question to address is: “Is a bonus plan a good thing or a bad thing for a dental office?”

In my opinion, bonus plans are a great way to not only reward staff for hard work and efforts, but also a way to keep them engaged on the goals of practice and help everyone be accountable for the numbers.

The down side of a bonus plan is that employees start to expect bonuses whether they have earned them or not. It is always difficult to take away bonus plans. Another downside or foot-fault is if a doctor spends money on marketing and the office is hitting the goals as a result of the marketing spend, the doctor could end up paying twice for hitting the goals (once in marketing dollars and once in a bonus).

I think the best bonus plans are plans that are simple to calculate and easy for the staff to understand. I like bonus plans that are based on a three-month rolling average so peaks and dips are fairly accounted for. I also like bonus plans that keep the team working as a team and not as competitors of each other.

One thing that should be considered when deciding on a bonus system is whether it should be based on production or collections. In some offices production and collections end up being very close to the same amount over time. However, in some offices production and collections are far apart. In addition, in some offices production could be very close to collections for some production and very far apart for other production. For example, doctor collections could be 70% of recorded production and in the same office hygiene collections could be very close to hygiene production.

In my opinion it is key to know your numbers and have a long-term business plan before implementing any bonus plan.

For more on bonus plans and business plans feel free to give me a call at 615-712-5992.

Greig Davis CPA CVA MST – Dental CPA

President/CEO – Dental ROI Associates – Dental CPA’s