Does a two-tier hygiene salary structure work?

2014 10 28 15 00 54 287 Mc Kenzie Sally 200

Most dentists pay all their team members a guaranteed hourly wage -- even their hygienists. While this might seem like a fair system and is one employees tend to like, using this structure to pay hygienists kills practice productivity and revenues.

Sally McKenzie, CEO of McKenzie Management.Sally McKenzie, CEO of McKenzie Management.

Why? Hygienists are producers, and this payment structure gives them no reason to improve their productivity. They get paid whether they're producing or not. That likely means their salary is well above the 33% of production benchmark, and that, dear doctor, sends practice overhead numbers soaring out of control.

So what can you do to fix this? Some dentists pay their hygienists a straight commission, but this isn't a solution I recommend. If you have a hygienist willing to sacrifice quality for quantity to bring in more money, it could lead to real trouble. This is pretty rare, but it's not the only issue with straight commission. Most hygienists don't like it. They want to know how much their paycheck is going to be every month and have no interest in switching to the uncertainty of a commission-based pay structure.

Instead, I suggest implementing a two-tier hygiene salary. This system benefits both your practice and your hygienist, motivating this important producer to excel while also growing your bottom line.

How the two-tier system works

“With this system, you pay your hygienist a guaranteed base plus commission.”

With this system, you pay your hygienist a guaranteed base plus commission. Here's an example of how it works. Let's say your hygienist works 10 days a month at $300 a day, for a total of $3,000 a month. That means your hygienist must produce $9,000 a month to meet production goals. If your hygienist produced $10,000 last month and you use the two-tier payment structure, you can pay a commission of 15% to 33% on the $1,000 your hygienist brought in over that monthly goal.

As you can see, this gives your hygienist incentive to go above and beyond rather than just be satisfied with the status quo -- and that means increased production and revenues for your practice.

How it helps with raises

The two-tier system also makes it much easier to figure out raises. Raises are based on a percentage increase on the commission, as long as it's less than the 33% maximum.

Why is this a benefit? Say you opt to pay your hygienist a straight commission. With that payment structure, your hygienist gets a raise every time you implement a fee increase. That means raises aren't based on performance measurements and your hygienist gets a boost in pay even if your expectations aren't being met. This not only gives your hygienist no incentive to improve performance, it also sends mixed messages.

Salaries stay manageable

The two-tier system keeps your hygienist's salary from sky rocketing above the 33% of production benchmark. If you pay a guaranteed wage, your hygienist's salary could creep above 33% of production in a number of ways -- hurting your practice in the process.

Here are a few examples of how that can happen:

  • You haven't made anyone accountable for managing the recall system, so no one is following up to get past-due hygiene patients in the chair -- keeping your hygienist from meeting, let alone exceeding, production goals.
  • You solely rely on preappointing six months out, leading to a high number of cancellations and no-shows.
  • You pay your long-term hygienist top dollar. You don't want to lose this valuable team member, so you reward her with a raise every year -- regardless of performance. These raises give your hygienist no incentive to improve performance, so production numbers stay stagnant and practice revenues suffer.
  • Your hygienist is simply underproducing. Maybe it's because your fees are too low, or the hygienist takes too long on each patient for the service provided and fee charged. It also could be because your practice has no periodontal therapy program and that leaves your hygienist only performing basic prophies.
  • You don't have enough patients to fill the practice's days of hygiene per week.
  • If these situations sound familiar, you might want to rethink more than just how you pay your hygienist.

Making the switch

Many hurting practices struggle with hygiene, and fixing your hygienist's salary/production ratio will help you turn it around. Switching to a two-tier payment structure will make your practice more profitable, while also keeping your hygienist happy. This system gives your hygienist motivation to excel, and that will improve practice production and your bottom line.

Sally McKenzie is CEO of McKenzie Management, which offers educational and management products available at www.mckenziemgmt.com. Contact her directly at 877-777-6151 or at [email protected].

Disclaimer: The comments in this article are not meant to be taken as financial advice. You always consult with a tax professional before making any significant changes in your financial or practice situation.

The comments and observations expressed herein do not necessarily reflect the opinions of DrBicuspid.com, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.

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