Article Date: 6/1/2003

fix this practice
Learning to Compromise
You don't have to overcompensate your staff to keep them loyal.
By Richard S. Kattouf, O.D.

Q Retaining staff is a constant battle. New applicants want benefits, but how can we afford things such as medical and dental benefits in a managed care environment that tugs at our net income?

Dr. T.E. Ferris, Via e-mail

A: Supplying healthcare insurance to small-business employees is rising in cost at 15% each year. As employers, we must be aware of our costs. When evaluating your percent of salaries to gross, you must include perks such as insurance, bonuses and commissions.

Re-evaluate your perks

Following are ways to control the rising cost of health and dental coverage for your employees:

► Entry-level employees aren't eligible for health insurance until they've worked for a defined period of time (six to 12 months). However, this may not apply to new employees who have experience in the ophthalmic field.

► When you do grant medical coverage, make sure it's for the employee only (no family members). Start by paying 25% of the total premium at first and when you want to give them a raise you can pay 50% of the premium and so on until 100%, where you should then cap the amount you pay.

► Notify all employees that any increase in the premium will be their responsibility, not yours. This caps your cost per employee.

► Rather than paying for a dental plan, offer each employee a set dollar amount of coverage each year at the dentist of their choice. Have the dentist bill you directly, but only pay up to the defined limit; the employee is responsible for the balance. Most employees won't even use the amount you grant them.


Case in point

Dr. Schultz (not his real name) asked for assistance in determining why his net income was so low. After studying his profit-and-loss statements, I realized he was paying his staff 46% of the practice's gross. Dr. Schultz was paying full medical for all staff and for some spouses and children. He was so afraid of losing employees that he'd enabled them to control him.

Another evident problem was the fact that he was overstaffed. After working with him and his staff for several days, I identified the "dead wood" (staffers who weren't pulling their weight and weren't income producers) and terminated two staffers. I also held a meeting with just the employees to let them know that if they didn't agree with a revamping of the insurance benefits, then their jobs would be at stake.

Improving Dr. Schultz's net

Teaching Dr. Schultz to control his practice and not let it control him did great things to lower his percent of salaries to gross. In three months we decreased his salaries to 20% (a 26% shift in his favor toward his net). If we hadn't implemented these changes, his practice wouldn't have survived.

This real-life example is more complex than just one single aspect such as medical insurance. Any number of other problems could create similar situations. For example, in this situation, some employees (who weren't terminated) were overpaid. In their cases, we adjusted their pay scale downward so they could retain their positions.

Tap into your business savvy

All O.D.s and M.D.s must be aware of the business side of their practices. It's easy for your finances to control you if your awareness skills are lacking.

Dr. Kattouf is president and founder of two management and consulting companies.  For information, call (800) 745-EYES or e-mail him at The information in this column is based on actual consulting files.


Optometric Management, Issue: June 2003