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Itâ€™s simple: All dentists want to increase patient flow and profits in their practices. Whatâ€™s complicated is achieving those goals. In this video, Kerry Straine, CPBA, CEO and President of Straine Consulting, walks dentists through the steps they need to take to achieve those goals. He says that for dentists, it all begins with establishing a personal budget that considers factors such as marital status and student loan debt.
“The way that we establish performance goals for patient flow and profitability begins with the profitability issue. How much do we need to make? That is the first step.
As I’ve said countless times in all of my presentations for the past 30 years, we need to know your number, and that number is profits. That really takes an assessment of your personal budget. How old are your children? Are you in a marriage? Are you in a relationship? Do you have school debt?
The school debt that graduates have today, approaches $500 to 600 thousand dollars in some cases. When they’re a specialist, it can approach a million dollars. It’s going to take a significant economic event to occur every year to be able to fund that obligation for the next 20 years. That’s where we begin with the business budget. It has to fund the personal budget.
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Then we assess the doctor’s comfort level in assessing patient flow, staff members, et cetera, and that will give us the confidence to help them commit to the right-sized facility. We’re fans of a minimum of four operatories per general dentist. That will allow the dentist to have two operatories for themselves, and two for their hygienists. The concept of a one-hygiene general dental practice doesn’t create enough recurring patient flow to keep the doctor busy from that internal source of patients. They then become new-patient driven, and then we end up with the dilemma of, I don’t have anywhere to put the new patients in continuing care, so how do I take care of them? It creates a crisis.
But once we assess what the economics are — production, collection, insurance, overhead, profitability – now we can establish the goals. And goals are broadly stated initially: I want to fill my practice up with happy patients. I want to fill my practice up with loving and happy colleagues: dental assistants, hygienists, assistants. I want everybody to love my vision and mission and be a part of it with me. But they’ve got to understand what that is so that they can buy into it.
Then we break it down. Each major goal has a subset of goals, and those subset goals may be, I need X number of new patients. I need a percentage of those new patients to accept treatment in order to fund the minimum production levels I’m anticipating in my budget, every day, every month, every year. From that group, I need a certain percentage of them to reappoint for their continuing care, because in a general dental practice, we want to grow the continuing care pool. We don’t want to just meet patients and then never see them again.
Dentists, I always say affectionately, are farmers. They grow a crop of patients much like I did in my accounting firm a number of years ago. And I took care of them, on and on, ongoing for years. Specialists, they’re more like hunters. They get the patient, they see them, and they’re gone. We have specialists as clients. They’re different from a general dentist. They’re not growing a pool. They need to find a recurring patient pool to tie into typically within the referring group.
Once we know what the patient count issues are — new patients, reappointment percentage – we can assess how large is that continuing care pool going to be. As a matter of fact, that’s the very first statistic we work on. If you’re going to have two hygienists, we know the number of patients you have scheduled in hygiene will have to be somewhere between 12 hundred and 15 hundred patients at maturity. If that isn’t a large enough pool to keep you busy, doc, you may have to grow to a third hygienist, although that can be a limitation in some states due to the dental practice act. That’s the first one. We need to know our body count. And we want to close the back door and have a 90 percent or higher reappointment rate.
Secondly, what is our daily production goal? For the doctor, it’s based on a combination of things: their clinical philosophy, the type of procedure mix that they subscribe to, the fee schedule, their proficiency, are they using technology to get the work done, are they doing the majority of the work, are the assistants helping them wherever legally possible.
The hygiene department goals, well that’s something based on something altogether different. We have to establish what the doctor’s clinical philosophy is for treating patients with periodontal disease. We have to conduct a survey to determine what percentage of the patients have those diseases so that we can estimate the various procedures we’re going to do based on our survey of our patient pool on a daily basis for adult prophies, child prophies, scaling and root planing, and associated services that are offered.
That establishes the hygiene goal. Once we know what these providers are going to produce, we know how many days they’re going to work, we can forecast the annual revenue. Next, we have to assess the collection percentage. Not everybody collects 98-100 percent of what they produce because they’re in network with a reduced-paying insurance plan. If that’s the case, then we have to calculate what the reimbursement rate is going to be, and that establishes our collection percentage.
Associated with that is our accounts receivable balance to production ratio. Nobody wants to be owed money from customers. There’s an old saying on the golf course, fast pay makes fast friends. Dentists and all small business owners are not large enough to be able to house a finance department to continue to bill and collect. Collecting copayments at the time of treatment is essential. Collecting from insurance companies within network within the period of time they pay has got to be determined as well. That will allow us to establish that percentage. Case-acceptance percentages are established as well and then associated reactivation efforts.
All of what I just described will generate production and collections. Once we know what that is, we have to come back to our overhead assessments for dental supplies, lab, advertising, occupancy, labor, general administrative, associate comp, debt service, all of these things that drive cash flow, and then of course, your CPA can pick it up from there and calculate the number of depreciation, amortization, and your tax liability, but that’s how we go through the process.”
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