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From the Greater New York Dental Meeting: Better record keeping is essential for driving profit in your dental practice. Here are some key metrics that you should track and understand.
Anyone who has spent any time studying management theory has probably encountered Peter Drucker, and his often-quoted phrase, “You can’t manage what you can’t measure.” Attendees of the continuing education session titled, “Know Your Practice by the Numbers” on Wednesday at the Greater New York Dental Meeting got an overview of critical profit and productivity indicators to better manage their practices.
The session was co-hosted by Karina Santos, BA, a practice management consultant who focuses on helping practices go chartless, and Arthur S. Wiederman, a CA CPA who specializes in making dental practices more profitable. The two experts provided steps that don’t just improve tracking and reporting within a practice, they can also increase overall production. The key, Santos and Wiederman said, is consistency and frequency in the reporting practice.
“Do you know what you’re looking for when you run your report?” Santos asked the audience.
She went on to explain that a practice’s complete financial picture can often be skewed by poor data-entry practices. If your goal is to increase collections, Santos said, you need to routinize thorough and consistent reporting by your office staff.
The first half of their session was a review of what they called “5 Key Point Indicators.” These indicators are areas of focus for your practice’s internal reporting process that should be tracked. Santos and Wiederman also offered advice on how to improve them.
1. Production Numbers. Do you set total production goals for yourself and your office staff on an annual basis? If you don’t, with the new year almost upon us, 2017 is a great time to start. Goals, Santos and Wiederman advised, help to incentivize staff, give you a target for net profit, and also help to accurately gauge overhead. Setting them is straightforward. They advised that you set a total production goal in dollars that is 5-10% higher than what they did last year. You’ll also want to ensure that your fees keep pace with inflation, Wiederman advised. And if you’re not seeing enough foot traffic in your practice, you’re SEO and marketing efforts might be to blame. “If you are not on Page 1 of Google you may as well not be on the Internet,” Wiederman said.
2. Collection Numbers. Nobody likes working for free. You shouldn’t either. But confronting people about unpaid bills is never easy, Wiederman said. He advised that it’s critical to have a front-desk staff that is comfortable talking tactfully about money. They also said that practice leaders should be diligent about not letting collections age past 90 days. This can be especially harmful if you’re looking to sell your practice in the near future. And if you aren’t pushing to collect your fees over the counter, you should be, they advised, putting the target at about 1/3 of total collections. Santos pointed out that there are now many good programs that will estimate what insurance will pay. Use them, and get paid sooner rather than later.
3. New Patients. Where are your patients coming from? You should be tracking this, along with the total number of new patients you’re taking in. If your numbers are low, Wiederman advised that you again revisit your SEO and marketing efforts. He also offered this useful metric: You should be seeing a minimum 5% return on investment for any advertising dollars spent. Also, think of that TV commercial you’ve seen a thousand times. There’s a reason for that. Advertising needs to be repetitive in order to work, Wiederman said, so don’t run a campaign one time and expect it to work.
4. Continued Care Statistics. Wiederman and Santos advised that you need to be diligent about tracking patient attrition. This figure gives you a good idea of how much money you’re leaving on the table. A useful metric in this category is the number of patients due for care, compared to the number scheduled. This figure should stand between 75-85% for patients scheduled for routine care.
5. Schedule Management Statistics. You want to track your hourly rate of production in dollars, as well as that of your hygienists. A lot depends on your practice type and location, Wiederman and Santos said. To give you an idea of what you should be aiming for, Wiederman said between $300 and $700 per hour for the dentist in CA is reasonable.