What do the numbers say?
by Vijay Sikka
This is the second in a series of articles that address how you can use some high technology and some not-so-high technology tools and techniques to help you uncover and recover profitability in your practice. (For readers who want to receive Part I, please contact [email protected].) In the first article, we discussed the four reclaims — profitability, patients, control, and peace of mind. We discussed fee optimization, patient demographics analysis, and patient reactivations for those who left, among other things.Sikka Software Dental Practice Optimizer Dashboard™, available through Dental Economics® and www.hotoptimize.com for a 15-day free trial, helps you achieve these objectives. It installs and reads data automatically from all major practice management systems in the U.S. and Canada.Helping our businesses and reducing stressThe health-care industries, both dental and medical, are the slowest to get into a recession and the slowest to get out. At least, that’s what we’ve been told. While we are in the middle of one of the greatest recessions in a century, what we can do to help our businesses and reduce our stress levels is the focus of these articles.We will start by sharing some basic facts based on national trends from over 5,700 practices that we monitor. See the charts at the end of this article.- Month to month from January to May between 2008 and 2009, the number of hours that doctors worked decreased.
- Month to month from January to May between 2008 and 2009, the number of new patients showed encouraging signs of improvement, although May 2009 saw a drop.
- Hygiene reappointments have shown a refreshing trend upward compared to the same period. This shows that hygienists and scheduling team members are doing a wonderful job of keeping the patient pipeline strong.
- Gross production per unique patient seen for comprehensive exams in 2009 went down from the same period in 2008. The most likely reason is that patients have fewer benefits remaining due to job losses, and the treatments have become need-based as opposed to want-based.
- Gross production per visit has remained stable but at much lower levels than previous years.
- Net production per hour saw the most critical drop and the trend kept getting worse between 2008 and 2009.
- Average number of patient visits per provider per month saw a consistent drop when comparing the first five months of 2008 and 2009.
- Besides fee optimization and direct benefit on profitability, what else can you do to improve your practice bottom line? First there is overhead control. By overhead we mean expenses minus the salary and benefits of the dentist. If you want to know what the magic number is for overhead, you’re in the wrong place. We’re not going to give you a specific number for your overhead because we’re not consultants. We would like you to monitor your overhead and calculate your profit and loss. Measurement enables management. You want to first make sure that you use a good financial system in addition to a good practice management system. There are many financial systems for dentists, such as Quickbooks, PeachTree, Quicken, Simply Accounting, and others. Once you use a good financial system and have a chart of accounts, you can use products such as Dental Practice Optimizer® to automatically read your chart of accounts and generate overhead numbers with details and give you profit and loss data. Armed with this information you can manage your practice better.
- Another thing you can do to maximize your profitability is to identify which insurance company is losing you money. Remember to first check how much production is being generated based on your patient demographics by insurance company. Next, determine the write-offs or adjustments you make compared to your office fee schedule, and once you have that, figure out what the average claim amount is and average time it takes for the insurance company to pay the claim. When you put all of this together, you can figure out a rating for the insurance company and loss of profitability. In the next article, we will speak about ROI for marketing and procedure code analysis to maximize profitability.
Once again, we have identified that 2009 is a year of struggles, but there is a silver lining. More is being treatment planned per patient. There is a refreshing uptick in the number of new patients, even though the number of patient visits still trails previous years. We also have noticed better performance by office and team members. We are hoping that the tools and techniques I’ve described here help you improve your profitability and peace of mind.
This is a series of articles that share what you can do to identify each element of your practice, and help you use tools such as Dental Practice Optimizer Dashboard by Sikka Software in conjunction with your practice management system and your financial system. Keep reading and keep that feedback coming!
Chart A
X – Axis is Months. January = 1, May = 5
Y – Axis is Doctor hours in #
Chart B
X – Axis is Months. January = 1, May = 5
Y – Axis is New Patients in #
Chart C
X – Axis is Months. January = 1, May = 5
Y – Axis is Number of Hygiene Reappointments in #
Chart D
X – Axis is Months. January = 1, May = 5
Y – Axis is Gross Production Per Unique Patient Seen for Comp Exams in $
Chart E
X – Axis is Months. January = 1, May = 5
Y – Axis is Gross Production Per Visit in $
Chart F
X – Axis is Months. January = 1, May = 5
Y – Axis is Net Production Per Hour in $
Chart G
X – Axis is Months. January = 1, May = 5
Y – Axis is Number of Patient Visits in #
