Know the numbers of your dental practice
There are many things to consider when keeping track of the numbers in your dental practice. Team members can all help to be responsible for the practice's numbers, and here are some tips to help everyone keep track.
Remember when you were a kid and your mom bought you a paint-by-numbers kit? It contained a box with a blank “canvas” that had an outline of a picture lightly stamped on it. Each area in the picture had a corresponding number that referred to a paint color. If you followed the numbers and applied paint to those areas, you ended up with a painting worthy of the family refrigerator.
Your practice is much more complex than a paint-by-numbers kit, but if you “follow the numbers” and make decisions correspondingly, you’ll end up with a masterpiece.
The template we use in our practice is our Practice Management Report. This is a dashboard-type report (one page and easy to read) that gives us all of our key practice indicators together. We monitor total office production and also our net production. In this era of PPOs that most of us have as a portion of our practice, it’s important to see how much you’re discounting your fees to third parties. Keep that percentage at or below 15% of your total production. Also, consider professional or friends and family discounts. Deduct those items from your gross production and call that your “net” production.
The same applies to collections. You have your gross collections but you need to take into account any patient reimbursements, merchant fees from credit card processors, and discounts from third party financing such as CareCredit or Springstone. Net collections should be 98% of your net production. Also keep your accounts receivable (AR) in a range of 40% to 80% of one month’s net production. AR higher than that range means you are too lax with your financial arrangements. Correspondingly, AR below that range means you’re probably leaving some treatment undone due to restrictive financial policies.
We have two doctors in our practice, and we monitor each doctor’s net production and divide that by the days each doctor works. That gives us each doctor’s daily average. We also monitor each doctor’s treatment recommended and treatment accepted, and we calculate treatment acceptance ratio by dividing treatment accepted in dollar amounts by treatment recommended in dollar amounts.
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There are a lot of excellent articles written about treatment acceptance. I encourage each of you to work on improving your treatment acceptance ratio because this reduces the number of new patients needed and the overall busyness of your practice. We monitor only immediate treatment acceptance and understand that over time the treatment acceptance will be higher because not everyone makes decisions about treatment at the beginning of the relationship.
I also think it’s important to monitor treatment acceptance on new patients versus existing patients. It should be higher on existing patients because they have an increased trust factor with your practice. You should compare your treatment acceptance ratio over time and not to others because everyone is at a different point on their journey and your treatment acceptance ratio may not correspond to someone else’s.
We set monthly goals for new patients and find out where each new patient comes from. By now I’m sure you’re aware of tracking phone numbers, which allows you to see from which source a patient is calling from, be it the Internet, direct mail or other advertising, or your internal referral program. We want to know not only the total number of new patients we see each month, but how many come from internal sources versus external sources.
In a mature practice you want the majority of new patients to come directly from patient or professional referrals. If your number of direct referrals is low, then you probably have an internal problem that inhibits patients from referring their friends or family. If that’s the case, survey your patients and find out the obstacle. If you’re getting plenty of new patients without external referrals, God bless you! For those not getting enough new patients, external advertising should be used to fill the gap between the number of direct referrals you get and your new patient goal. Personally I use direct mail postcards and an enhanced web presence.
Finally, we monitor each hygienist’s production and divide that by the number of days that the hygienist works. That will give you their daily average. In the past we said hygienists should produce three times their daily salary, but in 2015 we’re looking for hygiene team members to produce four times their daily salary. No longer is hygiene a lost leader but an integral part of your practice.
By now you’re probably wondering how we do all this. It’s important that while the dentist is the managerof this information, the staff is responsible for compiling it. We do this daily so that it doesn’t pile up. Numbers monitored by your staff will magically improve. We give each team member a number to “own,” and base their incentives on their individual numbers.
1. If you don’t monitor your numbers, you’re making decisions based on emotions that may have no bearing on what is actually happening in your practice.
2. You’re the manager of your numbers and your staff needs to have ownership in compiling them for you.
3. Numbers that are monitored increase awareness by your team and will magically improve over time.
Review the Practice Management Report and short-videos I’ve put together to help you grow your dental practice.
Michael Mulkey, DMD, is the founder and owner of Lost Mountain Dental, located in Marietta, Georgia. They focus on complex restorative, cosmetic, implant, and sedation dentistry. Dr. Mulkey has been in practice since 1988 and began the current practice in 1996. He enjoys all aspects of patient care, office management, and teaching other dentists.