Dr. Joseph was a happy man when he sold his practice. His practice appeared to be merely “average” for the area. He got almost precisely his listing price, and not because he had a better location, newer equipment, or higher profit than many of his colleagues. The reason he got his price is because he did two smart things: he kept his office vital from a “patient experience” viewpoint, and he kept great records. All his data supported the purchase price to take the fear out of failure for the buyers.
Many of my clients don’t like the “business” of dentistry, nor do they have a handle on practice stats, which makes it more appealing to sell before they’re ready. Stop underestimating your ability to operate effectively and you might find you’re happier and more successful. This accomplishes two things: more profit in the short run and a more attractive practice when you sell. Good systems make it easy to monitor key areas. Develop a Daily Flash report that includes 10 statistics to review each day. Here are some recommendations to get you started:
1. Over the counter collection percentage
The OTC is a good way to track copays. OTC is the amount of your fee collected from today’s patients. Well-run practices should collect 35% of the day’s production.
2. Number of cancellations or no-shows
When investigated, offices frequently do not have real statistics to share, only “a feeling” by the doctor or staff. Tracking this number is essential.
3. Number of new patients seen
The average practice may lose as much as 10% of its patient base through normal attrition. Set a goal of 15% growth in order to achieve actual growth. If your practice accepts any discount plans, you should track the breakdown of those plans vs. fee-for-service.
4. Ratio of treatment presented vs. treatment accepted
Getting solid information on the amount of treatment presented vs. treatment accepted can identify whether the doctor or staff need to improve their treatment presentation skills. A good benchmark is an acceptance ratio of 70% to 90%.
5. Doctor and hygiene production per hour
If you accept discounted fee programs, calculate both the gross and the net production per hour. If you average $375 per hour, an increase of $50 per hour for the doctor represents about a $73,000 increase and additional profit of about $60,000! Similarly, monitor hygiene production per hour. The average per hour we see is about $100.
6. Number of patients seen each day
Monitor the number of patients that both you and the hygienists see each day. The ideal for the doctor is eight to 12 patients. It is also a good idea to monitor the patients who left the office without scheduling their next appointment.
7. Ratio of unscheduled units for doctor and hygiene to total available
This statistic will determine how efficiently you are scheduled. You may have surplus capacity, which may mean you’re overstaffed.
8. Production adjustments
One of the key items to track is the amount and type of your production adjustments, paying particular attention to the write-downs. Ask your front desk staff frequent questions on the adjustments they make. One client gave away $45,000 to his club members simply because it wasn’t tracked.
9. Number of new-patient phone inquiries compared to appointments set
The effectiveness of your advertising and marketing can be tracked to the number of new-patient phone inquiries compared to the number appointed. Ineffective techniques used by the front desk may limit the number of new patients appointed. Your front desk is your most effective marketing salesperson!
10. Funds deposited in the bank compared to day sheet
Deter embezzlement! Have your staff print the day sheet for you to review at home. This tells them you are engaged in the finances of your practice. Staff can collect the data in a few minutes each day. Stay in the habit of monitoring these key numbers, and act accordingly. You may find that feeling more in control leads to more satisfaction and less stress until you can explore your exit strategies.
Randy Marie Daigler, Transition Manager of the DBS Companies, has served financial and transition needs of Michigan dentists for more than 25 years. A respected author and speaker, she participates in ADS, and is a member of Practice Valuation Study Group. Reach her at (888) 419-5590, ext. 989, or email@example.com.