Measuring dental practice production with specific key performance indicators (KPIs) on a daily, weekly, monthly, and annual basis is fundamental when seeking to increase profit and foster long-term success in your dental practice.
The most successful dental practices share one common factor: they regularly measure production, keeping track of KPIs (key performance indicators), and making any necessary adjustments. Among the most important performance metrics to track are production and collection. Dental practices, like any business, must prioritize profit and manage production efficiently to ensure long-term success, offer best-in-class patient care, and remain competitive within the industry.
Measure, Report, and Analyze
First, you must get into a routine of measuring, reporting, and analyzing specific KPIs from your practice. It’s important that this becomes fully integrated into your practice’s day-to-day operations to ensure the implementation and execution of operational processes are successful. Everyone in your office, from clinical to administration, should be aware of the KPIs set, as well as any specific production goals that need to be met within a certain timeframe. Your team is a huge investment and asset to your practice. Make sure to keep everyone informed so they can collaborate to achieve the practice’s goals with speed and excellence. Staying consistent and maintaining steady attention to your dental practice’s KPIs and production goals will help reduce future frustrations or stressors related to performance.
It’s important that you keep track of the reports you create for future reference. After a few weeks or months of setting production goals and measuring KPIs, you should be noticing trends. You may notice positive or negative trends, but by keeping track of your KPI reports, you’ll be able to analyze the data collected to make better-informed business decisions. Furthermore, you can take the opportunity to revise and optimize processes that are causing inefficiencies within your practice. As with everything, consistency is key.
KPIs to Track
In general, dental practices should track similar KPIs to see the greatest success. However, practices that offer specialty treatments such as cosmetic or sedation dentistry services may need to track additional KPIs.
KPIs you should track daily include:
- How many patients have scheduled their next appointments?
- How many patients are overdue?
- Of the patients that were contacted today, how many scheduled their next appointment?
- How many patients paid outstanding balances due?
KPIs you should track weekly, monthly, quarterly, and annually include:
- Production by provider – Measuring the production of each provider in your office will help you identify how much revenue each provider generates (production) for the practice. We consider this to be the single most important metric to measure because production is directly tied to revenue and business growth.
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- Collections – The standard recommendation is to collect 98% or more payments. However, according to Jarvis Analytics, “the average dental practice is losing 9% of their production to uncollected revenues.” To find your collection percentage, divide your production amount by the amount collected, but be mindful of insurance reimbursement delays when calculating.
- Overhead, revenue, and profit – It’s an industry standard that your staff labor expenses should be around 25% of your revenue.
- Hygiene pre-appointment rate – Hygiene pre-appointment rate is a very important KPI to measure if you seek to understand and increase your patient retention rate. This is especially true for dental practices that offer additional services such as cosmetic dentistry.
- Treatment case acceptance – Measuring your practice’s treatment case acceptance rate is a key insight into predicting profit and revenue growth. If you are dissatisfied with your current treatment case acceptance rate, consider new avenues of educating patients about their prescribed treatment plans and diagnosis. Increasing your treatment case acceptance rate should be a goal for any dental practice seeking to grow revenue.
- Appointment no-show rate/cancellation rate – Keep a close eye on appointment cancellations and no-shows. These add up and can be damaging to any dental practice.
- Number of new patients and lost business – Is your dental practice gaining more patients than you’re losing? This KPI is essential to measure to get an accurate picture of your patient retention rate.
- Cash on hand – Your practice should maintain at least 3 or 4 months’ worth of cash on reserve for emergencies or other unforeseen events.
Set Goals and Benchmarks
Based on industry standards, here are some goals to aim for in your dental practice:
Daily Production Goals
- Dentist: $4,500-$5,000
- Per Hygienist: $750-$1,000
Annual Production Goals (Assumes a 4-day work week with 4 weeks of vacation)
- Dentist: $864,000-$960,000
- Per Hygienist: $144,000-$192,000
Total Production Goals (Assumes 1 full-time dentist and 2 full-time hygienists)
- Daily: $6,000-$7,000
- Annually: $1,152,000-$1,344,000
Manage Production
After measuring KPIs, creating reports, and analyzing your findings, it’s time to create a plan of action. Managing production is key to the success of any business, but this is especially true of dental practices. Production comes in many forms in a dental office – cleanings, treatments, and complex procedures all contribute to the overall production of your practice.
“The most expensive thing in a dental office is an empty chair! It’s crucial for your practice’s financial success to have a patient schedule that’s full daily and constantly monitored for the inevitable cancellations and reschedules that will occur. Always maintain constant vigilance on your patient schedules to ensure all providers are busy treating patients and producing revenue for your practice. All successful dental practices have a broken appointments policy and patients are made aware of it. A great way to remind your patients of this policy is to have it written on the appointment reminder card, which is handed to the patient before they leave after each visit.” –Tom Loeblein, President/CEO, The Dental CFO
Managing and maximizing production starts with patient scheduling. Inefficient patient scheduling can be the biggest reason patients transfer to another dental practice. Avoid making your patients wait past their scheduled appointment time to help ensure they are satisfied with their visit. The patient experience starts when they walk in the door. If you make your patients wait long after their scheduled appointment time to be seen, your practice’s reputation may be damaged by dissatisfied patients. Furthermore, make sure your administrative staff is scheduling patient appointments with the appropriate amount of time to ensure your clinical staff has an adequate amount of time with the patient. Nobody likes to rush; optimizing your practice’s scheduling habits will eliminate any unnecessary stress on both your patients and your staff.
Stop killing the dental schedule by avoiding the following scheduling “sins”:
- Starting late at the beginning of the day or after lunch
- Not having needed lab work ready for the appointment
- Not having each operatory setup when the patient enters
- Unexpected and unplanned procedures or changing procedures
- Not having a “late patient” protocol or not consistently applying the “late patient” protocol you do have in place
- Non-patient interruptions such as phone calls and vendors
- Not having morning huddles to check for glitches in that day’s schedule
- Dentists not moving from room to room efficiently and getting too focused on one patient
If just one of your production goals isn’t aligned with your KPIs, you may need to adjust a process or policy. For instance, if your collection percentage is down, you can adjust the collection process or policy to alleviate the drop.
Other examples of how tracking metrics can help you manage production include:
- Hygienists may complete a high number of cleanings per day, however, cleanings are not a big income generator. Therefore, dentists must set goals as to how many complex procedures are completed per day or week to meet revenue goals.
- Are treatment acceptance rates low? Analyze how these cases are presented to the patients. Is enough education being provided to influence decisions?
- Underestimated time of procedure? This could upset patients on a strict schedule, which could lead to patients transferring to a different dental practice. This is easily avoidable by scheduling patient procedures for an adequate amount of time, especially if the procedure is predicted to be complex.
- If your practice’s collection percentage is down, adjust the collection process and/or policy.
- Patients aren’t paying the day of the procedure? Establish and enforce a past-due policy.
Conclusion
If you aren’t measuring, reporting, and analyzing key dental KPIs on a daily, weekly, monthly, and annual basis, you need to start now. The dental practice industry is constantly growing and changing, which is why you need to position yourself as a competitive practice in your area with top-notch client care. Extend the longevity and success of your business by measuring KPIs and managing production.
At The Dental CFO®, we offer strategic dental financial management and accounting solutions tailored to your specific needs and goals. Whether you’re looking to improve your individual practice or want to expand into multiple locations, we can help you. We provide the expertise and clarity you need to resolve management and financial frustrations and produce a practice that is not only successful but fun to lead.
Contact us today and let our team of experts guide your practice to success and give your business a competitive edge in today’s challenging and dynamic dental practice industry.