Are Inefficiencies Crushing Your Profits?
Recently, chatting about finances with a practice manager, she was telling me that she found herself under increasing pressure from some suppliers to settle accounts.
The threat of a stop on the supply of materials was a regular occurrence. This then put her under pressure to chase patient debt, check stock usage, seek quotes from other suppliers and consider cheaper products. This lost time then meant she had lost focus on marketing, recalls and other important tasks. Does any of this sound familiar?
We know the feeling. The challenges of running a business profitably and efficiently are demanding, and a dental practice is no exception. Too many business owners just plod along, content to get by, not appreciating the potential for improved levels of job satisfaction and profits. This frequently leads to stress, cash flow issues, inefficiencies and low morale in the practice. But the good news is, there are ways to improve the situation.
Dentistry, like any appointment book-based business, is a bottoms-on-seats business. The average dental chair has a patient in it on average, 78% of the available time. Well-run, efficient practices will run at 90% plus. That 12 percentage point’s improvement is crucial to driving up revenue. Inefficiencies with your diary utilisation, your recall system and your patient retention will have a massive impact on profitability.
So, measuring these aspects of your business is crucial. These Key Performance Indicators (KPIs) are the measurable outcomes that will help you achieve your goals and increase profitability. Each KPI should offer an insight into the little things that help you progress towards those goals.
Before I suggest what KPIs to consider, to understand and appreciate the following is necessary. A couple of 15-minute gaps in a dentist’s diary equates to £15,000 in revenue per year. So as an example, a 4-chair practice where we could reduce the number of gaps, failed appointments and short-notice cancellations by that 30 minutes per day for each chair is missing out on in the region of £50,000 of PROFIT each year.
So, I would suggest you consider the following KPIs, all measured by clinician. Don’t feel that you need to focus on all 12 straightaway. Improvement in each of these areas will make you more profitable and more efficient.
Failed to Attend Time
FTAs are a big issue in many practices, so having strategies in place to reduce them is essential. This goes way beyond just having a charging structure in place. Time taken to chase no-shows and rebook them makes you inefficient. All your fixed overheads such as wages, insurances, computer fees and equipment leases still apply even when that chair is empty, so when a patient doesn’t turn up, you are losing money. I have proven techniques that will help you reduce FTAs by up to 50%. Read on and then feel free to contact me for a no-obligation chat.
Gaps in Diary
If today and tomorrow are full and we repeat that process every day, then we are efficient. If there are gaps in your diary over the next 48 hours, apart from any necessary emergency slots, then filling these gaps is a priority. It shouldn’t be a case of waiting for the phone to ring to fill a gap. It takes more efficient strategies such as outbound call activity to keep your diary full.
Short Notice Cancellation
Too many patients see you as low-priority. They don’t understand the consequences to you as a business to decide a few hours beforehand that something else is more important or appealing than a visit to the dentist. Have you trained your reception team, dentists and nurses how to minimise short notice cancellations?
Overall Diary Utilisation
This KPI takes into account the previous three KPIs. You should be aiming for 93% to 95%. Broken down by each dentist, it can give you a great insight into the patient’s perception, trust and likeability of your associates.
New Patients & Registered Patient Counts
You will naturally lose patients through bereavement and house moves and other personal circumstances. However, failed recalls and patients thinking they don’t need to visit the practice regularly also impact on registered patient numbers. So, attracting new patients to replace these losses is a given.
Re-booking on completion
In any business, getting a new customer is more costly than keeping an existing one. Booking the next exam on completion of current course makes great business sense. Your patients are busy people, and will not always respond to that text message or email (if they even open it). Your reception team can become inefficient by having to chase patients to try and get them booked in for their next routine check-up. A receptionist continually on the phone can send out the wrong message to those patients waiting at reception.
Recall Success Rate
How effective is your recall system? For every 100 recalls you send out, how many patients make an appointment? How many attempts do you make to get that patient booked back in again? I’d love to share with you how I worked with a practice recently to drive recall success rate up from 43% to 83%. But do you know how effective your current recall system is?
How good are you at keeping patients long-term? Is another practices’ marketing efforts impacting on your patient numbers? How many of the patients you saw in 2018 did you see again in 2019? How does this vary per dentist in your practice?
Average time between examinations
This is a slightly different measure on some of the above but is a good indicator as well to overall performance. If for example, you can reduce the average time between routine examinations from say, 9 months to 7 months, then you could increase revenue by 20%. Call me if you’d like me to explain that to you, or if you prefer, complete the enquiry form below.
Patient Referral Numbers
More than ever, people are looking at online reviews on websites, Google and Facebook when making decisions about choosing a new dentist. Having a strategy in place to encourage your patients to promote you is essential nowadays. Happy customers are your unpaid marketing team.
Earnings per hour
Improvements in many of the above will impact on this KPI, but some dentists are more productive than others. Helping each associate to understand their current earnings and the potential to improve those earning works well. If each associate can increase earnings per hour by 10%, you could be looking at your overall profitability improving by 25%.
Private Treatment Sales
Patients want choices nowadays, and some of the treatments they are interested in are not available on the NHS. Do we always offer our patients choices? It’s not selling; it’s communication and relationship building. Simply having good conversations about patients wishes and their concerns will drive up private treatment sales.
So, lots to consider. Some of you will not be monitoring any of the above in a structured,measured way. Many of you will have a good understanding of the above, but undoubtedly, all of you can improve on most, if not all the above.
So, whether you are new to this or just looking to achieve a few percentage point improvements, I hope you can see that the KPIs above offer many ways to drive up revenue, improve efficiencies and become more profitable.