Reducing Empty Chairs, Increasing Profits

Author:
Simon
Date:
05
March
,
2018
Category(s):
Dental BlogsProfitability Coaching

When I meet with dentists to discuss increasing profitability in their practice, I always ask about empty chair time. Unfortunately, most of my clients seem to initially dismiss empty chair time, not valuing its grand potential for an increase in revenue. I frequently hear that “empty chair time is minimal, and filling it wouldn’t make a big difference in revenue” or that “empty chair time provides a buffer in case appointments run over and allows for a break within the day, and I don’t want to give that up.” Yet, in every circumstance, once I clearly outline the increase in revenue that can occur from just a minimal decrease in empty chairs, each of my clients quickly become enthusiastic to fill those seats!

Before proceeding, I encourage you to look at your appointment book to determine what percentage of your chair time is unfilled. That will give you a reference point in understanding the potential for increasing revenues in your practice without having to increase overheads.  

What exactly are overheads?  

In order to understand why filling your empty chairs can have such an impact on profit, you have to understand the concept of overhead costs. An overhead cost is a cost related to your business that you have to pay whether or not you have patients in your chairs. For example, regardless of whether you are 100% booked or 75% booked, you still have to pay rent, so that makes it an overhead cost. Other common overhead costs you likely face include nurse and receptionist wages, computer support fees, insurances and utilities – simply keeping the lights and the heat on.

Overhead costs are significant when discussing empty chairs because typically filling empty chair time does not cost you anything additional other than the associated lab fees and materials necessary for that patient visit. Your building is already open, your lights are on, your rent is paid and your insurance is covered, so a significant amount of those patients’ fees can go directly toward increased profits.

What does an empty chair cost me?

From my extensive past experience working with dental practices, increasing chair time from 80% booked on average to 90% booked on average can result in an increase of up to 25% in profits per year for any practice. As stated above, you have few costs associated with filling those chairs, so the gains associated with those patients are very significant. Let’s say you have a daily 15-minute gap in your schedule that you seek to fill. This doesn’t seem significant, right? Well, that adds up to 1.25 hours of empty time per week, or 65 HOURS of empty chair time per year. If you typically realize approximately £30 of revenue per 15-minute visit (and that's actually a low target), that eventually adds up to almost £8,000 pounds of additional revenue per year – all by just simply filling one 15-minute gap each day.

But please don’t stop there: dream big! If your practice has the potential to fill more than one 15-minute gap per day, imagine how much additional revenue you could realize each year – all while taking on very little additional cost! A 4-chair practice, with maybe a couple of 15 minute gaps each per day is looking at unrealized revenue in excess of £60,000 per year!

What else does it cost?

Clearly, empty chair time costs any practice a missed opportunity for revenue, but there are other less quantifiable costs, too. When staff aren't challenged and kept busy, they can often become distracted and less committed to their work, ultimately resulting in a lack of motivation and a lesser quality output of work. Other patients may see the empty chairs in your practice and question your business; a thriving, healthy dental practice shouldn’t have gaps in the schedule. Do you think a patient will be likely to recommend your practice if they don’t have an entirely positive view on it? Of course not, so the empty chair time can ultimately cost you in patient referrals, too. And if a patient seems to think that you are rarely fully booked, they can be more likely to cancel, reschedule or delay booking their next appointment, thinking that you have plenty of free space available to accommodate them. All of these ripple effects spurred by the gaps in your schedule can eventually permeate throughout the business, costing you much more than a missed opportunity for revenue.

How do I fill my chairs?

There are two important things to look at here. Firstly, what are the reception team doing to address these gaps - are they focusing on the next available appointment at all times? Are they saying the right things to reduce failed appointments and short notice cancellations Secondly, a cost effective and easy way to fill your chair gap is to reactivate former patients and schedule their overdue checkups. In my experience, I have found that more than a third of the patients you contact will be enthusiastic to book an appointment – they simply need a reminder – but you can read more about the importance of patient reactivation here.

You can also fill your chairs by ensuring your clients book their next appointment when they are in the office. Simple strategies such as saying, “That's you all finished for now - let's just get another routine check-up booked for 6 months time which we can always reschedule nearer the time if need be.” can be used to ensure they leave the office with a next appointment in their diary. And of course, a similar approach with clients who have failed to show for their appointment or cancelled can be used to get them rebooked. Having efficient reminder systems set up in the preferred manner for each client – text message, phone message, email, etc. – also reduces empty chair time by reducing the number of missed appointments.

Lastly, I recommend having a visible, strict and enforced cancellation policy. When expectations are set forth clearly and firmly, you will find that clients are much more respectful of your policy and therefore less likely to cancel last minute.

What next?

Hopefully this overview has provided a solid groundwork to help you understand why filling your empty chairs is vital to profitability for any dental practice. But now it is important to review your current policies and procedures and identify which areas you may be lacking and how you can go about decreasing empty chair time. You may need to focus on reactivating patients or maybe you need to seriously review your cancellation policy. I would be enthusiastic about the opportunity to meet with you to discuss your practice’s needs and work together to develop a targeted plan that is bound to quickly increase revenues. 

I typically find that I can help practices improve diary utilisation by a minimum of 10% and that usually equates to a 25% increase in practice profitability. How does that sound?

Please call me today on 07860 476 358 or 0800 093 2874 to schedule a complimentary appointment so that we can quickly get to work increasing your profitability!

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Reducing Empty Chairs, Increasing Profits

Author:
Simon
Date:
05
March
,
2018
Category(s):
Dental BlogsProfitability Coaching

When I meet with dentists to discuss increasing profitability in their practice, I always ask about empty chair time. Unfortunately, most of my clients seem to initially dismiss empty chair time, not valuing its grand potential for an increase in revenue. I frequently hear that “empty chair time is minimal, and filling it wouldn’t make a big difference in revenue” or that “empty chair time provides a buffer in case appointments run over and allows for a break within the day, and I don’t want to give that up.” Yet, in every circumstance, once I clearly outline the increase in revenue that can occur from just a minimal decrease in empty chairs, each of my clients quickly become enthusiastic to fill those seats!

Before proceeding, I encourage you to look at your appointment book to determine what percentage of your chair time is unfilled. That will give you a reference point in understanding the potential for increasing revenues in your practice without having to increase overheads.  

What exactly are overheads?  

In order to understand why filling your empty chairs can have such an impact on profit, you have to understand the concept of overhead costs. An overhead cost is a cost related to your business that you have to pay whether or not you have patients in your chairs. For example, regardless of whether you are 100% booked or 75% booked, you still have to pay rent, so that makes it an overhead cost. Other common overhead costs you likely face include nurse and receptionist wages, computer support fees, insurances and utilities – simply keeping the lights and the heat on.

Overhead costs are significant when discussing empty chairs because typically filling empty chair time does not cost you anything additional other than the associated lab fees and materials necessary for that patient visit. Your building is already open, your lights are on, your rent is paid and your insurance is covered, so a significant amount of those patients’ fees can go directly toward increased profits.

What does an empty chair cost me?

From my extensive past experience working with dental practices, increasing chair time from 80% booked on average to 90% booked on average can result in an increase of up to 25% in profits per year for any practice. As stated above, you have few costs associated with filling those chairs, so the gains associated with those patients are very significant. Let’s say you have a daily 15-minute gap in your schedule that you seek to fill. This doesn’t seem significant, right? Well, that adds up to 1.25 hours of empty time per week, or 65 HOURS of empty chair time per year. If you typically realize approximately £30 of revenue per 15-minute visit (and that's actually a low target), that eventually adds up to almost £8,000 pounds of additional revenue per year – all by just simply filling one 15-minute gap each day.

But please don’t stop there: dream big! If your practice has the potential to fill more than one 15-minute gap per day, imagine how much additional revenue you could realize each year – all while taking on very little additional cost! A 4-chair practice, with maybe a couple of 15 minute gaps each per day is looking at unrealized revenue in excess of £60,000 per year!

What else does it cost?

Clearly, empty chair time costs any practice a missed opportunity for revenue, but there are other less quantifiable costs, too. When staff aren't challenged and kept busy, they can often become distracted and less committed to their work, ultimately resulting in a lack of motivation and a lesser quality output of work. Other patients may see the empty chairs in your practice and question your business; a thriving, healthy dental practice shouldn’t have gaps in the schedule. Do you think a patient will be likely to recommend your practice if they don’t have an entirely positive view on it? Of course not, so the empty chair time can ultimately cost you in patient referrals, too. And if a patient seems to think that you are rarely fully booked, they can be more likely to cancel, reschedule or delay booking their next appointment, thinking that you have plenty of free space available to accommodate them. All of these ripple effects spurred by the gaps in your schedule can eventually permeate throughout the business, costing you much more than a missed opportunity for revenue.

How do I fill my chairs?

There are two important things to look at here. Firstly, what are the reception team doing to address these gaps - are they focusing on the next available appointment at all times? Are they saying the right things to reduce failed appointments and short notice cancellations Secondly, a cost effective and easy way to fill your chair gap is to reactivate former patients and schedule their overdue checkups. In my experience, I have found that more than a third of the patients you contact will be enthusiastic to book an appointment – they simply need a reminder – but you can read more about the importance of patient reactivation here.

You can also fill your chairs by ensuring your clients book their next appointment when they are in the office. Simple strategies such as saying, “That's you all finished for now - let's just get another routine check-up booked for 6 months time which we can always reschedule nearer the time if need be.” can be used to ensure they leave the office with a next appointment in their diary. And of course, a similar approach with clients who have failed to show for their appointment or cancelled can be used to get them rebooked. Having efficient reminder systems set up in the preferred manner for each client – text message, phone message, email, etc. – also reduces empty chair time by reducing the number of missed appointments.

Lastly, I recommend having a visible, strict and enforced cancellation policy. When expectations are set forth clearly and firmly, you will find that clients are much more respectful of your policy and therefore less likely to cancel last minute.

What next?

Hopefully this overview has provided a solid groundwork to help you understand why filling your empty chairs is vital to profitability for any dental practice. But now it is important to review your current policies and procedures and identify which areas you may be lacking and how you can go about decreasing empty chair time. You may need to focus on reactivating patients or maybe you need to seriously review your cancellation policy. I would be enthusiastic about the opportunity to meet with you to discuss your practice’s needs and work together to develop a targeted plan that is bound to quickly increase revenues. 

I typically find that I can help practices improve diary utilisation by a minimum of 10% and that usually equates to a 25% increase in practice profitability. How does that sound?

Please call me today on 07860 476 358 or 0800 093 2874 to schedule a complimentary appointment so that we can quickly get to work increasing your profitability!