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Most practices fail to follow the most important numbers or “key practice indicators” (KPI’s) when monitoring their progress. In fact most doctors don’t even look at the most important indicators of practice health. If you don’t follow this one “do or die” indicator, you are certain to encounter continual frustration and stress while never seeing sustained growth and success in your practice.

We need to remember that being a consumer driven business means that we can be “voted off the island” by our clients. That’s why the percentage of direct referrals (those new patients coming from the recommendation of existing patients) is so important. This KPI is such a fundamental and revealing statistic that without hitting at least a 50% referral rate, you will languish in mediocrity while constantly struggling to grow. Ever wonder why you hit practice plateaus? The number one reason is that you are failing to inspire your current patients. This lackluster performance in the eyes of your clients is reflected in your direct referral rate.

So why would practices fail to have at least a 50% referral rate? The bottom line is that the clients you meet don’t like you or like something about the practice. It could be the lack of consumer hours, not being in network with their insurance, not seeing everyone in the family (kids), or not having the services or convenience they are looking for. Let me give you a big picture outline of a few symptoms that will drive your referrals, growth, and profits into the toilet.
• Your comparable prices are too high: Consumers, by definition, shop and buy. They consume goods and services. With marketing and Internet connections they know what the going rate is for these goods and services. Keeping your fees competitive and at about the 80-90th percentile is a necessary strategy. I am often told (by doctors) that all of his/her patients love him/her and comment on how great the office and staff is, and yet they only get 20-30 percent direct referrals. Odds are good here that the office is perceived as being too expensive. They love you and would never go anywhere else but they would never refer anyone to you because they are afraid their friends and neighbors couldn’t afford you. This is a zero sum strategy and spells dwindling patient growth.
• You keep your existing patients waiting: Patients don’t like you not being on time. Generally you will see this when patients are not coming back or they start showing up late for appointments. What’s worse is that it engenders an indifference to the office as a whole and a lowering of your worth in their estimation.
• You do poor financial arrangements: In other words, you do the work without firm financial arrangements and payment agreements. Your collection rate should and can approach levels above 100% when you communicate the benefit of outside financing and prepayment strategies. This will show up in the form of poor accounts receivable management and low cash flow. People that owe you money do not refer.
• Being unable to get a new patient in within 4-10 days during peak demand times (7-9AM, 3-6PM, and Saturdays): We could broaden this to refer to it as the “threshold effect”: What barriers do you construct that make it difficult for new patients to get in to your office? Under this we can include many of the before mentioned items: not treating kids, not having the right services, poor consumer hours, never cleaning teeth on the first appointment, out of network for their insurance, etc. We have to make it easy for our potential clients to come in and then inspire them so that we have a protocol for developing a strong referral base in our practice.
• Use of an itemized superbill or computer generated treatment plan/cost estimate for patients while doing financial arrangements: We dentists are awesome at telling patients what they need and pretty poor at listening. Most of our patients come in with some specific reason for showing up. We need to be able to find out what they want and happily give it to them without appearing that we want the dentistry more than they do. The result of using a computer driven document is that it prints everything you entered into the treatment plan, does not take into account what they wanted, and most often overwhelms them with the cost “if” they actually say yes to everything. Learn to concentrate on what they want first, and then you will get the opportunity to do what they need.
• You become marketing driven: You spend more and more on marketing but with fewer new patients to show for it. This is the number one knee jerk response to poor direct referrals. You have to spend more and more to make up for the lack of inspiring the people you encounter. You are looking for an external solution to an internal problem.
• High staff turnover: Surprise! Yes, poor leadership, poor culture, and lack of management in the form of a revolving door for staff is a huge obstacle when it comes to inspiring referrals. Patients want to go to businesses where they feel comfortable. They like the familiar face and the trust and bonding that it encourages. This last area really points to the leadership and probably the doctor’s failure to ever work on their practice rather than just in the practice.

The takeaway is that if you have referrals of less than 50%, you have to figure out “why” and quickly fix it. Knowing that this percentage reflects the good, the bad, and the ugly of your entire practice should push you to remedy any shortfall. This is how you Summit.


Mike Abernathy, DDS
972-523-4660 cell
[email protected]