BENCHMARKS THAT SHOULD GIVE YOU PAUSE #4 – LAB PERCENTAGES
Once again, we are looking at a number that few, if any, consistently follow. The amount you spend on your lab bills becomes a significant indicator of whether your marketing is working, demographics are good, systems are done consistently well, case acceptance is high, and even your ability to inspire a new patient. So, what we are looking at is the percentage that your lab expense is of your monthly collections. All you have to do is divide the dollar amount spent on lab (supplies, out sourced lab, and even in-house lab costs like CEREC or E4D machines and supplies and often time postage on the lab cases) by the total collections for that month and it gives you your lab percentage. If you collected $100,000 for last month and spent $8,500 on your total lab costs your percentage would be 8.5%.
So where should this number fall? Good practices will be in the 8-10% range. Boutique practices that do a lot of crown and bridge on few adult patients might be in the 12+% range. Let’s say that your lab percentage is around 5.5% (which would not be good). Let’s also assume you don’t use an in-office milling machine. This low lab number indicates several things:
• Poor demographics: This comes in the form of a population that is very young (about age 30 or less). They have not been around enough to mess up their teeth to create the need for restorations requiring lab work. This happens. It could also indicate an older affluent population are dentally well educated and have always taken care of their mouths so they don’t need any work.
• We could have a low number of new patients: (any thing less than 20 per month) New patients are the fuel in any successful dental practice. A lack of new patients means you have fewer opportunities to do lab dependent services.
• Poor on-boarding of new patients: You have a nice number of new patients per month but the production per new patient is low due to poor systems, low phone conversion to an appointment, a poor recall system, low case acceptance, and high matriculation of patients.
• Non-assertive doctor, hygienist, and/or staff: The number one reason that people do not have dentistry done, is that it was never presented. Non-assertive doctors will confuse the patients and only propose treatment that they feel the patient will always want to do. They tend to do a lot of really large fillings rather than doing the crown. Your benchmark here should be what you would do for a family member that is not being charged or the type of dentistry you would do in your own mouth. Don’t rob the patient of the opportunity to invest in the future of their good health and bright smiles by not presenting the finest dentistry you can offer.
• Over assertive doctor, staff or hygienist: This happens a lot. The doctor takes some continuing education course and becomes a “dentist turned time-share salesman”. They tend to overwhelm the patient by not listening to what the patient wants but rather just telling them all they need. If you believe that patients want what you have to sell, then you’re in for a real surprise. If that patient ever feels like you want the treatment more than they do, you will have crossed a line that dooms your case acceptance to mediocrity or worse.
I mentioned this before, but if you will contact Max Gotcher at firstname.lastname@example.org he can show you how to get 100% Case Acceptance and The Hygiene Factor. Get these comprehensive reports and see your practice take off. This is how you Summit.
Michael Abernathy, DDS
PS. Your lab percentage could be artificially high because you are overpaying for crowns. These days you should not be paying more than $99 per unit. In fact, there are a couple of options now available at BEST for Dentistry (www.bestfordentistry.com) that are even less than $99 per unit. As insurance company reimbursements continue to drop, you simply must consider this option to keep your overhead under control.