BENCHMARKS THAT SHOULD GIVE YOU PAUSE – #5 PRODUCTION PER NEW PATIENT
A lot of software companies can produce this number for you, but the short fall here is that we don’t take the information and act quickly to improve our standing. If you have not yet given each of the benchmark articles to your office manager and staff, you are missing a huge opportunity in having them partner with you to take your practice to the next level. As you can see, with each of these topics I have connected them to your profitability. Growth in profitability can be stated as a formula with each of these topics playing a part. Here is the big picture formula:
Number of Visits X Production per Visit X Collections % – Overhead = Profits
A simple formula with complex implications in running a successful business. In the above formula we could lump Number of Visits and Production per Visit as PRODUCTION PER PATIENT. Today we are looking at the production per “New” Patient. This number will be the predictor of the lifetime value of that patient. If they don’t spend money with you initially, doesn’t it make sense that they won’t spend it indefinitely with you?
To arrive at this number, you merely take your total production for the month and divide it by your number of new patients for that same month. While this should be obvious, we are not arriving at the production “on” each new patient, but the production “per” new patient or just a simple ratio. An average practice will have about $1,200 per new patient. An ideal number would be in the $2,500-$3,500 range. Hit these numbers and your overhead will generally go into the 50%-60% range. Only making the average amount of $1,200 per new patient results in overheads in the 70% and greater area. So, what affects our ability to hit the higher numbers and perfect our Profitability Formula?
• Case Acceptance approaching 90%. The average case acceptance is in the lower 60% range. What a difference fine tuning and staging this protocol in your practice can make. Poor acceptance is usually the result of no trust established, poor financial arrangements, and the fact that you came up short when this patient compared you to other offices they had visited.
• Age of the average patient. Demographics have a significant effect on production per new patient. Very young patients tend to not need higher ticket items. Older patients sometimes cannot afford to do what they need done. Ages can also affect the types of treatment needed.
• Income of the patient. Becoming an expert at fitting your new patient’s needs into their budget is the final and sometimes the most important step in case acceptance. Some areas demographics of income are so low that dentistry is not a priority and many services are out of their reach. If you look at very high incomes with highly educated people you will see that they have little or no dental needs to speak of. They have always taken care of their teeth because they came from a middle-class family and are highly educated. A smile and having all of their teeth is important. This type of patient already got it fixed, or never needed it in the first place.
• Treatment mix. You must have the skills, range of treatment options, (do you do implants, dentures, oral surgery, kids, ortho?) and ability to get in step with the patient. As your abilities improve, you will also see that more patients will say yes. Competence breeds confidence and this can be contagious with new patients. You just come across as being the “it” dentist in your area. Add to these higher end procedures and you will have hit the sweet spot in the profitability formula.
You will have to do the math yourself to track this number, but don’t minimize the importance of its value on your practice. This is how you Summit.
Michael Abernathy, DDS
PS. One additional thought. A contributing factor to low production per new patient might be insufficient numbers of new patients or new patient numbers that fluctuate wildly. You might consider purchasing my latest book entitled Marketing the Super General Dental Practice. If you want/need more new patients, this will show you how to get them. Just click here for more info and to order.