That’s right, its half time. The “woulda’s, coulda’s, and shoulda’s” didn’t show up, so you and your practice didn’t keep that New Years Eve resolution to take your practice to the next level. Half the year is over and you have the opportunity to take it to the locker room and come out with a new strategy for the final half. Wouldn’t it be great to change your average and put 2012 in the win column?
Let’s get back to basics. How did the first half go? What is the score after the first six months?
Before we start, I need for you to get a couple of things out, sit down in front of the office computer and pull up the schedule for yesterday and let’s take a hard look at the foundation of a great practice. I need the average production, collections, new patients, and referred patients for the first 5 months of this year in front of you before we start. The last thing is a copy of the first five months Profit and Loss Statement. For once, don’t fudge. Put this article down until the front desk can retrieve the information I have asked for. Don’t rely on your memory. It won’t work, has never worked, and you will not get what you need out of this article without the real unblemished truth of statistics and numbers in front of you. OK: You have the numbers and you have the computer on, so go ahead and start reading.
First add up all the production numbers and get an average, the same with the collections, and with the number of new patients, and number of direct referrals. You now have the average production, collections, and new patients for the first half of the year. The computer is open to the last production day you were at the office. Not today, but the last workday that you have finished.
- Is there a goal at the top of the page for office, hygiene, and doctor production? If not, why not? Have you changed it this year or is it left over from five years ago? Did you make it that day or was it a bust? Does anyone in your office know what the score was for that day? No one can hit a target they can’t see.
- Look at your schedule (doctor’s) and count up the number of minutes that you were not directly working on a patient. Your goal should be at least 90% utilization. If you were open eight hours or 480 minutes of work, were you directly involved with treating patients for 432 minutes of that time? If not, something is wrong.
- Look at the hygiene day and see what her utilization is. Is she paid by the hour and as a result every recall patient spends 60 minutes with the hygienist whether they have teeth or not?
- Is your hygienist producing three times what she is being paid?
- Is the total hygiene production about a third or 33% of the total office production? If not, your hygiene department is broken. Fix it.
- Is it the policy of your office to pre-book at least 90% of your patients today for a future recall? Almost every office and doctor says yes, but let’s see. Look at your computer and click on the tab that allows you to go six months into the future. How many patients are scheduled on that day? Most of you will find it is less than three, probably one. Are they in peak demand times that you should be saving for new patients? If not, why not? If not, something is broken. Fix it. Someone is not following through to create a viable recall system. In most general practices, 67% of the entire production of the office comes from patients returning on hygiene recall visits. Your office has figured out a way to make sure that it will never happen.
- Now go back to the current day you started out with. Look at your schedule 10 days out as well as the hygiene schedule 10 days out. Do you have peak demand times (early and late: 7AM-10AM, and 3PM-6PM, and Saturdays available for patients to schedule) or are they all booked? If you don’t have peak demand times available within 5-10 days your marketing won’t work to grow the number of new patients and you have a blockage that will limit growth. This can be very subtle and difficult to identify. No peak demand times, then no new patients, and no growth in production.
- Take a look at the average production per month for the first half and divide it by the number of full time employees you have (treat a part time employee as a fraction of what a full time one would be). Is your production $20,000-$25,000/employee/month? If not, you are either under producing or you are overstaffed. Being overstaffed means your overhead will be greater than 25% for employee compensation. This means there is less for you to take home. Stop hiring mediocre staff.
- Take the number of operatories that you have and divide them into the average production. If it is less than $25,000-$30,000/Op./month, you have room to grow. The important thing to remember is that as you approach these benchmarks you will begin to see your productivity slow. It will feel like walking on concrete and then transitioning to dirt and as you get closer to the blockage threshold, it begins to feel like sand: More effort, but with diminished results. This is the time that the good leaders anticipate the slow down, diagnose the cause (staff, physical capacity, peak demand time shortage, poor systems…) and act quickly to get back on the hard surface and increase your momentum again.
- Let’s see how your new patients look. Look at the average and look at the P&L and see what you have spent to make this happen. You now are looking at the average amount of money you spend per month for marketing. Let’s see how well it is working for you. From the total of new patients, subtract the number of direct referrals. Marketing didn’t bring them in, another inspired patient did. Also subtract the number of PPO’s and other managed care patients from what’s left because they didn’t come in because you are a great dentist or were moved by your marketing. They picked you out of a booklet that their employer gave them. What’s left is a much smaller number than what we started out with. This smaller number represents the patients that your marketing brought in. Divide that number into the marketing dollars and you now know what you pay for each marketed new patient.
- Next take the total number of new patients and divide it into the average production to get the production per new patient ratio. A well-run general practice should see about $2,500/new patient. Now you can determine a Return on Investment (ROI) for your marketing: Money spent versus money produced as a direct result of said marketing.
- The last and probably the most important number is the average number of referred patients. Compare the referred average to the total number of new patients. If you are not getting at least a 50% referral rate something is terribly wrong. This number, the referred new patient average, is probably the truest way of assessing the effectiveness of your systems. Something less than fifty percent is your patient’s way of saying they don’t like you, your systems, the way you bundle fees, hours, staff, etc. This number is your patient shouting at the top of their lungs about there being something wrong. Your patients are talking, are you listening? Offices with less than fifty percent referrals are Donor practices that should not market until they fix the internal problems that fail to inspire everyone they see. Never look for an external solution (marketing) for an internal problem (lack of inspiring the patient).
Now you know what the score is. You have to go back out on the field and finish the game. What are you going to do that you didn’t do in the first half? Follow through? Work a very intentional plan? Hire a coach? Accept nothing but the results you set out to get? Free up some ones future that is making your life miserable? Whatever it is, do it today and change the trajectory of your practice, productivity, profitability, and life.
Michael Abernathy, DDS