While we know that it’s all about what we net, most of us only look at production. I want to take a moment, maybe even a few, and in the process have you look at production in a different way. If you over produce or under produce you set in motion a chain reaction that can reverse all of your gains in new patients and profitability.
“Over production” is defined as doing work for which you will not get paid. We have all seen a gung ho doctor just charge ahead and do work when the office has not done adequate financial arrangements, setting in motion several inevitable results:
1. Decreased collections, because the patient was not prepared to make the commitment and ultimate payment for the “extra” work that was done.
2. Over production results from having a “slow” practice which causes you to think that forcing the patient into same day dentistry, while short cutting your financial arrangements, will somehow turn the tide. It won’t.
3. Over production creates poor schedule control. You will often run over, causing others to wait, which leads to increased cancellations and no-shows. Not being on time every time is telling the waiting patients that you don’t respect their time.
4. It will often lead to an increase in accounts receivable, which, if you think about it, leads to fewer direct referrals. People that owe you money don’t refer.
5. Over production can lead to increased stress, decreased communication, and eventually to no bonus. Stress is caused by a lack of control. Without actually collecting what you produce, you forget that it is all about “net”.
6. Finally, over production leads to poor financial arrangements because, by definition, over production only occurs when there are inadequate financial arrangements leading to a host of other problems.
“Under production” would be defined as not doing the work that the patient needs therefore lowering your monthly and hourly production rate. This is a symptom of a non-assertive doctor without the compensating actions of a motivated, well-trained team to mitigate the doctor’s shortcomings. This can set in motion several poor results:
1. No money to pay bills. (basically you are destined to have skinny kids)
2. No bonus, since “bonus” as we define it is really profit sharing in a great overhead model.
3. Increased stress for the doctor and staff as bills mount and the pressure of having to get more patients in and do more successful case presentations mounts.
4. You will begin to appear desperate to the patient when you need the dentistry more than the patient does.
5. Like falling dominoes, you begin to push yourself to incorporate poor strategies.
6. Under production is most often the direct result of poor case presentation skills and systems.
7. If you don’t schedule at least 60% of your day in “substantial cases” (at or above the value of a crown) you will never reach a lofty goal of growth and profit.
8. Inability to pay your bills and never being able to avoid the consequences of financial captivity. You are darned if you do and darned if you don’t. It is a vicious cycle leading to a financial death spiral.
9. Poor hygiene systems guarantee that you will never be able to build your practice on the trust created when patients bond to your office through your hygiene department. Your hygiene department should produce about 33% of the total office production. In a good hygiene department, your recall will generate 67% of total doctor production, year in and year out.
How can production be bad? Now you know. The business of Dentistry demands you understand the how, when, why, and what of production.
Michael Abernathy, DDS