No one should ever want to be an average practice. Certainly, no patient wants to go to a practice that is just ok, or average. In fact, great practices actually want to dominate other offices in their sphere of influence or about a 5–7-mile radius of your office location. Perhaps “dominate” seems a bit strong to you, but I would have to say that the doctors who excel at their profession will smile when I say dominate. These doctors know exactly what I am saying. They want a commanding influence on or exercise control over where their patients come from and who they see as their dentist. They want to become remarkable in the eyes of every potential patient in their demographic.
If you would consider this attitude as ideal for any business, then we need to understand dental “demand”. How and why do patients choose one practice over another? What are our options to entice more people to consider our practice for a dental home? Basically, there are four areas that entice or attract patients. Each and every one has a specific reason and way they influence patients to call and stay in your practice. Take a hard look at each of the four, understanding that the best and most efficient way to attract patients is to utilize all four. It doesn’t matter whether you are a fee-for-service practice (6% of the dental offices in the US) or participate in-network with some or all insurance programs. No patient selects an office because it is fee-for-service. They select an office because of these four factors. It is only after they select you and come in that they make the decision as to whether they want to stay regardless of insurance participation. Also, remember that every office is always trying to attract more fee-for-service patients.
Here are the four ways patients find your office.
1. Natural Marketing: I would have to say this is the most powerful reason patients not only find you but stay with you. Even if this is so, great practices consider this natural marketing as foundational and only the starting point in attracting and keeping patients. Natural marketing revolves around “convenience”. I will list a few of the things people consider as convenience, but also note that each and every patient will weight or rank convenience in a different way. So, make sure you can check every box or at least understand that if you don’t, won’t, or can’t, you will minimize the patient pool available to you. Convenience will include being in-network if they have insurance; your hours being consumer friendly hours; the ability to exceed the desires of every consumer; the range of ages that you treat; the services you offer (endo, perio, oral surgery, ortho, kids, etc.); how you can fit the cost of dentistry into their budgets while decreasing any threshold hassles that might prevent people from coming in; the location of your office; and being sure that the culture of your practice matches what a patient is looking for in a dentist and office.
2. Manufactured Marketing: This would be any external or even internal marketing you do. The scary part is that most practices do not track why or what drove patients into their office. This could include Internet, Facebook, Google, billboards, radio, TV, direct mail, newsletters, signage, and how nice your physical office looks to a patient. Often times, if you need to spend more and more money on external marketing, you have a real problem. Good practices market, but they don’t really need to because almost everything they do is right on the mark. Poor offices need to market but shouldn’t because they are looking for an external solution to an internal problem. If the poor office needs to market more, there is a reason, and it is usually that patients that have been in the office don’t like something. Figure out what it is that patients don’t like before you continue to spend more and more to attract patients that won’t say yes to treatment, won’t refer others, and won’t become raving fans and stay in your practice forever.
3. Negotiated Marketing: This is managed care. You have decided to spend money to attract patients who want to use their dental insurance benefits and maximize that utilization. To be sure, you are giving up 30% plus of your usual fee by being in-network. On the other hand, not being in-network might mean you can’t pay your bills. Bottom line is that if you are embracing managed care, you must become the Tarzan in a managed care jungle. Offices that participate in managed care can still have overheads if the mid-fifty percent to sixty percent range if they can collect 100%+ of their net adjusted production and produce $20,000-$25,000 per month per employee and $25,000-$30,000 per op per month.
4. Inspired Marketing: These are your direct referrals. They are the patients who show up, pay for their treatment, and tell everybody they know about your practice. These are the raving fans that most offices never seem to inspire. Each of these patients wouldn’t think of going anywhere else. They are life-time patients, and their value is priceless. Once again, the sad truth is that most offices don’t even track the number of direct referrals they get every month. They don’t strive to create more referrals and correct the things that stand in the way of attracting more. This percentage of direct referrals is the one KPI that most likely will show you whether you are doing things well or striking out with you patients. I call this Referral Intensity. Let me challenge you into taking a very simple formula, run the numbers, share the results with the team and commit to improving your results. In fact, I wouldn’t spend money on external marketing unless I was getting at least 50% of my new patients from direct referrals.
Referral Intensity is: Number of Direct Referrals times Case Average divided by 100 =______.
Case average would be the dollar amount of your monthly collections divided by the number of new patients that month. It is not the production/collection on each new patient, but rather the production/collection per each new patient – a simple ratio. If you collected $100,000 last month and had 33 new patients, your case average would be $3,030. Let’s assume that in this same month the number of direct referrals was 15. Now plug in the numbers to the formula:
15(direct referrals) times $3,030(case average) = 454.5 Referral Intensity
100
Now, think of the solution (454.5) as a batting average. This would be the all-time baseball hall of fame batting average. It would be beyond awesome.
Now let’s look at a more average practice to add a little reality in what I see in most practices. An average practice collects about $700,000/year, or $58,333/month with 20-30 new patients a month and for this example we will assume that they get about 33% of their new patients from direct referrals on 30 new patients/month or 10 direct referrals. To help you with the math we will divide the $58,333/month by the 30 new patients/month to arrive at a case average of $1,944.
As you can see below, the 194.4 referral intensity is pretty low. A batting average score that should put you back in the minor leagues.
10 (direct referrals) X $1,944 (case average) = 194.4 Referral Intensity
100
Take the time to do your own math and use your score to give you impetus to make some needed changes. Balance your outreach into these four areas and reap an unlimited new patient result. Make this the year you put your practice in the big league.
Michael Abernathy DDS
972.523.4660 cell
[email protected]