Wouldn’t it be easier if every area of our life could be reduced to a simple formula or equation. A math problem where one plus one always added up to be two. A recipe that always produced the same great meal. A set of black and white circumstances and solutions that anyone could follow. When we play sports or even a kid’s board game, there are rules, a “field” of play, winners and losers, risks, and rewards. Everything has its place and the reason someone wins is clearly defined. If you lost, you could easily see why and change your strategy for the next game. This is keeping score.
In dentistry, I believe that these fields of play, rewards, and risks can be defined by a pretty simple formula that I would like to lay out for you. Beneath this math problem will be a number of possible variables along with solutions that are easily followed. If I do my job well, my hope is that this “formula” will lay out a simple, reproducible, easy to follow roadmap to dental success regardless of where you live or what the economy does in the future. This formula, in any business, will help you see the pathway to “profits”. Ultimately in the journey of understanding how to determine your score in any game, we have to understand the basics of the playing field, where we are in that playing field, how to score, and what type of score determines if you “win”. What follows is the “game” of dentistry.
This simple formula includes four and only four variables. For all you math wizards, these four areas are like integers in a math problem.
- Number of patient visits (PV).
- Production per each visit (PEV).
- Collection percentage (CP).
- Overhead (traditional cost of doing business before any profits (O).
Work through the equation and the result is Profit (P).
The formula is then: The number of patient visits times the production per each visit times the collection percentage minus the overhead equals your net profits.
PV x PEV x CP – O = P
Fundamentally, this is the way your accountant, the IRS, and your bank account sees your practice. Failure to understand the unalterable truth of this equation will ensure that your practice will struggle, your financial options will be limited, and your overall attitude towards dentistry will be poor. On the other hand, this should create clarity by finding a simple, straight forward representation of the practice of dentistry.
Like most things simple, the real truth is in the details. We are going to take each integral part in our formula and expand on what you might or should do to improve the final outcome or your profits.
NUMBER OF PATIENT VISITS: PV
Generally speaking, we could say that if we had a practice where very few patients actually showed up, we would not make much of a living. In fact, we could go belly up. On the other hand, if we had people fighting to get into our practices, we could also assume that we would produce more. The bottom line is that we need patients to prosper. Patients are like wood we place in our fireplaces to produce heat. No wood, no heat. Right about now, each of you are thinking that duh, this is too simplistic. I assure you that if the average practices of the world were saying that, and they could only attract 20-30 new patients a month, they, like most dentists, are not considering the implications and importance of an unlimited number of new patients.
Sure, you can make it with the right 8 patients a month, but would that get you through the ups and downs of bust and boom economies? Can you attract the 8 perfect patients and get them all to say yes to your case presentation? Can you sustain a year in, year out growth rate of 15%-20% a year for the rest of your career? If you had the desire, would just an average number of patients allow you to grow in leadership, management, and profits to support a time when your practice or practices were staffed with associates while you enjoyed other opportunities outside the limited arena of a dental chair?
Like it or not, the number of patient visits are directly affected by 5 important sources.
- New patients: I have always found ways to create an unlimited number of new patients by making sure that I always gave clients more than I promised. I always invested in the right type of marketing that ensured an unlimited number of opportunities to convert each phone call into a new patient who showed up, paid for their treatment, and referred everyone they knew to us. It is that last statement (referred patients) that has driven any and all the practices I have owned or worked with. Once you understand that you must become remarkable in the eyes of your audience, you become the “it” dentist. I refer to this as “Validity in the Marketplace”. You create the circumstances where every patient becomes a raving fan. They can’t help but tell everyone they know about you, your team, and your office. What’s neat is that it is extremely easy to become remarkable to most people because most dentists are just OK; average dentists where people will never even remember their name. Keep in mind that you must track the number of new patients. Even more important is that you need to know where each and every one of them come from. The most important benchmark you can follow is the percentage and number of patients that have come to you from a direct referral source. If you are not getting at least 50% of your patients from direct referrals of other happy patients, you probably shouldn’t even spend money on external marketing. Lack of referrals represent patients and the public telling you that they don’t like something about you or the practice. Take this to heart and start measuring this number. You can’t manage, improve, or work on things you don’t measure. This “Scoring Equation” hinges on these five integers becoming your top priority.
- Case acceptance: Actually, opening your front door by marketing and asking for referrals only gets the potential client into the office. Every practice management software has something called a “routing slip”. A part of the software that can track patients as they interact with each person in various areas of the office. The simple brilliance of using the routing slip allows you to discover when, where, and with whom the patient becomes disillusioned or disappointed and decides to go elsewhere. It might be after you overwhelm them with your comprehensive diagnostic appointment, when you couldn’t get them numb, made them wait, took three impressions to finally get a crown or denture to fit, or your hygienist hurt them. Regardless, there will aways be a point where you lose a patient unless you are getting a 100% active patient number. I know this because the average dental practice has less than a 60% acceptance rate for their case presentations. This is a key number you need to track in order to keep score. Don’t be like the patient that didn’t want to go to the doctor because they were afraid that they might have something really bad. Bite the bullet, start due diligence by tracking these numbers and then act on what you find. Lose your excuses and start finding your results.
- Re-appointment: Remember, we are talking about how to affect the first portion of our equation or Patient Visits. No one should ever leave your office without another appointment. This should never, ever happen. It could be for the next appointment for treatment with the dentist, recall for a hygiene appointment in 6 months, a short appointment to check your work and to see how the patient is doing after an appointment, or it could be an appointment for you to give them a call and check up on that case presentation, or that excuse they gave you for not scheduling in the first place. This is an overlooked, easy to fix, crippling habit of not doing what it takes to keep the patients you have. Sadly, in hygiene the average recall rate in the average dental office is only 42%. That means 58% of your patients are not coming back. This is a sucking chest would when it comes to successful practice management. Keep in mind that 67% of all the dentistry you will ever do in your office will come from hygiene recall patients, not new patients. Even more disheartening is that 90% of offices can’t even tell you what their recall rate is. If you have a practice management software like Dentrix, you could run a Practice Statistics Report: Patients by age, zip code, male/female, insurance or no insurance, active patients, and active patients without an appointment. Eagle Soft has their Patient Analysis Report that gives you the same data. Every software has this type of report except for Open Dental (you can get it, but you have to go to six or seven different areas to compile the data that most other practice software companies already have in a simple to get report). NOTE: An average hygienist can see just over 600 patients a year if they see them twice a year and less if they see them three times. If you are average and have 20-30 new patients a month or on the high side, about 360 new patients a year, and you don’t hire a new additional hygienist every 2 years, your patients are not coming back. Think about it. It is almost common place to see practices that are average in their number of new patients, been in practice 7 years, and still only have one hygienist. The writing is on the wall. Read the graffiti and accept that something is terribly wrong. Self- diagnose, analyze the data, and then act. There is no learning without application.
- Re-activation: Each and every one of you will come up short in direct referrals and 80%-90% recall in hygiene. If that is the case, you must have a protocol for reactivating those patients who have fallen through the cracks or decided to go down the street because you don’t have consumer friendly hours, don’t take their insurance, don’t offer the services they want, or failed to welcome the entire family. Reactivation is a band aid for the practice not being proactive in not letting the patients fall into these cracks. Ideally, you should finally get to the point where there is less and less need for reactivation because you are now doing everything else correctly and not having the symptoms of lost patients.
- Reduce broken appointments: The most important piece of technology in the office is your telephone and the most important person in the office is the front desk person who answers it. This person becomes the voice and face of your practice. They create that first impression that you cannot redo if done poorly. It is not enough to market well and then drop the ball on the phone or at the new patients first visit to your office. Broken appointments happen when we don’t address the four areas of concern that every patient has when they call your office: Time, Money, Fear, and Trust. Of these, trust is that elusive something that makes you remarkable, helps you come across as caring, compassionate, and competent. Lack of trust wreaks havoc with broken appointments, case acceptance, direct referrals, and 5-star reviews. Oh, and survival in a dental practice. All four are equally and vitally important. Leave out one or not address one while the patient is in your office and broken appointments will soar. Generally, when I hear doctors or team members exclaim that patients don’t care or they are just crazy and don’t value a dental appointment, I know that this response and attitude is merely a reflection of the lack of understanding of what it takes to become remarkable in the competitive dental market. You get what you deserve, not what you want. Everything you do is precisely designed to give you the results you are getting. If these results are not good, change everything you do until you get it right. Read chapters 16 and 17 or the Super General Dental practice (free at www.supergeneralpractice.com ).
Next time we will deal with the second number in our equation: Production for each visit (PEV).
PV x PEV x CP – O = P
Michael Abernathy DDS