Most dentists truly enjoy the clinical aspects of dental practice but often find the management of business systems and staff challenging. That’s understandable. Most dentists’ education is lacking in business management courses. It makes no sense that we spend four or more years becoming educated to practice dentistry, and then are thrown into a business setting without any particular business education.
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BUSINESS MODEL FOR DENTAL PRACTICES
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Taking courses in business management is extremely difficult if you are running a practice. In fact, diagnosis, treatment, supervising and training staff members and the need to have a balanced life make it all but impossible. Fortunately, there is a general business management model that can be applied to most dental practices. It can act as a blueprint for successfully balancing the business side of the practice with the clinical side in order to achieve specific goals for treatment and income. In addition, well-run and documented business systems have been found to reduce stress, increase production, decrease turnover and increase doctor and staff satisfaction.
In this column, I will explore the concept of key performance indicators, or KPIs. KPIs are specific numbers and statistics that Levin Group has developed to be reviewed at regular intervals. These numbers and statistics allow the dentist or any team member to evaluate the factors that drive a practice forward. The data that I will offer are based on information developed by Levin Group (Baltimore) and on the established Levin Group Method.
In dental offices, even the most basic systems produce so much data that making sense of it can be overwhelming.
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KEY PERFORMANCE INDICATORS
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The KPIs concept was pioneered by the chief executive officers of top companies such as Frito-Lay and top strategic management consulting firms that consult to the Fortune 500 companies. KPIs were developed as a means of dealing with an overwhelming amount of data. The use of KPIs has made a tremendous difference for many CEOs wishing to pare down information to meaningful data.
In dental offices, even the most basic systems produce so much data that making sense of it can be overwhelming. Dentist/owners are looking for ways to reduce the size and scope of these data in order to make better decisions more quickly. This is essential since dental professionals see patients all day and have very little time to dedicate solely to business management tasks. Using KPIs cuts through the data avalanche. It helps dentists develop a quick snapshot of the performance of their practice. Using KPIs, they can determine quickly whether or not goals are being achieved.
The KPIs will also indicate any new trends in the performance of the practice that dentists need to understand. KPIs offer information that is crucial to running the practice for peak performance. For example, KPIs will
- – reveal whether the number of new patients is going up or down;
- – indicate whether the average production per new patient is increasing or decreasing;
- – tell whether the new patients are insurance-based patients or fee-for-service.
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MORE ADDED VALUE FROM KEY PERFORMANCE INDICATORS
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Dentists cannot make effective decisions without adequate information about how the practice is operating currently. These decisions could include adding another staff member, opening another treatment room, moving the practice, adding an associate and a host of other decisions. It is also difficult to design and document expert business systems to operate the practice more efficiently and effectively without understanding the current situation. By making available immediate information about the current state of the practice, KPIs help the doctor evaluate the overall practice strengths and weaknesses.
KPIs reveal where goals are not being met, and indicate what additional information you need to develop before taking action. For example, let’s say KPIs reveal that the population of insurance-based patients seeking treatment in your practice is expanding. It would be prudent to evaluate what types of plans they are in, the reimbursement those plans offer, the maximum reimbursement from each plan, etc. This assessment is important because it may have a direct impact on the production and revenue of the practice six to 12 months down the road.
Below is a partial list of key driving factors for the success of your practice for which KPI-based information is useful:
- – production;
- – collection;
- – production/collection ratio;
- – number of new patients;
- – total overhead;
- – overhead percentage;
- – total profit;
- – profit percentage;
- – average production per patient;
- – average production per new patient;
- – days in accounts receivable;
- – procedure-service mix ratio.
Additional assessments may include
- – staff labor percentage expenditures relative to revenue;
- – the percentage of scheduled time that results in no-show patients;
- – the percentage of scheduled time that results in last-minute cancellations.
KPIs demonstrate whether or not the practice is on track to achieve its goals. They quickly reveal when performance is not acceptable. This gives the dentist an opportunity to investigate and address those areas immediately. It is wise to limit KPIs to 12–15 statistics or the information may still be too extensive to be useful in making decisions quickly and in developing a workable action plan.
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SUMMARY
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Dentistry is a rapidly evolving health care occupation that can offer an outstanding quality of life, allowing each doctor to define how he or she would like to practice. Dentistry has a high-income potential compared with many other occupations, and this also contributes to the quality of life of dental professionals.
But the profession can be overwhelming due to the variety of procedures performed, the large number of systems in place and the multiple management issues to deal with. While there is no one-size-fits-all system that will work for all practices, KPIs can help each professional evaluate how he or she would like the practice to operate and grow. Using KPIs to help identify the strengths and weaknesses of your practice, you can set and establish the systems that will assure achievement of those goals.
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BUSINESS MODEL FOR DENTAL...
KEY PERFORMANCE INDICATORS
