Each individual dentist must define for himself or herself the meaning
of practice success. However, from a business perspective I would
define it succinctly as a practice that is as profitable and enjoyable as
possible.
Creating business success is important because a profitable practice
allows you to deliver on your promise to provide the highest quality
care to your patients. A practice that is financially successful enables
you to use the best laboratories, employ the best team members, have
a state-of-the-art facility, use the highest quality materials, take comprehensive
continuing education courses, and deliver a high level of
customer service. A successful practice should also provide the doctor
and team members with appropriate compensation to live comfortably
in the present and provide financially for the future. A properly
managed practice can provide you with a thoroughly enjoyable work
environment and create financial independence for you and your team
members. This article presents the following four specific strategies to
help you develop a financially successful practice:
• measure practice performance
• establish an appropriate fee schedule
• create a system for payment success
• develop a plan for financial independence
Measure Practice
Performance
While there are many business
and clinical activities that can be
effectively delegated within your
practice, it is absolutely crucial for
the doctor to maintain an understanding
and control of the financial
aspects of the practice. I firmly
believe that the financial control of
the practice should not be delegated.
Team members and advisors can
assist with this process; however; the
doctor must maintain oversight. The
reason that doctors must maintain
financial control is that understanding
key financial indicators will
provide the doctor with necessary
information to make the strategic
decisions that will ensure peak practice
performance. I recommend that
the doctor review the following 10
financial indicators each month as a
means of “taking the pulse” of practice
performance:
Collection percentage: Monthly
collections divided by monthly production.
Accounts receivable ratio: Total
accounts receivable divided by
monthly production.
Case acceptance percentage for
new patients: Scheduled treatment
divided by diagnosed treatment for
all new patients.
Case acceptance percentage for
existing patients: Scheduled treatment
divided by diagnosed treatment
for dentistry identified in hygiene
exams on existing patients.
Marketing return on investment
(ROI): This is calculated by evaluating
each specific marketing activity
and identifying production dollars
as a function of investment spent.
Hygiene department production
percentage: Total hygiene department
production divided by total
office production.
Perio production percentage: Perio production delivered by hygienists
(4000 CDT codes; e.g.,
4341, 4910) divided by total hygiene
production.
Unused hygiene units: Total unused
units (typically in 10-minute
increments) of hygiene time for the
month.
Unused doctor units: Total unused
doctor units (typically in 10-minute increments) for the month.
Team wage percentage: Total
staff wages (including payroll taxes
and benefits) divided by monthly
collections.
The information gathered in these
10 categories will provide the doctor
with a very specific “scorecard” with
which to understand practice performance.
With this knowledge the
doctor can then make changes and
adjustments when indicated.
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