One of the world’s most famous management consultants is known for saying, “If you can’t measure it, you can’t change it,” and, “What gets measured gets managed.”
If you recognize these quotes from Peter Drucker, then you already know that you need to be looking at your dental practice’s metrics to understand where you’ve been, where you are, and where you could be headed.
It’s tempting to rely on your gut instinct about how your practice is doing. Unfortunately, you don’t get a clear picture of your business that way. Instead, measure it scientifically, establish benchmarks, and identify areas where you’re doing well and where you need to improve.
We know it can be overwhelming to prioritize what metrics you should be reviewing. Almost no one wants to spend their day compiling reports!
Start with these five dental metrics to get an overview of your practice. Continue to revisit these metrics either monthly or quarterly, and again annually, to see how you’ve improved over time.
1.Annual Patient Value
Do you know how much a new patient is worth to your practice? On average, at least according to the ADA, patients spend $653 per year at the dentist. Assuming that a patient stays with you for ten years, you can estimate a patient’s LTV (lifetime value) to be approximately $6,500. This figure doesn’t count referrals or add-on family members, so these figures could be much higher.
There is, however, danger in relying on averages. Your office could also be on the low end due to patient attrition or other factors that are hard to see if you don’t have a tracking system in place. Weave’s analytics tool can help you make sure that other metrics are not skewing your patient lifetime value.
The reason this number is significant is that it helps you determine:
How much you can spend to acquire a new patient (using advertising, direct mail, etc.).
How many active patients you need in your practice to meet your financial goals.
As your practice grows, knowing your annual patient value also helps you determine when it’s appropriate to add an associate doctor, another hygienist, or more support staff to your team. Overbooking yourself can lead to burnout and fatigue. Knowing how much revenue an additional patient brings to your practice will give you insight into whether you can bring on more help at a profit while freeing up more time for yourself.
2.Broken Appointment Percentage
Missed appointments cost your practice thousands, and they also negatively affect patient outcomes. The average no-show rate for the field of dentistry is 15%. The time that your chairs spend empty is money not being added to the bottom line of the practice.
Some offices charge no-show and cancellation fees, which can be extremely effective in reducing missed appointments. Other offices take a different approach and work with patients to make sure they’re on track to attend their appointments. Reminder calls, text messages, and even an email or letter can all work to increase show-up percentages.
If your no-show rate is above the 15% average, one of your top priorities should be to find out why. It could be that your patients forget because they’re not getting a reminder, or perhaps your parking lot is a nightmare. No-shows are also more frequent if your patients are late on their payments, and they’re worried about accumulating more debt.
Once you get to the heart of the issue, you’ll be able to address it. Usually, the lack of a friendly reminder system is to blame, so we suggest implementing a reminder software and then re-measuring this metric. If you already have a system, it might be time to audit it to make sure it’s working as you intended.
Most practice management consultants will tell you that “hygiene is the backbone of a successful dental practice.” Recently, the role of the hygienist has expanded. It’s no longer limited to routine teeth cleanings and minor procedures.
Today, hygienists play a critical role in any dental practice. Advanced training allows them to take on more responsibility. They can educate patients and make recommendations to the doctor. The hygienist is often the one whom patients see the most regularly, so this relationship can also have an impact.
From a philosophical standpoint, the more patients you have that are visiting your office bi-annually to take preventive care of their oral health, the better your practice is likely to be.
There are a couple of ways to track this metric. The most common and straightforward is as a percentage of total office production. If you have a practice that’s earning a million dollars annually and your hygiene department accounts for $300,000 of that total, then your hygiene production is 30%.
You should track your hygiene production as a percentage of your total office production. Ideally, the range should be between 30% and 40%. As a general rule, top practices aim for this figure to be one-third or 33%.
Another way to track this metric is as a total number of re-care visits for hygiene appointments. Here’s how to calculate this statistic:
Determine how many active patients you have. For simplicity, let’s call it 1,000.
Multiply this figure by two to determine the number of hygiene appointments you should have annually. For this example, the number is now 2,000.
Divide this number by 12 to calculate the goal number of monthly re-care visits. In this example, the number is now 166.
Now divide by the number of days each month that you see patients. If you see patients 20 days a month, then you should have approximately eight re-care appointments in your practice daily.
The above example assumes an unrealistic 100% compliance rate, but at least you’ll get an idea of how many of your patients are following a recommended schedule.
4.Whitening Procedures per Month
Teething whitening procedures can be a very lucrative part of your practice, perhaps in ways you hadn’t considered. Practice management consultants will tell you that patients who get their teeth whitened are more actively involved in their oral health, and they’re more likely to follow protocols like scheduling routine teeth cleanings.
What you’ve probably also realized from experience is that whitening procedures can be a gateway to cosmetic dentistry. Once patients see the results from getting their teeth whitened, they’re more likely to be interested in going a step further to perfect their smile.
For this metric, calculate how many whitening procedures you do each year. The goal is one per day, but feel free to exceed this as your office grows.
Some offices get their entire staff involved in promoting whitening. The receptionist can discuss it when patients schedule appointments, and the hygienist could also mention it tactfully during a teeth cleaning. It helps if you have a promotional special you’re offering so that the offer doesn’t come across as a condescending suggestion. Instead, it’ll be an opportunity too good to pass up.
5.Aged Accounts Receivable
Weave’s text to pay feature has helped offices all over the country collect their accounts receivable faster.
Whether your office is dealing with an insurance claim or a financed care plan, you should be tracking how much money is owed to you and how old the debt is. Once an account receivable is aged 60 days or more, it becomes increasingly unlikely that you’re going to collect it.
The threshold at which aged receivables becomes problematic is going to be different for each practice. It could depend on your patient demographic, how many of your patients use insurance, and what types of procedures you do most often. Practice management coach Gary Takacs says that no more than 20% of your total accounts receivable should be aged more than 60 days.
If you’re dealing primarily with insurance, you might want to limit claims to a concrete number rather than a percentage. These claims can be labor-intensive and problematic to follow up on, draining your resources. In situations like these, Takacs suggests limiting the number of aged accounts to no more than 20 claims that are 30 days past due.
By tracking aged accounts receivable and keeping them under control, you’ll be better able to predict cash flow and plan for investments and expenditures.
Distinguishing Between Metrics and KPIs
It’s important to distinguish the difference between a metric and a KPI (key performance indicator). These terms tend to be used interchangeably, but they’re not the same thing.
A metric can be thought of as a stand-alone statistic or data point that measures one part of your practice. A KPI, on the other hand, tends to include one or more metrics used together in a calculation. KPIs will give you an idea of the overall health or performance of your practice.
For example, many dental practices work very hard on getting more patients to call or visit their office for a consultation. The number of calls or complimentary consultations would be considered a metric. A KPI, by contrast, would be the percentage of these calls or visits resulted in a new patient. This KPI is referred to as New Patient Conversion Rate.
For a list of KPIs that we recommend tracking, take a look at this blog post.