The Numbers Don’t Lie


Illuminate Your Dental Practice Performance with KPIs.
Is your dental practice as busy as you’d like it to be? Do you feel like your practice is getting busier and busier, but at the end of each month you barely have enough revenue to keep the lights on? The lights may be on, but unless you know key metrics, it may feel like you’re bumbling around in the dark. Key performance indicators (KPIs) are well known business tools that can shed light on the areas of your dental practice that may be in need of some extra attention.

KPIs are hallmarks of growing comprehensive dental practices. By measuring and utilizing them, you can discover whether your practice is performing at or above average levels, and if not, where the deficiencies may lie. Dental practice KPIs should be compared against industry averages to determine what needs to be done to achieve healthy growth.

KPIs are simple calculations but they provide important (and often revealing) information about your practice. KPIs are not just a theory taught in business school—they are intended to make sure your practice stays on track or is steadily growing.

Reviewing KPIs should be an ongoing part of the improvement process at every dental practice. The power of having managed KPIs lies in evaluating data and then taking action with targeted and sequential improvements in your practice. The benefit of KPIs is that they offer a strategic means of measurement for structured improvement.

Even though KPIs usually measure a single component of production, strategic growth is always a team effort. By sharing KPIs with dental team members, the team can work together to create solutions and growth.

Measuring Outcomes and Progress
To find industry standards, I generally look at two reliable sources. The first source is a study of 12,500 dentists initiated by Dentistry iQ magazine. Their research shows that dentist production in 2016 averaged $216/hour.

I also looked at statistics from the American Dental Association (ADA), which provided slightly different numbers. According to that group, gross billing was roughly $655,000 per dental practice, which equates to $455 of production per hour if you calculate that amount over 15 working days per month.

Obviously, these sources report baseline numbers that are wildly different from each other. For this article, the Dentistry iQ numbers represent a bare minimum goal, and the ADA numbers represent a higher goal. Ultimately, after comparing your dental practice KPIs to industry standards, a goal to exceed even the ADA numbers is absolutely doable and worth striving for.

KPIs for Production
I recommend starting with three main areas of KPIs: production, collection, and referrals. When looking at these three KPIs, production is the most important number to understand because overall gross production is how you’re surviving (and hopefully thriving) as a business.

Each practice varies in their production but it’s important to, as Dr. Jim Downs says, “know your numbers.” Unfortunately, in dental school, little emphasis is placed on teaching business principles. Therefore, many new dentists may not always understand how to assess their production.

The first step in understanding overall production is to calculate production per hour. To do this, open your dental practice software and run a “Total Annual Production” report. Each system is different, so call or search for help within your software on how to run this report.

Most systems can run a report on total production per practice and production per insurance provider. Calculate what you are producing per month, per week, and per hour, and that will give you your production KPIs.

Then start by comparing your numbers to the ADA’s production number of $455/hour. Is your production closer to Dentistry iQ’s production-per-hour number? If so, there are steps your practice can take to increase production, but knowing how much your practice makes and how you compare to others is a good start at “turning on the lights.”

In the Total Team Training seminars that I teach with the Dr. Dick Barnes Group (DDBG), I suggest that a typical goal for a general practitioner is to produce $1 million per year. That goal is for a dental practice that includes one clinician, one or two hygienists, one clinical team, and a front office person. If your practice has multiple dental offices and multiple dentists, then you should increase that amount.

If your production goal is $1 million a year, your practice needs to make $83,332 a month, and $5,208 per day (based on an estimate of about 16 working days per month). To estimate a per-hour goal, simply divide that number by 8 for an estimate of $651 per hour. Therefore, to meet a goal of producing $1 million per year, the production goal should be $651/hour—well above the industry standards of $455 or $216/hour.

Tips for Increasing Production
If you’ve checked your production KPIs for months, weeks, and hours, and are short of your goal, what can you do? Here are some practical tips to get you started and move the needle for production:
1. First, know your production numbers and share them—both your goals and your actual production numbers—with your team members.
Dentists often are reluctant to be transparent with their teams regarding production numbers. However, if you don’t give your team the opportunity to get involved and make a positive impact on the business, it’s very difficult to grow.

A dental practice is a team environment. There is not just one producer in the practice; everybody on the team is producing. If all the team members know the collective goals, and understand how to contribute to those goals, it can make a huge difference to the bottom line.

2. Second, evaluate how much hygiene appointments are contributing to the identification of enhanced dental procedures. Educate your hygiene department on treatment modalities and empower them to identify all the oral issues that could and should be addressed with the patient.

3. The third tip is to diagnose all patients comprehensively. Every patient should be given the opportunity to learn about the possibilities for optimal care. Not every patient will be able to commit to his or her dream dentistry, but every patient should be given the same opportunity to understand what’s possible. When dentists look at their patients comprehensively, they not only have the opportunity to increase production, but they give patients an understanding of what it will take to keep their teeth for a lifetime. From there, the sky’s the limit!

KPIs for Collections
In my consultations with dental teams, a typical goal for collections (in a general practice) is 98 percent. However, for a comprehensive practice, I recommend a goal of collecting more than 100 percent. Top-performing practices regularly report collections of 101 or 103 percent because they offer financing for patients, or they are collecting for the total amount of treatment prior to the day of treatment. The DDBG recommends arranging and/or receiving payment in advance of the scheduled treatment (also known as “pay to play”).

Collecting anything less than that 98 percent means that the dental team should work to increase collections. Ninety-eight percent is the industry standard for all dental practices.

For insurance-driven practices, the percentage can fluctuate throughout the year based on receivables from dental insurance. In fee-for-service practices, collections can be more directly managed because there isn’t an extra step of working with insurance approvals.

KPIs for collections can be calculated a couple of different ways. One is to look at collections from patients, and the other is to look at collections from insurance companies. With both collections taken together, the goal at the end of the year should be at least 98 percent. Run a report for your production numbers, identify what you billed patients and insurance, and then determine how much your practice has received overall in accounts receivable.

If on a monthly basis you have less than 98 percent collections, then the first thing you want to examine is what your collection percentage is on fee-for-service versus insurance, because you’ve likely got a problem in one of those two areas.

Tips for Increasing Collections
1. My first tip for increasing collections is, again, to diagnose comprehensive dentistry. With comprehensive dentistry, patients learn what it takes to maintain their teeth or restore them to optimal health. When patients understand the treatment, they are more likely to finance the entire process up front and make a monthly budget to afford it. Diagnosing comprehensively helps with collections by enabling dental teams to collect what they need up front.

2. Another tip is to provide patients with financing options and credit. Whether it’s financing through the dental office, or going to an outside source, there are a variety of options. Offering patients something that they can fit into their budget is a key component to getting case acceptance and increasing collections.

3. My third tip is to regularly review your insurance collections. Use your dental practice software to run an “Annual Collections” report. This report provides a breakdown of your practice revenue based on collections. Once you have generated the report, calculate and evaluate the percentage of insurance collections versus private payments.

Many offices have no idea if they’re insurance-driven or not. To find out what drives your practice, see Peggy Nelson’s article “Beyond Drill-and-Fill.” She offers pragmatic tips to determine your practice drivers, and how to have healthy ratios of different types of cases.

Having a high percentage of your collections come through insurance reveals how insurance-driven your practice is. It is almost impossible to be at 98 percent on collections if you’re waiting for insurance collections. Aim for keeping insurance collections at 30 percent or less of your total collections.

KPIs for Referrals
Referrals are the pulse of any thriving dental practice. A general dental practice should have a goal to see 25 to 30 new patients each month. A comprehensive dental practice should have 30 to 35 new patients per month.

As important as it is to get new patients through the door, it’s also important to know where those new patients are coming from—whether from existing patient referrals, referrals from other physicians, online searches, direct mail campaigns, or any other sources. In the dental practice where I worked for several years, our number one referral generator was always existing patient referrals.

1. To evaluate where new patients are coming from, always ask them who you can thank for their referral. Let them know that your practice is always striving for referrals. Dental teams should know and keep track of not only where new patients are coming from, but also what their conversion ratio looks like. If you have 30 new patients coming in, and only 5 of them convert to treatment, it’s time to work at increasing the conversion rate.

2. My second tip for referrals is to nurture relationships. For example, if you’re a practice that does a lot of comprehensive dentistry, physician referrals may be a big KPI. Maintain good communication with physicians in order to encourage referrals from them.

Nurturing such relationships can increase your number of referrals—often dramatically. In the past, I often sent letters to physicians that our patients were seeing (with the patient’s permission), giving them an update on the current status of the case, and making it easy for them to contact us in case they needed anything.

3. Community outreach is my third tip for increasing referrals. This involves helping a dental practice understand their connection to their local community. Some practices offer “patient appreciation” activities and invite referring offices. Other practices sponsor local sporting teams or participate in local health fairs. Such activities are intended to increase the name-recognition and reputation of your practice.

After implementing some of these practices, review your referral KPIs in a few months and notice your progress.

Be careful not to overwhelm your team members by starting with 15 or 16 KPIs. Start by looking at a small number of them and consider using small rewards to incentivize team members to reach their goals.

In the dental practice where I worked, when we implemented a system where team members were rewarded when they achieved their goals, it was a great motivator. If you create a gaming environment, instead of being a stressful task, meeting KPIs becomes a fun and positive goal to strive for.

Rewards can be anything the team is interested in—an outdoor excursion, a fun night of bowling, a nice dinner, a show that the entire team can go to—something fun that gets the team energized! Rewarding the team with money is always good too, but it’s important to mix things up.

The goal of gamification is to retain your team members. If each person on the team is treated as important and rewarded, they will be loyal and want to stay at the practice. Of course, circumstances arise in which team members may need to move for personal reasons, but a game environment can help encourage overall retention of team members.

Shine Your Light
KPIs are great tools, but they don’t stand by themselves. The numbers are only important if they spark a light that inspires team members to do something more—something better.

We work in a competitive industry with more and more dentists graduating from dental school each year. By using KPIs to measure how your practice is performing, you can make sure it continues to stand out from the rest.

Don’t continue toiling away in the dark. Turn the lights on and learn how your practice is truly functioning by identifying KPIs and measuring them against those of other dental practices. You have nothing to lose and everything to gain!

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Glennine Varga is a Business Development Coach for Arrowhead Dental Laboratory. She has been a TMD/OSA trainer and speaker with an emphasis on medical billing and documentation for over 15 years, and has trained doctors and dental teams in the use of electro-diagnostic equipment. Glennine is an expanded duties dental assistant certified in TMD with the American Academy of Craniofacial Pain. She is a visiting faculty member of The Pankey Institute, the American Dental Association, the Academy of General Dentistry, and Spear Education’s Dental Sleep Medicine courses. Glennine currently teaches Total Team Training and co-teaches Airway Management and Dentistry for the Dr. Dick Barnes Group seminars.


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