Conduct Your Own Practice Analysis

One of the hallmarks of practice management is the “Practice Analysis”. On any given weekday, we’re combing through piles of reports, profit and loss statements and employee benefit information to determine what could be tweaked in a practice to improve their bottom line. This information takes time to compile and can be quite pricey to attain, especially if you hire an outside person to do the math for you. What if you could do a mini practice analysis on your own? Would you? In our current economic climate, you have nothing to lose by being your best. This month’s newsletter is designed to help you uncover what’s holding you back…so bring a calculator and let’s get started!

1. Determine your number of active patients. We do this the easy way by running a report of current patients in your database. If you don’t have this capability in your software, try the old consultant’s trick: Count the charts in the B section and multiply by ten. This should get you within 50 patients of your true number. If your true numbers are below 1000, don’t despair. You’ll simply have to ramp up retention in your hygiene department and present treatment plans with as much visual stimuli as possible.
2. Determine your number of new patients. New patients don’t include emergencies or quick check appointments. We use the comprehensive exam code (ADA code 00150) to qualify a person as a new patient. This means we only call someone a new patient who has had time with the doctor for diagnosis and has been given a complete treatment plan. The 00150 code also requires a complete periodontal charting, so be sure that step is part of the process of new patient induction. Most solo practitioners cannot thrive with less than twenty-five new patients per month. If you’re seeing less, you must begin to intentionally ask for referrals and market externally more than you’re doing now.
3. Determine the effectiveness of your recare department. First, take your active patient base and multiply by two. (This will give you the potential number of recare visits possible if 100% of your patients had their teeth cleaned twice annually.) Then, determine how many periodic exams (ADA code 00120) have been performed in the practice. Divide the number of periodic exams by the number of possible recare appointments to get your recare effectiveness ratio. If you’re like most practices, this number is far less than 100%; most are between 11% and 35%. If you’re serving less than seven in ten of your patients in hygiene, it’s time to examine your ‘overdue for recare’ list and begin reactivating patients.
4. Determine your staff costs. This is simple enough and comes straight from your profit and loss statement from your accountant. We recommend you get a copy of your P&L each month, so you can track costs and overhead expenses. Staff costs include staff salary and payroll taxes only; they do not include the doctor’s salary. Also not included are any family members who draw a check but don’t actually work in the practice. Divide your staff salaries by your collections total to see your staff cost percentage. If your percentage is higher than 22%, you are either overstaffed or underproductive - but most likely the latter. Since staff costs are the most controllable expense that you have, this determination will drive you to take a look at our next category; productivity.
5. Determine your dollars earned per day/hour. This figure is simple to get and a great way to see how well your schedule is working. Take your production and divide by the number of days worked, then divide by hours worked per day. For example, if you’ve produced $500,000 and you’ve worked 98 days, your average day is worth $5102. If you work an eight hour day, you’ve averaged $638 per hour. If you’re producing less than $650 per hour, you must consider pre-blocking your schedule for production and/or ramping up business in your hygiene department.
6. Examine your case acceptance ratio. In our work, we look for basic communication skills that teams have put into practice with their patients of record. Do you verbally “hand off” the patient from the hygienist to the dentist? Is a clinical team member communicating to the administrative team what the patient has said “yes” to, so everyone involved can plainly hear and understand? In a true Analysis, we print off an unscheduled treatment plan report from your software for the last 24 months to get a true picture of what has been proposed, but not accepted. If this number is larger than three months of average production, we know there are improvements in the communication strategy that must be made. In many multi-doctor practices, this report total is in the millions of dollars. Any sale lost (or not followed up on) is a loss of true income for your business. If your team can improve in this one area alone, your business will skyrocket.

Practice analysis is an excellent tool to benchmark how well you’re doing and what parts of the practice need attention. So often, we’re too busy working “in” the practice to work “on” it. Take the opportunity to do an in-depth examination of how well you take care of patients and how effectively you spend your time. All you need is a few minutes, a calculator and an interest in being more successful. It’s time well spent!