When trying to grow and meet goals as a dental practice, it can be very difficult if you don't know the patterns of your progress. Monitoring specific KPI's is crucial to understanding your practice's performance. Want to reach your goals? Stop, drop, and run a report! You can't meet goals that you aren't tracking.
Here is a list of the top KPI's your practice needs to monitor below and why they matter:
Seeing your gross production is seeing an overall picture of the practice. Your gross production is valuable to know as a point of reference for work done, but it's not the total of what the practice can actually collect.
This KPI is the most basic way to set a standard within the practice and provide a baseline of what is going on in your practice.
For example, in our personal lives if someone can make $1 million in income, but they spend $1.1 million - this person has a budgeting problem. If they have $50k income, but their budget is $48k, they don't have a budgeting problem, they have an income problem.
Knowing your gross production allows you to know if things are healthy in the areas of production and adjustments OR if there's a problem that needs to be addressed.
Do you know how much you are adjusting from your gross production? Is there an adjustment source that needs an in-depth review? What is your adjusted production? A practice cannot collect on money that they're adjusting off from their production. It is money that they can't call anyone to get paid for such as charity work.
For example, what if you have great amounts of production, but you are removing 35% of your production via adjustments. That would not be an income problem, but rather an adjustment problem. There may need to be a renegotiation of an insurance contract or there are too many arbitrary discounts that are not sustainable to keep the practice in operation.
How much of what you produce actually goes to the bank? Your collections are your financial foundation, it's what pays your bills. Monitoring this KPI is vital because it will let you know if you can sustain the level of business you're at with the number of collections coming into the practice?
Your collections KPI allows you to budget accurately for your practice.
4. Active Patients:
Active patients are unique patients that have engaged with your practice for the past 18 months. Your dental management system could have 20,000 active patients, but, who is a current relevant patient?
If your number of active patients grows, you know that your practice is growing numerically. If it declines, you should know the other metrics to get the full picture. For example, even if your active patients decline, maybe your adjusted production increases. This shows a growth pattern, especially if the procedures focused on are the more profitable procedures.
Note: In order to know which procedure is profitable, the overhead needs to be calculated on each procedure. To have a predictable overhead, there should be an operations manual that demonstrates how to perform procedures in order to have consistent procedure costs.
5. Active Patients Schedule for Future Hygiene Appointments:
This metric shows how many of your active patient base regularly visit your practice and are actively engaged. Essentially, you are 'their' dentist, not 'the' dentist. Hygiene appointments allow the doctor an opportunity to diagnose new treatment, as well as reconvey the importance of un-appointed treatment.
If your active scheduled hygiene patient number grows, you know your patient experience is good. Tracking this metric provides the most consistent amount of future production. It ensures that you are fostering a good patient relationship so that once their treatment is needed, that patient is more apt to accept it. This should also raise your treatment acceptance KPI. The goal is patient health, and it would be better to foster a relationship and ensure your patients are investing in their future rather than have a 'one and done' policy!
6. New Patients:
Is your practice growing?
New patients are essential for a practice to thrive. Attrition can be improved, but it is inevitable. You should know the baseline of how many new patients are coming through the door in order to maintain your current active patient base. This KPI will also help you see how many of your active patients are new, knowing this will indicate back to your active patient KPI and show if you are maintaining patients long term or short term.
How are you bringing in new customers? Your new customer KPI will quickly tell you if it's working, and give you your ROI numbers to budget off of.
7. New Patients Referral Source:
- Which of your marketing efforts is working for you?
- What is your main source?
- What is your ROI for your marketing dollars?
- Are your new patients coming through referrals from your existing patient base?
- Is there an external source bringing in new patients?
- Are you throwing away money in regards to your marketing?
We have seen practices spend $1,000 dollars in a referral source that was not bringing in any new patients. Are your radio ads effective? What about postcards or Facebook ads?
You should know the primary source of referrals and the secondary. These can be found out with two questions:
- How did you hear about us? - Primary
- What made you decide to come in? - Secondary
Dental insurances should be acting as agents promoting your practice when you are in a contract with them. Your dental insurance should be tracked with new patients. If you are not receiving any new patients from insurances that you are in contract with, perhaps it's time to renegotiate those contracts. There's also the option to explore jumping to a fee-for-service practice. If there are no new patients via those insurances and if the current patient base is primarily fee-for-service patients, it might be worth a conversation with your dental consultant if that is something you already were planning on in the future.
8. Patient Attrition:
How dedicated is your team to patient experience, service, and retention? Are you doing all the work to get them into the practice, but losing them out the back door?
These numbers along with your production, adjusted production, and collections paint the picture. If all those metrics are on the decline, this is something that should be focused on. If you are having elevated attrition rates, maybe there should be better hand-off policies. Perhaps there needs to be an entire practice culture change. If each patient felt like they are the most important patient within the practice, most likely they will come back if financially feasible.
Overhead is a very important KPI to monitor.
Ask yourself these questions:
- How much does it cost you to be in business?
- Can you stay in business at the current rate that you are collecting?
- How much does each procedure cost your practice?
- Do you know which procedure is your most expensive procedure for your practice, with the least amount of profit?
- Perhaps there should be special advertising applied to the more profitable procedures in the practice.
Knowing your overhead allows you to have informed decisions for running your practice as a whole. This includes payroll, supplies, equipment, property expenses, etc.
How much profit does each procedure bring into your practice?
Collection - Overhead = Profit
What is your practice's profit? Keeping your practice profitable ensures a healthy practice and will keep you and your team from being stressed out. If your practice's profit is going down, your practice value is also going down, this could interfere with your exit strategy. Have you asked yourself what is your exit strategy? In order to have a successful exit strategy, the practice should be profitable. Are your practice's profits going up or down? The goal of a dental entrepreneur is not to pay payroll out of a personal checking account but to create profit that can sustain the business.
Could you imagine trying to set accurate goals for your practice without knowing this information? The likelihood that you could create achievable goals is very low without having the proper information. You need to make sure you are creating SMART goals for your dental practice. If they aren't specific, measurable, attainable, relevant, and timely, you are less likely to get your team on board and achieve them.
To know where you're going, you need to know where you've been.
Dental KPI monitoring is a solution to help you take the first step to be a better practice. Using a dental KPI dashboard will ensure that you are tracking key metrics and staying accountable to your goals. Make sure you find a KPI dashboard that integrates with your practice management software, gives you the metrics you need in an easy-to-view dental dashboard, and has good customer support to train you and your team on the platform.