Know Your Numbers
It is essential to know your practice management numbers. Many doctors and practice managers struggle with this.
Not knowing your numbers is like driving a car with a blindfold on. You are going somewhere, but don’t know where or in what direction.
There are certain numbers that all doctors and practice managers should be familiar with at all times. We will discuss a few important KPIs below in this article.
Office Production
Office production is one KPI that is very important to be monitored.
(Production =Production per visit x # of visits)
Without production, there would not be any collections to account for, which can hinder the practice. Therefore, production must be monitored daily. Production needs to be monitored to see if any trends are causing drops in production, usually over 3 months, so that corrections can be made and the overall effect can be adjusted positively. Accounts Receivable is also a very important KPI that needs to be constantly measured.
The A/R can get out of hand very quickly. A/R is on a nonstop timeline. The longer the balance goes uncollected, the less likely it is to be collectible.
One way to combat A/R is to collect balances up front before rendering services. Practice managers must set aside meeting times to review the A/R work with their team to stay on top of it.
I set aside two monthly meetings to review the directions of the A/R. These meetings hold people accountable and prove that the A/R has a better outcome through proven collections
Overhead Expenses
(Overhead rate = Overhead expenses/revenue)
Overhead expenses are typically expenses that have very little wiggle room to decrease. These expenses are mostly fixed costs, the cost of doing business. Examples of these costs are marketing, salaries, and rent.
When taking overhead into account, always remember to calculate the percentage of overhead versus revenue. Any office manager should monitor overhead expenses consistently so corrections can be made before significant dollars are spent unnecessarily.
Cancellation/No Show Rate
(Cancellation Rate = # of cancelled visits/#scheduled visits)
This calculation is probably the least calculated and overlooked by many doctors and practice managers. This number will show you how much the practice is losing, giving insight into trends and how to deal with this loss.
Monitoring the rate of cancellations and no-shows gives management accurate data on how much revenue is lost, so that a plan can be initiated to help with this problem. A few ways to do this include charging a fee for no-show appointments or requiring prepayment to reschedule.
Why Tracking KPIs Matters
These are just a few KPIs that are important to be able to run a profitable and efficient practice. I have talked to so many practices that don’t track any metrics. This can be devastating to a practice.
It is important to know these and other KPIs to remain successful. Monitoring KPIs should be looked at consistently in any successful dental practice.
If you do not want to do this alone, it is well worth it to outsource this to a consulting firm and let them track metrics and meet with them monthly so you know what direction to take in operating your dental practice.
No one likes leaving home without knowing where they are going. That same approach can be used as an analogy for a dental office that is operating blindfolded. Once again, “know your numbers .”It makes all the difference in the world.
About the Author
Melanie Keesee, MAADOM
Melanie Keesee joined AADOM in 2021. She is currently a member of the Tri-State DPLN. Melanie’s background is primarily in Business Management, Human Resources, and Finance and Accounting. She received her BSBA in Management from Sullivan University.
Melanie and her husband, Michael, live on their farm in Custer, KY, along with their 2 adorable dogs, Chopper and Copper. When she isn’t working, she visits the beach as much as possible.
