September 18, 2015Key Performance Indicators
A Simple 5 Step Guide to Tracking Your Dental Practice`s Key Performance Indicators
I’ve spoken with hundreds of dental practice owners. Some have been successful, other’s… not so much.
Have you ever heard this before?
“I know that I could be doing better, but I’m just not sure where to start.”
Hell, have you said that before?
Typically, the thought process that dentists use at this point is to either hire a consultant or do nothing. Both have their own set of problems.
Problem #1 – Hiring a Dental Consultant
- They are typically very expensive.
- There are some that aren’t nearly as good as others.
- Some specialize in certain areas like hygiene, while others specialize in processes like scheduling. So how do you know where to start?
Problem #2 – Doing Nothing
I’ve seen too many dentists get caught in a squat.
Don’t get caught in the squat.
“What is he talking about?”
Getting caught in the squat! It is the number one problem dentists face today. It’s an old business analogy, but it is incredibly relevant to dentists.
The old adage goes:
If you put a frog into boiling water, the frog has the strength and speed to jump out of the boiling water before dying. However, if you put the frog into a pan of water at room temperature and slowly turn up the temperature… the frog will get caught in the squat.
The dentist gets comfortable and doesn’t notice the rising temperature in his practice. He focuses on the wrong things in order to reach his own conception of success.
The Solution to Both Problems – Tracking your dental KPIs
Tracking your KPI’s can help spot that rise in temperature. Obviously this is the starting block, not the finish line. But the process goes like this:
Step 1: Start tracking your KPIs on a broad level
Here are five to get you started;
- New Patients a Day
- Average Production a Day
- Staff Expense to Total Collections
- Hygiene Production to Total Production
- Overhead % to Collections
We want to start by pulling at least the past three months data on these. Some will be available in your practice management software or PMS for short. (But since I own this how to guide on KPI tracking, I’m going to call them what they are, POS)
The rest you can get from your accountant if you aren’t sure on the rest .
REMEMBER: Starting this Process is FAR more important than being SUPER DUPER ACCURATE.
Example of not making this a fancy problem (using Google Docs):
You may already be doing this in your practice in some form, and if so, good for you. The problem with a spreadsheet is it is not a visual representation, but again we are just looking for trends.
Step 2: Look for weaknesses, drill down to a more defined level in the areas of highest deficiency.
For example, the Hygiene Production to Total Production number is less than ideal. There are other numbers that look less than optimal, but remember, focus on one improvement at a time.
(The #DIV/0! is from June-August’s numbers that aren’t entered yet. I’ve actually included a copy of the spreadsheets here if you want to download, along with a video explaining how to use it, I even set it up with three additional months so you can use it going forward) Click here to get the videos and spreadsheetA lot of dental consults say this number should be around 33%. Obviously, we are under-performing compared to what our goal should be. The next step would be to dig down in this specific KPI to a more detailed analysis. For this KPI we would dig down to:
- Average Production by Provider by Day
- Average Production by Patient By Provider
- Patients Seen by Provider by Day
Step #3 – Find the “missing piece”.
By digging down and focusing on only a few KPI’s at a time, you are allowing yourself the time to go to a molecular level. Once you get to this point, you should be able to see some pretty interesting trends in your production. For instance, did you notice that Hygienist #3 is averaging a higher average daily production than the other two hygienists, but her production by patient is lower than the other two hygienists? Also interesting is that Hygienist #2 has a higher production by patient by almost $20 a patient. The only kicker is that she isn’t seeing as many patients. This gives you a starting point to make efficient change in the practice and your policies. In this example, Hygienist #3 was just better at recall and Hygienist #2 was better at upselling/cross-selling. Cross training can be done between staff and if you do the math of an additional $20/patient for two of the hygienists and an additional $60 a day for two other hygienist, this practice could add another $6,000 month by just cross-training. I would advise a consultant come in at some point to up those production numbers but this is something that can be done today and isn’t too difficult to setup. (I even provided a spreadsheet earlier in the post for you to get started)
Step #4 – Setting Goals
Now that we know areas where we are deficient, we have to set goals for our staff.
So where do you start? Well going back to Step #3 we found that Hygienist #3 can hit $570/day in production with 5.31 patients a day. If we up $20/patient that would be an additional $106.20 a day in production or let’s say $675/day in production. Seems pretty reasonable. Can Hygienist #2 really say “I can’t get to 5.31 patients a day! My patients always cancel!” when you can easily show them that Hygienist #3 gets there. (In this example, all the hygienists in question had similar experience levels and pulled from the same patient pool) Now we need to communicate with our employees what the goal is. If our ideal hygienist’s production is $675/day, then should we expect them to be there tomorrow? Possibly. But you need to be realistic sometimes and there is nothing wrong with tiering that goal to be a three month process ($33/month increase in daily average) You can bribe them, but I wouldn’t. I feel that continued employment is reason enough to do what is expected of you. And pretty much any business book will tell you that if you give an employee a defined goal, they will do one of two things:
- Quit (seriously)
- Consciously and Subconsciously try to meet that goal.
Is someone quitting because you gave them a goal a bad thing? Nope. This is actually YOUR goal as a practice owner. You want the bad employees to fizzle out FASTER so that you can make MORE money. Even if they don’t just up and quit, there performance will consistently be low and you will be on top of it. Letting them go will be easier on you when you see how much money they are losing you by being a bad employee. (Now, this isn’t an excuse to go fire everyone, you have to do some training at times, but the point is valid) So, how often do you gently remind your staff of the goals you’ve set? I say once a week. And look at their progress each week, send them an email/text/phone call/smoke signal/bat signal/twitapic or what-have-you. But communicate with your staff. If you don’t, have your office manager be the bear. This is where the rubber meets the road.
Step #5 – Rinse and Repeat
Consistently re-evaluate and stay on top of your numbers. Of all the dentists I’ve met with over the years, the number one secret is that the dentists who are obsessed over their numbers, are the ones who make the big bucks. Once you see weakness you have to attack it. Leave no dollar behind in your pursuit of business perfection! (I’m assuming you got in business and took out these big dental practice loans to try and make money, right?) Click here to receive a copy of the spreadsheet as well as a video guide to using it in your practice!
What KPI’s are you keeping up with in your practice? What KPI do you feel our example is doing the worst in? Share in the comments below. Also if you have any feedback on the guide, I’d love to hear it.