To
expand on item #1 from our post on the importance of information in your practice, here are the 5 most important values we have seen that drive success
in dental and orthodontic practices:
1 Collections – No matter how you
practice, the end result is collecting money from patients and insurance
companies. If you do great work, sign
lots of patients and don’t collect the funds, you will end up with lots of good
memories when being evicted from your office.
As such, ensuring that you are paid for your efforts deserves your
attention.
2 New patient contract value/production – If patients are showing up at your practice and you are signing
them, you have overcome the most significant challenge to building a
practice. Production becomes collections
and the amount of collections are
closely determined by the amount of production.
3 New patient consultations – For most
practices, the most difficult part of starting up and growing is getting new
patients to come through the door. Over
time, you will find that a lot of our discussion and posts revolve around
marketing and attacting new patients.
The relationship here is simple: if new patients come in, you can start
treating them in the highest quality manner posible and once that happens, you
can collect from them.
4 Conversion rate – Here, we are
talking about the ratio of patients who start treatment with you to the total
number of new patient consultations. So,
say you have 25 new patients scheduled for one month and 10 of them start
treatment with you. That means that your
conversion rate is 40% (10 / 25).
Potential patients may have not shown up for their consultation, may not
have needed treatment, may have been referred out or may simply not have wanted
to be a part of your practice. In any
case, you should examine the reasons why patients do not sign and solve any
problems that are solvable.
5 Nonpaying patients in treatment –
These patients may simply not be able to pay, have completed making payments
but are still in treatment past their projected completion date or are waiting
on some insurance issue to be resolved.
Whatever the case, these types of patients represent an anchor on
profits of the practice. You and your
staff are spending time and resources on them and getting nothing in
return. Identify them, get payment or
finish their treatment effectively.
Bart, one thing that practices I have worked with tend to struggle with getting a handle on is that collections figure. In particular, they often get overly worried about fluctuations in collections from day to day. After analyzing their data I've found that period to period fluctuations in collections are the result of the timing of insurance payments on contracts (or procedures in the general dental world). Thus, my question is should the collections be tied to production/banding date/procedure or is it suffice enough to simple track overall collections rolled into monthly or weekly time buckets? Or, is there some other method that is appropriate? Interested in hearing more.
ReplyDeleteWhen viewing the practice picture overall, you simply want to look at total collections regardless of the source, date of procedure, etc. That will give you a good starting point. If a trend or relationship to production (e.g. production is $35,000 per month while collections are $25,000 per month), you can dig deeper using some of the more specific analyses you've described in your comment.
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