Managing a practice requires that you look at “the numbers” on a regular basis. If you’re like most practicing Doctors, you probably try to glance at the production and collections figures at least monthly. Did you know that there are a lot of other performance metrics that can help you gauge how your practice is performing?
Figuring out which metrics are meaningful is one challenge. The problem is that calculating those metrics and then looking at those performance indicators in a vacuum doesn’t provide you with much insight at all. For that reason, calculating various performance metrics will be much more valuable to you if you can compare your practice’s metrics to your peer group.
My CPA firm currently provides tax, accounting, payroll, and basic practice management services to more than 130 dental practices. This past winter, we collected practice management data from many of our practice clients and used that data to calculate the following ten meaningful performance metrics for general dentists for 2012:
Number of Active Patients (Defined as an individuals?treated at least once during the prior twelve months)
Collections per Active Patient
Collections per Doctor Hour
Collections per Procedure
Number of Procedures per Active Patient
Number of Non-Diagnostic and Non-Preventive Procedures per Active Patient
Re-Care Efficiency (Defined as the percentage of Active?Patients who came in for two exams during the year)
Number of New Patients brought in during the last year
Percent of New Patients to Active Patients
Percent of Adjustments and Write-Offs to Gross Production
Please note that even though the data was collected mostly from practices in the Greater Boston area, I feel that most of these metrics are relevant to practices located within all 50 states.
To make these metrics even more meaningful, we calculated each performance metric based on the data collected from all the participating practices, and then re-calculated them based on the practices that collected $1 million dollars or more during 2012. It’s very interesting to see how the performance metrics for the total sample compare with the same metrics calculated from just the million dollar practices.
An part of our analysis, we also created a graph that we call our “Internal Marketing Matrix”. This graph plots Re-Care Efficiency on the x-axis versus New Patient Percentage on the y-axis for each of the participating practices. Depending on your practice metrics and where you fall on this graph, you’ll either be apolitician, engineer, neophyte, or “dentist-preneur”.
If you’re practicing in the Greater Boston area and would?like to set up a time for my firm to help you figure out these metrics for your practice, please do not hesitate to e-mail me that request.? We’d really appreciate the opportunity to help you gain some insight on the performance metrics for your practice.
That’s generally the first question I ask to new clients who own medical and dental practices. While doctors help their patients with some aspect of their health, entrepreneurs run businesses, trying to maximize the long-term profitability of that business.
Whether you own a practice, work at someone else?s practice, or work at a hospital, you need to remember that every healthcare office is a small business that needs to be managed as a business. Nothing that happens within your office should happen by accident. If any aspect of the practice isn?t the absolute best that it can be, you should have a plan in place to address and improve that part of the practice.
One recommendation we routinely make to our practice owner clients is to implement a Simple Incentive Bonus System. For short, we call this SIBS.
For a bonus system to work, it needs to be:
Easy to understand.
Attainable, but not automatic.
Something that the staff members feel they can impact
As an example, SIBS works well with dentists. Most dental practices are staffed by a relatively small team that must work well together for the practice to routinely hit its goals.
Front desk person ? Fills the doctors? and hygienists? schedules and collects money from patients and insurance companies
Hygienists ? Validate treatment planning presented to patients. and can also provide additional services which add top line revenue and profits
Assistants ? Help improve patient flow efficiency
Implementing SIBS is pretty easy. Simply figure out your annual goal, divide that figure by twelve, and that?s the monthly goal. (Obviously this will only work if your practice doesn?t have seasonal fluctuations.)
Any month that you hit the goal, give each team member a $100 bonus. Hit 110% of the goal, and increase the bonus to $200 or $250.
Don?t worry about sharing the practice?s financial information with the staff. If the goal is based on monthly collections, make sure to remind your staff that even though the monthly collection goal seems high, the practice overhead is high as well. Remember, there are staff expenses, occupancy costs, lab fees, dental supplies, debt payments, equipment to buy and maintain, insurance, computer hardware and software, and all sorts of other costs, and then the practice still needs to pay your salary.
You should also periodically adjust the threshold used to calculate the monthly bonus. A good time to adjust the goal is around the time you hand out raises
Here is an example of SIBS. Let?s say that you set your annual collections goal at $900k, so the monthly goal is $75k. You have a meeting, and explain to your staff that any month the practice collects $75k, each team member gets a $100 bonus. And if the practice collects 110% of that goal, or $82.5k, everyone gets $250
You then remind the staff that while the monthly collections seems high, you have a ton of expenses to pay each month, and after paying your salary, there is not a lot of money left over. Trust me, after a few times of telling them this spiel; they will start saying it to you whenever you bring up the monthly collection goal. That’s what happens at my office anyway.
Here are a few suggestions to make SIBS even more effective:
Don?t lump the bonus check in with the regular payroll that gets directly deposited into each staff member’s bank account.
Instead, issue a printed check from this bonus, and personally hand this check to each employee. (This will also allow your employee to cash this check and use the money for something special such as going out to dinner and to a movie or shopping for something they’ve been waiting to buy.)
At that time, thank each team member for their hard work in helping the practice achieve the monthly goal.
Just think how powerful a statement you are making to your staff if you hand them a check for their bonus payment, and personally thank them for helping the practice reach its goal.
As a reminder, you then do need to call this manual check into your payroll service since the income belongs on each employees? W-2.
Like everything else these days, there are a few pitfall of SIBS. For starters, this bonus plan can lose it?s luster over time. So, keep it fresh by changing the focus of the bonus over time. Maybe switch from monthly collections to new patients brought in to re-care efficiency, and then go back to collections. However, no matter what practice variable you use, always make sure to align the goals set within SIBS to the long-term goals of your practice.
You also need to be careful that your staff doesn?t game the system. I saw this at one client where the front desk person stopped depositing checks once the maximum goal was met, and held those checks to deposit the following month. Make sure to tell your staff the bonus will end immediately if anyone tries to beat the system by pulling a stunt like this.
Win-Win With SIBS
We?ve had a lot of practice owner clients implement SIBS, and they often see an immediate increase in collections Plus, the staff at these practices end up making a little extra money too, which keeps them focused on reaching the stated goal each month. Hopefully you?ll realize similar results.
Fred’s basic premise is quite simple. “Patients can?t assess quality of care, but they can assess their own experience.” Think about your own experience when going to a dentist or physician, having your taxes done, meeting with an attorney, or getting your car fixed. Don’t you just automatically assume the person is proficient in their profession or trade?
Fred starts his book on marketing for dentists by talking about the difference between a satisfied customer and aloyal customer.?A satisfied customer got what they expected. A loyal customer experienced something unexpected.? Fred goes on to explain that while a satisfied patient will keep coming back to your practice, only a loyal patient routinely refers their family members, friends and co-workers to you and your practice.
Think about the professionals you regularly recommend to people. And then think about those you wouldn’t recommend to your arch enemy in a million years. Fred is right. It’s all about the experience, right?
Please keep in mind that the patient experience isn’t limited to when he or she is “sitting in the chair”. The experience starts when the person researches which Doctor to call and then books an appointment, continues through the pre-appointment correspondence, followed by being greeted at your office by your front desk staff, and ends with the follow up information and/or phone call, paying the bill, and responding to your patient survey. Is your operation set up to maximize the patient experience at each and every step of the process?
My Patient Experience
I recently had a simple procedure at a local outpatient clinic. Prior to the procedure, the GI practice sent me a copy of instructions to follow the day prior to the procedure. The copies looked as though they were made by a 5 year-old child on a Xerox machine from the 1970s. Based on the poor qualify of the pre-procedure materials they sent to me, I didn’t feel overly confident about the care I would be receiving from this group. I ended up a satisfied customer, but I most likely wouldn’t refer anyone to this group if asked for a recommendation of a GI doc.
What do you need to do to reach that higher threshold of patient satisfaction? For starters, according to Fred, you can maximize the patient experience through:
If someone is trying to tell you something, that person wants to be heard at that time. Let the person fully explain their situation, and listen intently to what he or she is saying. Interrupting the person or finishing their sentences does not demonstrate empathy.
For many of us, listening is a skill that we never fully developed. Remember, at most schools in the US, we learn to read, write, and speak. Very few schools teach us to listen.
And while empathy is a trait that some people are born with, all people can learn to be empathetic. Trust me, as a Schwartz, I was born with very little empathy, but feel that over the years I have managed to learn to be much more empathetic when dealing with others in my home and professional life.
If you’ve had the privilege of reading Stephen Covey’s Seven Habits of Highly Effective People, he discussed Empathetic Listening in great detail. I strongly recommend that you read this book at some time if you haven’t already done so. (This past summer and fall, we had a book club in my office and read one habit per month starting in May. It was a big hit and we all learned a lot by discussing the chapters together.)
Do Something Unexpected
What are some easy ways that Fred recommend to maximize the patient experience by doing something unexpected?
You and all your staff should greet each patient by name. Who doesn’t like to be addressed by name?
Put personal info into your practice management? software (such as the birth of a grandchild or a great trip they were telling you about) and bring up that nugget to the patient at their next visit.
Call all new patients at the end of the day they contacted your office staff to book their first appointment with you. How?reassuring would it be to get a call from your new Doctor welcoming you to the practice? Yes, you’re busy, but it shouldn’t take too long to leave a??message on their cell phone.
Track how each new patient came to your practice so you?know where to focus your marketing dollars and efforts.
Thank patients for referrals. This doesn’t need to be a?gift card or movie tickets. A hand written note is a nice touch.
My closing bit of advice? Read Fred’s book. I read it and ended up instituting changes in my CPA firm based on recommendations that Fred made to the dental community. During one of our staff meetings, we utilized the chapter on phone scripts and took turns reading his recommendations for the right way and the wrong way to handle certain situations. Even though the scripts were for a dental office, everyone found this exercise to be very worthwhile.
After reading the book, think about every aspect of the experience you are offering your patients, clients, or customers, and determine what you can do to maximize each person’s experience. Ask your staff to help come up with ideas. Then take the steps necessary to improve the internal marketing at your practice. Hopefully you’ll soon see an uptick in referrals coming to your office, and the improvements you have implemented at your practice will become as routine to you and your staff as going to the dentist.