The data within your practice management software is a pot of gold. Applying it to key metrics can help you make good business decisions for your dental practice.
Data is the key to successfully growing and maintaining a healthy practice, and it’s never been easier to access the data you need to make effective business decisions. The practice management software you’re already using can probably generate all the information you need. The challenge is taking the time to actually look at the data your software provides, understand what it’s telling you about your practice and then take action based on what you’ve learned.
Here are some of the key metrics you should be tracking:
Annual Patient Value (APV)
This metric helps quantify how much a new patient is worth to your practice. An ADA Health Policy Institute study reports If you keep a patient for ten years, their lifetime value (LTV) to your practice is about $6,000, not counting referrals they may bring in. Your APV could be higher or lower; either way, the data can help you determine things like:
- How much you can spend on advertising, direct mail, etc. to acquire new patients.
- How many patients your practice needs to meet your financial goals.
- When you need to add staff, such as a hygienist, an associate doctor or administration.
Production Per Visit (PPV)
PPV data tells you what kind of treatment you’re providing, how much of it, and what your acceptance rate is. It’s important to track this metric to see if it’s trending up or down, or if it’s cyclical. It can also help you drill down on what’s behind the trends. For instance, if your PPV is down, you can see if it’s because patients are accepting less treatment, or if the decrease is due to you offering less productive treatment options.
Broken Appointment Percentage
No-shows are a direct hit on your bottom line, so it’s important to know the percentage of missed appointments in your practice. According to dental consultants, the average rate is 15%. If you’re above that, it’s time to tighten up your process. If you’re below, think about what more you can do to whittle that number down.
The more patients you have coming in for their semiannual teeth cleaning and oral exam, the better your practice. There is a lot of information you can track on this topic, but let’s take something really basic, like scheduling. The gold standard is to have 95% of patients scheduled for their next appointment before they leave your office. If you fall below that target, improving your percentage will make a substantial impact on business revenue.
Age of Accounts Receivable
Whether it’s an insurance claim or a financed care plan, at any given time you should know how much money you’re owed and how old the debt is. If the debt is over 60 days, the chances of collecting decrease significantly. That threshold, where accounts receivable become problematic, can vary among practices and is influenced by factors such as patient demographics, the percentage of patients who use insurance, and the type of insurance used. If 20% of your total accounts receivable are older than 60 days, you may have a problem.
Monthly Practice Overhead
To really know how profitable your practice is, you need to know the complete and total dollar amount of ALL expenses associated with running it. This includes, but is not limited to, things like:
- Employee compensation (including associated costs such as health insurance, 401K, taxes, uniforms, etc.)
- Occupancy (rent or mortgage, electricity, WIFI, etc.)
- Lab work
- Administrative costs
Metrics provide a clear-eyed view of how your business is performing so you don’t have to resort to making crucial decisions based on a hunch. At Engage Advisors, these metrics are a standard part of our client quarterly conversations, because our role includes helping you become better business owners. If you want to learn more about how Engage Advisors can help you reach your business goals, our accounting and financial professionals are ready to take your call. Schedule a call with us today.