The Critical Factors of the Business of Dentistry

The success of your practice will be in direct proportion with the success of your systems. – Cathy Jameson, PhD “

Ididn’t learn how to run a business or manage a team during dental school. I love doing dentistry, but all of the other things I have to do are stressful. I don’t know where to begin.”

That’s not an unusual statement by dentists who are in the early years of practice. Actually, it’s not an unusual statement for a dentist at any phase of his/her practicing life! Of course, your main purpose and what interests you the most is taking care of patients— doing the dentistry. But, doing the kind of dentistry you want, in the way you want to do it, takes a great team working cohesively toward the goals of the practice. Goals need to be established for each of the systems.

At Jameson, we believe that there are three things you must do to have a well-managed practice:

1. Set up the systems effectively. 2. Teach the people on your team how to administer those systems effectively and with consistency.

3. Monitor the systems to make sure that the goals you have set and the results you want are, indeed, being obtained.

Mastery of clinical skills requires dedicated time, study and investment for continuous improvement. The same commitment must be given to the business aspect of your dental practice. The accomplishment of a successful practice requires dedicated time, study and investment, too. The art and science of management are not learned by osmosis. With intention and action, the investment you make to improve both clinical and management skills will be profitable.

Let’s look at the major critical factors, or systems, in your dental practice. (Note: These are not all of the critical factors, but 12 of the major ones.)

The Major 12 Critical Factors of the Business of Dentistry are listed below:

1. Production 2. Collection 3. Accounts receivable 4. Patient financing programs

5. Overhead control/profitability 6. New patients: external and internal marketing 7. Case acceptance 8. Scheduling 9. Hygiene 11. Teamwork 12. Leadership

1. Production Determine your production goal carefully. Analyze (perhaps with the help of your accountant or consultant) the monthly costs of running your dental practice. Then add to that the dentist’s required and desired salary and compensation (obviously, this is for the dentist’s information only). Add a margin of profit that you wish to accumulate for an emergency fund, continuing education, or future purchases. This, then, is your production goal. This goal will go up every year or as your own costs of operation climb.

Schedule toward these predetermined production goals on a daily, weekly, monthly and yearly basis.

2. Collection Establish a goal of collecting a minimum of 97 -98 percent of production. Pre-payments or collection of past due accounts may lead to a higher percentage. Pay as close attention to your collections as you do production. You can only pay bills with dollars in the bank.

NOTE: If you are involved with managed care programs, your collection percentage will be lower. Add your collections to your adjustments to see if you are collecting all that you can collect.

3. Accounts receivable Accounts receivable are monies owed to you for dentistry already performed. You may or may not have made a financial agreement, but the balance of the account remains on your books.

Consider moving out of the banking business. Instead of carrying accounts on your own books, which means that you are loaning money to your patients, consider getting involved with a patient

financing program. Let financial experts manage the credit portion of your dental practice so that you can focus on patient care.

increases in salary and/or benefits to yourself and/or your team.

A business must have a budget and a handle on Profit and Loss or overhead. You cannot determine and control your overhead without knowing the true numbers. Get professional help in this critical area of business management. Don’t guess! Be as interested in profit as you are in production.

4. Patient financing programs Concern about cost is the main reason people do not come to the dentist or do not schedule treatment. Become involved with a patient financing program. And, if you are already involved with a program, consider using it more extensively. The service fees you pay for these programs is much less than the cost of carrying accounts on your own books or the loss of productivity when people cannot afford large sums at one time.

6. New patients: external and internal marketing

Marketing is (1) a part of developing a new practice,( 2) retaining the patients from an established practice and (3) maintaining a healthy practice throughout your career. Everything you do is related to marketing and marketing is a part of everything you do. Develop and implement a strategic marketing plan based on acceptable budget, desired goals and expected results.

5. Overhead Overhead is the amount it costs to run your practice. There are three ways to increase profit margin and lower the percentage of overhead:

Increase production. • Decrease costs. • Increase fees. Any of these three entities will increase profit margin. By incorporating all three of these measures, your profit margin increases substantially. Expansion of the profit margin makes it possible to provide

New patients: The number of new patients you need per month depends on many factors.

cases, you will not need as many new patients as a general family dental practice. • What are your production goals? • How many dentists are in your practice? Determine what you believe would be the best new patient experience. Then, provide this each time a new person enters your dental practice. Commit to not just having people as one-time patients floating through your practice, but rather, focus on turning one-time patients into forever patients—who become referral sources.

Existing patient family: The purpose of your internal marketing program is to help more patients say yes to treatment, stay actively involved in your hygiene program and refer others to you because of the excellent service and care they received. Track the amount of treatment diagnosed and presented, and how much is being accepted and scheduled. Develop a program of follow-up on any patient who leaves the dental practice without scheduling an appointment.

For example: • What type of treatment are you providing? • If you are doing large aesthetic/cosmetic, implant, or reconstruction

Your marketing is two-fold: attracting new patients in the appropriate numbers and retaining patients over time.

7. Case acceptance It makes no sense to attract new patients into the practice only to have patients declining treatment and/or not staying actively involved in your hygiene program. If you are losing as many patients each month as you are attracting, your dental practice will plateau or go downhill.

Perform a comprehensive diagnosis and design a treatment plan for all patients. Enter all treatment plans into your computer. Then, carefully and regularly follow up on all patients who have incomplete treatment. You will be evaluating several things when you begin monitoring this critical factor of your dental practice.

Are patients accepting your recommendations? Or do you need to improve your case presentations? • How well are you following up on incomplete treatment? What is your conversion rate?

The fulcrum of your dental practice is comprehensive diagnosis, complete treatment planning and excellent case presentations for each patient.

8. Scheduling With a great scheduling system, you can:

d. Opportunities for advanced restorative treatment.

(a) Reach production goals (b) Stay on time (c) Have plenty of time to perform excellent treatment

(d) Be more profitable (e) Control stress

You control your appointment book rather than have your appointment book control you.

In evaluating the effectiveness of your scheduling system, ask the following questions.

• How far out are we solidly booked into the future? • When can we schedule a new patient? • When can we schedule a long aesthetic or comprehensive restorative case? • When can we schedule a hygiene patient?
• Can we see a periodontal patient quickly and regularly? • Do we run behind schedule? • Are we delegating responsibilities when and where possible according to the laws of our state or country? • Are we exhausted at the end of the day because we have seen so many patients? • Are our days smooth flowing as well as productive? • Do scheduling difficulties cause stress on a regular basis? • Do we have numerous broken appointments and no shows? Scheduling is a difficult and challenging system but one that can be mastered. 9. Hygiene The hygiene department is the lifeblood of your dental practice. For most practices, about 30-33 percent of the overall productivity of the practice will come from the hygiene department.

odontal therapy? • How much restorative treatment is coming out of hygiene?

10. Team No critical factor, system, or protocol in your dental practice can work effectively if you don’t have a great team working together to accomplish the practice goals. Hire properly, educate continuously and “create a healthy work environment” © that fosters productive teamwork.

Answer these questions: • Do you have the appropriate number of team members in the right positions so that patient care is stellar, production is not limited and stress is controlled? • Do you have current, well-defined, workable descriptions of position responsibilities? Do these descriptions focus on key responsibilities, expected results and accountabilities? • Do you have a current personnel policy manual? Has everyone read and agreed to this manual? • Are your team meetings and daily meetings productive and effective? • Do you have equitable salary, benefit, and incentive programs in place? Are these healthy for the dental practice as well as for team members?

Identify patients coming through hygiene who have the following:

a. Dentistry diagnosed but incomplete. b. New areas of concern since the last appointment.

c. Periodontal concerns that need to be addressed.

e. Opportunities for aesthetic alteration. Here, in the hygiene area, much of your patient education will take place; not just education about how to brush and floss, but education about the five areas listed above. Approximately 40-60 percent of your restorative treatment and aesthetic treatment comes from hygiene patients.

Within your hygiene department there are multiple systems that require monitoring:

What is the hygiene production daily, monthly, yearly? • What percentage of the overall production of the dental practice is coming from hygiene? • Hygiene retention: What percentage of your active patients are participating in your hygiene program? • What percentage of your hygiene production is non-surgical peri-