Do you know your numbers?
Lindsay O’Neill explains why you should be crunching the numbers in your practice.
As a practice owner how do you know if the changes you are making to your business are working? How do we really know if things are working efficiently and effectively? How do we measure our performance and know if we are improving?
Key performance indicators (KPIs) are a quantifiable measure used to evaluate the success of an organisation, employee etc in meeting objectives for performance. They are invaluable to the dental practice in many ways, but especially in measuring performance relating to improvements that effect profitability. So which KPIs are actually worth keeping an eye on?
- Surgery cost per hour – how much does it cost to be open? What is your break-even point?
- Income per hour, per clinician – again, this helps you work out if appointment times or fees need changing. It also gives you a very clear picture of what everyone is doing in the practice. Are your associates earning you enough money to cover the surgery costs that you have already worked out and make a profit as well? Is there one associate who is carrying everyone else? Having these figures will help you to then have the conversation with associates about their productivity, especially if they can see how much it costs for them to use a surgery
- Occupancy rate – are your staff filling the books? Are certain people quieter than others? Are your appointment books full? Could the surgeries be used for longer and be more productive?
- New private patients and the number that are then being converted to plan patients – is there a flow of new patients and are most of these being converted to plan patients? If not why? How did the new patients hear about you?
- Fees versus related costs – are the fees set appropriately? Are you having to use specialised materials or lab bills for certain treatments and are the fees reflective of these costs? Are these fees then increased as these costs increase?
- Staff cost as a percentage of revenue – keep up to date and benchmark against the NASDAL annual figures, are you carrying too many staff?
- Materials as a percentage of revenue – again keep up to date and benchmark against the NASDAL annual figures, are you over spending on stock? Keep an eye on overstocking as it is a bad habit for practices to get into and inevitably leads to stock going out of date and unnecessary wastage
- FTA figures – what is the failed to attend (FTA) rate? Do you have a policy for FTAs? Is the FTA rate the same for all dentists at the practice? Do you send appointment reminders?
- Open courses of treatment – what is your percentage of treatment plans taken up? Is this an area where clinicians and staff need help?
- Waiting times – this should be set at an agreed average for the practice and reviewed monthly, as it ultimately affects how your patients feel about you and their satisfaction with the practice. Is there a reason for someone running behind? Do appointment times need to be looked at?
KPIs themselves won’t give you an answer but will help identify areas where you need to make changes to your business. Looked at in isolation, this information just gives you a snapshot of your most recent month, but looked at over a 12-month period, they become a powerful tool to help improve your practice and your profitability.