If you run a business, you know it’s always better to understand how things are going before they begin to take any turns. Knowing how your team and practice are performing at any given moment gives you the info you need to keep things running smoothly and successfully. But what kind of info are we talking about?
There are all kinds of dental key performance indicators you can track that provide valuable insight about your business. Once you understand what dental KPIs are and how they can help your practice, the list of KPIs you track will start producing results in ways more valuable than you ever imagined.
What are Dental KPIs?
Dental KPIs, or dental key performance indicators, are like the stats on the back of a baseball card. They provide you with a quick snapshot that shows how a player’s performance has evolved from year to year, and depending on the trends you see, gives you some insight as to what you can expect in the upcoming year.
KPIs work the same way in your dental practice. Through these dental practice statistics, you can see which operating processes are working well, which ones are not, and which ones to improve upon based on the things that need attention. Some KPIs carry more weight than others, so understanding which ones are going to give you the most valuable information is key to getting the most out of tracking your dental KPIs.
Dental KPIs that can change the way you operate
There are dozens, if not hundreds, of KPIs that you could use to assess your practice’s performance. Some are interesting but mean little to your daily operations or the bottom line. Others give you crucial bits of information that tell you almost everything you need to know before making big moves like hiring new employees or expanding your business. Let’s look at some key performance indicators for dental offices that are game changers.
The most important KPI in dental practices is going to be “production”. No other KPI gives you as much insight into whether or not your team as doing the things that are necessary to be profitable in the long run.
Setting and meeting production goals is an essential part of solid practice performance, and your progress should be evaluated on a regular basis. Evaluating dental team performance at the end of the year will give you some insight into how you and your team did over the past year, but if something isn’t working quite right, you’ll want to know about it ASAP. This allows you to make timely adjustments that ensure you are limited to a tough month or two rather than a whole year.
Additional dental KPIs under the production umbrella that offer invaluable insight include:
- Average production for established patients
- Average production for new patients
- Average production per visit
- Daily hygienist production
Collections (Accounts Receivable)
Providing a service is one thing, but if you want to stay in business, you must get paid for your work. Unfortunately, collecting money owed to you from patients and insurance companies isn’t always as simple and straightforward as we would like it to be. There is also often a time gap between billing and collecting, so tracking your collections process is a great way to keep track of the money that is coming in on schedule, as well as the money that isn’t.
As a KPI for dental practices, “collections” ranks right up with “production”. The average collection percentage dental offices should be seeing is in the range of about 91-98%, and if yours is lower, you’ll want to reassess your collection strategy. The key to understanding and assessing your practice’s percentage with enough time to do something about it is through dental KPIs.
Another very important KPI dental practices should be tracking relates to the number of patients coming through the doors. Knowing how many new patients you are seeing each month, as well as how many previous patients were lost can be a good indicator of the practice’s health, especially for those looking to grow their businesses.
Setting up your dental KPI spreadsheet to track metrics like (a) the number of new patients, (b) the number of cancellations and no-shows, (c) how many patients have scheduled their next appointments, (d) average individual patient earnings, (e) hygiene production, and (f) case acceptance lets you see all the ins and outs of whether or not your practice is attracting and retaining patients. When dealing with practice performance, dental professionals can use these metrics for evaluation, and the outcomes will result in either growth or stagnancy for your organization.
Here are some more dental KPIs under the patient umbrella that are great to track:
- Total number of patients – How many total patients are in your database?
- Number of active patients – How many of those patients are scheduled for their next appointment?
- New patient conversion rate – How many of the prospective patients who contact the office ultimately come in for a visit?
The bottom line for any business is generating revenue, and in the world of dental KPIs, tracking that revenue is an incredibly important one. Many practice owners think they know how much money they’re bringing in each month, but due to issues with collections and adjustments, some of that may never even come through the door. The only way to know for sure is to track it.
Tracking the actual amount of practice revenue that comes through the door gives you a baseline upon which to make all kinds of business decisions, from purchasing, to hiring, to marketing. Improving the systems that increase your revenue leads to more money for expansion and bonuses. It can even help you amass some cash reserves for the business.
You should make sure your practice has enough cash on hand to weather any storms. Whether we are talking about the business of dentistry, or the business of life, experts always recommend keeping cash equivalent to 3-4 months worth of expenses on hand.
Overhead expenses are an unavoidable aspect of running any business. We need a place to conduct our business, equipment for providing our services, and people who can make the business operate efficiently. All these things incur recurring costs that reduce our profit and tracking them is an important part of understanding where our businesses stand at any given time.
Paying close attention to our overhead costs ensures we set realistic revenue goals and end the day with acceptable profit margins. Since some overhead expenses occur only periodically, keeping track of our overhead on a regular basis can ensure everything is accounted for, whether particular expenses get paid this month or next.
Generating lots of revenue is great, but if you spend too much on overhead, software, and gadgets, you may not actually be running a profitable business. If you want to implement all the dental business ideas you’ve got in mind, you need to make sure you’re generating enough profit to make them a reality without strapping yourself for cash.
“Profit” is basically “revenue” minus “overhead”. Keeping track of all three is the only way to give yourself a clear picture of your practice’s profitability, which can affect everything from interest rates on business loans to the price you ultimately get when the time comes to sell the company.
How to keep tabs on your dental KPIs
In order for KPIs to be useful, you need some way to track and keep tabs on them. Dental KPI tracking can be done by an accountant, but if you don’t have a full time accountant working in-house, you may need another solution.
Some people hire a dental startup consultant to help with everything from operations to marketing and everything in between. This can be a great solution because you can save on overhead cost by enlisting the help of a consultant while still enjoying many of the benefits that come along with a full time employee. Maintaining a KPI for dental assistants can show you whether or not your consultant or virtual assistant is accomplishing the things you need.
Implementing your KPI strategy
There are so many dental KPIs that you could track that it can be tough to determine which dentist metrics mean the most to your practice. Your list may grow and shrink over time, but remember that tracking those indicators will lead to a more efficient and profitable practice.
Start with the ones you think are most important, and make adjustments when you see gaps or extraneous information. You’ll ultimately come to a list of dental KPIs that work for you and your practice, and you’ll wonder how you ever operated without them.