Your primary concern in your dental practice is patient care. As the owner, your other concerns run the gamut from office space rental to front office administration. The responsibilities and decisions that create your success are up to you. Sometimes it’s difficult to know where to focus your attention, but mastering the revenue cycle is one concern that lifts other concerns.
Understanding the Revenue Cycle
What is the revenue cycle?
Your revenue cycle is the revenue you receive from your patients. It spans all the administrative and clinical functions from the moment a patient account is created to the final billing. It’s where the money flows. Understanding that flow is key to the growth and success of your practice.
Your dental practice is tied to your patients. So is your revenue cycle. It’s also tied to your marketing, your front administrative office, the dental care you provide, your billing cycle, and the larger health care system. Understanding how these things converge is essential in not only setting revenue targets but hitting those targets.
Setting revenue goals and targets
To hit your revenue target, you need to set revenue goals. It’s simple. Knowing where you are going makes it a lot easier to get there. Setting revenue goals defines where you are going.
Your revenue goals are a strategy to improve the profit of your dental practice. Make them actionable. It’s not only about the numbers. It is about the steps you take to get there. A revenue target is more about the process than the product. Make them SMART.
Being SMART about setting your revenue goals is just that. SMART.
Here’s how SMART works:
S – Specific.
Effective goals get into the nitty-gritty details. Think about: what needs to be accomplished, who is responsible for it, and the steps to achieve it.
M – Measurable
Make sure your revenue goals are quantifiable, and you have the data to back them up. Better yet, make it trackable.
A – Achievable
Setting the bar to stretch and grow, but don’t set it so high that you tumble backward. You are in your dental practice for the long term. Incremental growth is sustainable growth.
Attach real benefit to your goals. Look at your dental practice with a wide lens. How are your goals going to affect the big picture?
Deadlines matter. Goals don’t stretch into infinity. Time-related parameters motivate achievement.
How do long-term goals differ from short-term goals?
Once you have set an annual goal to target annual revenue, it’s time to break it down into short-term goals. Setting quarterly, monthly, and weekly goals balance your revenue goals within your revenue cycle. You bill monthly. You book weekly appointments. Tie these schedules to your revenue goals. Using tools like a revenue goal planner also helps you map your way to your revenue target.
Learn more about breaking down your revenue goal numbers. Exceed your Revenue Goals
Helpful Hints: Hitting Your Revenue Goals
There are two big categories to concentrate on to hit your revenue goals: Cash Flow and Marketing. Several specific actions within these categories will maximize your chances of reaching your revenue target. Let’s take them one at a time.
Category #1 – Cash Flow
Cash flow and insufficient accounts receivable is a typical cause for dental practices not meeting their revenue goals. Two ways to squash it are through revenue cycle management and business risk management.
1) Revenue Cycle Management
What is revenue cycle management?
Revenue cycle management organizes and controls the revenue cycle steps from patient in-take to final bill payment.
What are the goals of revenue cycle management?
Problems in the revenue cycle often occur with failures at different points in the revenue cycle system. The goals of revenue cycle management are to turn these failures into successes.
Typical system failures:
- Failure to check patient insurance
- Failure to collect patient co-payments
- Failure to collect outstanding balances
- Failure to code correctly
- Failure to timely follow up with insurance denials
Luckily, these failures have remedies. Most are at the point of contact between your patients and your front desk staff. Communication between you and your staff and between your staff and your patients is essential. Streamlined and clear administration procedures are too.
- Accurately capture all patient contact information, including insurance.
- Verify patient’s insurance eligibility, coverage, and benefits.
- Communicate payment policies with patients in writing, including co-pays, payment methods, and unpaid balances.
- Update patient information.
- Answer billing questions.
- Collect co-pays and any outstanding balances.
- Collect estimated patient portions upfront or set up a payment plan schedule on the day of the visit.
- Submit the correct payment codes.
- Keep up to date on payment code changes to avoid unnecessary denials.
- Use software for timely patient billing.
2) Business Risk
Assessing business risk protects your dental practice from threats to revenue and cash flow. Every business faces unexpected events (like a global pandemic) that cause unforeseen disruptions to earnings. Business risk management models and analysis help identify and control these threats. Planning helps mitigate loss when these events occur.
Category #2: Marketing
Marketing brings patients to your practice, and most importantly, it brings new patients into your office. New patients mean revenue growth. Here are a few tips to maximize your marketing strategy.
1) Build A Strategic Communications Plan
A strategic communications plan helps turn your target audience into your new patients by:
- Organizing the analysis of your target audience
- Turns analysis into actionable steps
- Determines when and where to deliver your key messages
A Few Questions to Help Define Your Target Audience:
- What is the perspective of your audience?
- Where are they?
- What are they looking for?
- Why are they looking for it?
- When are they most perceptive to your message?
- What content is the best to reach them?
- What channels work best to deliver your message to them?
Learn more about how to create a communication plan: Ways to tell a compelling brand story To refine your strategic communications plan and your key messages contact a strategic planning consultant.
2) Lead Marketing Strategies
Lead marketing is the process of converting a prospective patient into a new patient. It turns a potential patient into an actual patient, but not all leads are created equal. Targeting leads and marketing qualified leads is a helpful strategy for hitting your revenue goals.
Sales qualified lead
Nurturing sales-qualified leads is one way to turn a lead into a new patient. The number of visitors to your website is all well and good, but in the end, it’s just a traffic report. Visitors who actively seek out more information about your dental practice, respond to your call to action, subscribe to your blog, become more than visitors, they become guests. And guests need to be cared for. Following up sales qualified leads with information or remarketing through targeted ads is the care they need to become your new patients.
Pre-qualified sales leads
Using a pre-qualified sales lead is an active way of turning a lead into a new patient. With this approach, instead of sitting and waiting to see if your website or call to action is compelling enough to book an office appointment, you seek out who to market to and then market to them.
Your best bet in figuring out pre-qualified leads is to analyze your existing patients. Chances are prospective new patients are similar to the ones you already have. Your practice is unique. So are your patients. Figure out what makes them unique for you and market to that person.
A few questions to ask:
- Are your existing patients primarily families?
- Busy working professionals?
- Older adults?
- What zip codes and neighborhoods do they live in?
- What jobs do they have?
- What types of procedures does your practice specialize in?
- Who seeks out those procedures?
Analyze this data and figure out who is most likely to become a new patient in your dental practice. Then target your key messages accordingly.
Mastering the Revenue Cycle
Learning revenue growth management is a decision towards success. Looking at the big picture of the revenue cycle, breaking it down into smaller increments, applying small changes at each increment, using tools and metrics to analyze where there are cycle hiccups, sticking to a strategic communications plan, and improving revenue cycle management are all choices you make to grow your dental practice. The revenue cycle is a responsibility worth mastering.