Monday, December 19, 2016

The ABCs of a Successful Dental Practice (Part 2 of 3)

As we know, there are myriad systems, processes and strategies required to operate a highly successful dental business. In this blog post, we will continue with the letters J–Q, presented so the dental practice owner can familiarize him or herself with some of the common threads found in highly prosperous dental practices across the United States (solo, small group or big-box dental chains). These tips are presented to help business owners increase their profitability while decreasing stress, creating accountability and leading to a more balanced lifestyle. 

As mentioned in my previous blog posts, the dentist is the primary revenue producer and should be chairside 95 percent of the time (as should the dental hygienist). As a result, it is vital to ensure that each team member is trained to perform his or her responsibilities, reinforced with proven systems, operating manuals and protocols for every conceivable patient/team interaction.

There is no substitute for excellent training and continuous education for all dental auxiliaries and non-clinical team members. Our clinical skillsets are no longer the differentiator in our success. The keys to today’s business success begins with embracing a service excellence culture that results in a patient-centric environment and engaged employees.

The following recommendations and/or suggestions are based upon more than 35 years of combined practice management, clinical mastery, project development and five-star hospitality customer service experience (the latter as a major hotel executive), as well as knowledge gained through the completion of a rigorous Master of Business Administration program, incorporating all facets of business. These recommendations are more than simply anecdotal ideas. They are based upon the science of business.

Job descriptions: Job descriptions serve different purposes for the employee or employee candidate and human resources department. Well thought-out job descriptions help organizations increasingly understand the experience and skill sets needed to enhance the success of any company. They assist in the hiring, evaluation and termination of employees. A well-prepared job description should serve as a basis for interviewing candidates, orienting new employees and finally evaluating job performance. There are no outside companies that can provide you with “cookie-cutter” job descriptions that are sufficient for the dental business owner. Each job description should be customized by office and position to fit within the culture of the business and should be reviewed annually by the owner/human resource manager.

Key performance indicators (KPIs): There are more than 200 meaningful KPIs that should be measured on a monthly basis to evaluate the success of any dental business. Unfortunately, the concept of “what gets measured gets done” is neither taught nor discussed in the conventional dental school curriculum. Analogous to a metabolic chemistry panel used by our medical colleagues to determine a patient’s general health, the astute and informed business owner should learn to evaluate the overall “business health” of their respective practices through what I refer to as a “Business Panel 200.” The use of quantifiable metrics with recommended corrective action should be incorporated into every dental business in the country. The most predictable way to become successful in today’s dental economy is to maximize your productivity, increase your collections and implement proven systems that are guaranteed to produce excellent outcomes.

Location: There is no substitute for a well-researched dental office location, existing or new. The average neighborhood changes every 10 years, and it is incumbent for the dental practice executive to be familiar with the socioeconomics of his or her respective patient base. If your office is located in a poor location, it may be time to relocate your practice or change your business philosophy. The savvy businessperson will obtain a demographics site analysis ($400 to $500) every two to three years and evaluate the number and location of homeowners (by ZIP code and carrier route), apartment dwellers, dental competitors, traffic flow, average income per household, average number of household members, average age per household (baby boomers born between 1946–64 have more expendable income), insurance dependency and much more. For example, it is difficult for a practice built upon treating edentulous and geriatric patients to survive in a neighborhood saturated with young families with an average age of 35 and with three children per household. Your business philosophy (level of quality, service and price) needs to match your customer profile, or you may experience catastrophic results. It starts with knowing what your patients want and where they live.

Marketing: When most business owners think of marketing, they think of print media or print advertising. Historically, many dental business owners have turned to ink campaigns when they want to acquire new patients or increase their business volume. Unfortunately, print media results are the poorest and most expensive method in which to acquire quality new patients (QNP). I don’t wish to degrade or demean any advertising company. However, the data is irrefutable and the return on investment is predictably dismal. If you want to increase your QNP, then identify your existing quality patients (approximately 20 percent of your customer base) and create an internal system that empowers and rewards your employees when they ask for referrals. For example, during your morning huddles, each team member could select one or two patients for whom they are in rapport with and ask for a referral. Once your team is armed with learned active verbal skills (some call this scripting), your internal marketing outcomes will reign superior. The beauty of a well-trained team of professionals built upon five-star customer service is the superior results and benefits for all parties, including the consumer/patient. Too many dentists are attempting to compete on price, and this can be a recipe for disaster.

Remember, everything we do can be considered a marketing effort. The most successful and powerful marketing strategy begins with building rapport that leads to value, value that leads to trust, followed by trust that leads to increased case acceptance and QNP.

Number of new patients per month: A well-run dental business should expect to see an average increase in annual production and collections of at least 8–10 percent. In order to accomplish this, it is important to grow the patient base through acquisition of new patients, as well as with cohesive systems that lead to increased case acceptance. To offset the attrition/churn rate (departing patients), the average dental practice needs to acquire 25 to 30 QNP per month for a single clinician/single dental hygienist operation. Are you tracking this information? This is one of 200 KPIs that should be monitored monthly. Remember, diagnosis is the key to delivering beautiful clinical dentistry with excellent business outcomes.

Opportunity cost: Opportunity cost refers to the benefit that a person could have received, but gave up, to take another course of action (sometimes by doing nothing or the same thing over and over, expecting a different result). Stated differently, the opportunity cost of attempting to self-learn the business of dentistry may conservatively cost the owner $750,000 to $1,500,000 over a 25-year career and/or bankrupt the gifted dentist before he or she ever realizes what has happened.

Production: Production can be one of the most misleading KPIs and is routinely measured at full fee for service without taking into consideration insurance adjustments (by carrier and plan), marketing adjustments and numerous other adjustments. Adjustments are different from write-offs, yet in most instances, they are lumped together, resulting in inaccurate data that leads to an incorrect diagnosis and ultimately the wrong corrective action. All production adjustments should be separated by categories and reported accurately.

Quadrant dentistry: The majority of dental school curriculums teach single-tooth dentistry without regard for the well-being of the patient and/or dental businessperson. Unfortunately, most dental school programs lack the money, time or faculty to prepare new graduates for the business of dentistry, yet alone clinical competency. With that said, and through mentoring, most dentists can achieve their goals and objectives. A few of the benefits delivering quadrant dentistry include fewer appointments for the patient, increased production and collections for the business, increased cash flow, decreased burnout of all team members, decreased equipment and facility maintenance, fewer insurance claims, improved clinical outcomes and much more.

Stay tuned for the final post in this series, in which I will provide additional tips on how to increase your efficiencies while ultimately leading a balanced lifestyle.

Change is inevitable. It can be logical or forced. There are marvelous and gifted dentists and surgeons who have suffered tremendously as a result of insufficient knowledge in the business of dentistry. A comprehensive education in every aspect of your business is paramount. The business clinician who can master excellent business and clinical skills will always have a place providing wonderful dental care with reduced stress.



Duke Aldridge, DDS, MBA, MAGD, MIC

2 comments:

cpc said...

Fantastic list! The only other function I would add (it's almost always left out) is Quality Control (correction) of staff as even the best staff go off the rails now and then.

Robert Linde said...

If you are interested in pursuing a career in dentistry, there are several steps to take. Whether you are in high school, college, it is never too late to start thinking about getting into this career. easiest dental schools to get into

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