The time is now -- we are about to see Dr. Colorado naked. After weeks of evaluating, we are finally going to see the practice with no clothes, accessories, or makeup. Nothing but the bare naked truth of what is really going on in his practice, so that he can make the necessary changes to improve the financial health of the office and his personal lifestyle.
If you remember, Dr. Colorado is a top-notch dentist who has been practicing for more than a decade. The whole community knows and loves the guy. Every time he walks into Walmart he is showered with acknowledgement. He works out of six operatories, and he collected $2.3 million in 2014. But he took home less than 7% of collections. A healthy practice should be taking home between 40% to 45%, meaning Dr. Colorado took home between $300,000 and $400,000 less than he should have.
From the outside (or with all his clothes on), he thought that he needed more new patients. As soon as we took the first article of clothing off, however, we discovered that his break-even point was not being reached until the end of the month.
Metrics that relate to the break-even point include the following:
- Facility and equipment
- Marketing and advertising
- Business and administrative expenses
- Associates' cost (separate this from other payroll)
- Owner's discretionary cost and compensation
Then I removed more clothing and things got real nasty. I noticed that his collection percentage, number of future visits, and average production per patient visit all were very unhealthy. A total makeover was sounding very good at this point. I could now see why dentists are so stressed!
In addition to all of these unhealthy aspects of the office, Dr. Colorado still needed to be a great dentist clinically, manage his team, deal with salesmen, relate to patients, understand new technology, and so on.
With all these moving parts, it is difficult to pinpoint the areas that need to be focused on. Although we have the technology to pull reports from Dentrix, Eaglesoft, Open Dental, and the like, all that the information tells us is what happened in the past. It is nearly impossible to know what an office needs to do to see lasting success unless you take all the "clothes" off the practice.
Luckily, we now have business intelligence that crunches all the practice and financial data to shows us what needs to be achieved for success versus reports that tell us what happened. This intelligence told Dr. Colorado what the true issues are, allowing him to make smart decisions as opposed to emotional decisions.
Being stripped naked and utilizing business intelligence, we start to cut the fat and sculpt this practice into an attractive business. We narrowed the intelligence into three keys to move forward:
Reveal the true issues. If it weren't for business intelligence, Dr. Colorado would have been making emotional decisions on which metric to improve. With business intelligence information, he can now make an informed decision to improve case acceptance, payroll, or recall percentage.
Choose one. Although he has narrowed his focus to three issues, it is important that he only focus on one metric until the trend is moving in the right direction for at least three weeks. Then he can move onto the next issue. Dr. Colorado chose to focus on case acceptance.
Perform daily monitoring and auditing. With case acceptance, it is critical that your practice is at no less than 60% every day. Once you know and focus on the concrete problem areas, you are finished, right? Wrong. If history tells us anything thing, it's that change is inevitable. In addition to monitoring and auditing the metrics that currently need improvement, it's wise to track all the metrics within the practice, so that when collections or production starts to slip, you can correct the struggling metric and improve it before you see a dip in your pocketbook. Because the practice has so many metrics, it is difficult to do this without business intelligence.
The fourth key would be to celebrate. Whenever the practice sees improvement with a metric, celebrating that achievement is essential. Not only is it gratifying for the moment, it is key for team members to help maintain energy in the practice.
Out of 400 separate metrics and numbers within Dr. Colorado's practice, he now knows that he must focus on achieving 60% or better on case acceptance. Once that is accomplished, he knows his next step. Life just became easier for him. It is no longer a guessing game or a game of impressing peers.
Dr. Colorado's practice has been stripped down, and what we found was not attractive. But with pinpoint focus on just a few items, Dr. Colorado is going to have the sexiest practice in the state.
Next time we will strip down a practice I call the "Pretty Woman." I'm excited to find out what we will learn.
Let's all look good naked.
Curtis Marshall serves as the vice president of marketing at Dental Intel. If you would like your practice to be in the next Naked Dentist column and have your practice undressed, contact him at email@example.com or 801-380-7070.
The comments and observations expressed herein do not necessarily reflect the opinions of DrBicuspid.com, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.