When trying to improve our lives, whether personally or professionally, data helps us track progress, including setbacks and successes along the way. Take weight loss, for example: without a number on a scale, we may still realize improvements are happening by the fit of our clothes, but we can’t understand with precise accuracy what is working — and what may be causing a setback along the way — without actual data.
The same is true for monitoring the health of your business … and not only when it comes to money. In today’s newsletter, we explain what “key performance indicators” (KPI) are… and why you should be paying close and repeated attention to them.
When tracking your practice’s customer growth, nothing is more important than numbers. Therefore, dentists must familiarize themselves with their unique KPIs to fully understand their practices’ health and viability. As the saying goes: “you can’t improve what you don’t measure.” A KPI is a way to measure — or identify, track and analyze various metrics in your business, such as production, collections, etc. — to help you see what is working … and what isn’t. This, in turn, helps you make better-informed, strategic decisions for your business.
Let’s say your practice has a system that encourages your team to ask patients to schedule follow-up visits before leaving an office visit. You practice that system for a year and regularly consult the numbers to see if it’s benefiting your practice. If your KPI for this system is 90 percent or above — in other words, if 90 percent or more of your patients have been scheduling follow-up visits before leaving the office while this system has been in place — then you know the system is working. This is how you use KPIs to your advantage.
But KPIs work similarly if a system is not working and needs improvement.
Production
Setting production goals and tracking your practice’s production is critical to the overall health of your business and is, therefore, the most important KPI. For instance, appointments are booked haphazardly to fill a schedule without a production goal for properly scheduling patient appointments. This causes havoc and headaches for the entire team. Practice production must grow, and this happens most successfully when data is tracked daily, weekly, monthly, quarterly, and annually. Comparing your practice’s data to your established KPI goals will help you quickly determine if your practice’s performance is working or may need some tweaking. The “production per-visit” metric is the most accurate KPI model to use when comparing providers or dental offices; it helps you determine why your production is up or down based on factors such as patient volume or return visits for routine care or treatment plans.
Collections
Where production is a powerful KPI for analyzing overall practice performance, collections make or break the bank. Measuring collections with KPIs — for both patients and insurance companies — will help increase profit and encourage long-term financial success for your practice. Collecting what you can, as quickly as you can, is critical: it’s ideal to collect copayments and at least 98 percent of net production (after insurance adjustments and other discounts). Knowing how much revenue your practice is collecting and how quickly you’re receiving it are two KPIs that will help determine how well your team is closing payment cycles and how your practice can best avoid or minimize having to mail bills.
Tracking patients
Tracking patients — including their retention — is another important KPI for your practice. Keeping a full schedule with few no-shows or last-minute cancellations is critical to running an efficient dental practice because it helps ensure your team is ready every day for the number of scheduled patients. Dental practices lose, on average, about five patients a month, so it’s important to constantly work on ways to attract new clients. We suggest 20-30 new patients a month, depending on the number of dentists in the practice. Patients who have visited the office within 18 months but don’t have an appointment scheduled are considered unscheduled patients. This group is another KPI that demands our attention because it can help us focus on filling our schedule and preventing patient attrition. No-shows and last-minute cancellations are also important to track, with the goal being that they represent no more than 8 percent of your scheduled appointments. While impossible to avoid them, tracking your rescheduling success rate as a KPI — especially if it’s at or above 85 percent — is a strong indicator, for instance, that your team is on the ball with communication. An uptick in cancellations could also mean it’s time to restructure financial-arrangement options or increase patient education about treatment plans, so they understand that the urgency of treatments is to prevent costly repairs down the road.
Regularly reporting, measuring, and analyzing your KPIs is critical to the long-term success of your business. Monitoring your KPIs and making adjustments will help you successfully position yourself as a competitive practice passionate about delivering only the best patient experience and care.
