The health of your patients is always top of mind for you, but what about the health of your business? Do you know the key metrics for your dental practice that will show how well you’re performing?
When you’re looking at a patient that recently got a treatment, you look at a few key indicators to determine how they are progressing – inflammation, things staying in the right place, etc.
Or for patients that might need a specific treatment, some key factors lead to them needed some work done – misalignment, unhealthy gums, etc.
The same type of thought process and monitoring applies to the health of your business!
We’re going to cover some business health metrics that will be able to help you quickly get to the status of your business and determine if action needs to be taken.
1. Production Per Visit (PPV)
This is the most important key metric for your dental practice. It’s simply a calculation of Production / Number of Visits, where production is the billed amount.
It’s a guide to your practice revenue and if you’re not growing your production, you’re not growing your practice, and if you’re not growing your practice, you will be shrinking sooner rather than later.
Extrapolating this to Total Production, you can see the top line for your business and compare that to months or years in the past to make sure you’re growing.
Splitting this out between new and returning (or ongoing) patients, you get a good feel for the trajectory that new clients are on and what they might need on an annual basis. Also if returning patients produce more than new ones, it implies that the normal trend is for patients to come in for a regular cleaning but come back for more complicated treatments. If they come back, they probably liked the service too!
Sublevel metrics – total production, production by new vs returning patient
2. Annual Patient Value
Along the same lines as Production Per Visit, the Annual Patient Value is a metric that helps forecast production and helps identify patients that might need to be scheduled for another visit soon. This, of course, is related to PPV and is up there in terms of important dental practice key metrics.
This is calculated as Annual Production / Number of Patients.
You can identify patients that are likely to/should come back if you know the average amount a patient is billed in a year or the average number of times they visit. For example, if your Production Per Visit is $275 and your Annual Patient Value is $625, you would expect patients to come back at least two times in a 12 month period.
Sublevel metric – the average number of visits in a year
3. Pre-Appointment Scheduling or Future Bookings
How many of your active patients are scheduled for a next visit? If you know the average number of times a patient visits in a year, you can determine when the next visit should be.
This is calculated as Active Patients Booked for A Next Appointment / Active Patients.
This number should ideally be above 90% but if it’s not, then you can dive into that further – did they leave and go somewhere else? Was there a miscommunication that lead to no future visit scheduled?
For those patients that have had one visit, but aren’t scheduled for another, you can easily flag them to reach out to.
This leads to finding out if they didn’t have a good enough experience to come back, and you can look into what procedure they had / who they worked with / etc. to see if there is a reason why they wouldn’t come back.
Making sure previous patients are booked for the next appointment is a great indicator of recurring revenue, lifetime value of a patient, and the overall retention of your patients. Having your patients be able to book through a well-designed website is a way to potentially increase this metric!
Sublevel metric – patient retention
4. Collection %
This is an important metric that leads to your profit. Production is huge and still the number one metric to track, but if you don’t collect any actual money from a visit, then you’ll be in trouble – no key metrics in your dental practice will matter if you’re not collecting any money!
This is calculated simply as Collected $ / Production $.
If you have multiple offices or are a part of multiple practices, collections per sqft is a good metric to use as a comparison between the different places you work at.
Ideally, this number is 100%, of course, because you would love to collect everything you bill, but we know things happen and not every dollar gets collected. Keeping an eye on this number is very important for the health of your business and can be an easy red flag to spot if you’re not able to collect for the work that you do.
Sublevel metrics – accounts receivable tracking (avg days to collection and policies around it), collections per sqft
5. New patients
This is another good indicator of a growing practice. Of course, one of the top ways to grow your practice is to bring in new clients (and retain them of course!) so this is a common dental practice key metric to track.
This is just a count of new patients – no fancy calculation required.
Going a bit deeper, you can see where these new patients are coming from. Determining what marketing avenues are working well and what aren’t working well can help you spend your budget in the smartest way possible and get the highest return for your marketing spend.
If you’re not getting many new patients, it might be time to work on your marketing strategy!
Sublevel metrics – marketing tracking
6. Overhead as a percent of revenue
Overhead can be a huge killer in business – dental practice or otherwise! It’s a crucial component in any income statement because it is necessary in every business. How the dollars are spent in the overhead bucket is another layer of necessary detail though.
This is calculated as Total Overhead $ / Revenue $.
You can be too high or too low in overhead, depending on what equipment you have, what staff and labor costs you incur, etc. Monitoring the overhead % is a good guide to see what might need to be adjusted to maximize profit. This doesn’t always mean cutting staff – it could easily mean the opposite where you may need to hire additional staff to free up more of your time for seeing patients.
This is a key metric that directly impacts the profitability of your dental practice and is necessary to keep track of for that exact reason.
Sublevel metric – labor overhead
Concluding Thoughts on Key Metrics for Dentists to Track
It might be stressful to think about how you can possibly spend all the necessary time to build out all of these processes and get the data intact enough to look at all of these metrics. Luckily, it’s an upfront investment and then you are able to quickly go through all of the key metrics to help grow your dental practice in a matter of minutes.
The upfront investment pays off in the long run with how you can know your numbers through and through, adjust your strategy from them, take the guesswork out of running a practice, and just spend your time with patients!