Key Performance Indicators
If you want to track your practice’s productivity, Key Performance Indicators (KPIs) are the way to do that. Done right, they give you a snapshot of your practice and let you know how you’re travelling.
However, many KPIs are pointless. They can require your staff to spend hours producing them. This is often followed by meetings where the staff desperately try to extract meaning from the figures.
Also, some commonly used KPIs are easy to fudge.
For example, a KPI tracks the percentage of hours booked versus hours available. In an 8-hour day, if the dentist is booked for 6 hours then the percentage is 75%. Staff can make this KPI artificially high by stretching appointments. I once worked in a practice where they booked 45 minutes for a check-up on a 3-year-old child. It made the KPI look good, but it left me twiddling my thumbs for 35 minutes.
Another easily-faked KPI is treatment accepted percentage. If a dentist treatment plans $5,000 of dentistry and the patient completes $2,500 of it then the percentage is 50%. To fake this, a dentist talks to a patient about treatment but only enters what the patient agrees to into the computer. Or, even worse, dentists create treatment plans with only simple things that they feel sure that the patients will say yes to. They under-diagnose to make this KPI look better.
My take on KPIs is that they should be simple and impossible to fake.
The first KPI I watch is dollars collected per month. Get your total collections for every month over the past two years. The second KPI is total overheads. Get your total running cost, before counting your wage, over the same time period.
Now, buy a poster-size sheet of graph paper. On the horizontal axis put months. On the vertical axis put dollars. Plot two lines. A black line for the dollars you’ve collected and a red line for your running cost. The gap between those two lines is your net revenue. It’s the space in which you live. It’s the money you use to buy groceries.
Have the lines ever crossed? If they have, you worked an entire month and lost money. Are the lines getting further apart (a good thing) or are they getting closer together (a bad thing)? What’s the trend for the black line? What’s the trend for the red line? Many dentists don’t know their net revenue until they visit the accountant at the end of the year. I like to know month by month.
If you transition to 6-handed dentistry you’ll need to employ an extra DA, so the red line will move up. That’s normally a bad thing but, the extra productivity should move the black line up at an even greater rate.
The gap between is the thing. You always need to look at the lines together, not in isolation. In my first practice I used to see children. I noticed that the gap got smaller during school holidays which showed me something important about treating children.
The third KPI that I follow is the number of adult new patients I receive each month. Just like the previous two it goes on a graph and the trend is what I watch. This lets me see how my marketing is working.
Fourth, I watch patient retention. The percentage of patients due for continuing care who actually attend within the defined recall period. Count completed visits, not future bookings. New patient numbers mean much less if existing patients disappear. Look at the trend. If it’s negative, maybe the economy’s getting worse or maybe you have a grumpy person at the front desk.
That’s it. Four KPIs. Each one is simple and impossible to fake. They will let you know if you are heading in the right direction and alert you to developing problems.
