KPIs are indispensable to track when it comes to keeping a check on the performance of your practice. KPIs, short for Key Performance Indicators, are metrics that help you measure different aspects of your business, and ultimately decide whether your practice is successful (profitable) or going down the drains.
When it comes to dental practice, there are a few KPIs more significant to track than others. While you should be tracking the maximum or all of dental-related KPIs, there are a few that deserve the most attention. Production and production-related KPIs take center stage here.
In a layman’s term, production is how much are you selling or producing. Like how many cakes you sold or how much crop you produced. But since you are a dentist and not a baker or a farmer, your production is your clients served and dental procedures performed. The more the number of clients you attend and procedures complete, the more is your production.
Production is the single most effective indicator to determine your overall profitability and growth. And as it is the most significant KPI to track, it is important to not only take a cursory look at it but measure it in detail, covering its various aspects. And this is where you might need professional assistance from a Certified Public Accountant like me.
Many people, when tracking and measuring production, don’t get the complete picture of the status of their practice profitability. The problem lies with the approach. It is better to divide your production into several categories and measure each one individually. This may seem like complicating stuff, but it’s the exact opposite of it. When you approach various kinds of productions independently, you make better assessments and evaluations, leading to more effective practice.
Average Production Per Patient
Observe and measure the number of services you are selling per patient and also their worth. Is the number of services per patient increasing or decreasing on an annual basis? If you see the number of productions coming from one patient decrease, you can begin to think about its causes. Is the patient not visiting as often as he should? Whether he is missing appointments or rescheduling them? Should the average hygiene procedures performed per patient be increased, like scheduling their hygiene visits more often?
If we ignore looking at average production for each patient, we might miss important information altogether, which can be easily avoided by deliberating more carefully into your production data.
Average Production Per New Patient
Average production per new patient is estimated the same way as the average production per patient. You might wonder why there is a need to calculate the average production for new patients separately. Never forget that in your practice, you should always be emphasizing getting new clients all the time. It is an unhealthy practice to rely only on your existing clientele. New patients can be a huge source of revenue. There is always gonna be someone looking to get his first oral examination or a disgruntled patient looking to change his dentist, and you certainly don’t want to lose the chance of being their dentist of choice.
If you are not getting a satisfactory number of new clients all the time, maybe revisit your marketing strategies over.
And what should be considered a sufficient (satisfactory) number of new clients or production per new patient? An average production per new patient, which is two to three percent lower than the average production per patient, should be considered worrisome. Always aim for a higher average production per new patient compared to regular patients.
Doctor Production vs. Hygiene Production
If dental production accounts for 75% of your total production while hygiene production the other 25%, you should consider your practice heading in the right direction. If your hygiene production makes up less than 25%, it is advised to revisit your hygiene production strategies. A hygiene production of less than 25% raises serious concerns – either the hygienists are not utilizing their full potential i.e., sitting idle for the most part of the day or undercharging their clients or not satisfying their patients fully with procedures performed.
Production by Procedures and Total Procedures Performed
Production by Procedures KPI can be fruitful if you are looking to increase your profit margins by performing more procedures. This can help you identify procedures bringing in more dollars or the ones more popular among your patients.
You can also choose to track production in general by estimating the total sales earned at the end of every week or month and then comparing it with the overheads of your business. If your production exceeds your overheads, well done, you are acing your business. If your overheads exceed or equal your production, you must start worrying about the efficacy of your practice. If this is the case, you need to dive deeper into the status of your dental practice and identify loopholes, which can be better ascertained by tracking different productions separately. This is why we emphasize tracking different production subsets individually.
Also, remember your production should keep growing. If it’s not growing steadily, you must take measures to make it possible. Don’t be complacent even if your overheads are declining; the production must grow continuously. Otherwise, it won’t take long before your practice spirals in the downward trajectory. This is where you can benefit from the expertise of a Certified Public Accountant (CPA) like me.