Take a look at your practice forward and backward
There are many factors to take into consideration when preparing for the new year: insurance, number of patients, equipment purchases, marketing, KPIs, and more. Here is some guidance as you close out your year.
Frank A. Semo
Business consultant Peter Drucker said, “Do what you do best, and outsource the rest.”1 This statement has guided me in both my personal and professional lives and is a major topic of focus when I’m consulting with dental professionals across the country.
This may come as a shock to some, but 2019 is already upon us. As a dental professional, you may be considering an end-of-year equipment or technology purchase for your practice, or a new-year practice and business enhancement. While I support and encourage this important business decision, I urge you to seek professional guidance before signing that dotted line.
Like me, many people act on impulse and react to what they feel is the priority in their lives or offices. It often makes the most sense to take a step back and ask someone for a helping hand. You’ll find that a conversation will provide reassurance in your decision or add the guidance you need to sway your focus in the right direction.
Now that you’re on the right track, I’d like to share some key tips you can take into your practice during the new year.
Understand the insurance makeup of your practice
The dental landscape has changed. Many dentists are faced with greater write-offs than ever before, and some feel the need to close their doors because of this. I’m constantly asked how to combat this inevitable occurrence, and my answer is always the same. Dental benefits plans are merely another form of marketing a dentist does to attract patients to the practice. You as the dentist have agreed to reduce your usual, customary, and reasonable fee (UCR) to attract new patients to your practice.
Although dental benefits are not the sole reason patients choose a practice, they do play a role and should not be taken lightly. You should be analyzing what PPO or other benefit plans you accept and review your profit margins for each plan. In any business, if a rendered service does not lead to profitability, the service should not be rendered unless for charitable purposes.
When applying this to the dental industry, you might want to consider out-of-network participation with plans that do not increase your bottom line. Like many clients I’ve consulted over the years, your eyes may be widening and your first reaction may be to drop the plan you once called the bane of your existence. My advice would be to understand whether any of these plans are negotiable in your state before removing them from your in-network participation list. If you haven’t negotiated your PPO plan rates during the last 18 to 24 months, you may be a candidate for negotiation in 2019. Seek guidance from professionals in the insurance management space.
Know your patients’ worth
Now that you’ve properly managed and optimized your benefit plans, review your new-patient count for 2018. On average, a full-time dentist should be receiving 25 to 30 new patients per month, assuming an attrition rate of 12–14%. If your practice isn’t meeting this goal or you aren’t retaining these patients, you should analyze your go-to marketing strategy as well as your internal systems for reappointment, case acceptance, and overall patient experience. These factors are just as—if not more—important than all of your external marketing efforts combined.
Take your 2018 collections total and divide that by the total number of patients who visited your practice last year. This will give you an average active patient value and will assist you in calculating a target marketing budget for the new year. Your office management software or practice dashboard service may also be able to provide an even more accurate key performance indicator (KPI). Remember, an active patient is not truly active until the person makes a second appointment and accepts the care you provide.
As you prepare your 2019 budget, business plan, and insurance management strategy, I recommend accompanying it with a practice analysis. This will enable you to analyze each department and procedure category in your practice and accurately set realistic goals with your team. The analysis will also provide you with a UCR fee guide to assist in proper fee balancing based on a targeted percentile for your specific location. This is an imperative first step when negotiating fee schedules with insurance carriers.
Feel free to email me if you would like an analysis of your practice or have questions.
1. Vitasek K. A new way to outsource. Forbes website. https://www.forbes.com/2010/06/01/vested-outsourcing-microsoft-intel-leadership-managing-kate-vitasek.html#5e0bd9e06736. Published June 1, 2010.
Frank A. Semo began his career as a dental assistant. After working with two multispecialty group practices, he joined Henry Schein Inc. as a field sales consultant in the New York tristate area. He accepted the role of senior business and consulting specialist, and now works directly with dentists on the east coast to provide them with tools for practice profitability, efficiency, and risk mitigation. He is currently Henry Schein’s business solutions district manager for the Eastern Area.