Sina Hedayatnia, DMD, MBA
Dentists often use production as an all-too-common metric when it comes to practice management and improving their success. There’s a good reason for this. A production number is discrete, understandable, and easy to measure and track over time. It provides a relevant benchmark with which to assess the performance of the doctors, hygienists, and treatment coordinators.
Production carries a lot of weight for a practicing dentist, both as an owner or associate, since compensation and hence one’s livelihood are tied to this number. Improving production can also provide direct rewards for other members of the team. An office that produces well will have a happy doctor, who will in turn make his or her team happy by treating them well, perhaps increasing wages or offering more benefits.
Given this logic, you may be hard-pressed to consider other variables when monitoring and evaluating the performance of your practice. However, I believe strongly that successful dentists should develop and closely track additional goals in order to improve the performances of their practices.
The problem with production
Let’s examine the problem of using solely production as a practice performance metric. First, production levels give no indication of how a practice will perform in the future. In business terms, it is a lagging measure, meaning it only shows what happened in the past. Say your practice recorded $100,000 in production last month. That sounds great! Maybe you hit your goal, or maybe you didn’t. There is nothing about this number that elucidates the myriad factors that could have contributed to that production or whether this level of performance is sustainable.
The many factors you still need to know: What is the source of production? Was the source a big full-mouth reconstruction that comes once in a blue moon, or a solid stream of bread-and-butter procedures (e.g., crowns, fillings, and extractions)? Was the production generated mainly from new or existing patients? Which team members—from doctors, hygienists, and treatment coordinators—“sold” the most production? What was the quality of patient experiences that month? When performing well, did you sustain the same level of attention and quality delivered to patients?
When considering these factors, it becomes clear that production gives a vague indication of how the practice is really performing, especially with regard to how everyone operates as a team. If you believe that the questions above can be turned into useful metrics for your practice, you are absolutely correct! Some measurable factors could be (1) production level by patient or procedure, (2) prevalence of pending or open treatment plans, or (3) patient satisfaction scores as measured by Yelp or Google reviews.
Meaningful metric development
It is important to distinguish practice metrics as either leading or lagging measures. Leading measures are useful to track in a practice because they serve as indicators of future performance and are potential management levers for improving clinical and practice operations. Imagine how much more useful such actionable measures are compared to lagging measures such as production and collections. If you know you underproduced last month, does that give you any idea of where to improve? In contrast, knowing that many pending treatment plans are piling up indicates that you and your team should focus on treatment presentations and closing cases.
Some of the best performing companies in the world, including Google and Intel, use a system of goal setting and tracking called objectives and key results (OKRs).1 These organizations have discovered that taking the time to identify quarterly goals (objectives) and monitor key results linked to these goals has a tremendous impact on their ability to perform and outdo their competition. While everyone in the organization maintains their own OKRs, these are mutually agreed upon so that a manager’s key results are closely aligned with the objectives of the subordinates. Because OKRs are publicly tracked and displayed, there is complete transparency regarding each person’s motivations, which facilitates more cooperation in order to collectively fulfill objectives.
As you think about how to grow and improve your practice, I highly recommend including OKRs as part of your strategic planning. Spend some time with your team to decide what it is you want your business to be known for. While I don’t think you should make your only objective “producing more” or “making more money,” even if you do so, consider the key results that would allow you to reach that objective. You will soon uncover numerous leading measures to monitor, evaluate, and adjust while in pursuit of your objective. Assign a deadline (usually quarterly) for achieving key results. This ensures that the team is engaged in actively reaching milestones and pursuing new goals as time progresses.
I hope I’ve convinced you that goal setting is a valuable and necessary part of being a business owner and achieving sustainable performance over time. Going forward, I hope you and your team take a thoughtful look at what you want to achieve, and then create a path that allows you to manage what you measure. But make sure it’s not just production.
1. Doerr J. Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs. New York, NY: Portfolio/Penguin; 2018.
Sina Hedayatnia, DMD, MBA, is a graduate of Harvard Dental and Harvard Business School. He currently practices in Northern Virginia. Reach him at email@example.com.