By Roger P. Levin, DDS
Then, almost overnight, the landscape changed drastically. The Great Recession stunned the world economy, and even dentistry -- historically able to bounce back quickly from such downturns -- lost its momentum. Patients, as consumers, either did lose or feared losing income. Many put oral health care spending on hold, and others became extremely cautious about how they spent their money. In macroeconomic terms, the law of supply and demand put severe financial pressure on countless dental practices across the country. Demand -- in the form of patients and potential production -- declined, while the supply of dentists increased with more new dental school graduates and fewer dentists able to afford retirement.
Numbers from the Levin Group Data Center™ tell the story. For example, 75% of dental practices -- three out of every four in the country -- either failed to increase production or actually declined in the last five years.
There are, however, other numbers that can play a key role in turning around a struggling practice and increasing production beyond prerecession levels.
Numbers as targets: Tools for growth
In our work with tens of thousands of practices, Levin Group has developed a comprehensive set of 20 to 25 performance targets that any practice can use to stimulate increased production, even in this tough new dental economy. These include:
- Keep 98% of all patients scheduled at all times
- Increase production by 18% in 12 months
- Maintain overhead at 59% or less (This is the GP target. It's different for each specialty.)
- Collect 99% of all money owed to the practice
- Increase average production per new patient by 50%
- Increase hygiene production by $100,000 in 12 months
- Close 90% of all cases presented
- Increase the dollar amount of patient financing each year
- Reduce no-shows and last-minute cancellations to less than 1%
- Identify periodontal disease in 40% of all patients through clinical diagnosis
- Get at least one referral per year from 40% to 60% of patients
- Create an internal marketing program with at least 15 strategies functioning together
- Reactivate 85% of inactive patients who have not moved or passed away
- Motivate 80% of new patients to refer their entire families
Other performance targets relate to insurance, inventory control, laboratory issues, and so on.
Which targets a practice chooses to focus on depends on the practice owner's goals, and the specific business conditions that are limiting growth.
The targets established by a practice not only provide benchmarks for practice performance, but also motivate the doctor and staff. For example, if the practice team sees that only 25% of current patients are referring new patients, i.e., they are on track to fall short of their 40% to 60% target by year-end, they will ask themselves such questions as what are we doing wrong, what's working, and why? What else can we do to encourage these referrals? This is a natural reaction among team members, and it works to great advantage for practice leaders who have learned the motivational value of setting and monitoring targets.
Management by the numbers
Most of the dental and nondental CEOs I know talk numbers fluently. They have learned the power of targets and use them with great skill. When a corporate leader makes a decision, sets a new course, implements an innovation, or gives an employee responsibility for moving the company forward, he or she always sets measurable, numeric targets with deadlines to gauge success. When subordinates report to the CEO, they know that numbers, not mere words, must be front and center.
This is similar to a doctor evaluating a patient's health at an annual physical. In addition to observing the patient and asking questions, numbers must also be generated -- for blood pressure, cholesterol, blood glucose, etc. By the same token, when a dental practice is in poor business health, the diagnosis will be found in the numbers. More important, its recovery will be measured and driven by translating those same goals into numerical targets.
To use targets as performance drivers, dentists should follow these steps:
1. Choose a set of targets
Identify 20 to 25 measurable, numerical targets such as those listed previously, plus others, that can have a direct and significant bearing on practice success. There is no single best set of targets, because each practice has its own unique challenges and opportunities.
2. Assign responsibility for each target
Every target must be "owned" by the doctor or a staff member. Practice leaders obviously shoulder ultimate responsibility for practice performance. However, because delegation plays a major role in increasing production, most target responsibilities should be distributed among team members. For example, an internal marketing coordinator would be tasked with reaching a patient referral target. An office manager might be the best person to address the overhead target, while a hygienist would be the logical choice for increasing hygiene production.
3. Provide training as needed
As a matter of course, well-run dental practices have staff training programs in place. Additional training may also be required to prepare the team for target-driven performance. When introducing and assigning targets, the dentist should objectively evaluate team members' skills. By doing so, the doctor can identify gaps that would limit the team member's ability to meet the assigned targets.
4. Monitor progress and review as a team
The best way to track targets is at a two-hour meeting of the entire staff every month, which Levin Group calls the Monthly Business Review™. Team members report on the numbers for which they are responsible. If the practice is on track to meet a target, there is no need for further discussion. If it appears that a target will not be met at the current rate of progress, the group can brainstorm ways to improve performance in the targeted area. This not only leads to innovative solutions, but also helps give the team a sense of common purpose and mutual support. Everyone must understand that the purpose is to solve problems, not assign blame.
5. Reach outside for innovative solutions
In cases where the team cannot get the numbers moving in the right direction, the practice owner should be prepared to look for innovative answers from external sources. Though dental practices are highly specialized businesses, viable solutions can often be found in management articles and books. Other excellent sources of ideas are seminars and other types of presentations that concentrate on nonclinical aspects of running a dental practice. Finally, to solve deep-seated performance problems or achieve positive results more quickly, doctors should consult with outside dental business experts.
How targets lead to innovations … and growth
Imagine a practice team having trouble reaching the first target on the list of examples -- Keep 98% of all patients scheduled at all times. In the first month of monitoring targets, the scheduling coordinator reports that only 84% of the practice's patients are currently scheduled. In the new dental economy, being nice to patients no longer guarantees they will remain active in the practice. Levin Group has taught many of its clients two innovative techniques to raise this number.
First is the One Day Rule, which involves calling and scheduling patients when they are just one day overdue. Note that the rule calls for more than just placing a call and leaving a message. The objective is to schedule the patient. The One-Day Rule often works by itself, but if it fails, the front desk coordinator initiates the second technique -- the Nine Week Follow-Up Process. This includes a call every week for three weeks, followed by an email every week for three weeks, concluding with a letter every week for three weeks. Keep in mind that all these communications should be in terms of the practice's concern for the patient's well-being.
At a time when dental practices must become more businesslike, one of the most important strategies is the use of targets to drive growth. By selecting the right performance targets, assigning responsibility to staff members, training, and reviewing progress at Monthly Business Reviews, even declining practices can begin to post excellent numbers.
To learn how to run a more profitable, efficient, and satisfying practice, come to Dr. Levin's upcoming seminar "Peak or Valley – Where Is Your Production Headed?" Pick a seminar location that fits your schedule at levingroup.com/gpseminars.
More by Roger P. Levin, DDS:
- 4 ways to improve communication with specialty dental practices
- Dental case acceptance: The growing importance of follow-up
- You owe your patients a standard of care -- you owe yourself a standard of living