Four ways to increase revenue
You will never substantially increase revenue by reducing expenses. Overhead control is important but not nearly as important as increasing revenue.
by Michael Kesner, DDS
You will never substantially increase revenue by reducing expenses. Overhead control is important but not nearly as important as increasing revenue. In fact, the best way to decrease overhead is to increase revenue. If you implement the following four guidelines, the increase in revenue will far exceed the increase in overhead. This, in turn, equates to profit.
Most of the time it is important that these guidelines be addressed in the order listed:
1. Increase your case acceptance rate. Most dentists have a case acceptance rate of 20% to 30%. This means that seven to eight out of 10 new patients each month are walking out the door without doing the dental treatment that was needed and recommended.
If you increased case acceptance rate to 60% to 70%, then you would double revenue on the same number of new patients.
How do you accomplish this? By making case presentation a "team event" as opposed to solely the doctor's responsibility. This method works better to inspire the patient to want the needed treatment. People will always find a way to pay for what they want, but not necessarily what they need.
Your case presentation should not be based upon teaching the patient dentistry. Patients decide to do dental treatment based on emotion, not education.
2. Increase your capacity to do more dentistry. The more dentistry you do per hour, the more revenue you will generate per hour. Increasing your capacity may include adding another treatment room, adding another hygiene room, adding more staff, or adding another dentist or hygienist.
You can also increase capacity to do more dentistry by increasing efficiency. By improving systems, you can create more time to do more dentistry. Examples include shortening room setup time, streamlining the sterilization process, or gaining speed on dental procedures through organization.
3. Increase your number of high profit procedures. Porcelain veneers, implants, endodontics, and crown and bridge are examples of procedures that typically have a higher profit margin. If you do not offer any of these services, you can get the necessary education to add these to your practice.
Remember that just because a service has a higher fee does not necessarily mean that it is profitable. If a procedure takes too much time and/or has too high of a cost to provide that service relative to the fee charged, then it is not profitable. For example, a root canal that takes you three hours to complete is probably not a profitable procedure.
4. Increase your number of new patients. You can increase the number of new patients by doing more internal and external marketing. It is important that you do the "right" kind of marketing (a topic for another day). I find that many dentists have ineffective marketing, thereby decreasing effectiveness and ROI.
Increasing the number of new patients is usually the first step most dentists want to take when their revenue is down. Doesn't it make more sense to fix the previous three categories first?
If you increased case acceptance rate first, then you would have more money to spend on marketing. This would also, in effect, decrease the marketing costs by increasing ROI.
By increasing capacity first, you could process and treat the increased number of new patients in a shorter amount of time. For instance, if your schedule feels fairly full with 25 new patients a month, then how are you going to handle 75 new patients a month?
Also, by increasing the number of high-profit procedures before increasing the number of new patients, you increase the amount of revenue generated per new patient.
What would happen if you only became 20% better in each of these four categories?
Your revenue would double! This is due to the "rule of 72." Since these four categories are inter-related, there is a compounding, synergistic effect in which the total is greater than the sum of the parts. This is how practices triple and quadruple revenue in a fairly short period of time.
Dr. Mike Kesner's practice ranks on the Inc. 5000 list as one of the fastest growing companies in America. He is author of the book "Multi-Million Dollar Dental Practice" and CEO of Quantum Leap Success in Dentistry. They teach more production, higher profits, and less stress. Contact him at DrKesner@QLSuccess.com.
Past DE Issues