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Practice Check-up notes Calgary'10 - Calgary District Dental Society

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Practice Check-up notes Calgary'10 - Calgary District Dental Society Powered By Docstoc
					An Effective
Dental Practice
Performance
Check-up
 H. Jack Stockton, DMD, CFP, MBA, FICD
 Box 478
 St. Pierre-Jolys, MB R0A 1V0

 Phone: (204) 433-3292
 Email: jack_stockton@umanitoba.ca
Practice Performance
          vs
  Practice Success
   Practice performance is measured
    by comparing your practice to
    industry norms.
   Practice success is achieving your
    personal goals.
   You don’t have to “keep up with the
    Jones” to be successful.

           H. J. STOCKTON                 2
    Performance Measures
    to Be Discussed
   Revenue data
   Expense data
   Return on investment
   Patients/new patients data
   Recall system effectiveness
   Accounts receivable control


          H. J. STOCKTON          3
    Revenue Data
   G.P. Gross billings vary significantly
    depending on:
     Type of practice – with or without
      hygienists/associates.
     Regional variations.

     Dentist’s age/years since graduation.




             H. J. STOCKTON                  4
Revenue Mix
   Average AB mix for family practice
    with hygienist(s):
     Dentist(s) =         62%
     Lab =                 8%
     Hygiene/CDA =        30%

   But, depends on type of practice:
     Preventive vs restorative
     Children vs adults




          H. J. STOCKTON                 5
Expense Data
   Wide variations in overhead.
   G.P. total overhead averages 60-
    65%.
   Operating overhead % (excludes
    financing and depreciation) is a
    more useful performance indicator.
   <55% operating overhead is good.
   Specialty endo & O.S. practice
    overheads are significantly lower.


          H. J. STOCKTON                 6
Expense Data (cont’d)
   Use managerial accounting and
    divide expenses into fixed and
    variable
   Have a separate category for staff
    wages, the largest expense -
    (mostly fixed, some variable)
   Next 3 largest expenses are:
     Lab (variable)
     Dental supplies (variable)

     Rent (fixed)


          H. J. STOCKTON                 7
Expense Data (cont’d)
   G.P. averages (as % of revenue):
     Staff wages 20-32%
     Lab 7-10%

     Dental supplies 6-9%

     Rent 5-6%

     All other operating expenses 10-13%




          H. J. STOCKTON               8
        Staff Wages
   To assess properly, must exclude
    dentists’ compensation & adjust family
    member’s wages to market.
   Average staff payroll for G.P. Practices is
    25-27% of revenue.
   Normal variation can be 18-35%,
    depending on revenue mix.
   Expect staff payroll % to be higher with
    more hygiene and less lab billings.

                 H. J. STOCKTON               9
       Staff Wages
   Refer to ADA&C Practice Management
    Manual for expected staff wages for
    different revenue mixes.




              H. J. STOCKTON          10
Return on Investment

   Measure of profitability.
   Excellent indicator of practice
    efficiency
   Two measures
     Return on assets (most useful)
     Return on equity




           H. J. STOCKTON              11
    Return on Investment
            (ROI)
   An owner-operator dentist should
    be remunerated in 3 ways:
    1.   For professional dental services
    2.   For management skill & effort
    3.   For capital investment in practice
         (ROI)



            H. J. STOCKTON                12
Return on Investment

Reported practice net income (adjusted)

less, Professional remuneration
less, Management remuneration
--------------------------------------------
Return on investment (ROI)



            H. J. STOCKTON                     13
Patients/New Patients Data
   (Urban GP Practices)

   Average no. of “active” patients
    (seen within 2 yrs.) = 1,200 – 1,800
   Average no. of “regular” patients
    (seen within 1 yr.) = 850 – 1,300
   Average no. of new patient exams
    per month = 12 - 18



             H. J. STOCKTON                14
        Recall System
    Performance Indicators
         (Urban GP Practices)
   Average no. of recalls per month
    = 90 – 120 per full-time dentist.
   AB hygienist billings (excluding exams)
    average ~ 30% of gross.
   Average % of patients on regular recall
    is only 50-60% of total patient base.


              H. J. STOCKTON             15
          Recall System
      Efficiency Calculation
     (% of patients on regular recall)

= Average recall frequency X no. of recalls/mo.
         Total no. of active patients




                    H. J. STOCKTON                16
Accounts Receivable Control
     Average A/R 6-8% of annual gross
      (3-4 weeks billings)
     Average bad debts ~ 1% of annual
      gross
     Average accounts over 90 days
      ~ 15% of A/R.



              H. J. STOCKTON             17
Other Useful Data to Monitor
       Missed/cancelled/open appointments.
       Sources of new patient referrals.
           Patient referrals
           Staff referrals
           Other professionals’ referrals
           Advertising
           Location
           Other sources
       Re-treatment costs (especially with
        associates).

                 H. J. STOCKTON               18
     Solutions to Revenue Problems
1.    Add staff/dentists (if saturated)
2.    Marketing
        Internal
        External
3.    Improve recall system/patient retention
4.    Improve diagnosis and treatment planning
5.    Improve case presentation/acceptance




                          H. J. STOCKTON         19
Solutions to Revenue Problems
                        (continued)

6.    Improve clinical ability
         Range of skills
         Efficiency
7.    Improve appointment book control
8.    Improve productive capacity of facility
9.    Improve staff selection/management
10.   Raise fees
11.   Relocation (if unlikely to increase revenue)


                            H. J. STOCKTON           20

				
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