Over the last four years, approximately 75 percent of dental practices have experienced a drop in production, according to a study conducted by the Levin Group Data Center. While some of this lost production can be attributed to the economic downturn felt by millions of families across the U.S. due to the financial crisis of the late 2000s – a 2013 Gallup poll found that 3 out of 10 Americans skip medical care due to cost during times of recession, while a Consumer Reports survey published the same year found that 45 percent of Americans skip out on medical care and prescriptions due to costs – the majority of this lost business is due to a number of changes that are currently reshaping the dental profession.
Dental practices now see fewer new patients walk through their door than ever before, case acceptance rates have dropped among existing patients, and reduced insurance reimbursements have made maintaining profitability problematic for many private practices.
To compete in this changing landscape, dental practices can no longer function without a proven business model that provides them the tools needed to navigate these new challenges. Simply trying to wait out the current downturn experienced by the dental industry is a losing proposition for any practice looking to keep its doors open. Instead, dental practices need to take proactive action that will help increase profitability and production.
A dental practice is an incredibly complex series of interconnected pieces that all need to work in harmony for a practice to maintain profitability. The front office needs to ably handle patient support, insurance claims, collections, scheduling, reporting and marketing, while the clinical side of the practice handles the responsibilities of hygiene care, restorative work, equipment maintenance and maintaining stocked supplies. Overseeing all of this, the business component of a practice needs to consider overhead, fee analysis and practice optimization when trying to determine overall profitability.
At the heart of any practice, however, remains the patient. That’s why at Practice Analytics, we have developed ways to closely monitor the Production Cycle in order to measure performance and accountability in any practice.
The Production Cycle begins at the hygiene appointment. At the moment when a patient finally sits in the chair, a practice must begin to measure several factors to determine production. How long does it take to complete each hygiene appointment? How many hygiene appointments does a practice have scheduled in office each month? During that hour with a patient, how much does a dental hygienist actually produce? What overall percentage of total production is spent on hygiene rather than say restoration or cosmetic procedures?
Following a hygiene appointment, two possible outcomes should occur from any one patient. First, no matter the patients’ overall oral health, the front office should always set the hygiene appointment, whether it be for another regular hygiene appointment or a possible periodontal related appointment. Second, if the patient suffers from any of a number of oral health concerns, a treatment plan is created leading patients to restorative work.
In either outcome, the patient is scheduled to return to hygiene in coming months. When the patient returns, the outcomes are the same. There may not be restorative needs at this point, but the patient is then scheduled for their next hygiene appointment. The cycle continues with the hopes that every patient returns for the upcoming hygiene appointment.
Industry standards suggest practices lose 10 to 15 percent of their patients annually. According to the Production Cycle, if that were the case, the practice would eventually have no patients left to treat. However, new patients regularly enter the hygiene schedule to potentially make up the lost production of those patients who have left. Those new patients then continue through the Production Cycle generating additional production. For most offices, it is a challenge to balance between new patients coming in and patients becoming inactive and falling off the schedule. Monitoring the Production Cycle closely becomes hugely important to managing growth at the practice.
Driving Production Within the Cycle
The Production Cycle is a complex system to monitor. Practices must understand how production is created throughout the cycle in order to identify what to monitor. Beginning with Hygiene, to determine how Total Hygiene Production is created, we break down how productive a hygienist is given how much time they spend with their patients. Hence, the Hygiene productivity, as measured on an hourly basis, multiplied by the number of hours patients are treated by a hygienist yields the Total Hygiene Production.
When determining the Total Restorative Production, a practice must first look at their average treatment plan per exam. For problem X, a practice recommends treatment plan Y. But to gauge productivity, a practice needs to know how much of that treatment plan is actually accepted and completed by the patient. Case Acceptance, or how much of a proposed treatment plan a patient accepts, has a variety of factors, including cost, comfort with the treatment plan, and insurance coverage. Total Restorative Production is the byproduct of the Average Treatment Plan, Case Acceptance and the number of Exams.
Practice Analytics then combines the data collected from Total Hygiene Production + Total Restorative Production to determine Total Office Production. Understanding how production is created in the Production Cycle not only identifies what to monitor, but also allows practices to see into the future and predict production.
Starting with the hygiene appointment and using the production data collected, we can define the three driving factors behind the Production Cycle: Utilization, Productivity and Future Production.
Production Drivers: Utilization
As with any business, how a dental practice utilizes its resources can greatly determine overall production. Since the resources of a dental practice revolve around patient care, the biggest constraint against production is the number of chairs available. A dental practice that has access to an unlimited number of new patients is still limited in its production by how successfully it utilizes the number of available chairs.
To determine utilization, we use the following metric for analyzing both hygiene and restorative chair utilization: Total Patient Time ÷ Available Chair Time = Utilization. So, for example, scheduling 36 patient hours into 40 available chair hours will result in a 90 percent utilization of available resources. Obviously the closer a practice comes to utilizing 100 percent of its available resources, the higher its profitability.
Production Drivers: Productivity
Once a practice determines its resources, the next question becomes how to maximize the highest amount of production from every available patient hour and what obstacles must be overcome to ensure peak productivity.
When examining hygiene productivity, some main drivers like prophy, periodontal production, fluoride and even products become important to watch. Conversely, for restorative productivity, some main drivers include the mix of procedures performed; the percentage of production related to crowns, implants, and other specialty procedures; and what percentage of treatment cases a practice refers out.
Overall, productivity serves as a function of treatment planning and case acceptance. While a practice can only treat the needs that walk into the office, productivity relies heavily on movement in case acceptance.
Production Drivers: Future Production
When trying to determine what future production opportunities exist, a practice needs to examine several available factors including things like case acceptance, hygiene recall rate, retention rate and perio diagnosis.
Once again, since patients drive every dental practice, increasing case acceptance rates can have the greatest single impact on overall future production. Even marginal improvements in case acceptance rates can pay significant dividends in driving production, as just a 1 percent increase in case acceptance rates can lead to an average improvement of 3 to 7 percent in overall production.
The importance of an effective business model that improves office production cannot be underestimated. The scarcity of new patients and increased competitiveness within the dental industry has made running a successful practice more challenging than ever. Practices the lack the focus and commitment needed to survive within the changing landscape of the dental industry will have a difficult time competing with the competition. At Practice Analytics, we can offer you the tools and resources necessary to take your dental practice to the next level by improving production and profitability.