Tips: Less New Patients = Lots Less Revenue

Nancy Caudill
Senior Consultant
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Less New Patients = Lots Less Revenue

Dr. Guy Gregory – Case Study #321

Dr. Gregory is a client of McKenzie Management and has experienced significant growth in his practice over the past 12 months. At the same time, due to the economic downturn and the effect it is having on his new patient numbers, he isn’t as productive now as he was 8-9 months ago. He wanted to know why. Let’s see what is happening.

Dr. Gregory’s practice statistics before MM in 2008:

$75,000/mo in collections
Doctor producing $4,750/day in gross production
Hygienists averaging $1,750/day with an assistant
25 New Comprehensive Patients/mo
Collecting 94% of net production

Improved systems and training after MM during the first six months of 2009:

Collections increased 34%
Doctor’s daily average increased 28% to $6,080
Hygienists stopped carrying the expense of an assistant and still exceeded their new goal of $1,600 per day
New patients increased to 29/month
Now collecting 109% of net production

So, you may be wondering: “Wow – that is great! What is the problem?” Let’s view the statistics during the last five months of 2009:

Collections are up only 4%
Doctor’s daily average increased only 1%
Hygienists experienced a 4% decrease in daily production
New patients fell off by 26% compared to 2008
The Schedule Coordinator is still collecting 109% (that’s the good news) – but she is still collecting old debt from 2008

What Happened?
After Dr. Gregory’s consultation, he learned how to improve his treatment recommendations to his patients. As a result, for the next six months all his new patients as well as his hygiene patients were saying “yes” to treatment. This increased his production and collections significantly. As these same patients returned for their subsequent professional cleaning or periodontal maintenance appointments with the hygienists, there was no additional treatment to be diagnosed. It had all been treated during the previous six months!

Due to a lack of marketing protocols, the practice’s number of new patients also dropped off significantly. Was this due to the economy? I am sure that this didn’t help any, but without a consistent marketing plan to bring in new patients, eventually all of the patients’ needs will be addressed.

Fortunately, the hygiene department has only experienced a slight decline in production because hygiene needs are repetitive and ever-revolving. This is one of many reasons why your hygiene department is so valuable to you; it provides passive income that is dependable, as long as there is a recall system in place that is retaining 95% of your hygiene patients.

Why New Patients Are So Important
As in this illustration with Dr. Gregory, 50% of a doctor’s production comes from the hygiene department during exams, and the rest comes from treatment needed by new patients. Once all the treatment plans are completed for the existing patients, the only treatment that remains is for emergency patients and new patients. If the number of new patients is less than 20-25 per month on average per doctor, doctor production is going to decline compared to the practice production when it was closer to 30. Dr. Gregory saw 11 less new patients per month compared to the 29 that he was averaging the first six months of 2009, and he felt the effects.

Another example of what happens when there are fewer new patients in a dental office would be that of a “mature” practice. Over the years, all the existing patients have had all their treatment completed. Without a healthy number of new patients, it is the hygiene department that keeps the practice alive. Again, “mature” doctors feel that they don’t need to advertise and grow their practice. However, when it comes time to sell, the numbers will not illustrate any significant growth and maybe even some decline. These statistics will not be favorable when establishing a selling price for the practice.

Market - Market - Market
Dr. Gregory invested 3% of his collections into a direct marketing campaign with a well-respected national company that specializes in dentistry. He understands that it is not a “one-shot” deal. Marketing must be repetitive, and meet as many needs of the potential patients as possible to reap positive results. It is a major investment but it is also necessary when he took note of the decline in new patients.

Learn a lesson from Dr. Gregory. Take action - don’t wait around until your doctor chairs are empty and you have cut the number of working days to 3 instead of the usual 4 because you don’t have patients.

If you would like more information on how McKenzie's Practice Enrichment Programs can help you IMPLEMENT proven strategies, email info@mckenziemgmt.com.

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