4.27.07 - Issue # 268 Forward This Newsletter To A Colleague

Nancy Caudill
Senior Consultant
McKenzie Management
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Quantity or Quality?

A McKenzie Management Case Study

Dr. Jerry Marks – Case Study #222

“I need more new patients!”, said  Dr. Marks who called McKenzie Management to see if he could “order” an additional 20 new patients per month.  We sure wish that we could fill such a request.  However, we do teach doctors and staff how to determine the number of new patients they really need.

Like many things in business, “more” is not always better.  Sometimes it is “quality” and not “quantity”.  Dr. Marks is a good example of this.

Practice statistics:

  • Practice 3 years old
  • Built the practice with Medicaid, PPOs and HMOs
  • Practice was seeing about 100 “new” patients per month
  • The doctor was spending almost 10% of his monthly net collections on marketing
  • Even though Fee Schedules were being posted that already illustrated a reduced production compared to the practice’s UCR fee, an additional 10% of gross production was still being written off.
  • 1 additional staff person was employed to manage the HMO and Medicaid pre-treatment estimates and claims

First, let’s determine the definition of “new patient”.  McKenzie Management’s definition of a new patient is someone that has been seen for a professional cleaning or perio maintenance appointment for the first time in the office.  Usually, this also means a patient that has been seen for a comprehensive exam, by the doctor, and then examined by the hygienist and placed into the recall system.  There are a few exceptions but we will use this definition for this example.

The reason for using this definition, opposed to any new patient, such as an emergency extraction, is that patients that go into the hygiene recall program contribute to the growth of the practice and patients that are seen only periodically for emergency treatment do not.  If you recall from previous articles, your practice grows by increasing the number of hygiene days, NOT by increasing the number of “new” patients that are seen.

Additional practice statistics relative to the practice growth:

  • Dr. Marks’ practice only had a 50% retention rate.
  • The number of new “hygiene” patients was only 50-60 patients per month.  The rest of his “new” patients were emergency only or were seen for restorative procedures, but never seen for professional cleanings or periodontal treatment and subsequent perio maintenance appointments.
  • After 3 months, he added a hygienist for 3 days a week and never increased his hygiene days over the past 3 years.

This information told me that even though he was seeing 100 “new” patients a month, the practice was not growing!  See, for those of you who thought you would be thrilled with 100 new patients a month, this means nothing relative to practice growth.  Why?  It is all about “quality and not quantity”.

After spending the first two days with Dr. Marks, we discussed his practice strategies and philosophy. 

New practice recommendations:

  • Consider not participating in state-funded programs
  • Consider not participating in HMO’s
  • Reduce the number of PPOs he participated in slowly and methodically
  • Improve his internal marketing
  • Seek professional assistance for external marketing
  • Create a practice identity and brand it
  • Set a new goal of 25 new Comprehensive Exam patients per month
  • Improve his patient retention to 90%
  • Increase the number of hygiene days as a result of improved retention

It may appear that these goals are unrealistic, but when I returned to his office less than 12 months later, he had achieved all of these and was reducing his PPO participation.

Now you are asking ….”How much money did he lose going through these changes?”  As these changes took place, there were also indirect changes that took place, such as a reduced number of staff, shorter office hours (no weekends and evenings), more customer service, and much less stress!

He also added an additional 2.5 days of hygiene per week and took more vacation time.  I would call this working “smarter and not harder”, wouldn’t you?  Let’s look at the following:

New practice statistics:

  • 6 days of hygiene per week.  This results in “passive net income” for Dr. Marks of almost $100,000 a year, not including 50% of his restorative production that comes from seeing his hygiene patients for their periodic exams.
  • Averaging 26 new “comprehensive” patients a month that are either participating in one of only 3 PPO plans which he still chooses to participate with or the patients accept his UCR fees.  (He still accepts the assignment of benefits as a courtesy to his patients but only participates in 3 PPOs).
  • His monthly “net” collections are only down about 10% because of the following:
    • Each patient accepts more treatment
    • Hygiene production has been increased
    • Overhead has been reduced

Dr. Marks is on schedule to net produce and collect more over the next 12 months than he did over the past 24 months on average.  By applying McKenzie Management’s business systems and maintaining his awareness of how his practice is performing by reviewing monthly statistics, the day-to-day activities of the practice are not a concern anymore.  Dr. Marks has learned how to “keep his finger on the pulse of the practice” as well as make sense of his monthly P&L that he receives from his accountant to determine if his overhead goals are being met.

Now…..I ask you.  What is more important?  Quantity or Quality?  Dr. Marks will tell you that 100 “new” patients a month did not get him where he is now or where he will be next year.  But, the 25 new “comprehensive” patients a month will!

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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