Be Proactive for Financial Success in 2017 and Beyond
As I write this, I’m on a plane heading back to my new home in Ohio. I’ve spent the last week in a dental practice, along with one of my consultants, in what I’ll call Anytown USA. While I was waiting to board the plane home, I decided to read The Wall Street Journal and reflect on the country’s new president-elect and the unknown possibility of change.
Over the last three decades, I’ve witnessed the various economic highs and lows that come with a new president and have learned that if you don’t know how new policies will affect your business, and thus do nothing to prepare, the change could be disastrous. You may not be able to directly impact what will happen to taxes, healthcare, etc., but you do have the ability to make sure you’re not a financial casualty, as long as you choose to be proactive. If you’re not, well, make sure you have your water wings ready and waiting, because the sea of red ink may just carry you away.
The dentist whose practice I visited last week is being proactive. This is a general dentist who has been practicing for nearly 20 years. Last year, his practice revenues came in at a little more than $1 million.
When he called me, he said he was worried about his recall system and just felt like something was off. He was right, and trusting his instincts led him to make that initial phone call to McKenzie Management for help. And it’s a good thing, because while he knew the practice was having problems, he had no idea just how bad those problems really were.
Let’s start with his patient retention rates. Over the past 13 years, nearly 8000 patients visited his practice. Not bad, right? Unfortunately, only 1194 remained active. If you’ve done the math, you know that’s an 85% patient loss! Ouch. From January through May, he had 2267 patient charts in the file yet barely half were active, which translates to a 53% patient retention rate.
In the first five months of 2016, this doctor treated 20 new patients a month. The problem? Forty patients left the practice every 30 days. In fact, the loss of patients DOUBLED in the first five months of the year as compared to the previous year. And the carnage didn’t stop there.
The unscheduled treatment plan report revealed an average of $86,000 a month in lost revenue in 2016 versus $42,000 a month in 2015, another figure that DOUBLED in the first five months of this year.
While these numbers are more than a little discouraging, this doctor didn’t sit back and ignore the situation. He may not have known exactly where the shortcomings were, but he made an effort to find out. He contacted us for help and now we have a plan to get his practice back on track.
With the proper training, we anticipate his practice will begin capturing a minimum of 75% of unscheduled treatment within the next few months, providing an increased revenue potential of $65,000 per month.
In reviewing the hygiene department, we found its current potential for appointments is 1565 a year. However, hygiene only actually treated 1060 patients. That’s a loss of 505 appointments, which is 3.1 openings per day for two hygienists and a lost revenue potential of $215,036 per year. We also found 219 past due recall patients. Based on two appointments per year, this represents an additional $77,964 a year in potential revenue opportunities. We project that with some system corrections, the doctor can make significant income gains in this area. Yes, things are looking up for this doctor – but the work doesn’t stop there.
Hygiene produced a dismal 6.4% of perio production. Why? Thorough assessments, patient education, scripting and communication are all lacking in this practice. Once the dentist puts all this in place, however, he’ll add $40,000 a month in revenue potential.
The practice collected 98% of production last year and so far this year BUT accounts receivable over 90 days are only at 35%! Not great, but with training and system improvements the practice is looking at retrieving another $20,000 per month.
And he thought he just had a recall issue.
Clearly the practice needs to tighten key systems. Improvements are also necessary in employee training, organization and communication. This doctor is very fortunate because his team has a sincere desire to improve in 2017. They’re genuinely motivated and want to do their part to turn this struggling practice into a thriving practice.
As this example illustrates, you can’t control the economy at large but you do have powerful influence over your own financial situation. The end of the year is a mere few weeks away, and the decisions you make today will determine whether you look at the year that was and count it as one of your worst, or one that tested you and your practice to become your best.
Need some help getting back on track? Give me a call 877-777-6151 and I’ll be happy to perform a baseline analysis on your practice, complimentary. Rather than waiting for the government’s next economic stimulus package, create your own! It’s just a phone call away.
Next week: Thinking about hiring a new team member in 2017? Read this first.
For additional information on this topic and more, visit my blog: The Lighter Side
Interested in speaking to me about your practice concerns? Email email@example.com
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