“It was the best of times; it was the worst of times … , ” wrote author Charles Dickens in his classic novel, “A Tale of Two Cities.”
While it’s certainly not the worst of times for most healthcare practices (that honor likely went to 2020-2021), things could always be better, right? You’re likely still dealing with the impacts of rampant inflation and ongoing short staffing, among other things. Despite these setbacks, there’s clear opportunities to move your practice forward to improve both production and productivity to help you reach your financial goals.
It all goes back to numbers—the key performance indicators (KPIs) that determine whether your practice sinks or swims. Some metrics are more important and vital to the success of your practice than others.
We’ve outlined five crucial KPIs you can apply to keep costs at bay, increase your revenue, and optimize your practice’s production. Only by measuring your practice’s operations and performance can you make the adjustments necessary to increase appointment volume, gain efficiencies, and boost profitability.
1. Production Per Visit
Production per visit (PPV) is calculated by taking your gross production and dividing it by your clinical hours. Most practices see a 5 to 10% annual increase. You can improve your PPV score with the following tips:
- Increase the number of your daily appointment slots or adjusting office hours.
- Train staff to ask patients to book follow-up and preventive care appointments during check out.
- Don’t miss opportunities to promote practice special offers and treatment options before patients’ appointments by sending them patient education newsletters.
- Text or email patient pre-visit instructions to ensure they arrive prepared and on time for visits. These might include wayfinding directions to your office, avoid eating before the appointment, or information about special offers and treatments they can get during their appointment.
2. Patient Attrition & Visits Per Year
It’s inevitable that a certain percentage of your patients will go AWOL, and it’s often because they’ve switched practices. For dental practices, average attrition is around 17%. Put another way, if you have 2,500 active patients, you can expect to lose about 425 per year. And ignoring attrition can be costly. With the average lifetime value of a patient $12,000 to $15,000, just losing two patients can total millions of dollars in the long term for your practice.
You also want to keep tabs on your visits per year per patient to ensure they’re getting in for needed preventive and wellness care. These tips can help you limit attrition and improve recall:
- Match patient messaging to each individual’s communication preferences (text, email, or phone call) to reach patients reliably and more efficiently.
- Give patients the ease and convenience of self-service options like online appointment scheduling, real-time two-way texting, and telehealth video visits.
- Use a digital recall tool to automatically send notifications to patients who are overdue for a dental checkup, an annual physical, chronic care management, etc.
- Improve patient loyalty and satisfaction with better patient outreach. Best practices include sending personalized birthday messages and quarterly patient education newsletters with special offers, discounts, and other perks.
3. Collection Rates
You can calculate your collection rate by dividing your total collections by your total adjusted production. An average collection rate for dental practices is 91%. That means if you’re producing $60,000 per month, you’re losing an average of $5,400 per month ($65,000 per year) in uncollected revenue. By improving collection, you can minimize those losses and move your collection rate in a positive direction. Consider the following tactics:
- Take inventory of your current collection rate and set monthly or quarterly improvement goals.
- Tweak your collection policies and ensure your staff is well trained on guidelines and protocols. Provide each staff member with a quick-reference guide to help them better understand collection policies and expectations.
- Since texting can be one of the most effective ways to reach patients, remind patients about outstanding balances with text prompts. A text-to-pay tool automatically sends patients a secure link to make an online payment. They’ll appreciate an easier way to pay their bill and you’ll see an uptake in revenue collection.
4. Practice Profitability
Figure out your practice’s profit margin by multiplying total visits by production per visit multiplied by your collection rate and then subtract your overhead. The larger your profit margin, the more resources you have to upgrade technology, save funds for retirement, or add to the practice owner’s personal income. Though average net margins were 14.28% in Q4 of 2021, they fell to 5.82 in Q2 and 4.44% in Q3 of 2022 because of ongoing staff shortages and record inflation. Turn that around with these tips:
- Increase your per appointment revenue by combining treatments or procedures typically spread over several visits into a single appointment. It can also help you scale savings on things like team salaries, practice operations hours, and supply costs.
- Boost production with time-saving tools like recall notifications, patient newsletters, and batch messaging. A digital recall solution helps you get more patients back in the office for needed care and has been proven to generate an extra $95,000 annually in recall revenue.
- Supplement your revenue with a referral program that makes it a cinch for your happy patients to submit names. A patient referral tool lets you add “Refer a Friend” links to your practice website and newsletters to help pad your acquisition numbers.
Your practice’s productivity to a large extent hinges on your fill rate. Compute your fill rate by dividing your total number of appointment slots filled by your total number of slots available. Most primary care practices have a fill rate between 90 and 95%. Practices that see large numbers of same-day or urgent-care patients may have lower rates. Drive higher productivity and fill rates with the following:
- Reduce excess capacity in your schedule or reorganize your providers’ schedules to make better use of your appointment availability.
- Give patients easier self-service options to access an appointment. An online scheduling tool can help you fill vacancies, reduce the incoming call burden on your staff, and provide patients with a more streamlined and convenient method to book a visit without making a call.
Don’t just leave your practice’s success and profitability to chance. Learn and apply the metrics and KPIs that can help you make consistent, sustained improvements to keep your cost down, raise your revenue, and grow your practice.
Combine these KPIs with digital patient communications solutions that deliver automation and data measurement to increase your production, dial up your productivity, and help you maximize your profit margin.