Episode 69 – How Dental Practices Hold On to Profits
“We have a wonderful cash flow business, yet we don’t hang on to the profits.” ~ Victoria Peterson
The average dentist has $25 million flow through their business during their career.
Dentistry really is a wonderful industry and creates a huge amount of cash flow. The reality is, most average dentists don’t see their share of the profits. Why?
There are so many ways a dental practice can leak money. So many ways.
It’s my passion to see every entrepreneurial dentist thriving with an Investment Grade Practice that they love to work in today, that will support their futures. And here’s what I want you to know: it’s not as hard as you might think to plug some of those holes that are bleeding away the hard-earned money from your dental practice.
Today, I am sharing with you a few practice optimization systems that you can do today that will allow you to patch up the money leaks in your practice so you can hold on to more of your profits, including:
- 5 questions to rank your practice’s systems
- How to use time and processes to build patient relationships
- Identifying – and patching – the 5 Money Leaks in your business
Hi doctor, Regan Robertson, CCO of Productive Dentist Academy here and have a question for you. Are you finding it hard to get your team aligned to your vision, but you know, you deserve growth just like everybody else? That’s why we’ve created the PDA productivity workshop. For nearly 20 years, PDA workshops have helped dentists just like you align their teams get control of scheduling, and create productive practices that they love walking into every day. Just imagine how you will feel when you know your schedule is productive, your systems are humming, and your team is aligned to your vision. It’s simple, but it’s not necessarily easy. We can help, visit productivedentist.com/workshop that’s productivedentist.com/workshop to secure your seats now.
Victoria Peterson 0:46
Let’s look into revenue cycle management. There’s so many ways you leak money, and so many ways to make money name as many as you can. I wish I could hear you so it’d be a fun game to play.
Welcome to Investment Grade Practices podcast where we believe private practice dentists deserve to get the lifestyle today while building an asset for tomorrow. Join your host, Victoria Peterson, to design the practice of your dreams and secure your financial independence. Let’s get started.
Victoria Peterson 1:24
Did you know that the average dentist working 25 years is going to have $25 million cash flow through their hands and yet they still can’t retire, you’re gonna hear me say this over and over again. It’s just my passion. We have such a wonderful cash flow business and yet we don’t hang on to the profits and there’s so many reasons why. Today we’re gonna go into the third block of building an Investment Grade Practice and that is practice optimization, optimizing the systems that help you close the money leaks and hang on to more of your money. So here’s your quiz for today, we got five questions, rank yourself quite five statements actually rank yourself one to five on these, are you ready? Number one, our schedule is templated for productivity, and our team is committed to hitting the goal. You’re at a one if you knew that you should be that way but you’re not you’re at a five is yes, we do have a template. In fact, it’s templated out six months from now and we keep rolling it out and the team has the goal. So that’s our first statement ours our schedule is templated for productivity, and our team is committed to hitting the goal. Number two, we review revenue cycle management and eliminate money leaks in the system. Number three, we’ve mapped the patient journey and understand each person’s role in creating exceptional experiences. Number four, our team is clinically kept calibrated to our diagnostic standards based on patient risk factors, and last but not least, we review our service mix at least twice a year, to ensure that we’re focusing on comprehensive care. Now there are a million and one practice KPIs I could have chosen for this piece of the scorecard for IGP. So let’s break these down. Scheduled templated productivity and our team is committed to hitting the goals. If you’ve attended a productivity workshop, you know that if you fill your major blocks, you’re at goal and that’s all you have to do. So if your goal is $5,000 a day, and you start an Invisalign case today, and that’s $5,000. Technically, that’s the only patient you need to see today. So what do you do with your team and what do you do with those extra rooms? Well, those are the days that you do the minor treatment, lots of minor treatment, the fillings, the things that the crown seats, the things that you just don’t have a place to put on other days. So scheduling to productivity really slows the practice down, gives you the time to be in relationship with patients and in good times, relationship marketing is the best marketing there is. In tough times when the economy is contracting and people are losing their jobs and they’re a little uncertain, relationship marketing is the only marketing that really gets people to say yes. So having the time, templating your schedule, so that you don’t appear rushed, that I am the only thing that’s important to you in this moment, that’s how your patients get committed to you and to their care. So it’s crucial enough demising the productivity over the practice. Let’s look into revenue cycle management, there’s so many ways you leak money, and so many ways to leak money, name as many as you can. I wish I could hear you. So be a fun game to play. Lead number, one call conversion, you spend a lot of money on marketing, the phone rings, we pick it up, and they say, “Do you take my insurance?” You say, “No,” and you hang up. That’s it, money down the drain. Instead of saying, “You know what, we have the ability to file for all the insurances, can you share with me your name,” you know, start a conversation, engage, get them in the door, then have that conversation about how they’re going to pay for their dentistry. So that’s money leak number one is called conversion. Are you converting at a high rate? Money leak number two, are you talking about financial options early? Because if they get to the operatory, and then they’re suddenly surprised and shocked by a big ticket item, and don’t know that you offer financial options, you shut down the conversation before it even begins. So be honest, you know, “Hey, we finance our refrigerators, why would we finance our dentistry, it’s expensive.” Recognize that, and I get it, it’s an investment, it will last me a lifetime. I had to chew with a daily for the next 60 years and all that good stuff, but when it comes down to that renew set of tires, I need to have the value for it. So that’s money leak number two is our patients not knowing upfront that we’ve got great financial options for nine out of 10 times we can fit it into their budget. Money leak number three, we don’t collect collectibles and deductibles and co-pay up front chasing down that ooh, that’s like resentment, money. Patients do not like to be that money, so get it upfront. Number four, when they skip the front desk, and they don’t pay for today’s visit, right, and you gotta go chase that down. Number five is when the EOB has come in, and we’ve got a small balance and you’re trying to collect on those. Now here’s the cool part is that technology has now caught up with the way consumers love to pay. So there are lots of integrated tools that work with your practice management system. There’s too many for me to name, but you should have an electronic payment portal. So it can come through your practice management software, it can come through your data analytics tool, it can come through third party financing tools like accept care and revenue well, and all of those things, you’ve got the tools in your practice, but have you taken the time to set them up? Think about the order in which you present financial options. Now the old way is really filled, filled with shame and I can tell you from my research, the only emotion where people say yes to care is when they feel confident and if something comes into that process and makes me embarrassed or ashamed or not feeling competent and here’s what the shame scenario sounds like, “Victoria, you’ve got two crowns that are breaking down, and we’re going to need to replace them, the new cavities are deep and you need some corporate fillings, it’s just a couple of crowns. It’s going to be $4,000 and Mary will get you scheduled,” and what you don’t know is that I may have just had some emergency in my family and I’ve already tapped in, you know, I needed a new roof or something happened. I’ve already tapped into my savings recently this year. So now as a patient, I’m sitting there going, “Man, I’ve already spent money I didn’t want to spend on house, now I’ve got to spend money on my teeth and what am I going to say. you know, do I have to do this now? Isn’t there a rinse I could do to slow down the decay?” And as clinicians, we get a little defensive when they say, “Look at Victoria, she has low Dental IQ. I thought she was smart, she just doesn’t care,” and you know what, get over yourself. It’s not about them at all, it’s about helping patients see how they can work it into their budget. So if we’re giving them a big number and say Mary’s going to help you with that, and it ends there. Now I’m stuck trying to figure this out myself. That’s a money leak. That’s a $4,000 money leak if it doesn’t come on, you’re on your schedule. So how can we frame that? No, we can say, “Victoria, I’m so glad you’re here. There. There are a couple of areas that we’re seeing new damage, if we don’t take care of this today, chances are that decay is going to tunnel right to the nerve of your tooth, you’ll need a root canal therapy and or possibly lose the tooth. So I want to go ahead and take care of it today while it’s still manageable and predictable. The fee on that is about $4,000 and we have financial options that can fit this into your budget. So whether you want to make small monthly payments over time, you want to pay upfront and receive a cash discount, or use your insurance as a down payment. I know that Mary can help you with that. What questions do you have?”
Victoria Peterson 10:34
When the clinical team can be that fluid with talking about finance you, you prevent that mom-against-dad, chase that lets the patient out the door. So anyway, we spent a lot of time here on number two, but you get what I mean with revenue cycle management, there’s lots of ways where money either doesn’t come in the door, the patient doesn’t come in the door, or we don’t convert, that cost is a lot of money and then there are spending leads. Now, do you have a system for tracking all of your supplies? Again, this is where technology can really help you out there are quite a few. I’m going to call them non-denominational softwares because they’re not dependent on the Big Three supply houses for participation. So you can, there are software’s that you have all the catalogs, you’ve got Paterson and Shine and Benco, and Midwest, all the catalogs are in the software’s, it’s one place, you can set up your routine orders, you can set up your specialty orders, you can track it, and it’s so much better than the paper systems that we’ve had before. So I’m gonna encourage you to check into supply management systems to really cut down on those money links a 2% savings there could add let me see spitball math, probably another $12,000, I’m not gonna say a month could probably add another $20,000 a year to your personal paycheck. So I think that’s worth looking at.
Victoria Peterson 12:08
Mapping the patient journey, we talked about that just a little bit in revenue cycle management, but in the revenue cycle management, it’s like what is physically happening? What is mechanically happening? In the patient journey, we’re thinking about how does the patient feel in every step of the way? Did you know there’s this rule called the threshold rule and if you walk into a room and you’re not recognized, within eight seconds, you begin to feel ignored and this is a super fun exercise to do with your team. Have someone sit at the front desk, and look down at the desk so that when your team is going to line up and come through the front door and just stand there and try to get that person’s attention ad they’re going to physically like mentally in their head start counting like one Mississippi, two Mississippi, three Mississippi, and they’re going to identify at what point do they start to get upset and at what point do they start feeling ignored. In some offices that I’ve done this that the front door is so close to the receptionist that you have two to three seconds to say hello, and others you have about eight, eight seconds is the max to say hello. Even better if you stand up and say hello and greet me by name. “Hello, Victoria. I’m so glad you’re here, man, you’re right on time.” “Hello, Victoria. I’m so glad you’re here. You’re a few minutes off schedule. We were worried.” Whatever it is, just acknowledge that I’m there and use my name. We’ll be right there as the beginning of the patient journey for that day. Here’s the fun fact, if you don’t get that right, patients oftentimes say no in the back and the clinical team is just totally befuddled. “Like, I thought everything went really well. Why aren’t they coming back?” You’ve got to elevate them up and make them feel cared for from the beginning and then hold that through every handoff throughout the experience, all the way through to the financials that we just talked about. A clinical calibration that’s a fun one, I love it. When I asked a new client, what’s your perio-therapy and lying down all the time? The answer is, “Well, that depends,” and I was like, “On what?” “Well, I’ve got three hygienists and one who was trained a long time ago and she’s kind of set in her ways. The other one, she’ll kind of go with the new things, but then it falls off, and then the third one is really into this oral systemic stuff.” I said, “So what’s your standard of care for period?” And they go, “It depends.” So that’s not a calibrated team. A calibrated team goes back to your philosophy of care and we talked about this and building the cultural Northstar. If you want to move in the same congruent direction, you have to get everybody at least in the neighborhood of the same clinical standards. So if bleeding and separation and bone loss means disease to you, it should mean disease to your hygienist, and we should be doing something about it. Conversely, your hygienist should know what your standards are, you know, when they see a hole in the tooth, are you going to do an inlay or onlay? A crown composite? How much bone loss, angular bone loss? What does it look like, functionally, what do I’m looking at for airways? All of these things need to be calibrated to standards that you set and, in my personal opinion, humble opinion, and an effort to lower patient’s risk factors so that when you repair the damage, you don’t have to come back and do it again, that I think is a secret a productive dentist is they attempt to do dentistry that will last a lifetime and that includes preventive care, which speaks to my former dental hygienist heart. Lastly, let’s look at our service mix twice a year to ensure we’re focusing on comprehensive care. This is really easy, you can either through Donatella, through your practice management system, you can run a production by a procedure code report and let’s say you think I do a lot of implants and you run it and you go, “Wow, we did two implants in the last six months.” So where did the focus go? What happened? You also can use these lists for reactivation. So I’ve got a couple of offices that run Invisalign days. So anybody that was treatment plan for Invisalign that didn’t accept care, twice a year, they’ll do an email blast, that says, “Hey, we’re running an Invisalign day. Here’s your $500 off, plus your retainer, plus some whitening, duh duh duh, that gets scheduled a day, we only have 20 slots, they booked alternately slots, and they have a great Invisalign day.” So these are some things I hope I’ve stimulated your thinking about practice optimization, all the things that I’m talking about, or what we call lead indicators. lead indicators are the behaviors of the things we do to put our systems in motion. So what do I do to put the system in motion, so that the lag indicators show up? So a lot of times in practice management, we talk about benchmarks for case acceptance and benchmarks for overhead and benchmarks for collections, and benchmarks for AR, all of those numbers are what we call lag indicators. They’re, they’re the end result, they’re the scorecard. I chose today to think of an optimization on terms that we can do, preemptively. We’re going to template the schedule, that’s a behavior that’s a lead indicator, is my schedule templated? Yes, then I stand a better chance of the lag indicator. Did we produce to production per hour? Have I set up my financial options, so that I prevent money leaks? If that’s a yes, then our AR is manageable. Have I looked at the drip patient journey and trained everybody in customer service? If I’ve done that, then I get five-star reviews. Is my team clinically calibrated to standards? If so, then buying diagnostics are high and that shows up in our KPIs. When we review our service mix, and we focus on the services that we want to show up, we focus on being comprehensive. When we do that training and calibration twice a year, then that shows up on our KPIs. So I hope you’ve enjoyed this episode of taking a look at practice management in a slightly different way. So that you can not only produce at a higher level, but you can collect it and have a whole lot more fun in the process. Thanks for joining.
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