Do you know when your slowest time of year is and your busiest time? Do you know what your collections rate is every month? To keep your practice moving in the right direction there are important numbers to know and look at every day.
On this episode of the Business of Dentistry podcast I share what those numbers are, how I look at them daily, weekly, monthly and yearly to make sure my practice is on track – and how you can do the same.
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There are a few primary areas I make a point of checking regularly: production, collections, adjustments and accounts receivables. My staff pulls these numbers for me on a daily basis because I believe it’s important to know if your business is growing, stagnating or declining.
I set a goal for my practice’s growth every year and the only way I know if we’re on pace to reach that goal is by looking at each of these areas.
The first area to know your numbers in is production or what is being charged for the daily work done in your practice. Once you know that you can set goals for your practice, which is what I do.
For example if my growth goal for the practice is 5% for this year I will look at productivity from last year. I’ll take the total days worked and divide productivity by the number of days worked. Next I will look at potential days to work this year and the number we need to hit. From there I work backwards to determine the monthly goal, then the weekly then the daily goals.
Next is collections or the actual money that has come in that day either through in person payments or the mail. To me this is the most important number to look at because you use this to pay bills, your staff, your own salary, equipment, technology, and to generally cover your overhead and generate a profit. So you need to know your collections numbers on a daily, weekly, yearly basis – and how they compare with previous years.
Our in-house rate is about 95%, and yours should be at least 88%. My office ensures this number stays high by collecting co-pays upfront, patient portions are paid ahead of time and insurance is verified on the day of surgery or a procedure. It’s been my experience that it is easier to collect payments before services are rendered versus waiting for the patient to pay the balance later!
Third is adjustments, or the amounts you are writing off. This number can include any charity donations you make, any cash discounts you give or other professional discounts as well as any insurance company write-offs. If you add adjustments and collections you should be near 100%.
And finally is accounts receivables, or the amount of money that you are waiting to be paid. The idea here is to keep this amount low – I like mine to be less than 1.5x the monthly collections. I keep my numbers down here by having patients pay their portion ahead of time and not billing them after services have been rendered.
Those are the four areas I routinely look at on a daily, weekly, monthly and yearly basis. My challenge to you is to do the same: what are your numbers telling you? Is your practice growing? If so do you know why?
If it’s declining or plateauing do you also know why? After you listen to today’s episode of the Business of Dentistry podcast I’d love to hear what your numbers are telling you!