5 Things to Watch to Prevent Profits Leaking From Your Practice

Here’s a big question for every dentist: How do you know how much your practice leaks profits?

Practices throughout the country suffer from leaking profits. No area of the practice is immune, and there are many. Here are the 5 biggest areas that typically lose profits:

1. Recare
2. Treatment enrollment and scheduling
3. Patient experience
4. Accounts receivable
5. Culture and leadership

Let’s go through each of these and, as we do, think about your practice and if you can say beyond a shadow of a doubt that you are following “best practices” in each area. Knowing you’re performing at your highest level versus thinking you’re performing at your highest level makes a world of difference.

Recare

On average, recare in a general practice loses about 25% of its profits. Most general practices overestimate their recare effectiveness and, because of that, miss leaks in their profits. And because recare drives not only hygiene production but treatment production, any leakage in production leads to leaky profits.

• Tip: Often patients are allowed to slip out of the office before being scheduled for their next appointment. Stop this practice. This is a no-brainer. Set their next recare visit for 4 to 6 months out. Put them on the schedule before they walk out the door.

Treatment Enrollment and Scheduling

Treatment enrollment and scheduling can change everything in a practice, so get these systems aligned well and tuned properly. Doing so can move a practice from being barely profitable to experiencing larger profits.

• Tip: When you enroll patients in treatment, there are 2 players. The first is the patient and what they want and the second is the doctor who sees what treatment the patient needs and when it should be done. The more these overlap, the higher the acceptance of treatments. It’s important to develop questioning and listening skills to really understand what the patient wants.
• Tip: To optimize scheduling, you must know the timing flow of the clinical staff for each treatment. Clarify this and scheduling starts to smooth out. Then more efficiencies can be added along with production goals.

Patient Experience

Patient experience, more than anything else, hides leaky areas in a practice. For example, when a patient doesn’t like an interaction in your practice, they become resistant to treatment plans and may take longer to pay. Often, patients simply walk away and go to a new dentist.

• Tip: Make the hospitality attitude part of the culture. Hospitality means that each contact, verbal exchange, text exchange, and email demonstrates how much you care. Every verbal exchange either builds up the relationship with the patient or diminishes it. You always want to be building up the relationship. Even the small interactions count.

Accounts Receivable

Accounts receivable (AR) leaks money except in the most well-run practices. For example, insurance payment delays and discounts and patient nonpayment or delayed payment clearly reduce on-time collections. To add to that, poor processes and poor leadership, management, and communication all contribute to out-of-control AR situations—and leaky profits.

It turns out these AR areas directly hack away at a doctor’s profits. Therefore, even an AR that’s “a little out of tune” can affect profits severely.

• Tip: Know your numbers. As a business owner, you have to know where you sit with outstanding accounts for both patients and insurance carriers. Then structure a project around this and get someone focused on the collection effort. This is not a once-every-6-months or once-every-12-months effort. It is a weekly effort. These are your business dollars at risk.

Culture and Leadership

Culture and leadership are undervalued. Both areas tend to be vastly underappreciated by practices, yet they affect profits more than anything else. Culture and leadership affect efficiencies, production, collections, and transition valuation in large ways, making them strategic in nature.

You can put the best processes in place and hire the most skilled people, but if you have a poor culture or leadership, your practice will leak profits like a sieve.

As a side note, did you know that an estimated 60% to 70% of dental practices and 70% of small businesses suffer from embezzlement, with an average take of more than $100,000 over many years? The fraud triangle, comprising mostly cultural and leadership issues and some process issues, defines this highly vulnerable situation in which practices often find themselves.

As management guru Peter Drucker once quipped, “Culture eats strategy for breakfast.” Once you align your culture, the practice turns into a team-driven practice of which most small businesses can only dream. In a well-aligned culture, dental assistants, hygienists, and those at the front desk constantly look to improve the practice. In addition, others hear about your excellent practice and want to come to work for you.

• Tip: This comes down to engaging your team to be their very best. When functioning at their best, your team members will make better choices for the practice. The first and best step to engaging them is showing them you care. Doctors, you actually must care, and you must get to know each of your team members. It’s amazing what this alone can do.

Time to optimize these leaky profit areas

If you successfully optimize these key areas, you have already gone a long way to stopping profits leaking at your practice. At Fortune Management we work with practices every day, from smaller, new practices to larger, more experienced ones looking to grow or transition, and we help them stop leaking profits. If you need some help plugging leaks at your practice, reach out to us. We’d be happy to help.