Dental Success

What is the customer acquisition cost for a dentist?

2011-03-05T19:50:00.001-08:00

See my answer on Quora: http://www.quora.com/What-is-the-customer-acquisition-cost-for-a-dentist.

A Dentist's Experience with Groupon - Preparing for the Deal

2010-11-13T09:44:00.000-08:00

The popularity of daily deal coupon sites like Groupon has increased dramatically over the last year. The consumer gets a discount, Groupon gets a cut of the offer price, reportedly around 50%, and the business offering the deal gets more customers. But recent articles such as Is Groupon Good for Small Business in the New York Times question whether the benefit of more customers outweighs the cost to the small business. The products or services offered in the deal are deeply discounted after all. Further, the dramatic increase in customer traffic may be more than the offering business can handle.

I work with a dentist in Grand Rapids, Michigan who decided to gamble and offer a Groupon for dental services. Actually, we put quite a bit of thought into the decision to do a Groupon. We considered internal costs, the value of new patients, the likelihood of deal buyers deciding to become regular patients, the ability to handle a large number of patients, some of the sticky points of offering health care services to patients who may not be appropriate candidates for the services included in the deal, and more. We answered our questions as best we could and worked with Groupon to structure the offer in a way that would reduce the potential for problems, but at the end of the day, we still faced a number of unknowns. The endeavor was in fact a gamble, but we believed it to be a smart gamble.

We capped the number of Groupons at 500, but anything close to 500 was a scary number. We could comfortably accomodate within the current practice schedule only about 150 Groupon patients. To prepare for the possibility of more than 150 Groupon patients, we identified some additional days we could open the practice if needed.

As I write, the deal is still being offered. I will write again to describe how it goes.

Dental practice bonus systems

2009-09-29T16:46:00.000-07:00

Dental staff bonus plans has been the most popular topic on this blog about dental practice management. I'm often asked whether dental practices pay bonuses to staff members. Some dental practices pay bonuses and some practices do not. Among practices that pay bonuses, bonuses (or incentive compensation) comprise anywhere from a small percent of earnings to 100 percent of earnings.

From my experience, there is no "normal" when it comes to dental staff bonuses. Dental practice managers need to decide for themselves what makes sense in their situation.

Four Factors to Increase Dental Collections

2009-09-01T15:35:00.000-07:00

See the full article, which I posted as a Knol. Here's the list:

Number of patient visits
Procedures per visit
Fees per procedure
Percent of fees collected

Five Dental Consulting Biases

2009-09-01T15:32:00.000-07:00

See the full article, which I posted as a Knol. Here's the list:

Short-term bias
Dramatic change bias
One size fits all bias
Smart sounding answer bias
Rule of thumb crutch

Appointment Reminders

2009-08-19T16:33:00.000-07:00

I offer anecdotal evidence on the value of appointment reminders. A dental practice in Grand Rapids, Michigan neglected to perform reminder calls one day. The no show rate was extraordinarly high for the affected day and some patients specifically said they forgot their appointments without the reminder calls. Separately, the practice quit sending appointment reminder postcards for three months. Last minute cancels were higher in those three months than ever before.

Dental production per dentist

2009-06-19T10:52:00.000-07:00

How much dentistry can a general dentist do in an hour? It depends on a number of factors including staffing and delegation of duties. A dentist with two or three hygienists and two or three registered dental assistants to whom all legally delegated duties are delegated can do a lot more dentistry than a dentist working alone doing his own cleanings. Proveer Practice Management has observed an order of magnitude difference in production per dentist across dental practices in West Michigan.

Production in a dental or medical practice

2009-04-11T07:08:00.000-07:00

While there are many ways to think about production in a dental or medical practice, one way I find insightful involves the following loose decomposition:

Production = Number of Patients Examined X Production Per Exam

where the latter factor includes production associated with the exam itself and any treatment that follows from the exam.

Different dental practices serve different market segments and accordingly optimize their strategy toward the above factors differently. Think spa dentist vs. medicaid dentist or single dentist practice vs. group practice or busy practice vs. not-so-busy practice.

In future posts, I will contrast approaches of one Grand Rapids, Michigan dentist office client of Proveer Practice Management, which provides dental practice management services in Michigan, with one hypothetical dentist in Grand Rapids and another hypothetical dentist office in Grand Rapids, Michigan.

Proveer completes first dental practice acquisition

2009-03-09T10:14:00.001-07:00

Proveer Practice Management helped Grand Rapids dentist office Van Haren Family Dentistry acquire the practice of Grand Rapids dentist Dr. Robert Bochniakas on March 1st, 2009. The merger is a win-win-win for Dr. Bochniak, Van Haren Family Dentistry, and patients. Dr. Bochniak will continue to see his patients at Van Haren Family Dentistry for 6-12 months while transitioning to full retirement. The larger patient base furthers Van Haren Family Dentistry's growth objective. Finally, Dr. Bochniak's patients will experience a smooth transfer of care to Grand Rapids dentist Dr. Ryan Van Haren as Dr. Bochniak transitions to retirement.

According to Dr. Van Haren, “We have experienced consistent organic growth over the last few years despite the economic downturn. Dr. Bochniak’s desire to transition to retirement offered us an opportunity to take a big leap in our growth."

Dr. Van Haren adds, "The fit between the practices in this merger is great. Both Dr. Bochniak and I enjoy the relationships we form with patients and our sense of service to patients. We both built our practices to foster those relationships and help our patients.”

Greg McGlaun from Proveer Practice Management was the architect of the acquisition and is now managing the transition. "We are managing a number of tansition issues: different location, different fees, different relationships with insurance companies, different practice management software, different approaches to periodontal care and x-rays, and more. It's early, but so far so good."

Genuine service

2009-01-11T18:01:00.000-08:00

I have been spending significant time inside the practice of a Grand Rapids Michigan Dentist, Dr. Ryan Van Haren. I am repeatedly struck by the depth of trust and comraderie between the dental staff and patients that flows from the staff's genuine interest in patients and the quality of patients' interactions with the practice. The staff and patients have relationships that go well beyond scripts or fake smiles.

Leveraging dental insurance benefits

2008-12-12T05:32:00.000-08:00

Dental insurance is complicated. Annual maximums, benefit periods, exclusions, participating versus non-participating, usual and customary, claim submission, narratives, explanation of benefits, deductibles, coverage levels, and writeoffs. Through all the complexity, hundreds or thousands of dollars of each patient's household budget are at stake.

Many insurance companies provide ready access to details of patients’ insurance benefits. Rather than assume each patient has generic benefits, dentists can leverage insurance benefit information to design treatment plans that better leverage patients’ dental insurance benefits. By taking account of variation in patients’ insurance benefits, dentists can produce one hundred or more dollars per day of highly profitable dentistry while providing better dental care to patients. Just one hundred dollars per day adds $10,000 or more profit for the dentist over the course of a year. What’s best, insurance companies pay for the extra production.

While insurance benefits would be irrelevant in a utopian world of “ideal treatment”, financial considerations are relevant in the real world. If economics were irrelevant, why would so many people – especially in poorer countries - continue to walk around with imperfect smiles? Why would employers put so much money and effort into providing dental insurance benefits? Why would patient financing programs such as Care Credit exist? Why would Americans seek dental care in Mexico or other countries?

The principle of Patient Autonomy in the ADA Code states, “The dentist’s primary obligations include involving patients in treatment decisions in a meaningful way, with due consideration being given to patient’s needs, desires, and abilities.” Finances are not only a justifiable, but a required consideration for dental treatment under the ADA Code.

With detailed information about patients' dental insurance benefits, dentists are armed to provide optimal care for real-world patients who face constraints on their household budgets.

Dental fees for profitability part 1

2008-11-04T16:12:00.000-08:00

I often find an opportunity for dentists to painlessly increase their profit by $10,000 to $30,000 just by updating their fees. I'm not talking about an across the board fee increase that can drive cost-conscious patients away. (If you have room to increase your fees without driving too many patients away, what are you waiting for?) Rather, dentists often fail to keep fees for lower profile procedures updated to reflect market conditions. For example, a dentist may set fees for exams, prophy's, fillings and crowns near median levels while fees for root canals and periodontal procedures are below 25th percentile. I am repeatedly surprised how much money is left on the table by a handful of fees that are set too low.

Proveer Practice Management now offers a dental fee balancing service with a guaranteed 1,000% return.

Dental treatment philosophy

2008-10-23T18:09:00.001-07:00

Do you expect dental patients to accept your recommendations regardless of financial or other patient circumstances? Or, do you try to educate patients about dental and non-dental health implications and leave the decision to the patient? Something in between? Comments welcome.

Detect missing money

2008-10-15T05:29:00.000-07:00

I visited a practice in which collections according to the practice management software wasn’t making it to the bank account. Further investigation revealed a number of discrepancies in the records.

Bad news: The practice faces the labor intensive task of correcting a number of patient accounts.

Good news: By comparing the numbers in the practice management software and the accounting records, we identified problems early.

Discrepancies between your practice management software and your accounting system serve as an easy warning sign that something is wrong. The problem can be innocent - systematic or one-time record keeping errors - or fraudulent.

Business stress in dentistry

2008-10-13T08:24:00.000-07:00

I had a conversation with a first year dental student over the weekend. Her dental education is preparing her for a life of clinical excellence, which is good for patients. But her dental education (perhaps not deliberately) is also sending her signals that dental practice ownership can be a stressful and sometimes overwhelming endeavor, which is not good for anyone.

Her response to the stress of private practice, “Screw this. I’m just going to hire you Greg.” Of course that was music to my ears. But the comment made me wonder why so many dentists choose a go it alone route on the business side of dentistry – an area of expertise completely distinct from their clinical training. Not only is stress at stake, but millions of dollars over the career of the dentist.

A few dentists grow a passion for and expertise in the business side of dentistry. I commend these dentists. But for others the business stuff seems to be a nuisance that just comes with the “freedom” of owning a practice.

Any insight from readers is welcome.

Dental bonus plans

2008-10-07T09:49:00.000-07:00

An optimal dental office bonus plan depends on the objective of the bonus plan. Possible objectives include:

1) Share the financial success of the practice with staff members
2) Motivate general performance
3) Motivate specific performance

Consider how three different dental practices with different bonus systems accomplish and the objectives above with varying success.

In Practice #1, the staff has a general sense they get paid more when the practice does better, but they do not know how their bonus is calculated. The office manager states, “It’s a complicated formula and the doc just tells us our bonus every quarter.” In Practice #1, the bonus system serves to share the financial success of the practice with staff members and indirectly motivate staff to contribute to the success of the practice. The bonus system does not, however, motivate staff performance in any specific areas because the staff does not understand the link between their performance and their pay.

In Practice #2, staff members know exactly how their bonus is calculated -- it happens to be based on collections -- and the bonus gives staff members a clear stake in the game. The doctor states, “Sometimes my staff seems obsessed with the collections number.” In Practice B, the bonus serves both to share the financial success of the practice and to motivate staff to increase collections -- a relatively general measure of practice success. Although the bonus system for Practice #1 and Practice #2 do not differ greatly, the staff’s clear understanding of the link between performance and the bonus in Practice #2 provides additional motivation for the staff.

Practice #3 uses the bonus system to motivate very specific performance. For example, all staff members receive a bonus for new patient referrals. At one point, the doc wanted his hygienist to provide more patient education before he entered the room and offered a bonus based on improvement in this area. While Practice #2 and Practice #3 both use a bonus system to motivate performance, Practice #3 uses the bonus system to target more specific aspects performance.

Outcome: Different practices employ different bonus systems with different outcomes.

Caveat: Bonuses can be powerful. A bonus can motivate targeted behavior at the expense of behavior that does not affect the bonus.

Practice valuations

2008-10-01T14:24:00.001-07:00

A Proveer Practice Management client wanted to purchase a practice where he was working as an associate. Before negotiations began, the seller provided a professional valuation that included three assumptions that caused the valuation to be 30% higher than it would have been under the assumptions I thought more appropriate. (The discrepancy led to some interesting discussions, but that’s another story.) Such a discrepancy calls for insight into the limits and uses of a valuation.

Limits of valuations
In this case, a few numbers on paper had a 30% impact on the estimated value of a multi-hundred thousand dollar transaction. The seller wisely stated, “The valuation is just a number.” Ultimately, the price is determined through negotiations between buyer and seller.

Each valuation firm employs its own valuation methods. Somewhat surprisingly, two practice valuation books published by the ADA are inconsistent with each other on some points. Further complicating the matter, the value of a dental practice is context specific. What is the value of the practice to a dentist versus a non-dentist? What is the value if sold as an intact practice versus parted out asset by asset? What is the value to a young dentist versus a dentist near retirement? What is the value to the dentist versus spouse in a divorce? What is the value in an orderly sale versus a fire sale due to death or disability? Such questions suggest there is no such thing as a single “value” for a practice.

Uses of valuations
Nonetheless, the economics and analysis underlying a valuation can provide real insight to a buyer, seller, or dentist who plans to continue running her practice. For example, when working with one client, we used valuation techniques to show he could pay roughly a quarter-million and turn the practice into something worth almost a half-million with some practice management changes. An understanding of the sources of value can also aid management of an ongoing practice or help prepare a practice for sale.

Reduce hours with no decrease in production

2008-09-30T09:37:00.000-07:00

While working with a practice open 4 days per week, I observed the doctor had time most days to browse the Internet and meet with me during what was supposed to be time with patients. We considered 4 possible solutions:
1) Get more patients in the door
2) Perform more services per patient
3) Cut doctor hours
4) Do nothing

Although attractive, solution #1 was infeasible in the short-term because we lacked a method to bring an instantaneous flood of patients in the door. After benchmarking the doctor’s procedure frequency against other practices, we determined the doctor was performing a reasonable number of procedures per patient given his treatment philosophy and the type of practice he wanted. Further, any reasonable changes in treatment recommendations were too small to close the gap between the current hours in the office and hours needed to perform procedures. So we ruled out #2. Solution #4 was our last choice.

Through an analysis of the schedule and patient load, we determined the doctor could easily meet the patient demand for services working 3 days per week. However, the single hygienist could not handle the patient load on 3 days per week. Since the doctor had an op available for a second hygienist, we found a hygienist available to work a second hygiene room one day per week.

Outcome: The doc now works 3 days per week instead of 4 with NO decrease in production.

Introduction

2008-09-30T09:13:00.000-07:00

As founding partner of Proveer Practice Management (http://www.proveerpm.com/), I work with dentists for a living. I chose this line of work because:
a) Dentists are often business owners but are experts in something other than business.
b) I often observe room for five and six figure improvements in the wealth of my clients.
c) It is fun!

The roughly 100,000 dental practices in the US face some common challenges and there’s no shortage of companies promoting universal solutions – practice management consultants, financial planners, continuing education seminars and institutes, software and equipment vendors, supply reps, and more. However, each dentist has her own values, talents, constraints, ethics, and set of circumstances. Rather than sell universal solutions, I promote the application of good business principles to each unique situation.

Lacking universal solutions and recognizing that teaching good business principles is too big a bite for this blog to chew, I plan to offer a series of stories and comments from my interactions with dentists.

Enjoy!