Last week I lectured in three cities across the United States. Each of my seminars started with an assessment of what doctors and office managers really know about their practices. It was not surprising to find out that most offices have very little information about their practice performance from a statistical standpoint. The truth is that most doctors and office managers know more stats about their favorite sports team than they do about the practice itself.
Data, metrics and statistics are critical. If you don’t have these you may well find that your practice is wandering in the wrong direction. Strategy, tactics and decisions for the practice should all be driven based on real data so that the decisions are in the best interest of the practice. All too often we are making decisions based on gut feeling which is increasingly wrong in a highly competitive environment.
There are five key performance indicators that are critical. They are production, collections, profit, overhead and new patients. These five statistics should be measured daily, weekly, monthly, quarterly and annually. Not only is each one a critical success factor, but they also correlate together. For example, if the number of new patients begins to decline, production and profit will decline next even if overhead is stable. Or if overhead can be reduced profit will increase even if production does not change. Understanding these five statistics is one of the most important aspects of the job of a dentist or office manager overseeing the practice and making decisions.
Every week we receive phone calls from doctors who are seeking consulting services because their practices are flat or declining. A flat practice now is simply one step before decline. In these conversations we usually find, just like the seminar audiences did last week, that doctors and office managers do not really have a handle on their key performance indicators and that is a contributing factor to their slide into plateau or decline.
Start analyzing these five statistics on a regular basis. They will gradually come together to tell a story or help a practice understand the level of performance it currently has and where it is headed. In many cases plateaus and declines are highly predictable and actions can be taken to prevent this occurrence.