The slow economy and the credit crisis don’t appear to be going away any time soon. Patients are struggling with higher prices for housing, heating, food, gasoline, healthcare and utilities. This isn’t a message of doom and gloom, but rather a statement of facts.
Am I saying that you should expect your production to decrease due to the current economy? Absolutely not! In fact, even in the current economic downturn, many practices are continuing to grow. Some are even experiencing exponential growth. Sound impossible? It’s not. Of course, you can’t keeping doing the same old things and expect different results.
While this economic slump has been a rather long and widespread one, it will eventually end and things will get better. But you can’t wait for the economy to improve. A passive approach will never get your practice where it needs to be. You have the power to improve your practice-right now!
To grow your practice in a down economy, Levin Group recommends these four overarching strategies:
1. Optimize Overhead
2. Control Collections
3. Organize Operations
4. Ramp Up Revenue
Optimize Overhead
What is your overhead percentage? Levin Group recommends that overhead costs do not exceed 60% of total practice production for general practices. Every point over 60% is costing you thousands of dollars. For example, if your practice is producing $700,000 with 65% overhead, that’s $35,000 in excess overhead. For a practice with a 75% overhead percentage, that would be $105,000 in excess overhead. That’s a lot of potential savings. Even if you’re a just few points above 60%, you still have opportunities to save thousands of dollars. Optimizing overhead requires a comprehensive approach, including these action steps:
• Follow the Money. Determine where your money comes from and where it goes. Keep track of your collections, purchases and expenses-from staff salaries to dental supplies. Record how much you spend in each category every month. Measure it against past costs to see if expenses are increasing, decreasing or staying the same.
• Track Inventory. What’s hiding in your supply closet? Do you know your current level of supplies? Practices should take inventory semi-annually. This will help you maintain a steady stream of supplies, avoid overages and shortages, and have stronger control over expenses.
• Examine Insurance Participation. Practices should review patient insurance participation each year. Dentists should be aware of important data such as what percentage of total practice collections is generated by insurance, what insurance plans pay the highest reimbursement rates, which ones the lowest, which ones are provided by local employers, etc. This information will help you make the best decisions regarding insurance participation.
Control Collections
It’s a simple concept. You should get paid for the services you provide. Many dentists and their team are uncomfortable asking for payment. Some doctors don’t like to think of their practice as a business. But that’s what it is. Of course, it’s a facility where dental care is provided, but it’s also a business that requires payment for services rendered, so you can continue providing high-quality care to patients.
Overdue collections are double trouble for practices. First, there is missed revenue from unpaid dentistry bills and other practice services. Second, there is the time spent by staff trying to track down this revenue when there are other tasks that need to be done. The best way to reduce collections is to have patients pay at the time of service.
We recommend practices collect 98.5% of money owed. In a tough economy, patients may be slower in paying their bills. That’s why you need clear financial policies that your team communicates to patients. A sign saying, “Payment is required at time of service,” should be posted at the front desk. The front desk team should receive training on how to effectively request payment during checkout.
Practices should offer a variety of payment options, including cash, check, credit cards and outside financing. Giving patients choices make treatment more affordable and full payment easier for patients.
Organize Operations
Outdated processes are like cholesterol clogging up your practice systems. Left unchecked, these inefficient processes will choke off productivity and ratchet up stress until you have a total systems breakdown. During a good economy, practices will often put up with outdated systems because the schedule is full with patients. However, a weak economy exposes vulnerabilities in older systems.
To avoid bottlenecks and lost productivity, practices should update their systems every three to five years. The following action steps will help you update your systems:
• Collect all necessary data to understand each practice system.
• Use all collected data to develop an ideal model based on the unique needs of your practice.
• Customize all ideal models to fit the goals of the doctor and team.
• Implement new systems to increase practice and production potential.
• Measure results to ensure that the new customized model is on track to achieve all practice goals.
Change doesn’t happen overnight. Depending on how old your systems are, it can require a year or more to completely update all systems without disrupting daily operations or causing excessive stress on the team. For total practice success, all major systems must be addressed and inefficiencies that slow down systems removed.
Ramp Up Revenue
Practices have two sources of revenue: current patients and new patients. Your current patients are the backbone of your practice and often a source of new patients. In a tight economy, patients are more likely to cancel or not show up. Levin Group recommends a variety of patient retention strategies to keep patients coming to your office:
• Schedule in advance the next recare appointment. The hygiene department provides a steady stream of patients and production. You want your patients to visit your office every six months for recare. The best way to do that is to schedule their next appointment while they are in your office.
• Confirm all appointments 48 hours in advance. Don’t just rely on home phone numbers. Use a variety of communications vehicles, including e-mail, text messages, work numbers and cell phone numbers.
• Provide “WOW” customer service. The goal should be to exceed expectations during every patient interaction. Don’t give patients a reason to NOT come to your office.
Quality customer service also encourages patients to talk about your practice to friends and family members. Remember, current patients are the best source for new patients. If your patients are “wowed’ by high-quality care and great customer service, they will gladly refer their friends, family members and neighbors. Team members should be trained on asking for referrals and testimonials from satisfied patients. Any patient who refers someone should receive a handwritten thank-you card and phone call from the doctor.
To grow in a down economy, practices need to present comprehensive dentistry to all patients. Some doctors might object to this, saying “People barely have money for basic dentistry right now.” That might be true for some patients, but there are other patients who will readily say “yes” to recommendations for implant or cosmetic dentistry. Remember, not everyone is affected by the economy in the same way. Major personal events (weddings, reunions, job interviews, etc.) often motivate people to invest in their appearance. Even if patients turn down treatment now, they may accept it at a later date. A slow economy doesn’t mean you should “slow down” on presenting comprehensive treatment to patients. You may be surprised at how many will say “yes.”
Conclusion
Even in a downtur
n, you still can grow your practice. These four strategies can help keep your current patients coming in, bring in new patients, reduce inefficiencies and unnecessary expenses, and increase practice production. Don’t wait for the economy to get better — make your practice better one patient at a time!
To receive a free audio CD from Dr. Levin on “Eight Strategies of Highly Successful Practices,” call 888-973-0000 or e-mail your name, type of practice, phone number, and address to customerservice@levingroup.com with “Eight Strategies DPM” in the subject line.
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Depending on how old your systems are, it can require a year or more to completely update all systems without disrupting daily operations or causing excessive stress on the team
