Zuelke & Associates
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How do you define and measure the “success” of your practice?

Production?  Collections?  Net Income?  New Patient Exams?  Case Starts?  Is it your rate of case acceptance, or perhaps how many doctors work for or with you?  Maybe it is how many satellite offices you have?

If you listened to some of the speakers at the AAO meeting this past week you would have been led to believe that “success” is reached by attracting new patients in any way possible.  Direct mail, discount coupons, signing up with the PPO’s and other forms of Managed Care, Yellow Page advertising, and even billboards on the highway were all promoted as a healthy way grow your practice and to have a profitable and “successful” practice.

Speakers promoted their personal version of excellent practice management that included signing up with every form of Managed Care available, ignoring patient risk, offering every new patient $0 or extremely low down payments, and allowing those same patients payment plans significantly longer than diagnosed treatment time.  One mentioned that while the practice “write-off” would be 5% by following such policies, the increased gross would be high enough that such a write-off rate could be easily handled.

I did a little bit of math and learned that in order to have 5% bad debt write-off, a practice would have to have 30 day delinquency well in excess of 25% of open accounts and 1-29 day delinquency of about 60% of open accounts!  Such a practice would have failed and cancelled appointments well above 30% of all scheduled patients.  Instances of poor clinical cooperation and patients over treatment time would be nightmarish.  Most important, patient referrals would be practically non-existent because delinquent patients and patients whose account may be current but has often been delinquent do not refer friends/relatives, etc. to the practice!

It is no wonder, therefore, why such a practice would have to sign up for the Managed Care companies, do direct mail, coupon, billboards, and other forms of advertising.  Without new exams coming as referrals from existing and past patients, the rate of case acceptance would be so poor that only large quantities of new exams could create the gross necessary to be profitable!

One consultant lecturing recommended that practices offer a 10% discount for patients choosing to pay in full.  I made that recommendation as well once, but that was back in the early 1980’s when inflation was high, the prime rate was 15%, mortgages were 16%+, and patients were earning interest on their savings at a rate that was 20 times what it is today.  Interest  on savings today is less than one half of one percent, inflation is insignificant (for now), and offering anything greater than a 4% discount for payment in full is throwing profit out the window.  Most of our clients are offering 2% or 3% discounts for paying in full and they still have 20%+ of their new starts paying in full.

I don’t know what the doctors and dental office consultants teaching this trash have as the goal for their believers and clients, but I imagine that it is that their practices reach their version of “success.”  The problem is that the definition of success these guys use is deeply and tragically flawed.

If you are reading this then you know that Zuelke & Associates, Inc., Paul Zuelke, and my small team, have an identical goal – that our clients have a successful practice – but we define success a bit differently.  Our goal for our clients is that their practices will:

  • Be highly productive, not by our opinion or that of some other consultants’ or doctors’ opinion, but by their own!  We have clients producing $100k per month who are stressed and believe they are working too hard.  We have others, whose production routinely exceeds $300k a month yet their goal is $400k!  The definition of “productive” is, simply put, whatever makes you happy.
  • Be highly profitable!
  • Have excellent statistics for all practice metrics such as those for your Collection Rate, Adjustment Rate, the ratio of your Accounts Receivable to your production, your rate of Case Acceptance, and the percentage of your patients who become delinquent.
  • Have excellent systems within the practice, including proper administrative staffing with quality job descriptions, perfect patient flow systems for new patient exams, great verbal skills and financial policies designed to get the case sold while also balancing risk.
  • Finally, and much more important than the previous four and something never mentioned by these self proclaimed gurus, our goal is that our clients will always have an outstanding quality of life within the practice and will never sacrifice the quality of life within the practice in order to get an extra case start!

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