The Hawthorne Effect is a psychological phenomenon referring to the concept that things that are measured improve. I am a firm believer in this concept in the dental practice.
Here are 7 of the most important Key Performance Indicators (KPI’s) in a dental practice:
Annual Production per Active Patient: My friend Rob Bay recently introduced this KPI in an interview I did with him on my Thriving Dentist Show. Here is a link to that interview http://bit.ly/ZYrBRn Rob suggested that your goal should be $800/per active patient in annual production.
Whitening Procedures per month: More whitening = more engaged patients! Goal is 1 whitening procedure per day.
Accounts Receivable Aging Detail: The longer an account ages the less likely you are to be paid. The goal is to have no more than 20% of your total accounts receivable aged 60 days or more.
Annual Production per Full Time Team Member: Staff wages are your single largest line item expense. Control this expense and you will have your overhead under control. Ideal goal is $200,000 in annual production per full time team member.
Account Receivable Ratio: To compute your accounts receivable ratio, divide your total accounts receivable by your average monthly production. Goal is an A/R Ratio of 1.0 or less. That means that your total accounts receivable are equal to or less than one month’s average production.
Hygiene Production as a % of Total Office Production: Keeping your hygiene schedule filled and productive provides a host of benefits to the practice. Ideally, hygiene production should be 33% of total office production.
Office Overhead: This may be the most important KPI of all. The goal is office overhead to be at 60% or less (all expenses before Dentist compensation).
If you are not already doing so, let me encourage you to start measuring these 7 KPI’s in your practice. Each one of these is a very important indicator of the performance of your practice. By measuring these KPI’s you will be able to see areas of your practice that require attention and make the changes that will produce the desired result. You will be able to spot trends in your practice and become pro-active in responding to these trends. Keep in mind that the data never lies! Using these KPI’s will help you understand precisely how your practice is performing against established benchmarks of success. Keep Smiling!