Learning the business side of things can be challenging for many new dental practice owners,. You may encounter many new business terminologies that trip you up. Knowing what they mean in the context of running a dental practice can help you apply the knowledge effectively. Here are five business terms every dentist should know.
1. Patient Attrition
You can calculate your patient attrition rate by subtracting the total number of patients you lose from the total number of new patients you gain in a year, then divide it by the total number of active patients in your practice. A high patient attrition rate can have a substantial impact on your revenue and profitability.
Let’s say you have a million dollar practice serving 1500 patients annually. That means you make $666 per patient per year. If your practice grows by 20 patients per month with an average attrition rate of 40%, you lose 8 patients monthly or 96 patients yearly — adding up to $63,936 in lost revenue.
If you run Google ads to attract prospects to replace these 96 lost patients, and it costs $200 in ad spend to get one new patient, you’d be spending $19,200 yearly just to make up for the attrition. Your total patient acquisition cost (or potential lost revenue) will be $63,936 + $19,200 = $83,136 per year!
2. Patient Retention
Retaining more patients helps you lower patient attrition and the associated revenue loss. In fact, it’s the key to maximizing a dental practice’s long-term profitability. Unfortunately, many new dental practice owners focus solely on patient acquisition and overlook this critical metric.
So how do you keep your patients coming back? You must cultivate patient relationships and stay top of mind with a post-visit communication strategy. Send monthly e-statements and incomplete treatment reminders when applicable. You can also ask patients to update their medical history periodically and fill out post-visit surveys to stay on their radar.
3. Marketing Funnel
Marketing your practice may sound intimidating, but there’s a method to the madness. A dental marketing funnel tracks a patient’s journey and helps you see the steps they take leading up to booking an appointment and continuing to engage with your practice.
Understanding the various stages — awareness, interest, decision, and action — will give you insights into how you can reach more prospects and leverage the right marketing message to turn them into patients.
You’ll also hear the term patient acquisition channels often when implementing your marketing funnel. These are the touchpoints through which you reach prospects and share your message. They include online reviews, search engine results, social media, online directories, webinars, and emails.
4. Key Performance Indicators (KPIs)
A KPI is a quantifiable measure of performance over time for a specific business objective. Identifying the right KPIs can help you focus on activities mos impactful for your practice and move it forward at the long-term, strategic level. Here are some essential dental KPIs to track:
- Production: Revenue your practice generates from each patient.
- Production per visit: The average revenue you generate per patient appointment.
- Patient acquisition and new patient visits: The number of new patients who book and attend their first appointments.
- Cases accepted: This metric can show the return on the time and money you invest in presenting new cases.
- Collection and accounts receivables: These two metrics show your financial health in terms of cash flow. The more income you have tied up in collection or accounts receivables, the less cash you have at your disposal.
5. Search Engine Optimization (SEO)
As more people research service providers online, you must ensure your website shows up in organic search results. SEO is a marketing discipline that optimizes your website content and structure so it ranks high in relevant search results. It’s important because most people don’t go beyond the first page of Google.
Besides on-page and off-page optimization like using the right keywords in your content and getting backlinks from authority sites, you should also optimize for local SEO by claiming and completing your Google My Business profile. Doing so can help your listing show up in the map (i.e., the coveted position zero) at the top of relevant local searches (e.g., “dentist near me”).
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