What are Dental KPIs, and Why Are They Important?
A KPI is a quantifiable performance measure for a specific objective over time. It gives businesses a target to guide their actions, milestones to gauge progress, and insights to make informed decisions.
Effective KPIs provide objective evidence of progress, help you understand trends, and are aligned with your business objectives. You can use them to track effectiveness, efficiency, timeliness, compliance, performance, etc.
What Dental KPIs Should You Track?
Here are the dental KPIs every dental practice should track:
- Accounts receivables
- Patient visits (new and return)
- Production per visit
- New patients
- Cases presented vs. cases accepted
- Production and collection per sq. ft. of a practice
Now you may wonder, why these KPIs?
They feed into your profit and loss equation and impact your cash flow accounting. After all, your goal of running a business is to be profitable, right?
Let’s consider the profit and loss equation:
P&L = R-C
Your profit and loss (P&L) equals revenue (R) minus cost (C)
And how revenue impacts your account receivables (A/R):
Production - Collection - Discount - Write-offs + Adjustments = Net A/R
The KPIs we listed above are the variables in these equations, which means they directly impact your cash flow and profitability.
Understanding Cost and Revenue Drivers in Your Dental Practice
Let’s look into what impacts your cost, revenue, and account receivables to improve your KPIs.
You probably have a pretty good handle on what goes out of your pocket every month to keep your practice running. These include fixed costs such as leases, utilities, loan repayments, staff salaries, and other overhead, which are straightforward and predictable.
Then, you have variable costs such as disposable inventory, which changes based on the number of patients per month. They often make up a small percentage of total costs and are easy to project. You may also run into unpredictable expenses, such as repairing equipment.
For simplicity, let’s assume revenue equals production. To increase revenue, we must understand what drives production:
- The number of patient visits: Affected by your patient acquisition and patient retention rates (e.g., getting recare patients to return.)
- Production per visit: Can be improved by facilitating hygiene and exam appointments and identifying patient needs so you can proactively recommend high-value procedures.
The number of patient visits multiplied by treatment fees equals production. To increase this KPI, you must have real-time data on these drivers. For example, if you know where your new patients come from (e.g., SEO, Facebook ads, referral,) you can double down on those channels to scale up.
Collection and Accounts Receivable
Case flow is king for any business, so you should track collection rate and A/R cycle time to maintain a positive cash flow. The faster you can collect payments from patients and insurance payers, the healthier your cash flow.
Simply put: you want to get paid faster. You can shorten patient collection cycle time by collecting co-payments during their visits, offering a cash discount to encourage upfront payments, sending automated e-statements and reminders, and offering online payment options to make it easy to pay you.
Putting It All Together
Tracking dental KPIs allows you to respond to today’s fast-changing business environment and quickly course-correct to stay profitable. A robust dental practice management software gives you the foundation you need to collect and compile all the data to generate in-depth insights.
tab32 offers an out-of-box intelligent dashboard to help you track and visualize these KPIs to support data-driven decision-making. Contact us for a free demo and learn how tab32 can help you improve operational efficiency and drive revenues.
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