Mastering Key Performance Indicators (KPIs) for a Thriving Dental Practice
Running a successful dental practice requires keen attention to various Key Performance Indicators (KPIs). In this blog, I’ll guide you through essential KPIs to monitor and optimize for a flourishing practice. Let’s explore the vital metrics that can drive your practice towards excellence.
TIP #1
Understanding Payroll Costs
Effective management of payroll costs is crucial for maintaining profitability. Here’s how you can optimize payroll expenses:
Industry Benchmark: Aim for payroll costs to be between 24% and 28% of your practice’s production. If your payroll costs exceed this range, it’s time to investigate further.
Employee Turnover: High turnover can lead to increased hiring and training expenses. Evaluate your work environment, reward systems, and accountability measures to address turnover issues.
Schedule Efficiency: Ensure your providers’ schedules are fully optimized to avoid downtime. If your schedule isn’t full, consider reducing hours or improving patient outreach to fill appointment slots.
Onboarding and Training: Implement a structured onboarding process for new hires. Clearly define job responsibilities, set expectations, and support new team members to help them integrate smoothly into your practice.
Time Management: Monitor clock-in and clock-out times to prevent payroll inefficiencies. Implement and enforce time policies to manage breaks and work hours effectively.
If you need assistance in analyzing and optimizing payroll costs, ADC CPA is here to help you streamline expenses and improve your practice’s financial health.
TIP #2
Controlling Sundries Expenses
Sundries, or disposable supplies, are a significant part of your practice’s budget. To manage these costs effectively, follow these guidelines:
Budget Allocation: Set and adhere to a budget for sundries. This will help control spending and prevent unnecessary expenses.
Avoid Bulk Buying: Resist the urge to purchase large quantities of supplies during sales or promotions. Overbuying can lead to wastage and expired products.
Inventory Management: Conduct regular inventory checks to avoid stockpiling and ensure supplies are used efficiently. Proper inventory management helps minimize waste and reduces costs.
Supplier Relations: Partner with a reliable sundry supplier and negotiate annual pricing. This approach can save time and money compared to constantly shopping around.
Remember, sundries expenses should only include disposable items. Exclude repairs, maintenance, and small equipment purchases from this category. For further assistance in managing your sundries expenses, feel free to contact me directly.
TIP #3
Managing Accounts Receivable (AR)
Efficient management of Accounts Receivable (AR) is vital for maintaining a healthy cash flow. Here’s how to keep your AR in check:
AR Targets: Strive to reduce your AR to approximately two weeks of production. This target helps ensure prompt cash flow and financial stability.
EDI Claims: Ensure electronic claims are submitted accurately and followed up diligently. Unresolved or failed claims can contribute to increased AR.
Insurance Coordination: Properly manage secondary insurance claims to avoid missed payments and delays. Effective coordination can help in timely collection of payments.
Direct Deposit: Transition to direct deposit for quicker payment processing. This reduces delays associated with mailed checks. Ensure timely entry of direct deposit statements into your patient management software to keep AR levels accurate.
If managing AR is challenging, ADC CPA can provide expert guidance to streamline your processes and improve your practice’s financial performance. Contact us to explore effective strategies for reducing AR.
Meet Sana Arshad
FOUNDER & CEO BEHIND ADC CPA
Sana Arshad has in-depth knowledge of dental and cost control from her experience at a start-up DSO. She completed her Master of Accountancy with specialization in Performance Management, and later achieved her Chartered Professional Accounting designation. Her passion is growing businesses through the balance of increasing sales and decreasing costs but also being a empathic leader that values and rewards team members to achieve these results.
Need 1:1 Help or Financial Assistance?
Thank you for reading! For more insights and personalized advice on optimizing your practice’s KPIs, reach out to ADC CPA. We’re committed to helping you achieve operational excellence and financial success.