Creating efficient and effective revenue drivers
Let’s take a look at probably the most important revenue driver: the number of active patients. Without patients, it doesn’t matter what facility you have and how good you are clinically, because there is no dentistry to do. To drive in new patients you will need to spend 50 to 60 percent of your energy and at least 5 to 7 percent of your collections in your first three years on internal and external marketing. Another critical lever is the practice’s financial policy. To do it right, right from the start, concentrate on dentistry and stay out of the banking business – which means no accounts receivable. Especially for new practices, cash flow is critical to success and your ability to meet payroll. So, find an outside patient financing partner, such as CareCredit, who can be an advocate in helping you optimize your resources without putting you at risk for non-paying patients. Another important revenue driver is the new patient flow. You will need a minimum of 50 to 60 new patients per month to allow for optimal growth.
Ultimately, it’s the planning that matters when you start a new practice. There is a saying: “If you fail to plan, plan to fail.” That is especially true in starting any new business. Within the five practice engines (CREPT), there are 21 levers or “value drivers” that are operating every minute of every day in a dental practice. (For a list of the 21 levers, visit www.transitionsonline.com.) It’s critical that each one of the metrics under each of the five engines are set up the right way from the beginning so your team members can succeed, and you will have an organized approach and a structured, systematic method for managing your business.
In the second part to this series next month, we’ll look at the first critical years, including understanding marketing and the patient experience.