In order to maximize the profitability and success of your office, you need to take an accurate and realistic snapshot of where you are by the numbers.
Patient retention is directly linked to how well your front office staff listens, engages, and responds. In order to become a top performing practice, every working part of your office—the staff, systems, processes, and protocols—must be performing at optimal speed. Be diligent and organized in your record-keeping. Take a quarterly snapshot of your office. If you know where you are, you can make a sustainable plan for future optimization and growth.
Here are the key financial numbers you need to know:
Budget
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Start-up costs – Property, building, equipment, technology, staff and marketing all go into start-up costs.
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Payroll – When your business is off the ground, payroll makes up a large part of your bottom line. Know how much you pay your personnel, in wages, taxes/insurance and bonuses throughout the year.
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Equipment – This includes initial cost, maintenance and materials required to run, update and optimize equipment.
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Marketing – Any expense targeted towards attracting new patients falls into this category, from pamphlets to website development and networking events.
ROI = (Gain – Cost) / Cost
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Procedures – Know how much every procedure costs you to perform, including supplies, time and personnel involved. Your potential gain per procedure is based on these expenses.
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Technology – Know how much a piece of new equipment costs to acquire and maintain. You’ll need to include maintenance and supply costs in your calculations of ROI for every piece of equipment in your office.
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Marketing – Knowing your ROI on marketing strategies allows you to quantitatively measure how successful a specific marketing tactic is. Know how your patients found your office and why they return—online marketing, networking at the right events, etc. Read more about how to calculate your marketing ROI in this article from Forbes.
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Website position – Know the numbers behind your website—how many people visit the site per day, what page they go to and stay on, what your bounce rate is, and modify from there.
Rates
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Conversion/Close rate – How many prospective patients do you “land”? How many are retained as long-term patients?
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No show/cancellation rate – On average, how many patients make an appointment and don’t show? Or cancel in advance?
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New patient rate – The number of new patients you bring in per month, year.
Room Revenue Assumptions
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Number of rooms – Total number of procedure rooms
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Hours of operation – How many days are you open?
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Average treatment price – Taking an average of all procedures offered, what is your average price?
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Average length of procedure – On average, how long do your procedures take? This includes operating preparation.
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Treatments per day – How many treatments do you complete per day? Are any days busier than others?
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Revenue/hour – Based on the numbers above, what is your average revenue per hour?
Goals
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New patients – Set a goal for the number of new patients retained per quarter. Using the LAER model I developed, you can train your staff to engage, respond to, and retain patients.
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Revenue – Based on where you are, what is your projected revenue? Set your revenue goals and make the necessary changes (processes, protocols, staff) to get there.
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Revenue/hour – To reach your revenue goals, how much do you need to generate per hour? The average room should do between $600-$1000 per hour.
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Price strategy (vs. competitors) – Based on your current and desired revenue, and keeping competitor pricing in mind, develop an informed and realistic price strategy.
