Jonathan VanHorn — The Fifteen Numbers that Will Make (or Break) Your Dental Practice

Introducing Jonathan VanHorn
Jonathan VanHorn is certainly an interesting guy.  He is a CPA, but has moved beyond the traditional CPA bailiwick of “historical” work like P&Ls and income tax filing.
Jonathan has founded a company called Dentistmetrics and now uses his considerable financial knowledge to help dentists improve their financial outcomes.  The following is an article that he wrote for our newsletter.  Welcome, Jonathan!
The Fifteen Numbers that Will Make (or Break) Your Dental Practice
I finished a goal setting session with a client this morning, and as we were wrapping up my client said to me, “If I’d set these plans in motion five years ago, I’d be taking home nearly $15,000 more a month right now.  If only I had known what I didn’t know.”
Many dentists know that “stats”, “benchmarks”, and “KPIs” exist, but don’t know where to start looking for improvements.
This article covers three of the most important numbers I’ve compiled through my time as a dental coach and dental CPA.  These numbers should give you a starting point for your practice.  I’ve looked at a lot of dental practices and the practices that have mastered these numbers are typically the most successful in terms of profit.
I do want to emphasize that averages apply to everyone but no one at the same time. What does this mean?  It means don’t immediately get upset over your performance if you look at these stats and are underperforming.  It also means that just because you meet these three numbers, you aren’t guaranteed to be maximizing your potential.
The Three KEY Numbers for any Dental Practice
But wait, the title is “Fifteen” not “Three”! What gives? I’m only able to share three of these numbers in this article, BUT, if you’d like to see a free report with more than fifteen of these same statistics, including a mini-guide with precise information on how to really get value out of tracking your performance, visit http://dentistmetrics.com/prosperidentfor a copy of the full report.
#1 – Wages and Salaries including payroll taxes benefits (not including associates, or owner’s expenses)
Goal: 25% of net productions.  If you have stable and consistent earnings, you can use collections, but net productions are a better indicator overall.
Subgoal: Of the 25% compared to net productions, around 1/3rd should be hygiene. (around 8% to net productions)  That leaves 17% for the office manager, the front desk, and dental assistants.
Subgoal: For every $35,000 in monthly collections, you have one front office staff.
Where you should look if you don’t meet the standard:
  • Are you overstaffed?
  • Are you overpaying your employees?
  • Is this a production problem?
#2 – Dental Supplies
Big Picture Goal: 5% of net productions.
This can vary a bit depending on the services you offer.  But 5% is where you should set your sights.
If you need help on lowering your supply costs, I wrote a set of posts covering this exact topic which you can find here: How to lower your dental supply costs.
#3 – Hygiene Rule of Three:
·        Hygiene should equal 1/3rd the production for the practice.
·        Hygiene should be compensated at 1/3rd production.
·        Less than 3 hours a week unscheduled/cancelled hygiene scheduled per hygienist. (also called open hygiene)
If you don’t meet the standard:
  • What is your average daily production for each hygienist?
  • What is the average production per patient seen from each hygienist?
  • What is your recall efficiency? (How many hygiene patients reschedule?)
To recap:
The three base numbers every practice should keep track of are the three big picture stats here.  If you keep these numbers in line, you will have the basis for a fantastic practice.  However, this isn’t the end all be-all of every practice.
If you want more stats, such as:
  • The baseline goal per day for each hygienist.
  • The goal for each hygienist’s service.
  • How many new patients a day you need to aim for.
And more than 13 other KPI’s for dental practices, along with a step by step guide of how to look at these numbers check ou thttp://dentistmetrics.com/prosperident for a full report.