Page 112 - The Dental Entrepreneur

The Dental Entrepreneur

Practice Monitors And Trend Analysis

I want to touch on some very elementary aspects of trend analysis and how it applies to
practice. Trend analysis may allow you to become aware of a particular problem and allow you
to take corrective action before a crisis arises. You may use either graphs or tables to chart the
vital statistics of your practice but the important point is that theses statistics are regularly
viewed and accounted for. Most practice management software programs today will quickly get
you this information

1. Production
2. Collections
3. Collection Percentage
4. Accounts Receivable

5. New Patients
6. Average production per new patient

If you are super anal, you can take this a step further and graph your individual overhead
components over time. Once again, spotting a potential negative trend well before it
significantly affects your bottom line profitability

When it comes right down to it, what you are attempting to account for on an ongoing basis is:

1. Where the money came from?
2. Where the money is now?

3. Where the money is going?
4. Where the money went?
5. How much am I really making?

With statistics in hand, you will be able to move to the highest utilization of theses figures and
schedule for productivity. You will have the power of being able to estimate what it will take
(down to the hourly production) to meet the annual goals you have set for yourself.

How much money would you like to earn annually? If your answer is “if I made $150,000 per
year at this point I would consider myself very happy. Lets work backwards and create that
cash flow. For discussion sake, we will use 70% overhead and 30% profit. Take 150,000 $
and divide by 30%. That will give you the amount of collections you need to yield that amount
of profit. In this case $500,000. With an average of 2000 work hours available per year, that
works out to a collection goal of $250 per hour. Every hour of every day!. As we know, the true
profit here is closer to $75,000 after taxes or $6250 per month.

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