Navigating High Costs with Financial Literacy : Exploring KPIs (Part 2)

Ready to transform your dental practice into a thriving business? Discover the essential KPIs you must track to ensure financial health and patient satisfaction. Join Dr. Shon as she breaks down the critical metrics—revenue growth rate, profit margin, patient retention rate, and new patient acquisition—that can make or break your practice. Learn how practice management software like CareStack can simplify your KPI tracking and why balancing new patient acquisition with retention efforts is vital for sustainable growth.

Facing high operational costs in your first year? Dr. Shon dives into the challenges of managing expenses, especially with insurance processes, and the importance of financial literacy. Unlock strategies to increase treatment acceptance rates through effective communication, patient education, and cutting-edge AI technology like Pearl. We'll also highlight the necessity of maintaining positive cash flow, leveraging business credit, and building a happy, productive team to ensure your practice not only survives but thrives. Tune in for actionable insights that could revolutionize your business operations!

Chapters

• 0:00 Crucial Business KPIs for Success
• 11:16 Effective KPI Implementation for Business

Transcript

Speaker 1: 0:00

Hello to mentees, supporters and family. We are back for part two of our KPI talk for business success. Okay, so in the last episode, which was a partial episode, we were just talking about some things that you really need to monitor in order to make sure you're off on the right foot during your first year of business, right? So I just want to welcome you all back. Thank you all for downloading, supporting, and don't be afraid to send me a text message using the link attached to this podcast. Let me know what financial literacy topics we should cover in the future and how we can grow and get better, because I'm always looking to get better every single day. Today, we're discussing the crucial topic of key performance indicators that every business, including dental practices, should monitor to ensure success. I'm Dr Sean and I am your host. I'm excited to share these insights with you, so let's dive right into our topic for the day. So, segment one I just want to talk about the introduction to key performance indicators, which are abbreviated KPIs. Kpis are essential metrics that help you understand how well your business is performing and where you can make some adjustments. Here are 10 primary KPIs that any business, especially a dental office, should monitor. The first one is revenue growth rate. We have a great system in CareStack stack, which is a practice management software where we can set goals for the month, for the quarter, for the year, and we can also use those to measure our kpis and it has some kpis built into the software. So it's always good to have a software that can track your revenue growth rate over time. This measures how good your business is doing, it's tracking the revenue growth and it helps you understand your financial, health and pro-future earnings. For a dental office, such as motivational dentistry, this includes all sources of income, from patient fees to insurance payments. So this is all the revenue that we are generating for a specific period of time. You can use it to calculate your overhead, to see where you can make some adjustments with your scheduling, with your staffing, just seeing how you can grow and what ways you can reinvest the overhead or reward your staff with bonuses and things of that nature.

Speaker 1: 2:47

The second thing that we're going to be looking at is our profit margin. A profit margin indicates the percentage of revenue that remains as profit after all expenses are deducted. Now it's crucial to keep an eye on this to ensure your business is not just generating revenue but also making a profit. So during our first year here in the dental office, what I noticed is that, like I said in the last episode, we were going really fast, sent a lot of patients, but the profit margins were low because we were in network with insurance and some of the payments that we were receiving from the insurance, from the revenue that we were receiving, wasn't enough to cover the overhead. So we were actually in the red before the patient sat down. Some procedures were cheaper than a hamburger from McDonald's nowadays, and I'm not even exaggerating and that's the sad part. So you really want to pay attention to your profit margin, because this is how you're going to grow your business increase the profit margins, increase the revenue and decrease your expenses.

Speaker 1: 3:58

Number three, the third thing that we're going to check patient retention rate. How many patients are we keeping? And this KPI measures the percentage of patients who return to your practice over a specific period. High retention rates normally indicate patient satisfaction and loyalty, which are vital for long-term success. So you want to make sure that you are giving customer service and that you are asking your patients how are you doing? I like to try to get five stars from my patients and if we don't deserve five stars, I want to know why, what are our weaknesses and how we can get better. So patient retention rate is vital. But also understand that you can't please every patient, because we get so caught up on the five stars that sometimes patients or even customers can use it as a weapon if something doesn't always go their way. So just try your best to keep in that five-star quality service. Make sure you are heavily relying on customer service, because that has been the thing that has kept our practice growing during this first year is the word of mouth. So we really pride ourselves on being all about customer service and how we can retain our patients. Now, some patients aren't patients. That's also like finding a doctor who you fit with. But even with customers, you aren't going to keep every customer. You want to keep the loyal ones, the ones who really believe in your vision and really want to see you succeed and wouldn't try to hurt your vision. So that's patient retention rate.

Speaker 1: 5:45

The fourth one, which is new patient acquisition or new customer acquisition, if you are not in the medical field, this is just monitoring of new patients to help gauge the effectiveness of your marketing efforts and the overall growth of your patient base. It's important to balance new patient acquisition with retention efforts. So this is an important balance because you want to keep the inflow of new patients but also retain your older patients over the years, and this is how you can grow your practices and potentially open up more practices and bring on more partners to your practice, if that's your goal but to get new patients, marketing is going to be very key in any business that you do, and that is a whole other topic for a whole other subject marketing. In this first year we started out heavily on the marketing, but our budget and our cash flow was really on the slower end. So we got away from the marketing and got in the network with the insurances. So they sent us a lot of patients. But I can see how, going out of network, you really have to hone in on your marketing and make sure that your brand is sending out, that your message is getting out, and try different platforms and different things. So that's going to be very important with new patient acquisition and this is a KPI that is going to tell you how good your marketing is doing and when you have those patients calling, you want to make sure that you ask them, or customers. How did you find me? How did you hear about me? Because that will give you an idea of how people are finding you.

Speaker 1: 7:26

Kpi that we're going to be checking for is appointment cancellation and no-show rate. This measures the number of scheduled appointments that are canceled or not no-shows. High rates can significantly impact your revenue and operational efficiency. Impact your revenue and operational efficiency. Implementing strategies to reduce cancellations and no-shows is essential. Okay, so you really want to put in the policies of how many times a patient can no-show or cancel. So for our office, we have a no tolerance for no-shows on your first appointment. If you cancel or you don't show up, there's a high chance that we won't have a relationship because you're going to waste my time. If you have more than one or two no-shows, then you are dismissed. So that's what any business people who are booking that time, scheduling for time, and they don't show up. It really hurts the business and you really can't perform like that, especially in a dental practice setting.

Speaker 1: 8:31

So just think about these first couple KPIs that we've went over so far. We got revenue growth rate, profit margin, patient retention rate, new patient acquisition, appointment cancellation and no-show rate. This KPI calculates the average amount of revenue generated from each patient. It helps you understand the value of each patient to your practice and identify opportunities to increase this value through additional services or treatment. Okay, so this is just basically letting you know how much revenue you can expect every time you have a patient in your office and what type of services these patients are requiring or asking about, and how you can improve your services, offer additional services or treatments. So I know for my practice we really want to grow in the area of implants because that is in a high demand, because people are losing teeth left and right and they want options to replace these teeth, and I want to be in that conversation to replace those teeth. So this is an opportunity for us to integrate this into our practice. Offer it more. This will actually increase our revenue per patient because we're offering a service that pays more. Just like in our last episode, we talked about charging what you're worth. Charging what you're worth is going to help you increase the revenue that you bring in per patient, especially when you are out of the network with the insurances, because they start you in the risk. You're going to bring in the revenue, but you're going to be in the negative when it comes to profits.

Speaker 1: 10:15

Okay, so the next thing that we're going to look at is operational costs. I think this is number seven. So operational costs is keeping track of your operational costs, including staff salaries, your equipment, your rent and your utilities. This is going to be crucial to your business. Monitoring these expenses can help you manage your budget and maintain profitability. You don't want to use all your revenue to make huge upgrades and then go into the rent and not really be profitable. You want the business to continue to be profitable. You want the business to continue to be profitable, so you have to budget. This is like staying with your personal finances. You want to budget, you want to make sure that you're not overspending and sometimes you have crisis, like we talked about with the change healthcare hack, where you have to decrease your salaries, decrease your staff and just really tighten up, because equipment breaks and you want to have a little cushion in that area.

Speaker 1: 11:16

So operational costs is something that we really had to slow down in our first year and look at, because we were bleeding money when it comes to staffing and the hours and this was requiring so much time, because insurance requires so much time and I realized I'm spending all my time battling insurances, battling with closing claims, sending claims. It was just a whole nother world and it absolutely, in my opinion, increased the operational cost. We lost a lot of money doing that and we saw so many people for little or nothing wasn't really worth it. I just basically worked a year for free. A lot of people got complimentary services and I learned that, hey, I really need to know financial literacy. I can't in a practice without knowing my KPIs, without slowing down and say, hey, with these thousands and something patients, we managed to gather new patients. How much revenue are we bringing in? And I realized that a lot of the state insurances were really like almost breathtaking the amount of loss that we were seeing. So I'm still just finishing up a couple cases that are in the red because they just don't pay enough. And the supplies, the lab costs, all this stuff is operational costs. They eat away at the revenue that they send, so they put you into a negative profit margin.

Speaker 1: 12:44

Okay, the next thing that we're going to talk about is treatment acceptance rate. This measures the percentage of patients who accept and proceed with recommended treatments. High acceptance rates indicate effective communication and trust between the dentist the patient. Okay, guys, so you want patients to be able to come into your office. Really, you want to listen to them. Make sure that you're hearing their complaints and giving treatment options that go along with their values and their dental goals. This will build trust and they know all the different options that they have. This will increase your acceptance rate.

Speaker 1: 13:26

Something else that I noticed that has increased acceptance rate, especially when it comes to treatment, is education. When you teach patients and you use all of the technology and the AI and all of the different gadgets that the patient can literally visualize what's going on in their mouth. It makes such a huge difference. One thing I love about our new era of dentistry is this AI movement, and I think it's impacting pretty much every industry and it is game changing. Now I can bring patients into the office. I have my SodaCloud, which is our x-ray system. There's this AI system called Pearl. Pearl is like a second opinion in the office and is so exhilarating to see how much detail I can explain my x-rays with Using this software. It checks for periodontal pockets, it checks for cavities, it shows bone loss, it shows existing dental work. It's just so game-changing even things such as taking pictures of the teeth. Just going that extra effort and communicating so that people know how important it is to save their teeth and to show up for their six-month cleanings increases the treatment acceptance rate. This goes to any business. The more you educate a patient or a customer, the more likely they are to trust you and buy from you and trust your brand and they will be retentive and they will continue to come back.

Speaker 1: 14:58

The next thing which is so important with a business is your cash flow. Now, this is something I struggled with in the first year is cash flow, and I feel like this is an area where a lot of people go bankrupt and they run out of business. First year is cash flow, and I feel like this is an area where a lot of people go bankrupt and they run out of business because of the cash flow. So this is where business credit comes into play and that is so important, and I think that's a whole topic for another podcast. But monitoring your cash flow ensures enough liquidity to cover expenses, invest in equipment and handle emergencies.

Speaker 1: 15:31

Positive cash flow is critical for the sustainability of your practice or your business. You want to make sure that the money is rolling, the numbers from your KPIs are showing progress and that you are generating enough cash flow that if some emergencies happen, you're able to cover it and not go out of business. This is probably the most stressful thing for me in the first year of business is worrying about cash flow, because without a loan, without going into the network with getting loans and things like that, and just being self-funded, you really want to take a hold of business credit and use other people's money so that you can free up your cash flow, things like that and just being self-funded. You really want to take a hold of business credit and use other people's money so that you can free up your cash flow, because if you're constantly using up all your cash, it really makes things tight where you can't really manage. And I feel like for the first year of business, that insurance hack it happened at a bad time because I wasn't prepared to use my cash flow to slow down and really check things. But everything happens. Everything happens for a reason. I'm able to now monitor my KPIs and really see that insurance is a scam. All right.

Speaker 1: 16:43

The next KPI is employee productivity and satisfaction. This KPI assesses the performance and satisfaction of your staff. Happy and productive employees are more likely to provide excellent patient care, contributing to the overall practice success, and regular feedback and professional development opportunities can enhance this metric. Building a team has been one of the hardest things in this first year of having a dental practice, because you think you know what you're doing, like with the hiring and the onboarding process and the training and OSHA and the health insurance and all these different things that it takes to manage an employee. It truly is an investment. You want to make sure this person is productive and also satisfied, because you don't want someone on your team that is going to be a bad apple and spread negativity and rub off on your other employees and that will definitely impact your overall patient care and it decreases your quality of care, which can decrease that customer service. So you never want to get away from the customer service. I always have to remind my team that we're here for the patients and we're here to give high quality customer service. In order to do that, we have to walk in every day with a positive mindset and positive attitude.

Speaker 1: 18:08

Okay, we're going to go over these KPIs one more time because I think they were really good and they can apply for any business. You can tweak those to your industry and just know what you're looking for. In those numbers we got revenue growth rate, profit margin, patient retention rate, new patient acquisition, appointment cancellation and no-show rate, average revenue per patient, operational costs, treatment acceptance rate, cash flow, employee productivity and satisfaction. You can pick out whatever metrics you want or that you feel are important for your business. Those are just some main ones that can apply to any business.

Speaker 1: 18:56

How do we implement these KPIs? Implementing KPIs involves regular tracking, analysis and making informed decisions based on the data. You have to have a system or some type of process, such as our system, which is the CareStack system, which actually tracks our process. And now I'm just now getting to the point where I can go and analyze this process, analyze the numbers and make decisions about how we can move forward as a company, how we are succeeding and I can see our weaknesses, simply by knowing the numbers. Ways that you can start knowing implementing your KPIs is to set your goals, define what success looks like for each KPI, basically with new patients, if you're targeting that like new patient retention, or you can say we want to have at least 30 new patients per month, what marketing things, or what marketing strategies do I need to implement to make that come to life?

Speaker 1: 20:09

You want to use reliable tools. Invest in software and tools that help you keep track of these metrics accurately. Our practice management software has these metrics that can help us manage these KPIs. We can export information and put it into Excel and really use this in our meetings to see how we want to pivot and get better or adjust Okay our meetings to see how we want to pivot and get better or adjust Okay. You want to review your KPIs regularly to stay on top of your practice's performance or your business's performance. You want to adjust. Be ready to tweak your strategies based on what the KPIs are telling you. So don't ignore your KPIs, because they are very important.

Speaker 1: 20:53

And one thing I know is in this first year, I ignore the kpis because I'm so used to like putting my head down as an associate dentist and just working and grinding it out and taking the insurances, because this is the model that I've seen everybody else do not everybody else, but a lot of people do so. For me it's just the quickest way to get burnt out. And I realized I was getting burnt out for no reason and I couldn't figure out. Why am I not able to pay myself? It's because I don't know my worth. As bad as I want to become that dentist who just comes out and just helps everybody and just gives, gives, gives. I realized I didn't have it to give, and that's something for me, coming from poverty.

Speaker 1: 21:37

I'm always trying to look out when I can't even look out for myself yet. Slowing down, learning the numbers, learning the financial literacy, the business literacy, knowing that I have a desire to do business and knowing that I have a learning milestone, a time where I have to really just dig and know what is going on or I will fail. There's no way to put it. If you don't dig in and know the numbers and know your KPIs and know why you're doing it, look at your profit, your loss, your cash flow, your operational costs, your revenue, your patient retention rate, your new patient or new customer acquisition rate, profit margins and making sure that they're positive and your revenue growth rate, you will have a higher chance that you will fail because you don't know that these numbers are super important to your business. Okay, as a new entrepreneur, we all are just learning how to go from hood to hood. There's a lot of different times being thrown at you. Just take it a little bit at a time and we will continue to grow on this information and become financially literate and generationally wealthy.

Speaker 1: 23:01

Okay, remember those KPIs, keep monitoring them. You can gain so much valuable insight into your business that will help you make informed decisions and ensure long-term success. Remember that understanding and leveraging your KPIs is a continuous process that requires action and attention and I realized, oh my God, this is a bad idea. I got to stop this today, otherwise we're not going to get anywhere Financially. I really want to wrap this up and tell you guys to know your worth. Do what you do with dignity and don't feel like you ever have to sell yourself short, because the person who appreciates your work, who appreciates you, is going to go the extra effort and go the extra mile to make sure that your business is successful and that they can be a part of that. That will be the perfect patient, the perfect person who believes in you and knows that you're a startup you're beginning. Know that I can't give you a discount. I'm just getting started. You know what I'm saying.

Speaker 1: 24:08

Thank you guys so much, and I really hope that these podcasts are resonating so much and I really hope that these podcasts are resonating and I hope that you found some of this information insightful and helpful for your business and, if you did, please subscribe, share and leave us a five star review. Your support helps me bring more valuable content to you guys. So I really want to continue this because I'm growing. I hope that you're growing. I hope that I will continue to get better at this process. Like I said, it's just a day at a time and I see you guys. Positive vibes always Until the next time. Remember to know your worth and charge accordingly. Stay confident and keep pushing. Don't forget to tune in next week as we delve into more topics to help you thrive in business and increase your financial literacy, all aboard the Hits of Hooded Express. This is Dr Sean, the motivational dentist, and I'll see you guys in the next episode.