The subject of Dental KPI initially appeared in chapter 7 of my book “Value Engineering: 10X the Value of Your Clinic and Dominate the Market” under the title ” Measure it So You Can Tweak It “.
Dental KPI . Measure it So You Can Tweak it.
If there is one thing that separates professionally managed dental clinics from the rest, it is their ability to measure, monitor, and tweak results through tracking Dental KPI also known as “Key Performance Index.” After all, the more tweaks we can make, the better results we can expect.
Performance management is a process required for any growing dental clinic to create an environment where employees can become the best they can be in their assigned position. It allows those of us in the leadership positions to communicate and align everyone on our team with our overall business strategy. Like if we were going to lose weight, measuring our calorie intake and adjusting it can help us get the desired results. In our practices, knowing where we are at any given point of time and continuously monitoring and fixing it can help our team achieve their goals. This is why knowing and Dental KPI is important.
This measurement is known as KPI (Key Performance Indicator), and it can apply to the entire chain process consisting of the Input, the Process, the Output, the Outcome, and the Feedback. It measures the performance that allows us to modify behaviors in our clinics through coaching, training, and retraining, enabling us to achieve our targeted results consistently.
Can you imagine making hiring or firing decisions and assigning people to train without knowing the KPI? Well, unfortunately, this is how most dental clinics operate, wearing blinders when managing their business. They make decisions based on emotions rather than logic.
Let’s look at an example of a chain process in a dental clinic’s hygiene department and how Dental KPI can apply to the entire chain:
The Input: Hire a hygienist, Set Up a Hygiene Room, Marketing, etc.
The Process: Patient Inquiry, Conversion, Acquistion, Greeting, Filling Out Forms, Dental Cleaning, Re-Appointing and Check-Out
The Output: Cleaned Teeth, Quality of Experience
The Outcome: Did appointment being and end on time?, Did we collect for the appointment? Did patient reschedule another visit?
The Feedback: What was patients’ satisfaction level? Dental hygienist performance? Equipment reliability?
As you can see, establishing a Dental KPI is possible for the entire patients’ journey. This is not to suggest that everything needs to be measured but it can be, if it will help improve our business’ primary metrics.
Let’s look at why clinics with established Dental KPI for their employees appraise higher than those with no or limited KPIs?
Dental KPI Leads to Accountability
Established baselines and targets allow our employees to evaluate their strengths as well as shortcomings. This self-evaluation promotes a healthy culture of responsibility while improving communication between the managers and employees. Investors or buyers know dental clinics with established KPI practices outperform their rivals without one and are willing to pay more to acquire these clinics where employees are held accountable through som form of a Dental KPI.
Dental KPI Helps Build Up Employee Morale
Employees are the backbone of any dental clinic, and when they are happy and engaged, they respond better to our patients and pay attention to and anticipate their needs. If we are continually asking our employees to perform at their best, we also owe it to then to quantify their actions through established metrics.
Employees driven by Dental KPI are more satisfied than those who merely show up and become more competitive in achieving their targets. All of this behavior results in a group culture that is positive and possesses high levels of morale. Investors and Buyers want to invest in clinics where the morale is healthy. A sense of ownership and belonging exists, and everyone is on a mission to make the company or the clinic better every day.
Dental KPI Tells a Story
The fastest way for me to learn about a company is through KPI‘s. When hired, I look at two sets of information. First, what my client is measuring.? Second, What action steps they are taking to meet the targeted Dental KPIs.
Professional investors reap substantial financial rewards by studying the KPI and executing plans to adjust the number of gaps toward the desired KPI. This gap is the difference between the current results and the desired result. When a company has well-established KPIs in place, it is valued much higher, as investors can easily understand its strengths and weaknesses.
Investors love clarity and transparency, and companies with established Dental KPI are a safer investment than businesses with no or limited measurement capacity; thus, they are willing to pay more for them.
Dental KPI Helps Defend Valuation
I often use Dental KPI of my clients to establish Value for a buyer. This strategy has helped me negotiate additional tens of million dollars in Value over the years, as I can show how an investor can make financial improvements within a business. Equipped with this knowledge, investors can see where they can stop waste and use their existing resources and economies of scale to derive Value for their stakeholders.
To professionally manage a business, we must measure, monitor, and adjust various metrics in our companies. Busy practice owners often ignore this simple idea. They settle for basic and generic KPIs offered by their software vendors that are not sufficient to transition a family-based company to a professionally operated business. Implementing key performance indicators in all departments must be one of the first things to do to improve current results and add significant value when ready to exit.
Frequently Asked Questions:
Q. We have measured our group’s performance through KPI for several years, but we keep missing our targets to the point that managers only try to do them to satisfy our bosses. What do you recommend we do to meet our objectives?
A. Measuring KPI‘s is like me going on a scale every week to see if I have lost weight but then don’t take any actions to support my targeted weight.
So, if you measure it for the sake of only pleasing the leadership team, it will never work. So, let’s examine some potential problems you are describing. First, you need to make sure the targets are not unrealistic. If your goals are too big, then employees will never be able to achieve it , and it will demoralize them, but also, after a while, they will not take it seriously. Secondly, the leadership team must adjust and improve KPIs, so the targeted results can be achievable. For example, if the KPI for the number of new patients converted from inquiry to an appointment is 150 in a month, but the actual numbers are far below the target, does leadership have specific plans to close the gap? More importantly, is the leadership genuinely committed to investing, re-inventing, or training to achieve desired results? Sometimes they are not.
Q. I have a small suburban dental practice with an average revenue of $600,000. Can I wait to implement Dental KPI once we have reached $1,000,000 + in income?
A. This question is prevalent among smaller practice owners. As owners of a small business, we face many challenges, and most of them have a significant impact on our finances. Thus, as a small business, we can become more vulnerable than a larger company with more substantial cash flow and a healthier balance sheet. Owners of small companies are often making poor decisions because of a lack of proper information and relying more on emotions and logic. Therefore, I strongly suggest incorporating the KPI’s into your practice immediately. Lack of it may have been why you have not grown to a bigger business already.
Q. How can we use KPIs to improve our customer service?
A. KPIs classify as either quantitative or qualitative. If you can easily measure them by actual numbers, it will be considered quantitative. But, specific information that we need to gather to improve our business performance is qualitative. For example, suppose you survey your customer’s level of satisfaction. In that case, even though it is qualitative, it can easily be translated to an NPS (Net Promoter Score), used for benchmarking against other companies. The higher the NPS score , the less financial impact on a business, as less capital is allocating for marketing activities.
If you are a clinic owner or a manager, it is important to implement KPI and introduce the concept to your team as soon a possible. Dental KPI allows you to increase the profitability of your dental clinic now as well as when ready to exit. If you like to learn how increase the valuation of your clinic, be sure to sign up and read my book, “Value Engineering: 10X the Value of Your Clinic and Dominate the Market”.
Dr. Allen Nazeri DDS MBA is the Founder and CEO of DentistConsultationHub. A teledentistry platform helping dentists to grow their practices by engaging with patients online and give treatment quotations. Dr. Allen practiced cosmetic and reconstructive implant dentistry for nearly 24 years before becoming a full time management consultant. He received his MBA from University of Bedfordshire, United Kingdom. He currently serves as a senior business development consultant for SmileDirectClub where he established the first Clinic Lease model for the company in Singapore to help dental clinics benefit from strategic partnership with SmileDirectClub.
