Dental business mentor says measuring performance is key

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Dental business coach Andy McDougall from Spot On Business Planning takes a detailed look at KPIs[/caption]Measuring performance – what gets measured gets done! In this blog, dental business coach Andy McDougall from Spot On Business Planning takes a detailed look at key performance indicators. As the name suggests, this is an important area and as such, it requires some careful reading and consideration.This is the first instalment of a two-part blog. There’s lots here to consider and put into place, so we thought we’d give you a couple of weeks before providing part two.KPIs are unique to your dental businessKey performance indicators or KPIs are like corporate fingerprints; they are unique to your dental business. Also known as metrics, KPIs span the financial and non-financial aspects of your dental business.Each dental practice should have a manageable number of KPIs. As the name suggests, we are only monitoring the performance indicators that are key to our success therefore by definition, there should be a focused number.Some principles that underpin your measurement system:

1. Measure what is important
2. Ensure your information comes from a sound source
3. Ensure your information is accurate
4. Ensure your information is timely
5. Ensure what you measure is derived with some consistency i.e. from the same basis each time
6. What and why you are measuring should be understood
7. Take appropriate and timely action based on the results

Dental business consultant Andy McDougall says: “KPIs should be financial and non financial but above all else, they should all relate back to the financial results. So for instance, if all non-financial performance indicators are up, e.g. new patient numbers, diary utilisation and uptake of treatments, then the financial performance should be up too. They cannot and should not be independent of one another.”

1. When measuring KPIs you need something to compare them against so that you have some gauge of whether performance has improved, gone backwards or remains flat. Some typical comparisons would be:
2. Against a pre-determined budget or target
3. Compared to last month
4. A comparison between performance in the month compared with the same month (period) last year
5. A comparison between performance year to date (YTD) and the YTD for the previous year

Be wary of ratios and averages. At Spot On Business Planning we often see numbers bandied about in the dental media in the form of key ratios such as the wages in a dental practice should be x% of turnover. Such ratios are only applicable if you are measuring on a like for like basis. If you are a single-handed dentist without a practice manager and treatment coordinator, then comparing your wage ratios to such a practice would be illogical.

KPI examples

Financial KPIs

• Total sales versus budget in the month, year to date (YTD) and against the same period last year
• Gross profit %
• Net profit

Non–financial KPIs

Non-financial KPIs are determined according to the specific needs of your dental business. Here are just some of the KPIs that may be relevant in a typical dental practice.

• The number and source of enquiries received in the month
• The number and source of new patients converted from those enquiries in the month
• Prescribing values by clinicians

We will provide more examples of financial and non-financial KPIs in the next blog.

Free consultation

Spot On Business Planning specialises in the dental sector and offers a tailored service because your dental business challenges, like your performance monitors, are unique.Finance is at the heart of what we do and we have a track record of transforming under-performing dental businesses and taking well-performing dental practices to new levels. Our analysis uncovers the challenges facing your dental business and by taking a structured approach, we plan a completely different financial performance for the future.Spot On Business Planning offers a free initial consultation whereby we will analyse your dental business accounts and highlight where opportunities and risks lie. For no more than a few hours of your time you will get a better understanding of your dental practice, its weaknesses, its strengths and the focus of your approach to achieve improved results.To arrange a free consultation with Andy McDougall call 01949 851723 or email info@spoton-businessplanning.co.uk