Five ways to effectively measure your practice’s performance

Oliver Gelles offers reliable metrics to gauge production and efficiency

In today’s challenging economic landscape, marked by factors like inflation and increased competition, the orthodontic industry faces unprecedented hurdles. Gaidge numbers show that 2022 starts retracted by 6%, with year-to-date 2023 showing a continued decrease of 3.5%. Maximizing your production and efficiency will allow you to manage this demand decrease.

It’s clear that practices now more than ever require a set of clear, reliable metrics to gauge their performance. Let’s delve into these challenges and explore five essential ways to effectively measure your practice’s performance.

1. Kept New Patient Exam Rate

The first key metric to assess is your Kept New Patient Exam Rate. Simply put, are your clients showing up for their exams? This metric holds the key to optimizing your front office efficiency. It’s akin to the art of “PREsuasion,” as coined by Brian Wright. Data indicates that potential new patients tend to contact up to five orthodontic practices before making their decision. To thrive in this competitive environment, it’s imperative to innovate your processes, attract new patients, and simultaneously reduce costs, stress, and no-shows.

2. 45-Day Treatment Recommended Conversion Rate (TRC)

Next on the list is the 45-Day Treatment Recommended Conversion Rate. This metric is a game-changer in the world of orthodontics. Unlike the erratic and noisy nature of Case Acceptance, TRC offers a stable and reliable measure. OrthoFi’s 45-Day TRC, which calculates the percentage of patients’ recommended treatment in the last 45 days who converted, is a far more dependable metric. It provides a short feedback window to test fee increases while ensuring consistent conversion rates and optimizing your practice’s growth.

Several key factors influence your TRC, including the ease of your scheduling system, the number of appointments needed to apply braces, the efficiency and timeliness of your new patient processes, and the affordability of your treatment plans.

3. Same-Day Contract Rate

The Same-Day Contract Rate is another pivotal metric. It measures the percentage of patients who sign contracts on the day of their initial exam. Why is this so crucial? Because the moment prospects leave your office, the chance of converting them falls dramatically. OrthoFi research shows that the likelihood of converting a patient drops by 20% the moment they step out the door and decreases by 35% for children and 45% for adults over the first 2 weeks. For many practices, follow-ups are often done in batches every other week, which cuts their chances of conversion by almost half.

The Same-Day Contract Rate also has a direct correlation with your overall conversion rate. If your fees exceed the elasticity of your local patient base, you can expect this rate to drop. However, it’s essential to note that a drop in Same-Day Contracts doesn’t necessarily mean a plummet in your conversion rate. Thus, focusing on Same-Day Contracts is a potent strategy to boost your practice’s growth.

In addition, getting patients to complete intake forms before their exams is essential to Same-Day Contracts. This approach ensures that you have all the necessary information to present the total out-of-pocket cost during the exam, as insurance benefits have been verified ahead of time.

4. Aggregate Cash-Flow Management

As your practice grows, it becomes paramount to manage your cash flow effectively. Expenses can sometimes outpace income, and that’s where the strategy of Aggregate Cash-Flow Management comes into play. This strategy enables you to intelligently create leverage in your business while maintaining a healthy and consistent cash flow.

With this approach, you can offer flexibility to those patients who need it, ensuring they can start treatment without financial barriers. Simultaneously, you can provide fair and enticing terms to patients who can afford to pay more upfront. The two key performance indicators for tracking your aggregate cash flow are Same Day Cash (SDC) and Payment % of Treatment Length.

Same Day Cash (SDC) measures the combination of the money you receive each day from pay-in-full (PIF) patients and down payments (DPs). The formula for SDC is (PIF + DP) divided by Total Patient Responsibility Production, where Patient Responsibility Production is Total Production minus Insurance Production. OrthoFi consultants typically suggest that 20% of patients should pay in full, while the remaining 80% of receivables come through with 17% down payments. This results in an average SDC of approximately 34% of your patient receivables, providing sufficient cash flow to meet your office’s financial obligations.

Payment % of Treatment Length monitors how closely your financing terms align with the average estimated treatment length. This approach allows you to manage risk appropriately, offering extended terms to those in need, without increasing aggregate risk or front office burden by promoting long-term payment financing across your practice.

When you effectively monitor these powerful metrics, you can confidently manage your aggregate cash flow.

5. Net Collection Rate

The final key metric is the Net Collection Rate. This metric measures how effectively you collect on all accounts for new and existing patients, encompassing insurance and cash receivables. By tracking Net Collection Rate, you can keep a watchful eye on delinquency management while expanding your patient base.

Conclusion

These five key metrics empower you to assess your conversion rate in real time and over an extended period, helping you identify areas of opportunity. This comprehensive understanding of your practice’s performance allows you to predict your future more accurately. By learning from the past and applying these metrics, you can master your practice’s performance and ensure its long-term success in the ever-evolving world of orthodontics.