Four metrics to watch and evaluate monthly to help avoid any potential practice slow down
By Roger P. Levin, DDS
The years 2020 and 2021 were unusual to say the least. Many orthodontic practices had record years regarding production in 2021 and in the recent Orthodontic Products/Levin Group Annual Orthodontic Practice Survey, the majority of orthodontic practices expressed optimism that they would grow again in 2022. We certainly hope they are right!
However, as people start spending money on travel, entertainment, luxury, and restaurants again, we may find that some families or individuals are less likely to take on the expense of traditional orthodontic treatment, especially given that there are new competitive models, including one DSO offering aligners at a much lower fee than most orthodontic practices.
Prevention is better than catch-up
As always, preventing a downturn and keeping the orthodontic practice growing every year is far better than finding out the practice has declined and then having to take steps to bounce back. The problem for orthodontic practices is identifying that things may be slowing down early enough to take specific steps and actions to ensure that production continues to grow. Here are four metrics that should be closely watched and evaluated regularly by orthodontic practices to help avoid any potential slowdown.
- Watch out for no-shows. In tougher economic times, parents and patients can fall behind in paying their monthly balances. This has a direct correlation to increasing overdue debonds, which then leads to an excess of patients. Overdue debonds represent 100% pure overhead so each visit is a profit loss to the practice. You want no-shows to be under 1%. Measurement: Open chair time.
- Watch for decreased conversions or case acceptance. Look at the average case acceptance for 2018, 2019, and 2021. We typically eliminate 2020 as an unusual year due to COVID-19 when monitoring 3-year statistics. Keep track of the average conversions or case acceptance per month for those 3 years against months going forward. If you see more than a 10% decrease, you should immediately take steps to increase new patient close rates. Measurement: Conversions per month.
- Watch the number of new patients making appointments. Once again, compare the number of new patients making appointments per month to the average for 2018, 2019, and 2021. If you see more than a 10% decrease in the number of new patients scheduling for appointments, you should consider launching an immediate comprehensive referral marketing program. Be sure to include patients, the community, and referring doctors. Referring doctors are currently one of the major overlooked areas by many orthodontic practices. Levin Group now estimates that referring doctors refer approximately $3.6 billion per year of orthodontic production to orthodontic practices. Measurement: New patients scheduled per month.
- Watch for a decrease in insured patients for plans that the practice doesn’t participate in. In good economic times patients are less concerned about paying out-of-pocket for orthodontics, although there are certainly still some concerns. As the economy changes due to economic factors, inflation, or other issues, some parents or patients may only accept treatment if they can use their dental insurance. If you see a decrease in the number of insured patients for plans in which the practice does not participate, the practice may want to consider certain opportunities such as discounts, more beneficial payment plans, patient financing, etc. Once again, use the 10% factor to automatically evaluate more flexible financial options. Measurement: Insured patients that reject treatment because their insurance isn’t accepted.
These four metrics are not measured by many practices, but they should be monitored closely. We suggest that you evaluate the statistics monthly and if you see a 10% shift in any of these measurements, take immediate action to avoid an orthodontic practice slow down. A decrease of 10% or more in any of these measurements indicates a change in practice condition that will have an overall negative effect. Keep in mind that a 10% decline can become 20% or more and that the best way to avoid any decline is to prevent one. These statistics will help you to evaluate the monthly status of your practice and avoid a slowdown.
What would you do in a turnaround?
In a recent symposium, I had the opportunity to explain to orthodontists that the same steps that you would take to turn around a practice are the same steps that you would use to grow a practice. I gave the example of a practice declining 20% and asked the audience what steps they would take. I received excellent answers including implementing a referral marketing program, hiring professional relations coordinator, increasing the number of positive reviews, and retraining the treatment coordinator to improve consult close rates. I then explained that these strategies are the same strategies that would be used to grow a practice 20% right now. It is easier and more enjoyable to grow a practice 20% than it is to turn around a practice within a difficult, stressful, and depressing environment. Turnarounds are certainly necessary but taking the exact same steps now to avoid any chance of a slowdown will also increase production and maintain practice success within a stable and enjoyable environment.
The old health care adage is true: An ounce of prevention is worth a pound of cure. I encourage practices to track the four statistics included in this article monthly and if you see any orthodontic practice slow down, take immediate action. It’s better to implement practice growth strategies now as an antidote to practice decline before you ever need it. OP
Roger P. Levin, DDS, is the CEO and founder of Levin Group, a leading practice management consulting firm that has worked with over 30,000 practices to increase production. A recognized expert on orthodontic practice management and marketing, he has written 67 books and over 4,000 articles and regularly presents seminars in the United States and around the world. To contact Levin or to join the 40,000 dental professionals who receive his Ortho Practice Production Tip of the Day, visit levingroup.com or email [email protected].