Mark Costes DDS The Profitability Accelerator How to

Mark Costes, DDS The Profitability Accelerator: How to Create a Sophisticated Data Driven Dental Practice Mark Costes, DDS

Phase 1 Overview Phase 1 - Focus is Business Awareness, Systemization and Overhead Control Expenses and Overhead targets: 30 -30 -30 -10 (Payroll-Expenses-Dr. Pay-Profit)

Phase 2 Overview Phase 2 - Focus is increased revenue and patient flow. Further emphasis on increasing hygiene production percentage Team Incentives Increased Data Analysis Internal and External Marketing (ROI) Expenses and Overhead targets: 30 -25 -30 -15 (Payroll-Expenses-Dr. Pay-Profit)

Phase 3 Overview Phase 3 - Focus is further revenue increase and overhead decrease. Increased clinical suite Increased capacity Increased providers Specialty services Expenses and Overhead targets: 25 -25 -30 -20 (Payroll-expenses-Dr. Pay-Profit)

Ideal Expense Ratios Payroll – Expenses – Dr. Pay - Profit PHASE I: 30 -30 -30 -10 60% Overhead PHASE II: 30 -25 -30 -15 - 55% Overhead PHASE III: 25 -25 -30 -20 - 50% Overhead

“There’s an epidemic failure within the game to find out what is really happening. ” “Baseball thinking is medieval, they’re asking all of the wrong questions. ”- Peter Brand How does this apply to the profession of dentistry and which analytics are we failing to consider? Where is the opportunity for those of us in dentistry who study analytics?

Moneyball 2001 Oakland A’s and manager Billy Beane lose to Yankees in the playoffs and lose their three biggest stars to free agency (Jason Giambi, Johnny Damon and Jason Isringhausen) Beane’s even bigger challenge: his budget is 1/3 rd of richer teams in the league How’s is he going to rebuild his team without his stars and without a budget?

Bean’s Solution… Data and Statistical Analysis Hires Yale grad and statistical genius Peter Brand Their hypothesis: standard agreed upon metrics in baseball aren’t the only predictors of success (RBI, BA, SB) They recognized that more important stats were (OBA, SP)

The Plan They hired a bunch of “Over the Hillers” and unknowns who were unwanted and hugely undervalued Result: The team won the AL Championship, 20 consecutive games and made it to the playoffs in 2002, 2003

Mining for Data Most dentists measure their practice’s success by tracking a limited number of metrics Expanding the statistics that are tracked and measured analyzed increases clarity in the decision making process and facilitates growth and management opportunities

Data Silos

Playing Dental Moneyball: Data Silos Silo #1: Fixed and Variable Expenses P and L/ Balance Sheet/Scorecard Cost per Procedure Silo #2: Practice Management Software. Practice Analytics Software Silo #3: Departmental Data: Turning nonproducers into Producers Front Office Back Office Hygiene Billing Department Marketing

Data Silo #1: Fixed and Variable Expenses Payroll 30% Lab Fees 9% Dental Supplies 5% Facility and Equipment 9%

Practice #1 The Traditional Baseball Practice, the Battle cry- “Drive Production…”

Phase 1: 30 -30 -30 -10 30 - Total Payroll 30 - Total Expenses (Fixed and Variable) 30 - Doctor’s Pay 10 - Profit 31. 6 - 54. 4 - 32. 9 - (-18. 9)

Practice #2 The Moneyball Practice…

Phase 2: 30 -25 -30 -15 30 - Total Payroll 25 - Total Expenses (Fixed and Variable) 30 - Doctor’s Pay 15 – Profit 22. 5 – 26. 5 – 25. 7 – 25. 3

Data Silo #1: Cost per Procedure How much does it cost to provide each procedure in your office? What is the average and desired adjusted production per hour per doctor? What is the average and desired adjusted production per hour per hygienist? What is the average and desired overhead per operatory per hour?

Data Silo #2: Practice Management and Analytics Software Additional Metrics to Track: Case Acceptance % Production per hour Missed Appointment % Attrition Rate Reappointment Rate Active Patient Hygiene Percentage Incompleted Treatment Total

Data Silo #3: Departmental Data. Front Office as Producers: New Patient Closing Percentage Patient Reviews Case Acceptance

Data Silo #3: Departmental Data-Back Office as Producers: Same Day Treatment Pre-Selling/Co-Diagnosis Patient Reviews Case Acceptance

Data Silo #3: Hygiene Adjusted Production Benchmarks 30% Total office production as a department 3. 0 -3. 3 X Hourly Wage Percentage of Active Patients Active in Hygiene Overall Perio Percentage Adjunct services benchmarks Pre-Selling/Co-Diagnosis Case Acceptance Patient Reviews

Data Silo #3: Billing Department Total Adjusted Production/Collections Ratio should equal 97 -100% Total AR should not exceed average one month collections AR Breakdown: 0 -60 days should be less than 80% of total AR 60 -90 days should be less than 8% Greater than 90 days should not exceed 12%

Data Silo: Marketing Dept Define monthly marketing budget depending on the life cycle of the practice Unique tracking numbers for each lead source Calculate ROI for each lead source

Metrics Reporting, Tracking and Accountabilty Cadence of Accountability(4 DX) Morning Huddle format Weekly Growth (WIG) Meetings Weekly OM/Supervisors Meetings Monthly Team Reviews Quarterly Calibration Meetings