The revenue black hole: Where your dental dollars disappear

There are three basic rules involved with revenue planning for a dental practice:

1. Not every patient will book an appointment.
2. Not every patient will show up for their appointment.
3. Not all patients will accept the recommended treatment.

Alex Nottingham.

In this article, I use a black hole as a metaphor to demonstrate revenue attrition at each step of the dental patient journey. This model will show you where the revenue disappears, and it suggests some simple changes you can make that can have a profound impact on revenue generation.

For this exercise, let’s assume $5 million in new patient opportunities come from advertising, word of mouth, and insurance (if applicable). Let’s look at what happens as the patient progresses along the patient journey.

Step one: The phone call

The first interaction in a patient’s journey with your practice is the phone call they make to your office. Research shows that typically only 35% of new patient calls convert to appointments. Therefore, that $5 million in opportunities is immediately reduced by 65% to $1.75 million -- a “loss” of $3.25 million.

Why is this important?

Simply put, you will never treat a patient who doesn’t book an appointment. Therefore, the first step in revenue generation begins with training your team to make the most of every opportunity on the phone when a new patient calls your practice.

Start with the phone call

It’s important to start with phone calls -- this is where people form opinions about what visiting your office and agreeing to treatment with you will be like. It is also where you establish a rapport with a new patient. This 65% potential revenue loss is so significant that it should be obvious that you must start training your team on the phones to have any hope of improving your bottom-line success.

Step two: Showing up

Research shows that only 85% of patients show up for their appointment. Our original $5 million in opportunities was slashed by a 65% loss due to failed phone call conversion, and it is further reduced by 15%. We went from $1.75 million and are now at $1.5 million in opportunities -- a loss of another $250,000.

This lost opportunity boils down to a failure to establish the importance and value of the appointment to the patient during their initial call (when they made the appointment). It is critical that the staff member who is working with patients on the phone establishes the value of the appointment and gets a commitment from the patient that they will honor their appointment.

Step three: Case acceptance

It’s estimated that, on average, only 60% of patients accept the initial treatment recommended by the clinician. This represents another significant loss in revenue. The original $5 million in opportunities is now only $900,000.

In reality, when you analyze the types and the dollar value of the treatment that is accepted, our measurement of “real case acceptance” turns out even lower -- more like 30%. This adjusted figure is because of patient negotiation and modification of the recommended treatment to accommodate the patient's desires.

So what may look like "acceptance" of a treatment plan may in reality be the patient only "buying" half of what you suggest. This results in another significant loss of revenue.

Final results

We started with $5 million in opportunities but ended up with only $450,000. That’s a loss of $4.5 million, or 91%! That’s shocking.

What can you do about it?

Small changes in how you and your team operate at each stage of the patient journey have a massive impact on your dental practice’s revenue. Understanding your strengths and weaknesses is the first step in identifying areas where you can train your staff. Training, effective patient communication, and a focus on service are vital for your long-term success.

Alex Nottingham is the CEO and founder of All-Star Dental Academy. Among his works, he has authored a book titled Dental Practice Excellence: 3 Steps to an All-Star Practice and leads an online training event.

The comments and observations expressed herein do not necessarily reflect the opinions of DrBicuspid.com, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.