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The Dental Practice Profitability Formula

July 26, 2022

The Dental Practice Profitability Formula

While the most important goal in a practice is to provide the very best care possible, building profitability should also be a priority. With profits come team bonuses, investment in new technology, and other key improvements. Profits also allow for growth and expansion, widening the pool of patients you can serve in the community. Profitability opens so many doors to creating a thriving practice.

While most people understand the basic principle of profitability, most owner-dentists don’t adequately understand what affects the profitability of a dental practice. So, we’ve built a formula to help dental leaders see exactly where profitability comes from. This formula is taught to our clients and profitability is monitored carefully as it's used to drive many practice decisions.

Here’s the formula:

Profitability Formula for Dental Practices

(Visits) x (Production Per Visit) x (Collection Percentage) – (Overhead) = Profits

Looking at this formula, it’s easier to see how different parts of the practice affect profitability.

For instance, let’s look at the first number in the formula, number of visits. If the number of visits goes up, profitability rises. Here are a few things that will increase the number of visits in a practice:

#1: Optimizing the Phones: On average, only about 60% of the incoming calls to practices get answered. Statistically, 1 in every 10 of those calls is a new patient. By increasing the number of answered calls and improving conversion to an appointment, a practice can improve the number of visits in the office and improve profitability.

#2: Re-Appointment: Of all the numbers we can measure in dentistry, reappointment percentage is the one most highly correlated with profitability. (NOTE: most teams believe their reappointment percentage is higher than it is. If you’re not closely tracking reappointments, you likely have room to increase visits in the practice).

Number of visits is just one part of the profitability formula. There are many additional ways to boost profitability in a practice and it’s important to make improvements to all of the numbers in this formula. Practice leaders should revisit this formula regularly to ensure the practice has the funds needed to create a bright future for everyone on the team.

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In this 6-part masterclass training, Dr. John Meis and Wendy Briggs walk through how to turn holes in the schedule into profitable production.

When the entire team understands how this works, you can end a day with more production than you started with while providing patients with what they want most, convenience.

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