“I didn’t see it coming.”
“How was I supposed to prepare?”
“I had to lay off my entire staff.”
“My bills are all overdue.”
“This will completely change how we provide dentistry.”
“Where can I get PPE?”
“I’m so scared.”
Have you said or felt any of these things in the last few months? We all have. The impact of the COVID-19 pandemic on our personal and professional lives has been profound. Most of us didn’t see this crisis coming, and even if we had, preparing for it would have been difficult, to say the least. All this being said, now is our moment of truth, isn’t it? Over the next few weeks, months, and even years, how we choose to respond to COVID-19 will be our real test.
If you are like most dental practice owners or team members, you are likely scrambling to figure out a good plan for responding to the pandemic. Planning is a great way for us to regain a sense of control. Making a plan fills us with a sense of anticipation and confidence that things are going to improve. Here’s the good news: Things are going to improve. This pandemic will end. What is still uncertain, however, is how things will look for our dental practices and team members when the pandemic has passed.
We’re here to help. Dental Intelligence has put together a simple, step-by-step plan that any dental practice can follow to “rebound” from COVID-19. Two brief definitions of “rebound” are helpful here:
- Bounce back through the air after hitting a hard surface or object
- Recover in value, amount, or strength after a previous decrease or decline
Both definitions apply, right? We’ve all hit a “hard surface,” so to speak. Almost everyone has felt some pain from the pandemic. Some have been devastated by the loss of a loved one, others have seen or will yet see a serious impact on their jobs and finances, and many have struggled with increased feelings of isolation, depression, and anxiety. “Hard surface” indeed. Bouncing back is still possible, but not without some help.
The second definition also resonates. We’re all anxiously hoping that dental practices can recover “in value, amount, or strength” from the hurricane-force winds of COVID-19. Having a recovery plan is absolutely critical. But what is included in that plan and how it will be implemented will make all the difference.
Here’s our simple rebound plan, with action items for each step:
- Front-Load Your Revenue
- Schedule Your Best Patients
That’s it – two steps. Although there are many other important things for you to focus on, these two are critical to a healthy recovery.
Front-Load Your Revenue
Unless you’ve discovered some government-approved way to still practice dentistry as you did before COVID-19, you’ve likely seen a huge decrease in revenue. And even if you’ve been providing emergency care to patients in need (and thank you to all that have compassionately and courageously done so) your normal sources of practice revenue have taken a huge and sustained hit.
Obviously, this isn’t something you’ll recover from overnight, or even over several weeks’ time. Reopening your practice and getting as many patients back in for treatment (while accounting for everyone’s safety) is crucial. But just filling your schedule right now (and we know that’s absolutely been happening) isn’t enough. You’ll also need to pay attention to the type of dentistry you are scheduling in order to jump-start your cash flow. Simply put, you’re going to need a lot of money coming in and as quickly as possible.
Let’s start with Average AR Days. Uhm, okay, what exactly are “Average AR Days?” Great question!
Average AR Days: This is the average time that it takes for your practice to receive payments owed to you – in terms of receivables – from your patients and from insurance claims.
Most insurance companies pay at around 30 days. The industry average for AR Days is 45 days, which means there is a 15-day buffer built-in to allow for claims to be paid. If this number goes above 45 days, your cash flow is upside down and that’s not healthy for your practice.
There are several ways that paying attention to AR Days can impact the financial health of your practice, including:
- It can indicate the amount of production your practice had during a specific time period
- It reveals how quickly patients are paying their bill
- It indicates if your practice’s collections process is working well
- It can help you understand what the state of patient satisfaction is
- It highlights if there are issues with certain patients’ insurance providers
- And it shows if credit is being extended to patients that may not be creditworthy.
Think of it this way. If a patient receives treatment from you at a cost of $5,000 on July 1st, when will you see the full payment (patient portion + insurance portion) of that $5,000? Before COVID-19, the average time for a financially sound practice was 45 days. Meaning, treatment on July 1st, payment on August 15th. Since the start of the pandemic, however, this number has doubled. That’s right, practices aren’t seeing that $5,000 for as many as 90 days or more. Multiply that by every patient and you can see the potential for a huge problem. Even though you still need to pay your employees, your vendors and everything else included in your overhead each month, having a 90-day or longer gap between services provided and payment received just isn’t sustainable.
So, what’s the action item here? At the very least, it’s to be aware. To understand that in order to counteract the fact that you’ve had little to no revenue coming in during the pandemic, you’re going to need to avoid a “business-as-usual” approach to your scheduling. Your first few months back need to be some of the highest-producing months your practice has ever had. Scattering a few high-dollar cases in between checkups and fillings is not going to be the best way to increase cashflow. You need to schedule the right patients so your operatories are filled with the patients most in need of treatment and who are most likely to promptly pay you for that treatment.
Schedule Your Best Patients
To help you with this one, we’ve created something we call our Dental Intelligence Profitability Formula™. Here’s what that looks like:
There’s a lot to take in here, but for the sake of simplicity, here’s what you need to understand: There are only two ways to increase production in a dental practice – Visits and Production Per Visit (PPV). That’s it. You can either add more patients to your schedule (Visits), more production per patient visit to your schedule (Production Per Visit), or some combination of both.
The focus here is on increasing Production Per Visit (PPV). This is the quickest, most effective way to accomplish step one – increasing revenue – in your COVID-19 recovery plan. You’ve probably heard the saying that goes “If you always do what you’ve always done, you’ll always get what you’ve always got.” Completely applies here. You can’t afford to only “get what you got” before the pandemic. That means that who and how you schedule will have to change.
Before the start of the current pandemic, around 44% of the eighty million patients in our database didn’t have a currently scheduled appointment with their dentist or hygienist. That’s over 35 million patients! As you can imagine, the percentage of unscheduled patients has exploded in the last few months – it’s now at over 65%, meaning over 50 million patients are currently unscheduled. You don’t need an advanced math degree to realize that there’s no possible way for all of that treatment to be rescheduled at the same time. Proper prioritization is a must.
First and most importantly, schedule the patients who have urgent and even emergency conditions that need to be treated. This includes those who have called to schedule and also those you know who have significant pain, serious gum disease, or other major concerns that weren’t addressed before and during the shutdown.
Second, focus on the patients that had treatment presented prior to the pandemic but which wasn’t completed before your office closed. Some of these had scheduled appointments that were canceled, but many hadn’t yet accepted the presented treatment. Their condition very likely has gotten worse. They need help. You give help. Seems like an ideal match.
Remember the goal here – providing the right treatment, to the right patients, and at the right time. In these first months back, your schedule needs to be packed with these patients. You NEED your first few weeks to be front-loaded with high-need, revenue-generating patients. This isn’t about adding to your personal checking account – this is about the financial health and viability of your practice and team members. To be clear, these are the patients with the most urgent need for healthcare. They are the patients with insurance that has a high and efficient reimbursement rate.
To summarize, having a full schedule isn’t enough. You need the right kind of patients who can help slingshot your practice toward full health again. Scheduling these types of patients will likely require a robust software solution that does much of the filtering for you. But even that won’t be adequate. You also need a plan that involves your entire team in a shared strategy. 2020 can still be one for the history books… and in a great way!
To help you get started, Dental Intelligence is here to assist in your recovery. Visit us today to take advantage of our no-cost practice analysis and begin your journey to success.