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Articles

The Professional Advisory

  1. Is it Time to Move?
  2. Staging A Dental Practice
  3. The High Cost of Dying
  4. Deal-Busters
  5. Patients - Attract and Retain
  6. Should I Stay or Should I Go?
  7. Is There a Buyer for Every Practice?
  8. Good, Better, Best - The Market has Spoken
  9. Smooth-Sale-ing
  10. Buying Time
  11. Patients, Patience, Patients
  12. A Real Patient
  13. Why Do a Practice Valuation? I'm not Selling
  14. Irrational Exuberance or The New Normal?
  15. Do dental equipment and dental technology affect a practice value?
  16. Finding and Being a Mentor
  17. Bigger is Better
  18. Daves Top Ten List for Buyers (Vendors should read this too!)
  19. How Well Do You Know Your Practice?
  20. Dave
  21. What will happen to dental practice Values in the next 10 years?
  22. Your Premises Lease is an Important Asset
  23. What are Associates Thinking?
  24. There is Life Outside the GTA
  25. When Is the Right Time to Sell My Dental Practice?
  26. Mergers are a Viable Option
  27. Is Your Associate an Asset or a Liability?
  28. Has your Practice Facility Kept Up With Your Billings?
  29. The 100 per cent of Gross Myth
  30. The Past, The Present and The Future
  31. Caveat Emptor
  32. Overpaid Long Term Staff
  33. Selling your Practice in Stages
  34. A Potential Pitfall of Selling Shares
  35. Value in Your Practice Through Balance
  36. Only Trusted Staff Can Defraud You
  37. To Own or Not to Own Practice Real Estate? That is the Question.
  38. Coping With A Large Patient Base
  39. Successful Dental Practice Transitions
  40. Taking Care of Business
  41. The Investing Dentist Phenomenon
  42. Two areas to focus upon that could negatively impact the value of your practice
  43. Organize your Debt in Order to Sell your Practice
  44. Having a Better Team
  45. How Do I Prepare My Practice For Sale
  46. How Do I Prepare My Practice For Sale? Part 3
  47. How Do I Prepare My Practice For Sale? Part 2
  48. How Do I Prepare My Practice For Sale? Part 1
  49. Advice to My Son or Daughter Graduating from Dental School
  50. Transition - What to Expect
  51. Discussion on Digital X-Rays
  52. Partnerships and Shotguns
  53. Strategic Planning - How to Get Started
  54. Calling All Vendors - Practices have Gone Up in Value
  55. Purchasers: Expect to Pay More for a Practice because of Lower Professional Corporation Tax Rates
  56. Matrimonial Practice Valuations
  57. Purchaser's Guide to Affording a Practice
  58. Location Improvements Throughout Your Career
  59. Small Practice Valuations
  60. Partnerships – The Best and The Worst
  61. Changing Location When the Opportunity Comes Along
  62. Visual Presentation of Your Practice
  63. Presentation of Charts
  64. Your Premises Lease Can Be Your Worst Enemy
  65. How to Select an Appraiser for Your Practice
  66. How Are Your Billing Ratios?
  67. It Pays to Invest in Your Tangible Assets
  68. The Importance of Separate Financial Statements
  69. Five Time Frame Levels to Sell a Practice
  70. 12 Suggestions to Safeguard Computer Data
  71. How to Buy a Visible Practice
  72. Why is there a shortage of good practices today?
  73. The Importance of Equipment in the Purchase of a Practice
  74. The Balanced Practice
  75. Will My Practice Be Saleable in The Future?
  76. Buyer Be Aware
  77. Excess Profit - The Second Key
  78. Patients and Profits are the Keys
  79. Plan Ahead

Volume 14: How Are Your Billing Ratios?

Download the PDF version now!

Quite often when I speak to groups of dentists I talk about ratios in a dental practice. Today I am writing about Billing Ratios so that you can compare your practice to them.

First to set some of the parameters:

  1. The ratios are difficult to use for new practices and specialty practices.
  2. Ratios may be very different when comparing small towns to Toronto.
  3. Ratios are not perfect but should give a good indication of where your practice sits relative to other practices.
  4. The ratios assume that the provider is working forty eight to fifty weeks per year.

A) Billings per day: Doctors

Experienced doctors should be able to bill $100,000 per day of the week that they work. That is to say if a doctor works four days per week his personal billings should be about $400,000 per year. This would include the hygiene examination fee. I have seen dentists doing $150,000 per day of the week that they work but these are the exception to the rule.

What can go wrong to not achieve these results?

If there is a limited patient base, the practitioner’s income could be much lower as his or her time is expanded to fit the patient load.

B) Billings per day: Hygienists.

Hygienists have three levels of production,

  1. Limited soft tissue management program would have 5% to 15% of the adults in the practice with periodontal appointments. Billings, excluding the doctor’s examination fee, would be about $800 per day or about $40,000 (per day of the week they work) over the course of a year. In other words if a hygienist works three days one would expect billings of (3 X 40,000) $120,000 per year. This is net billings after missed appointments etc.
  2. Moderate soft tissue management patients would have 25% to 45% of the adults in the practice with periodontal appointments. Billings, excluding the doctor’s examination fee, would be about $1,000 per day or about $50,000 (per day of the week they work) over the course of a year. In other words if a hygienist works three days one would expect billings of (3 X 50,000) $150,000 per year. This is net billings after missed appointments etc.
  3. Strong soft tissue management patients would have 50% to 70% of the adults in the practice with periodontal appointments. Billings, excluding the doctor’s examination fee, would be about $1,200 per day or about $60,000 (per day of the week they work) over the course of a year. In other words if a hygienist works three days one would expect billings of (3 X 60,000) $180,000 per year. This is net billings after missed appointments etc.

What can go wrong to not achieve these results?

  1. The hygienist has too many last minute cancellations which cannot be filled. This would have a negative impact on achieving the desired results. To overcome this problem reduce the Hygienist’s hours so as to not use all of the patient base the do the original bookings, thus there would be patients available to fill in the openings as cancellations cause holes in the schedule.

Not charging the current fee guide can certainly have a negative impact. To overcome this problem meet with the staff to set a new direction to better reflect the current fee guide.

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