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Volume 14: How Are Your Billing Ratios?

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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.

The Professional Advisory

  1. One Year Later

  2. Dealing with Unsolicited Offers

  3. Covid-19 Practice Sales Update

  4. When is the Right Time to Sell Your Practice and Why?

  5. Partnership Pitfalls

  6. The Real Cost of a Dental Practice Set-up

  7. Smaller Practice Realities

  8. Dental Market Update - 2019

  9. Creating Your Own Most Valuable Practice (MVP)

  10. Small Practice Economics

  11. The Market is Very Efficient

  12. How Can Dental Practice Values be Rising and Declining?

  13. Hygiene as a Value Driver

  14. The Value of a Good Team

  15. Is it Time to Move?

  16. Staging A Dental Practice

  17. The High Cost of Dying

  18. Deal-Busters

  19. Patients - Attract and Retain

  20. Should I Stay or Should I Go?

  21. Is There a Buyer for Every Practice?

  22. Good, Better, Best - The Market has Spoken

  23. Smooth-Sale-ing

  24. Buying Time

  25. Patients, Patience, Patients

  26. A Real Patient

  27. Why Do a Practice Valuation? I'm not Selling

  28. Irrational Exuberance or The New Normal?

  29. Do dental equipment and dental technology affect a practice value?

  30. Finding and Being a Mentor

  31. Bigger is Better

  32. Dave's Top Ten List for Buyers (Vendors should read this too!)

  33. How Well Do You Know Your Practice?

  34. Dave's Top Ten List for Vendors

  35. What will happen to dental practice Values in the next 10 years?

  36. Your Premises Lease is an Important Asset

  37. What are Associates Thinking?

  38. There is Life Outside the GTA

  39. When Is the Right Time to Sell My Dental Practice?

  40. Mergers are a Viable Option

  41. Is Your Associate an Asset or a Liability?

  42. Has your Practice Facility Kept Up With Your Billings?

  43. The 100 per cent of Gross Myth

  44. The Past, The Present and The Future

  45. Caveat Emptor

  46. Overpaid Long Term Staff

  47. Selling your Practice in Stages

  48. A Potential Pitfall of Selling Shares

  49. Value in Your Practice Through Balance

  50. Only Trusted Staff Can Defraud You

  51. To Own or Not to Own Practice Real Estate? That is the Question.

  52. Coping With A Large Patient Base

  53. Successful Dental Practice Transitions

  54. Taking Care of Business

  55. The Investing Dentist Phenomenon

  56. Two areas to focus upon that could negatively impact the value of your practice

  57. Organize your Debt in Order to Sell your Practice

  58. Having a Better Team

  59. How Do I Prepare My Practice For Sale

  60. How Do I Prepare My Practice For Sale? Part 3

  61. How Do I Prepare My Practice For Sale? Part 2

  62. How Do I Prepare My Practice For Sale? Part 1

  63. Advice to My Son or Daughter Graduating from Dental School

  64. Transition - What to Expect

  65. Discussion on Digital X-Rays

  66. Partnerships and Shotguns

  67. Strategic Planning - How to Get Started

  68. Calling All Vendors - Practices have Gone Up in Value

  69. Purchasers: Expect to Pay More for a Practice because of Lower Professional Corporation Tax Rates

  70. Matrimonial Practice Valuations

  71. Purchaser's Guide to Affording a Practice

  72. Location Improvements Throughout Your Career

  73. Small Practice Valuations

  74. Partnerships – The Best and The Worst

  75. Changing Location When the Opportunity Comes Along

  76. Visual Presentation of Your Practice

  77. Presentation of Charts

  78. Your Premises Lease Can Be Your Worst Enemy

  79. How to Select an Appraiser for Your Practice

  80. How Are Your Billing Ratios?

  81. It Pays to Invest in Your Tangible Assets

  82. The Importance of Separate Financial Statements

  83. Five Time Frame Levels to Sell a Practice

  84. 12 Suggestions to Safeguard Computer Data

  85. How to Buy a Visible Practice

  86. Why is there a shortage of good practices today?

  87. The Importance of Equipment in the Purchase of a Practice

  88. The Balanced Practice

  89. Will My Practice Be Saleable in The Future?

  90. Buyer Be Aware

  91. Excess Profit - The Second Key

  92. Patients and Profits are the Keys

  93. Plan Ahead

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