Volume 14: How Are Your Billing Ratios?
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:
- The ratios are difficult to use for new practices and specialty practices.
- Ratios may be very different when comparing small towns to Toronto.
- Ratios are not perfect but should give a good indication of where your practice sits relative to other practices.
- 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,
- 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.
- 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.
- 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?
- 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
- One Year Later
- Dealing with Unsolicited Offers
- Covid-19 Practice Sales Update
- When is the Right Time to Sell Your Practice and Why?
- Partnership Pitfalls
- The Real Cost of a Dental Practice Set-up
- Smaller Practice Realities
- Dental Market Update - 2019
- Creating Your Own Most Valuable Practice (MVP)
- Small Practice Economics
- The Market is Very Efficient
- How Can Dental Practice Values be Rising and Declining?
- Hygiene as a Value Driver
- The Value of a Good Team
- Is it Time to Move?
- Staging A Dental Practice
- The High Cost of Dying
- Patients - Attract and Retain
- Should I Stay or Should I Go?
- Is There a Buyer for Every Practice?
- Good, Better, Best - The Market has Spoken
- Buying Time
- Patients, Patience, Patients
- A Real Patient
- Why Do a Practice Valuation? I'm not Selling
- Irrational Exuberance or The New Normal?
- Do dental equipment and dental technology affect a practice value?
- Finding and Being a Mentor
- Bigger is Better
- Dave's Top Ten List for Buyers (Vendors should read this too!)
- How Well Do You Know Your Practice?
- Dave's Top Ten List for Vendors
- What will happen to dental practice Values in the next 10 years?
- Your Premises Lease is an Important Asset
- What are Associates Thinking?
- There is Life Outside the GTA
- When Is the Right Time to Sell My Dental Practice?
- Mergers are a Viable Option
- Is Your Associate an Asset or a Liability?
- Has your Practice Facility Kept Up With Your Billings?
- The 100 per cent of Gross Myth
- The Past, The Present and The Future
- Caveat Emptor
- Overpaid Long Term Staff
- Selling your Practice in Stages
- A Potential Pitfall of Selling Shares
- Value in Your Practice Through Balance
- Only Trusted Staff Can Defraud You
- To Own or Not to Own Practice Real Estate? That is the Question.
- Coping With A Large Patient Base
- Successful Dental Practice Transitions
- Taking Care of Business
- The Investing Dentist Phenomenon
- Two areas to focus upon that could negatively impact the value of your practice
- Organize your Debt in Order to Sell your Practice
- Having a Better Team
- How Do I Prepare My Practice For Sale
- How Do I Prepare My Practice For Sale? Part 3
- How Do I Prepare My Practice For Sale? Part 2
- How Do I Prepare My Practice For Sale? Part 1
- Advice to My Son or Daughter Graduating from Dental School
- Transition - What to Expect
- Discussion on Digital X-Rays
- Partnerships and Shotguns
- Strategic Planning - How to Get Started
- Calling All Vendors - Practices have Gone Up in Value
- Purchasers: Expect to Pay More for a Practice because of Lower Professional Corporation Tax Rates
- Matrimonial Practice Valuations
- Purchaser's Guide to Affording a Practice
- Location Improvements Throughout Your Career
- Small Practice Valuations
- Partnerships – The Best and The Worst
- Changing Location When the Opportunity Comes Along
- Visual Presentation of Your Practice
- Presentation of Charts
- Your Premises Lease Can Be Your Worst Enemy
- How to Select an Appraiser for Your Practice
- How Are Your Billing Ratios?
- It Pays to Invest in Your Tangible Assets
- The Importance of Separate Financial Statements
- Five Time Frame Levels to Sell a Practice
- 12 Suggestions to Safeguard Computer Data
- How to Buy a Visible Practice
- Why is there a shortage of good practices today?
- The Importance of Equipment in the Purchase of a Practice
- The Balanced Practice
- Will My Practice Be Saleable in The Future?
- Buyer Be Aware
- Excess Profit - The Second Key
- Patients and Profits are the Keys
- Plan Ahead