Metrics Pediatric

Pedometrics: The ‘scaffolding’ of a successful pediatric practice
These experts in pediatric dentistry realize there are many differences between practices designed for adults and those designed for children. Developing the practice around those differences will make a pediatric venture more successful.

Sanger Roger G Dds
Scott Lauer

In a previous series for Dental Economics, the term pedonomics is defined as the economic impact of pediatric dental care. With pedonomics, profitability management supplements productivity analysis as dental reimbursement declines as a percentage of practices’ usual, customary, and reasonable (UCR) fees.

It’s no longer enough to focus on what is billed in fees per procedure; offices also need to focus on their profit per visit. Practicing better, faster, and easier dentistry with new pediatric game-changing technologies can shorten the time needed per visit. This results in an increase in the number of procedures performed, which can yield greater overall profitability despite lower reimbursement rates.

With the birth rate at about four million per year in the US,1 a caries epidemic that is now attacking preschoolers to teens, a pediatric dental uninsured rate hovering at 10%,2 and an explosion of new technology in innovative pediatric dental materials and equipment, a new paradigm shift into pediatric dentistry has begun.

Traditionally, analyzing the clinical and business metrics of pediatric dental practices without accounting for how they differ from adult practices has led to incorrect conclusions and poor management decisions. To address this shortcoming, we coined the term pedometrics. Pedometrics refers to the appropriate collection and analysis of the clinical and business metrics for practices that primarily treat children.

Clinical metrics are measurable statistics relating to recruiting, treating, and interacting with patients and their parents. These include new patients (from both internal and external marketing), case presentations, case acceptance, appointment scheduling, appointment incompletion by failure or cancellation, patient doctor visits, patient recall and recare visits, time per procedure, procedural doctor code billing, procedural recall and recare code billing, complete care numbers for new and recall patients, average revenue per new patient, and more.

Business metrics are measurable system statistics that relate to operating and maintaining a practice. These include facility expenses, marketing expenses, staff salaries and benefits, lab-related expenses, supplies or materials expenses, income per days worked, and more.

Pediatric practice metrics versus adult practice metrics
Clinical metrics are generally different in a pediatric practice than in an adult practice. For instance, the average number of new patients per month in pediatric practices is often reported in surveys as being higher than the number of new patients in adult practices. Why? Because the average revenue generated by completed care in a pediatric patient is less than for an adult. Therefore, less revenue per pediatric patient requires that a practice primarily treating young patients attract more new patients than an adult restorative practice.

Likewise, in a pediatric practice, the average time for both doctor procedures and staff procedures is less than in an adult practice due to the behavior management of children. Moreover, some pediatric practices prefer to age out older teenagers, which means these practices must attract new young patients if they are to replace the lost production from teenagers. A smart pediatric practice often establishes a teenage atmosphere as well as child décor if both cosmetic and orthodontic care are offered. So, when comparing new patient metrics, the child, teen, and adult care variables within this metric are important.

Similarly, business metrics in a pediatric practice are generally different than in an adult practice. One reason is that laboratory expenses in a pediatric practice are often negligible, while they can be substantial in an adult practice. Another reason is that pediatric practices tend to require less investment in expensive equipment than do adult practices.

The point is that it’s like comparing apples to oranges if someone attempts to compare certain clinical and business metrics in a pediatric and teenage practice to those of an adult practice. While the daily billed production per doctor from treating patients might be higher in an adult practice, the profit per day may be higher in the pediatric and teenage practice due to the greater number of patients seen per day, the negligible lab expenses, and the lack of subsequent appointments.

The “scaffolding effect” of metrics in making strategic decisions
Clinical and business metrics form the “scaffolding” with which strategic management plans toward greater profitability are erected. However, don’t get caught up in metric paralysis where you measure, measure, measure and never apply human interaction to effect positive change. Instead, measure, analyze, decide, manage, and repeat.Using metrics in a proactive way will stop knee-jerk reactive management and lead to proactive planning that will have a positive effect on profitability.

Accounting for capacity
Capacity must be factored in when analyzing the metrics of a pediatric practice. What good does it do to increase new patient numbers with the goal of boosting production if the number of doctor appointments is limited by a shortage of (1) available days to schedule (time), (2) available operatories (space), (3) available staff (human resources), and so on? Likewise, the needs of new patients (high caries, low caries, no caries) also must be factored in. A practice that treats children with low to no caries rates will need greater capacity to generate the same production as a practice that treats children with high caries rates because hygiene-dispensed services produce considerably less revenue than doctor-dispensed services.

Marketing is a favorite topic among pediatric dental practices. Many practices pride themselves on marketing metric success when the scheduling of new patients is well into the future. The scheduling metric, however, may indicate that capacity has been reached as doctors, chairs, staff, and more are insufficient to provide greater access to urgent scheduling. A practice that cannot accommodate same- or next-day new or returning appointments may need to examine its capacity. The old adage is often overlooked—the most important day in scheduling is today, and the next most important day is tomorrow. After that, patients lose interest. The point is that one metric (i.e., new patients) may be reduced by another metric (available appointments) when appointment availability does not match marketing response.

This is the basic concept behind pedometrics. 

References
1. Martin JA, Hamilton BE, Ventura SJ, Osterman MJK, Wilson EC, Metthews TJ. Births: Final data for 2010. Natl Vital Stat Rep. 2012;61(1):1-72.

2. Nasseh K, Vujicic M. Dental benefits coverage rates increased for children and young adults in 2013. American Dental Association website. http://www.ada.org/~/media/ADA/Science%20and%20Research/HPI/Files/HPIBrief_1015_3.ashx. Accessed February 28, 2018.


Mastering clinical metrics
Clinical metrics are related to recruiting, treating, and interacting with patients and parents. There are five main categories of clinical metrics: marketing, sales, scheduling, production, and collection. These metrics should be computed on daily, monthly, quarterly, and yearly bases.

Marketing metrics
New patients per month/year and by amount of revenue produced—These metrics are influenced by the caries rate (high, medium, low, none) of the new patient and the funding source for care (private pay, indemnity insurance, PPO, government program). Target marketing to parents of children with higher needs. Greater funding may require smaller numbers in this metric. Both external and internal metrics for sourcing new patients should be calculated.

Set your new-patient goals based on your desired mix for caries rates and funding sources with profitability in mind. For instance, one in three children today is covered by a governmental dental plan. These children tend to have higher caries rates.

A pediatric practice may accept children on these state or federal plans, but regular analyses should be performed to ensure the practice’s patient profile does not become too skewed toward this patient population.

Recall patients per month/year with amount and percentage of total patients—This metric is influenced by customer satisfaction. Parents who like the way they and their children were cared for will often schedule an appointment to return (six-month recall). Even parents who like the way they and their children were cared for but decide to delay recommended care will schedule a return care evaluation. Pediatric practices must respect parents’ time for customer satisfaction today. For example, the “waiting room” should now be the “reception experience,” with a minimal amount of time spent waiting.

New or returning emergency patients, urgent-care patients, and episodic-care patients—These metrics, while sometimes involving patients with problematic behaviors, are useful in filling up the schedule, increasing production and collected revenue, gaining new patients, etc. Never consider these patients undesirable. If this metric is high, buffer capacity should be built into the schedule to accommodate these patients.

Sales metrics
Case acceptance rate and average dollar amount of case per new and returning patient—This metric is influenced by the caries rate and funding source, plus the ability of the doctor and staff to diagnose, plan treatment, and get acceptance for both care and payment. You should not aim for higher new-patient numbers with high caries rates if case acceptance is low; your focus should be on increasing your case acceptance rates. If your case acceptance metric is low for new patients, it is probably lower than it should be for recall patients, as well.

Same-day treatment sales and production—This is a new metric for most practices. Same-day care, although demanding of all, can remedy scheduling upsets and enhance profitability if the entire staff is committed to work as a team. Millennial parents like same-day care.

Scheduling metrics
Alternative care choice, cancellation, and/or failure rate—These metrics are influenced by the behavior of parents and children and such considerations as need, time, convenience, fear, and finances. A cancellation and/or failure rate above 10% may indicate a poor or nonexistent scheduling policy.

Production metrics
Billable revenue generated over a period of time (hour, day, month, quarter, year) by dental provider (dentist, dental hygienist, dental auxiliary)—These metrics are influenced by state regulatory compliance (who can legally do what) and by the treatment plans that are presented to and accepted by both new and returning patients. These metrics are also influenced by the owner/doctor’s decision regarding what constitutes a “workweek” or a “workday”—four days a week, seven hours a day, etc. Fee analysis also plays a role here. The most-used procedural codes and their fees should be evaluated and adjusted for inflation and/or community provider comparison every six months.

Collection metrics
Collection metrics include the following:

• Revenue collected as amount and as percentage of billed production by third-party entity (check and/or direct-wire transfer), patient direct pay at visit, patient pay from billing, or patient use of credit services

• Percentage and aging of accounts receivable by time periods (under 30, 60, or 90 days; over 90 days; collection service, etc.)

• Write-off amounts and percentage from patient direct discounting, PPO contracting, or governmental program contracting

In general, adjusted collections should be at least 96%, and accounts receivable should be no greater than an average of one month’s adjusted production. (Adjustments take write-offs, etc., into account.)

This myriad of clinical metrics is influenced by the doctor’s decisions on the practice’s patient payment policies, contracting into PPO and governmental program provider networks for the practice, etc. As PPO and governmental plans outpace indemnity insurance and private pay plans, these metrics need significant attention.

Mastering business metrics
These are segmented more by facility, human resources, technology, external services contractors, specialized consultants, etc., and generally are reported by historical accountancy on monthly, quarterly, and yearly bases. Multidoctor and multioffice groups may have different ranges as consolidation of services is achieved.

Facility and equipment metrics
Lease or mortgage payments, maintenance, janitorial, utilities, telephone, cable, taxes, etc.—The normal range is 5%–10% of collections, depending on ownership status and size of building.

Equipment lease or debt, tenant improvements lease or debt—This variable expense depends on the age and growth curve of the practice. Newer or expanding practices will have a higher range, and the amount and length of the lease or debt will also influence this metric.

Marketing metrics
Marketing, website and social media, advertising, promotions—The normal range is 3%–4% of collections, but with aggressive and diversified technology, the metric can be higher.

Human resources metrics
Staff salaries, benefits, taxes (excluding associate doctors)—The normal range is 19%–27% of collections, depending on the size of the staff and their qualifications (dental hygienists versus dental assistants, office management versus clerical) and the types of benefits (insurance, retirement plans, etc.).

Supplies metrics
Dental supplies—This variable expense has a normal range of 4%–6% of collections, depending on the complexities of orthodontic, pulpal, and restorative care delivered.

Office supplies, bank, credit card, postal, computer, printings, and fees—This variable expense has a normal range of 2%–5% of collections, depending on the complexities of computer and credit usage.

Contracted service metrics
Contracted laboratory services—This variable expense is usually below 2% of collections unless orthodontic services are delivered.

Contracted service consultants (accounting, legal, insurance, business)—This variable expense has a normal range of 2%–5% of collections, depending on associates, partners, number of offices, network contracts, etc.

The breakeven point: The best motivator
One of the most motivating metrics for any practice is knowing the point during the month when the month-to-date collections equal the month’s total fixed expenses plus month-to-date variable expenses. After that point, the only expenses that will need to be covered before profit is declared are month-to-go variable expenses, which are far lower than fixed expenses. This point is called the breakeven point—the sooner it comes in the month, the more profitable the practice will be in that month. The same is true on a quarterly and yearly basis.

Of course, you can make your breakeven point arrive earlier simply by reducing expenses. Better yet, by embracing pedometrics, you can combine controlling expenses with incorporating game-changing technologies and techniques that allow you to work better, faster, and more easily and achieve greater profitability. We want you to choose the latter.