Dr James, 0s:

Today we're here to talk about the metrics that matter which is exactly the title of this podcast and we're gonna say that what we mean is obviously profitability both for principles and associates of course. I'm joined today by Mr Derek Turner and Alon Preiskel and both of them have a wealth of experience running dental practices and they work together on an extending project called Collaborate Dental which investigates exactly that. We're here today to talk about what numbers we need to monitor to be the best version of our styles when it comes to the business of dentistry, give you the hot facts and what Alon and Derek have learned over the years in order that we all might benefit and become better dentists connected to, of course. Looking forward to this episode. As ever, you can claim your CPD for this episode within the official Dentists Who Invest Smart Money Members Club. Smart Money Members Club also includes multiple mini courses and webinar series on finance for dentists, including how to become as tax efficient as possible, as well as understanding investing. All of this content counts as verifiable CPD, and you can download your certificates there and then upon completion of each lesson. In addition to this, we also include a whopping 10% discount on your dental indemnity and a 5% discount on lab bills for dental principals, amongst other perks and discounts for members. Please use the link in the description to claim your verifiable CPD for this episode. Alon and Derek, welcome to Dentists Who Invest Podcast, the metrics that matter. And I suppose to set the scene, it is important to say that you both own a company together which monitors KPIs for principles, but also this is the stuff that the associates can use as well. And over the years of doing this, you find that there are some very high-leverage KPIs that just matter above and beyond everything else, and that's what's gonna be the topic of conversation in today's podcast because that's the gold dust, and you've seen this in the field. Hi James, great to uh join you. Nice one. And would you say that that's a fairly apt description what I just said?

Alon, 2m 6s:

Absolutely. Um and so it's uh having uh yeah, it's all about understanding your business.

Dr James, 2m 16s:

You can only manage what you measure and you master what you measure, a wise man once said as well. I've never actually heard that you can only manage what you measure, but I guess it makes sense too. And the number of times I've bothered to investigate uh what's going on on a deeper level and get the actual metrics, and I'm like, right, bang, that's what we fix right there, is just crazy. But you kind of have to go through that to experience it really, and that is that is your key philosophy at collaborate dental, of course. So, Derek, Alon, we were catching up just before the podcast started, and I said to you guys, what are the three give me, give me three of the biggies that when dentists get clarity on these KPIs, these three specific KPIs, three of the biggest ones, they tend to be the ones that are most pivotal to their business, or they really help the business move forwards and become more profitable. So we talked about the three, and you know what? I'm not gonna spoil them. I think that we should just reveal them as they come up during this podcast, and we can we can have some fun that way. But yeah, let's let's jump straight in with those because I think that could be a good place to start.

Derek, 3m 28s:

Excellent. Well, let's jump in with the first one, maybe. I mean, um, we have a a number of um potential clients um come and talk to us, and um the initial conversation predominantly is about uh the need for for more patients. So that the the first key metric for us is actually is how you manage your existing patients, not funnily enough, uh the measurement of new patients. Um, and how it is along the lines of how you invest your time and your processes uh and monitoring your KPIs linked to your existing patients. Um, our viewpoint on it really is about measuring um such elements as your forward bookings, um, dire utilization, etc., um, which we'll come on to in a little bit more detail shortly, um, to ensure that you're engaging the correct way uh with your existing patients and maximizing uh your touch points and patient journeys with those individuals uh rather than chasing the ever-ending dream of um acquiring new patients all the time. So that's number one.

Dr James, 4m 32s:

Sure. And I guess um I guess with that sort of stuff, you know, it's kind of like another manifestation of the grass is always greener that we always think that we need to get more and more more and move around and have more patients. We actually don't need some marketing terminology. New patients are always gonna be cold leads, whereas the people that you have are gonna be the warm leads, and the amount of people who I see who are just not doing follow-up properly is crazy. And just on that, what would you guys suggest as some useful? I guess, I guess, whenever it comes to actually remedying that, how can dentists follow up better to get those patients back in the dental chair?

Derek, 5m 11s:

Um I mean, I guess as we started this sort of podcast sort of revealing like um you you need to measure um where your current state is, first of all. So the first thing is understanding where you currently are. Um that may be looking at key metrics like um your occupancy rate uh within the diary, it may be like looking at your forward bookings rate or your recalls rate, and actually understanding whether or not you've got a uh an avid um follower of the practice to return. I always compare it really to sort of a leaky bucket, really. Um if if you're imagining sort of new patients coming in the top, if the leak at the bottom, which is your existing patients, far outweighs the rate that you're filling it at the top, your your practice is actually in decline rather than in growth. So it's about trying to minimize uh those that are actually leaving. And in real terms, you're always going to have people leave, whether they move away, pass away unfortunately, choose another practice for whatever reason, or may even be a financial um choice that they just can't afford to come to the practice. Uh, there are a multitude of reasons why people won't return, but it's about minimising that as much as possible, keeping the leak as small as possible, so that when you are in filling it at the top, your practice is in growth, in a healthy state, and you're projecting obviously your expansion into the future. So it's about looking at those metrics, understanding where you are, and then about understanding what levers you need to push and pull to actually maximise uh the results of those actions, uh, as I've sort of said, um, regarding the likes of recalls, how successful are you there, how often do you actually change the process of recalls? I mean, we all get into very much a sort of safe space of um, well, we send out an email once or twice, um, we we we might send out a couple of SMSs, and then we might get round to ringing the patient if we were sort of really desperate and nobody really likes doing the sort of ringing part, but it's about understanding what is what is success for your practice and how do you measure that success and how is it visible, and how do you then lean into that, and as I say, pull or push the right lever to maximize the result uh on that one element of all. And there's lots of tools out there uh that we can assist with uh in regard to making sure that you have the best results you possibly can do with recalls, um, and likewise with um such things um as reminders and forward bookings. And again, key aspect of us funneling this down and asking a question to everybody out there would be how much time, money, and investment do you put in your front of house team compared to maybe the clinical team and your nursing team? And in very many situations that we come across, actually, the reception team, the front-of-house team are probably the least invested in. Um, and yet they are the oils, if you like that. Um, oils, the cogs that actually makes your business work.

Dr James, 8m 3s:

Excellent. So that's very valuable to know. So these are, I know what you were saying, you have to really get into the actually, you know, this the specifics to figure out what's going on. But even that in and of itself is super valuable because these will be some places that dentists can look. And even having the clarity to know, okay, cool, uh, what are the most common things that other dentists struggle with? Because there's a good chance that we can implement this into their practice whenever they know that stuff, and knowing where to look is extremely valuable. Alon, anything to add?

Alon, 8m 32s:

Yeah, I mean the peric sort of uh sums up very nicely. Um, yeah, one of the KPIs which we look at, uh which is kind of touched upon, was looking at your sort of active patients. Uh, and so that's something that a lot of practices don't keep updated. So looking at who's active, who's lapsed, uh, who's who should be archived, uh and that's kind of gives you that information around the leaky bucket or the potential leak in the bucket that Derek was talking about. So, as you know, so because as dentists, we kind of just look at the diary and see, you know, are we busy or not? But actually, that doesn't really give the whole picture because it might be that we're getting lots of new patients, but it might be also that a whole bunch of patients are disappearing. Uh and that and those are really valuable. So you know, that metric is really important uh to give an understanding of what's going on in the business. Um and then again, yeah, again, the other thing that was you know, just something to think about is you know that concept of lifetime value. Uh and I think it's something that's very very relevant for dentistry because you know very often you kind of particularly if you spend a lot of money in marketing, you people just want to sort of get in there and do lots of complex dentistry, but but dentistry is around trust. And so having really good, a really good team, a well-trained team that helps build that trust is so important to building the value, you know, both in terms of your personal connection, in terms of the treatment that you do, and you know, then so that that that all ended up filtering down to the bottom line.

Dr James, 10m 24s:

Excellent. Hey, everything that we have to say on that topic, round it off. I think I guess probably we can probably make a whole podcast about that, right? We've we've covered it sufficiently for today, I feel, right? Yeah. Okay. In that case, moving on. What is the next biggest KPI, I guess, or area that dentists should look at in order to boost their profitability, in your opinion, from having done this hundreds of times with lots of different dental practices?

Derek, 10m 56s:

So we've sort of touched on sort of dire utilization, and Alon just mentioned it there. So I'm actually gonna sort of we and we we sort of talked about dire utilization um before we sort of jumped into the podcast um here, but I'm gonna actually skip that one as well. We sort of touched on it, but I'm I'm gonna move on to sort of um um production rate per hour, um, and and again about assessing um what the value of each chair is per hour in your business to actually um determine on whether or not you're actually um, first of all, obviously bringing in the right revenue per hour that you're you're expecting, but also, and we'll this will come into the third one, whether or not that drops down into operating profit as well. So, really, I'd focus on um exactly that. So your production rate per hour, if you know how many hours you're working, or in effect, in a simple calculation, you know how many hours you're available, you know how many hours you've worked, that's obviously giving you your occupancy per chair, but then those those worked hours multiplied by your production rate per hour is obviously giving you what your income is uh per hour, then multiplied up per day, etc. like that. So it's about understanding what your production rate is per hour and also what production rate per hour you need to achieve to actually ascertain the the um profitability that you're looking uh to achieve in the practice uh long term.

Dr James, 12m 20s:

Excellent. So production rate is uh a big point of leverage, and what about uh if we were to just go one layer deeper on that still, specifically uh about how we can improve production?

Derek, 12m 35s:

So, and Alon might want to jump in on this one as well. For my side, is it in the operating side of the business, really, it's about making sure that the um chairs are efficient um and that they're filled. Uh similarly, there's not much sort of more to that, and and there's a blend of treatment throughout the working day, the working week, the working month. And um, many people have sort of heard analogies sort of out there, maybe about sort of um rocks, pebbles, and sand, being the fact that when you're looking at your clinical diary in the day, that what we want to do is find make sure that there's the right balance of large treatments, your rocks, then you're infilling with your smaller treatments, your pebbles, and then you sort of the the smaller gaps, the exams, et cetera, the emergencies is the sand where you sort of infill to make sure there's very little gaps. If you look at that big that glass jar of the three different types of uh sizes of stones, we've got as few little gaps in it as possible. So it's about sort of ensuring that the diary is efficient as possible so that you're maximising the revenue. You can predict your hourly rate in a in a much greater way and over a much greater period of time, rather than having this sort of um up and down roller coaster effect where some days are crowned of treatment and it's a large income day, and other days are just full of exams, and in effect you you make no money on those days. It's about trying to have a smooth road, a smooth pathway, so that you can um align what your income is in effect with what what your um outgoing costs are going to be uh as well. And Alon, you may want to jump in on the treatment side of things, really.

Alon, 14m 12s:

Yeah, I think there's I think there's a a balance to be had. So there's but what Derek says is really true is that if you can get a good mix in your practice, then keeping that that really helps to keep the cash flow stable. Of course, as clinicians, some people like to have lots of variation in their day. Some people actually like to have you know, okay, you know, Monday, Monday morning is a day like 50 so um but the yeah, so from my my perspective and what we do with collaborating, it's about understanding what that means. So you know, if you change X, this is actually what's going to happen to the business. And that might be something that you think is good, or it might be something that um you think is bad, and therefore you do something different. But the important thing, which so many dentists don't do, is have actually any implication or understanding of how you run your how you how you structure your day actually impacts your bottom line. Uh, and so you need to it's about having your you know having your eyes open to understand to understand what you know what is driving the business, uh, and that's why you know what comes out of it is is a is as a result of the way that the business is being run with with very specific things that we can measure.

Dr James, 15m 42s:

Nice. All right, brilliant. Well, that's the production side of things dealt with. And I know there was we wanted to go for the hat trick today, we wanted to have three because three three is a magic number, it's always nice to have three, but we kind of covered have we covered three?

Alon, 15m 56s:

Well, I wanted to talk about treatment profitability. Oh you beat me to it. Ah, okay. So great minds think alike. Let's do that.

Dr James, 16m 3s:

Let's do that, let's do that. Treatment profitability it is, and then we can go on to three.

Alon, 16m 8s:

Yeah, I'm Derek. Oh, you're gonna be a little bit. Okay, thank you.

Derek, 16m 14s:

Almost obviously sort of leading on to production rate per hour. And and someone wiser than me once sort of said, like, look, um, income is for show and profit is for dull. It's one thing sort of earning the money on your top line and seeing what your income is, but it's whether or not you can actually protect that income as much as possible so that as much of it falls down onto your operating profit um as possible. So it's really fundamentally about understanding what the costs are for your treatments uh that you undertake, taking everything into account, whether or not that be your sort of um uh the cost of your associates, your labs, your all your um uh cost of sales, your lab cost materials, um uh, etc. And then all your admin costs as well that fall off your team costs of your nurses and everything else that it costs to keep uh the doors open, uh, rent rates, light, power, water, insurances, and everything that goes with it. So it's about understanding what all those costs are, how they add up into each treatment, and therefore what what and also of course what profit margin you want uh for each treatment, and therefore what you should charge uh for each individual treatment, with the sort of caveat that obviously you've got to understand what the market forces are in your locality, what you can actually afford to pay, and whether or not you'd make yourself an outlier. But it's about having a balance about knowing what your local area can take, but truly what your and I must stress your operating cost, because when uh when um a lot of principals look at what they should charge, the first thing they do is go and have a look at the competitors nearby and say, well, they're charging £100 for this treatment or £1,000 for this treatment, I'm going to charge the same or a shade over or a shade under. Um, what they don't maybe comprehend is the fact that that other competitor might have completely different operating costs from start to finish. The lease might be higher or lower, the what they pay the associates might be up 5%, down 10%, their staff costs might be different per hour, and everything else that that comes together to get your total costs to run your business. So it's a good sort of pointer for 10 if you like, looking at what the competitors are, and you certainly need to be in that sort of market unless you really are standing out at one edge or the other. Um, but fundamentally you need to do the hard yards, which is understanding what it costs to deliver each treatment line uh within your business, um, adding on your profit margin to actually truly get where you should be at treatment cost. So fundamentally, um that's where like we need to be in understanding that you're making money on all the treatments that you actually um conduct, and that that conversation might also be around well, actually, how much are you making as a principal doing the same treatment compared to actually if you pass that work on to an associate to do it and take into the of course the the consideration the associate's fees, what does that do to the profitability for that treatment? And which treatments should you do yourself as a principal, which should you pass on, etc. So uh fundamentally profitability of treatments is definitely the sort of the number three for the hat trick. Alon?

Dr James, 19m 23s:

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Alon, 21m 13s:

Yeah, totally agree. Uh I think again from uh yeah, as the way I sort of started off in Dentistry, you know, you just looked at the your your good, you were looking at your accounts at the end of the month, or very often it was just at the end of the year, and you just see kind of how much money was made, and no real understanding of what it is that you did on a day-to-day basis that sort of made an impact into that. Um and so when we look at practices, very often we'll find that there are a whole bunch of treatments that don't really make any profit. And then there's a bunch of treatment that do. And then quite frankly, the reason why a practice is is possible or not is the relationship between those and very often that's very just ad you know pretty ad hoc and not very well planned. And so the fundamental is to understand you know what every treatment does to the business from a financial perspective. And a way one of the things I like to look at is is the phrase of understanding the difference between a lost leader and a loss maker. So as I was alluding to a lot of times a lot of things we do is about building trust, building relationships. And that's fine. And it's fine to have a lost leader as long as it's being measured and it's being tracked. But if it's not being measured not being tracked and you don't understand the balance between your loss making treatments and your profit making treatments, you then become loss makers. And so it's being able to understand that in the first instance is super important to planning what you should be charging. And then and then as Derek was alluding to we can then look at say okay actually this area we think there's we think there's scope to change the fees so we can make sure we're making some profit in those treatments maybe we're limited by the market and we can say okay we might not be making much profit on these treatments but at least we know we need to monitor the number of patients that are coming through and making sure that we're maximizing on the goodwill that we're generating by seeing the patients. And so it's really I say it's like everything we do it's about providing information and understanding so that we can look after practices better and ultimately look after the team and our patients better.

Dr James, 23m 47s:

Hell yeah awesome brilliant well I think what just to reiterate what we were saying earlier um you know the reason why I wanted to ask you guys specifically this is these are just not three KPIs or factors that we're just pulling out of the air and thinking to ourselves right okay these sound about right I think it's these three things this actually comes from hard data this comes from you helping Dennis with this stuff over many many years and you're able to say right actually these three specific things are the biggest common trends we've noticed amongst all the possible ways there are to make more profit in a business these are the most common ones that we've picked up on so I just wanted to reiterate that for the audience's benefit. So basically in essence there's a good chance that if you're a principal or you are an associate as well of course or you're going to be a principal one day as well that if your business is not quite hitting the numbers that it would like you'd like it to or you just want it to be even more profitable there's a good chance it's going to be one of these three things or it's going to be a factor within these three things and I just think that's a really cool thing to highlight and it is also important to mention that you can actually get all of this data it's actually buried in your PMS but it's just that people don't know how or they don't have a very good interface by way of software dashboard to be able to extract the info which is kind of the thinking behind what you guys do.

Derek, 25m 13s:

Yeah yeah so so a lot rather rather than all uh James a lot of the information is is there in your PMS and it's about understanding what parameters to use to extract it and analyze it and and and get what actions are needed. But um the benefit if you like of the dashboards that we create for our members is we don't just stop at PMS. We've talked about sort of um operating profit here and treatment profitability. Now obviously we can we can get the sort of um income levels out of the PMS but when it comes to the profitability what we need to do then is obviously merge all the costs together as well to find out what the profitability is. So our dashboards actually bring together really all the key metrics needed to run a successful dental practice. So now whether that's actually your your profit and loss accounts that come from your your bookkeeper or accountant that we look at and take the costs out to look at your treatment profitabilities. It may well be HR platforms that you have to look at um both the volume and cost of your um team members and equate that to a ratio with your clinical team to make sure that we're uh you're staffed at the optimum level um it may well be a compliance elements um or um some other function that we we sort of pull together your marketing functions for instance um when it comes to your your gems etc that you may well be using we pull all of this data into a very clear and concise um Microsoft Power BI dashboard um which enables us really to build a picture analyze uh your business and communicate in a very structured way with yourselves as business owners on where you currently are um where you want to be and how you actually get there looking at the numbers um now we find this is key not only is obviously um all decisions is backed by um analytics and and and numbers in the practice but also we're very conscious of the fact that look time is precious if you yourself go away and try and pull this data from your PMS and your management accounts and your your your um marketing platforms and HR platforms it's going to take you hours hours that takes you away from being sort of face to face with your patients etc now we do all the hard work for you and all the heavy lifting bring it all together into a nice readable format as I've said and really can sit down with you every week give you a picture of where um your business is what needs to be done using our experience and knowledge of your business and many other businesses out there as well which gives us a great wide picture of what's happening out there in the wider dental world rather than just your sort of silo dental practice so we can sort of help you with that and then we sort of support you in actually delivering those actions um to maximise the benefit for your business. I think um I left a dramatic pause there I actually think you might jump in James but I really I was just going to reel off as well just we've talked about a couple of KPIs actually but um just sort of leading on to that as just an example of what we've done and if I was going to sort of pull out a a number of examples um obviously one of the key metrics is work hours. I mean we we've helped uh one of our members over the last couple of years who's increased their clinical work hours by 184%. Now when you multiply that up by the um hourly production rate increase um um all of a sudden you start to see large numbers um and again it's it's very much the sort of sky sports uh sky cycling analogy here which is marginal gains you're not necessarily going to get one clear answer out of one KPI it's about looking at a metric off tens if not hundreds of KPIs and looking for marginal gains out of each of them and actually added together gives you the performance that you're looking for. But um yeah so work dollars increase 184% um with increased income actually um at the same practice by 198% um over the same sort of period um so that obviously is is is a massive win for the practice owner gives them security of life and then you can talk about your work life balance as well and it brings in a lot more decisions about what you want to do with your future knowing the fact that your business is looked after and taken care of and there's no surprises going forward. Well it's interesting because that was actually one thing I was going to ask as well which was can you give us any worked examples of when this has yeah absolutely I mean many I mean I'm not going to sort of sit here and sort of reel off but sort of just sort of practices about I mean again I mean things that we focus on I mean we've taken one practice again that again we look at each individual business as exactly that as individual and have a look and see what needs to be done. But another example maybe um would be on the lines of um forward bookings which we increased um by 176%. So again taking away the stress out of reception and actually putting in processes in place that actually we book patients when leaving rather than on the recall process um so that encouraged patients to come back more regularly enabled our reception team to actually have much more of a um face-to-face interaction with patients as they walked through the door and then left etc um and made payment so again it's it's it's smoothened out um the processes in that practice um again we can have a look at sort of then gross profit um increasing by um 174% uh practices I'm gonna stop there instead of reel them off as well but uh maybe what I should do as I mentioned profit I should reel off one last one on operating profit again I'd say that operating profits are sort of um up 128% uh another practice I'm sort of just looking at the list here so all of our practices different sizes different shapes etc sort of thing so we range from sort of mixed practices up to sort of Harley Street sort of practices really so um really we we cover all different types shapes and sizes of practices and depending on what the metrics are obviously depends what we we need to sort of look at and what what they're looking to strive for um as for goals in the future and how we can help them.

Dr James, 31m 27s:

Excellent and it's obviously really good to be able to put some figures on there as you have done just there because it kind of shows people what is possible and just how much this can mean for someone and the key thing is we want to emphasize you know the dentists are not working harder for this they're really not it's just that the machine that they've created is in their business is just more efficiently giving them returns for the exact same amount of effort effectively because of how they've set it up and that's a really good way to think about it. We're thinking like our business like a system and we're like okay where can I I've got this WD40 or oil if you will and there's all these cogs okay and I'm trying to find out where I need to put the oil on the cogs which cogs I need to put the oil on and then all of a sudden for the exact same amount of effort on the crankshaft so to speak there's so much more coming through by way of production by way of profit and I think that's a really nice analogy.

Alon, 32m 21s:

Alon anything to add um Derek said lots um and I I would just yeah just to add for me it's about opening people's eyes up it's uh under it's as dentists we spend most of our day in patients' mouths sort of head down working away and so we just don't have the time in the day to really see what was going on in the business. And so having all the information in one place is absolutely valuable to understand what's going on in the business. Having someone like Derek who can really look at those numbers in detail and give you some professional analysis on it again isn't valuable. And yeah we enjoy being part of that journey for our practices and if anybody wants to reach out to find out about anything that we talked about today from the podcast where they're best off finding you can find our website uh collaboratedental.com or reach out to myself or collaboratental.com or dedicate collaborate dental dot com.