Incremental Revenue – A Series – Part 4 – Hygiene Revenue

 

Introduction   

This installment in the Incremental Revenue series is the first to deal directly with revenue sources.  Installment #3 focused on new patients, an important raw material for providing incremental revenue.  In this installment, we investigate specific areas within the practice where a dentist can find incremental revenue.

Proposition   

In most practices, hygiene operations are the source of the greatest amount of incremental revenue.  Incremental revenue comes from either additional hygiene services or dental services.  In most cases, the cost of incremental hygiene revenue is very low compared to the cost of incremental dental revenue.  A dental practice can often generate incremental hygiene revenue with minimal additional staff costs.  Incremental dental revenue comes with the imputed professional compensation cost component of at least 40% of the fees produced after first deducting lab costs.  We will show how a typical dental practice can increase its hygiene revenue by between 25% to 50%, creating a significant increase in net profit and practice value.

Supporting Particulars

The first step in uncovering any hidden incremental hygiene revenue is to determine if you have any.  Once you have determined if you have any, it is a matter of figuring out how to access it.  Let’s address both of those issues.

Analysis

It is very simple to determine whether you are achieving your full potential in terms of hygiene production.  You only need to know two metrics, both of which are easy to obtain.   You need to know how many active patients you have, and you need to know the amount of your hygiene revenue for the last 12 months.  For this exercise, we are defining an active patient as a patient who has received any treatment other than one-time emergency treatment over the past 24 months.  An active patient is a patient that is likely to sustain the practice on an ongoing basis.  Sustaining patients may have a longer than 12-month visitation cycle, which is why the total number of patients who have received treatment within the last 12 months is not a good indicator of actual active patients.  Most practice management software programs can give you this information; make sure that you ask for “unique” patients that have visited the practice in the last 24 months.

If you know how many active patients you have and you know what your hygiene fees were for the last 12 months, it is easy to calculate the Average Annual Revenue per Patient (AARP) for hygiene.

 

Figure 1

 

In the example above, we have a practice with 1,600 active patients.  The hygiene revenue is $270,000, which equals $169 of hygiene revenue per patient per annum.  The question is whether or not $169 of hygiene revenue per patient is OK.  To answer that question, you need to know what the norm is, and the norm is going to be different for each province because each province has a different fee guide.  The same service in different provinces will not cost the same amount.  I am in Ontario so let’s use Ontario as the baseline.

In Ontario, the AARP for hygiene revenue ranges between $260 and $300.  For our example, we will use a conservative $260 as our “norm,” which means that the practice produces $91 less than the “norm.”  That means the practice is billing about $146,000 less than the “norm.”  If the practice were billing $260 of hygiene revenue per patient, then the total billings would be $996,000, which means its current billings are about 14.5% less than expected.  We are dealing with hygiene revenue, where approximately 75% of the incremental revenue of the $146,000 is going directly to the bottom line, which equates to about $109,500.  If we use a 5.5 times multiple of net profit, the effect would be to increase the value of the practice by $602,250.  I think we can agree that a relatively small incremental increase in gross revenue will have a significant effect on cash flow and value.

The example below illustrates the difference in Pre-Incremental and Post-Incremental gross revenue and AARP.

 

Figure 2

 

Fortunately, incremental hygiene revenue is reasonably easy to find and easy to incorporate into any practice. I will address three very simple but effective protocols for incorporating incremental hygiene revenue into a dental office. The protocols are as follows:

  1. Booking Recall Appointments
  2. Reactivation Strategies
  3. COE’s – Complete Oral Exams
  4. Soft Tissue Management Protocols

Pre-Booked Recall Appointments

At this stage, everyone knows what a prebooked recall appointment is. There is a great deal of psychology behind why prebooking works. Our focus here is not on why it works but rather on how it should work. There are 3 or 4 critical steps to an effective prebook system as follows:

  1. Book the patient’s “next” appointment before they leave their current appointment with the explanation that they will be contacted two weeks in advance to confirm their appointment, at which time they can change dates and time if necessary. If you don’t know, ask the patient for their preferred method of contact.
  2. If the patient is booking to coincide with their insurance coverage, try booking the appointment on the anniversary date plus two weeks. If the patient needs to move their appointment, you can move them forward to fill any holes in the schedule without putting them offside with their insurance coverage.
  3. Contact the patient two weeks before the upcoming appointment and confirm the appointment. If you have determined their preferred method of contact, use it and if you haven’t, make sure you find it out at the earliest opportunity. If the patient cannot make the pre-appointed date, attempt to move their appointment forward to fill any holes in the schedule. This works if you prebook with a two-week buffer. If you use an online scheduler, you may not be able to do this, or you may be able to pre-block available appointment times. However you do it, the overall objective is to fill near-term holes in the schedule before moving them further out.
  4. Remind patients, if and only if necessary, to use their preferred communication method the day before their upcoming appointment. Whatever reminder method you use, try to get a confirmation that the reminder has been received.

The overall objective is to ensure that patients do not fall through the cracks but to do it in a patient-friendly way. There are several essential components to this protocol.

  • If a patient should refuse to prebook, prebook them anyways. When you do this, indicate in the schedule that the patient has asked not to be prebooked and is not aware that they have been prebooked. When the patient receives their two-week confirmation communication, it will need to be treated not as a confirmation but as an appointment booking reminder. Patients who are not prebooked, at best, become reactivation problems or, at worst, get lost in the system.
  • Whenever possible, if patients need to move their prebooked appointment, encourage them to move their appointments forward to fill near-term holes in the schedule so long as this does not put them offside with their insurance coverage.
  • Get to know who needs a day before reminder and only contact those patients. This is particularly important if your method of reminding is a phone call.

Once your prebooking system has been up and running for at least nine months, you should be able to pull any chart and confirm that every patient has a booked recall appointment. There should be a specific reason why any patients do not have an appointment. If you find patients without appointments, then you have a reactivation problem. Our next stop – reactivations.

 Reactivations

As much as you try to control your recall appointments by prebooking, there will be patients who do not get properly prebooked. It would be essential to reactivate these patients before they go inactive. Set your practice management software to produce a list of unbooked recall patients based on your recall interval or the default interval of your system. Reactivation systems are the number one most mismanaged system in dental offices. Daily, patients of record, are going inactive or over 18 months overdue, and in many cases, they are lost forever or until something hurts. Properly executing your reactivation system will be a function of the software you are using; however, the following highlights some key protocols that should be found or followed in an effective reactivation system.

  1. Assign one team member, the hygiene coordinator, to manage your reactivation protocols which should be to contact unbooked recall patients on a monthly basis.
  2. Make phone calls in addition to texts and emails to ensure that you have made positive contact. Do not assume that your automated systems have made a positive connection.
  3. Conduct a complete purge of all charts at least once a year to reactivate or close all unbooked patients.
  4. Give all reactivated patients a prebooked appointment for their next visit and, where appropriate, offer a scale-only appointment before the end of the year.
  5. At the morning meeting, check the recall status of all treatment patients and family members of all patients to ensure that they all have booked recall appointments.
  6. Ensure all staff knows and is following the office cancelation policy.

Complete Oral Examinations (COE’s)

COE’s are a lot like a new patient exam after the fact and used to be reasonably accessible. Unfortunately, they are not easy today. Now you have to show that the need for a COE is “warranted.” The definition of warranted is not entirely clear; however, it would be reasonable to assume that any significant oral health change would warrant a COE. It is essential to take advantage of COE opportunities when they arise. The following is a list of common COE procedures:

  • Identification of damaged, missing, decayed teeth and teeth with signs of early decay
  • A periodontal examination includes the measurement of periodontal pockets, an assessment of inflammation or other periodontal diseases
  • An evaluation of the condition of previous dental work
  • An occlusal assessment
  • Cancer and additional growths screening
  • A TMJ assessment
  • A medical history update
  • X-rays as required
  • Oral hygiene home care recommendations

When booking COE’s, it is essential to inform the patient that the appointment will be longer than usual and that their insurance will cover the cost. It’s usually an infrequent opportunity to re-treatment plan patients both dentally and periodontally. When you do have the chance, be sure to take it.

Soft Tissue Management

Depending on whose study you read, about 60% of adults and an even more significant percentage of senior adults have some form of periodontal disease. If you are not treating accordingly, not only are you undertreating your patients, but you are passing up some serious incremental revenue.

The treatment options for soft tissue management are extensive and well beyond the intent and scope of this article. Soft Tissue Management has spawned a whole industry of treatment options, none of which is relevant to the point we are making. What is relevant is whether or not you are providing a comprehensive selection of appropriate services. If you are not, you need to consider embracing a few changes to your service offerings as follows:

  • Hygienists almost exclusively provide soft tissue treatment in a non-perio office. The success of your perio program will be largely dependant on having a hygienist on staff who is enthusiastic about delivering perio services.
  • You will need to have a treatment protocol that works and that you are comfortable with. Deciding on treatment protocols is something that may require or benefit from the input of a qualified consultant.

There are two points of importance here. Firstly, without an effective perio program, you run the highly probable risk of undertreating your adult patients. Secondly, without an effective perio program, you are missing out on a significant source of incremental revenue.

Conclusion

The hygiene departments of most dental practices consistently underperform and, as such, are a great place to look for incremental revenue.  It is not unheard of to double hygiene revenue or at the very least increase it by 50%.  Incremental hygiene revenue, because of its relatively low delivery cost, also has a very significant and positive effect on cash flow and practice value.  As a strategy to increase fees billed per patient, increasing hygiene revenue should be the first place you look for incremental revenue.

Contact

For information about coaching services specifically designed to help you capture all of your incremental hygiene revenue, please contact Linda Anderson at linda@heapsanddoyle.com.  Linda heads the dental coaching team at HD Dental Coaching (a Heaps & Doyle company).  If you would like more information about this or any other articles in the Incremental Revenue series, please contact Derek Hill at dhill@hillkindy.com.  For other articles by Derek Hill, you can visit the Hill Kindy Practice Sales (a Heaps & Doyle company) website www.hillkindy.com.